DAIKIN Inc.

Case:

Key Words:

air conditioner, advertisement, number one

Reference:

Fair Trade Commission Decision of January 27, 2010 (the 871st Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 099011

Industry:

Retail Sale of Electrical Household Appliance in Specialized Stores (4741)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. The public reported that the advertisement of DAIKIN air conditioners published in the newspapers by DAIKIN Inc. (hereinafter referred to as DAIKIN) in May 2009 claiming that "DAIKIN's and Matsushita's small air conditioners are both ranked the number one products in sales… in Japan…" was based on no objective statistical data and possibly untrue.

2. Findings of the FTC after investigation:
   (1) DAIKIN published the advertisement in question in the newspapers on May 2009. In this advertisement wordings of "Small Air Conditioners Leading Groups DAIKIN Matsushita" were indicated under the "Sales Ranking of Japan Air Conditioner Market." It was also stated under the ranking chart that "Source: The Japan Refrigeration and Air Conditioning Industry Association, DAIKIN 2007 Estimated Financial Statements for Matsushita and DAIKIN." The explanation of the wordings was that "Inverter Air Conditioners - Number One in Japan," DAIKIN stated in the advertisement that "DAIKIN's and Matsushita's small air conditioners are both ranked the number one products in sales… in Japan…" The advertisement in question brought the consumers an impression that the sales of DAIKIN's small air conditioners together with Matsushita's products were both ranked number in Japan in 2007.
   (2) It was found that DAIKIN used the data obtained from Fuji-Keizai Group's "Japan Fuji Economy - Electric Power and Energy System Market in 2008" and NIKKEI's "NIKKEI – 2009 Market Share" as the support for its advertisement. However, according to the above data, in Japan, Matsushita's market share of small air conditioners based on the sales amount was 22.2% in 2007, while DAIKIN 20%. Matsushita's market share based on the sales quantity was 21.7%, while DAIKIN 19.6%. Either way, Matsushita was the number one brand in sales. Furthermore, if the market share of small air conditioners in Japan from 2004 to 2007 was considered, DAIKIN was the number one brand in sales only in 2004. Matsushita was ranked number one from 2005 to 2007.

3. Grounds for Disposition:
   According to the market survey results gathered by DAIKIN, DAIKIN's sales of small air conditioners in Japan was only the number one brand in sales in year 2004. DAIKIN failed to submit evidence to prove that DAIKIN was the number one brand in sales in 2007 or when the advertisement in question was published. As a result, the advertisement in question claiming that "DAIKIN's and Matsushita's small air conditioners are both ranked the number one products in sales… in Japan…" went beyond the acceptable level and was sufficient to cause wrong perception of the public with regard to making reasonable determinations and trade decisions. DAIKIN indeed violated Article 21(1) of the Fair Trade Law by making false, untrue, and misleading representations in its advertisement and was imposed with an administrative fine of NT$300,000.

Appendix:
DAIKIN Inc.'s Uniform Invoice Number: 03251000
Summarized by Huang, Li-Ming; Supervised by Chi, Hsueh-Li