Masterhold International Co., Ltd. and Ho-Kang Tech Co., Ltd.

Case:

Key Words:

Automotive Research and Testing Center (ARTC), safest battery, energy saving, carbon reduction, low gas consumption

Reference:

Fair Trade Commission Decision of November 17, 2010 (the 993rd Commission Meeting), Dispositions Kung Ch’u Tzu No. 099124 and No. 099125

Industry:

Motor Vehicle Parts Manufacturing (3030)

Relevant Laws:

Article 21 of the Fair Trade Law

Summary:

1. Masterhold International Co., Ltd. (hereinafter referred to as Masterhold Co.) and Ho-Kang Tech Co., Ltd. (hereinafter referred to as Ho-Kang Co.), both engaging in car battery sales, were reported to have advertised their car batteries in auto magazines and fliers as "proven to be the safest batteries whose lithium iron core has gone through various vigorous puncture and impact tests without catching fire or exploding and users need not worry about their cars catching fire (Automotive Research and Testing Center (ARTC) No. B98RE077 Report ). Plus, they also save energy, cut carbon emissions and reduce gas consumption up to 5~25% (ARTC report)." The said claim was inconsistent with the reports from ARTC. False and or misleading representations in advertising were suspected.
2. Findings of the FTC after investigation:
   (1)Masterhold Co. claimed that it had commissioned ARTC to conduct environmental tests on the batteries, including vibration, high temperature storage, temperature shock, high-temperature and high-pressure water spray, and sand and dust tests. There were also reports from UL on impact tests and reports on puncture tests conducted by Masterhold Co. itself. The aforesaid advertising wording was based on these reports.
   (2)According to Ho-Kang Co., the company had asked ARTC to run energy consumption tests on the batteries. In addition to the test results and data Masterhold Co. provided, Ho-Kang had also run gas consumption tests with their own vehicles on different road surfaces at different hours and come up with the 5~25% gas consumption reduction conclusion.
3. Grounds for disposition:
   (1)Regarding the safety claim Masterhold advertised in auto magazines, ARTC expressed that the No. B98RE077 Report had been an environmental test report on the environmental temperature and pressure differences of the said car batteries. No puncture or impact safety test as described in auto magazines had been performed. Therefore, Masterhold Co. could not have established the safety conclusion on the batteries, as advertised in auto magazines, from the said report. The claim by Masterhold in auto magazines was apparently inconsistent with the content of the ARTC report. It was a false, untrue and misleading representation in violation of Article 21 (1) of the Fair Trade Law (FTL).
   (2)Regarding the gas-saving performance of the batteries claimed in the fliers from Ho-Kang, ARTC expressed that the average energy consumption difference before and after installation of the batteries was only 0.2KM/L. It was within the reasonable error range. There was no 5~25% energy consumption or carbon emission reduction as claimed in the fliers. As for Ho-Kang's conclusion that the batteries could reduce 5~25% gas consumption from its own tests with their own vehicles on different road surfaces at different hours, it lacked objectivity since the tests had not been conducted by an objective and just agency. Hence, the claim in the fliers was inconsistent with the ARTC report. It was a false, untrue and misleading representation in violation of Article 21 (1) of the FTL.

Appendix:
Masterhold International Co., Ltd. 's Uniform Invoice Number: 27961992
Ho-Kang Tech Co., Ltd.'s Uniform Invoice Number: 80437384

Summarized by: Wu, Hsin-Te; Supervised by: Chen, Chun-Ting