Hsin-Hsin Gas Pipeline Enterprises

Case:

Key Words:

gas pipe, safety equipment, pushing sales under the pretext of providing safety check

Reference:

Fair Trade Commission Decision of September 15, 2010 (the 984th Commissioners' Meeting)

Industry:

Safety Equipment (2499)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. Findings of the FTC after investigation:
   1. The FTC aimed "regulating the trading order of the gas safety equipment market" a key target in year 2010 and acquired from domestic natural gas providers information on businesses that pushed gas safety equipment on end users on the pretext of offering free safety checks under the names of natural gas providers. Efforts were made to investigate over ten cases suspected of such illegal conducts and administrative dispositions were made against nine of them. This case, one of the nine, was investigated based on the complaints from some customers of Shin Shin Natural Gas Co., Ltd. (hereinafter referred to as Shin Shin Gas).
   2. Findings of the FTC after investigation:
      That the accused was a gas valve company that had the same name as Shin Shin Natural Gas and operated in the same area. Moreover, the "Hsin Hisn Gas Piping Service Notice" carried an obscure company stamp and the statements such as "Thank you for using our gas valve," "Your esteemed customer," "enhanced soft gas pipe maintenance," "regular gas equipment inspection service," and so on, were to make believe that the notice had come from the local natural gas provider. The intension to mislead customers was obvious. According to descriptions from the customers of Shin Shin Natural Gas, the employees of the accused wore a Hsin Hsin Gas uniform and a pass with Hsin Hsin Gas printed on it. They carried a gas detector and expressed they were there to perform gas pipe safety inspections. When called in for clarification, the person in charge of the accused company said that " our salespeople carried a detector and claimed to be there to perform safety inspections when visiting potential customers was an imitation of what the people sent from natural gas providers normally do." The excuse was ridiculous but it clearly indicated that the employees of the accused intentionally hid the fact that they were not from the natural gas provider and they were there to push certain products. On the contrary, they acted like they were from the natural gas provider and used the pretext of performing safety inspections to make it difficult for the natural gas end users to know that they in fact were not from the natural gas provider.
2. Grounds for disposition:
   1. Shin Shin Natural Gas is the sole legally licensed natural gas provider for the specific area. It has the responsibility to inspect gas piping on a regular basis. The accused would put the service notice in the end users' mailboxes in the operating area of Shin Shin Gas just several days before its employees would make house calls to push products. It was using the trust of people in the natural gas provider to do this promotion. When people received the notice in their mailboxes, they mistook it as coming from the natural gas provider. Then when the employees showed up at their doors allegedly to perform safety inspections, people generally would not think otherwise but just let them in. What followed was the employees from the accused would say there was a gas leak and push people to have a gas shutter installed. The accused, in order to promote sales, hid the fact that it was not the natural gas provider in order to mislead and cheat people. Its sales strategy of performing safety inspections as a pretext to sell its products was deceptive conduct sufficient to affect trading order and in violation of Article 24 of the Fair Trade Law.
   2. Despite that the business capital of the accused was merely NT$50,000 and its scale was small, the FTC, besides ordering the accused to immediately cease the unlawful act, imposed an administrative fine of NT$200,000 on the accused because the impact of its conduct of pretending to be the natural gas provider and using the pretext of performing safety inspections on the psychology of consumers was far greater that common deceptive actions.

Appendix:
Hsin-Hisn Gas Pipeline Enterprise's Uniform Invoice Number: 30142408

Summarized by:Liu, Chin-Chih; Supervised by:Sun, Ya-Chuan