Taiwan Secom Co., Ltd.

Case:

Key Words:

Market share, commercial applications of AGPS, access control and attendance record system

Reference:

Fair Trade Commission Decision of March 21, 2012 (at the 1063rd Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 101028

Industry:

Security Services (8001)

Relevant Laws:

Paragraph 3 of Article 21 of the Fair Trade Law and Paragraph 1 applicable mutatis mutandis, and Article 24

Summary:

1. The FTC received complaints that on its website and propaganda fliers and in its "Dr. ID Access Control and Attendance Record System" catalog, Taiwan Secom Co., Ltd. (hereinafter referred to as Taiwan Secom) made the claims that the company accounted for 60% of the system security market share and it was "the first enterprise in world to use ‘AGPS' in commercial applications." The wording was a false, untrue, and misleading representation with regard to the quality of service in violation of Paragraph 3 of Article 21 of the Fair Trade Law and Paragraph 1 of the same law was applicable mutatis mutandis. In addition, the descriptions of the access control and attendance record systems from competitors in the "Dr. ID Access Control and Attendance System" catalog was also a false, untrue, and misleading representation in violation of Article 24 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   1. The information that Taiwan Secom provided on its own website and other websites and in its "Dr. ID Access Control and Attendance Record System" catalog all made the same claim that the company had 60% of the market. In addition, the "Dr. ID Access Control and Attendance Record System" catalog also contained the wording that "the first enterprise in world to use ‘AGPS' in commercial applications." However, Taiwan Secom admitted that the claim of "having 60% of the market" had no real statistical basis or objective proof but a figure that its advertising division had estimated over a decade ago and had been adopted ever since. As to the claim of the company being "the first enterprise in world to use ‘AGPS' in commercial applications," Taiwan Secom also confessed that it had never done any survey or research to substantiate it. A report from the Industrial Technology Research Institute indicated that before Taiwan Secom marketed its Mini Bond mobile security service that used the AGPS, some companies in the US and Korea had already applied the AGPS in commercial applications.
   2. There was a list of comparisons in the "Dr. ID Access Control and Attendance Record System" catalog between the DR. ID system and the services of competitors in "management methods," "economic benefits," "product warranty," "depreciation modes," "maintenance and problems," and "maintenance fees." The FTC's investigation showed that the comparisons were made between Taiwan Secom's access control and attendance record management for its clients on a rental basis and its conjectures of the performance of similar services of its competitors that were purchased by their clients. Taiwan Secom admitted that during the period that the catalog was used, other security companies also provide access control and attendance record services on a rental basis. The FTC's investigation confirmed that there were indeed other companies providing access control and attendance record management services during the said period and some of them were provided on a rental basis. Therefore, the information provided in the catalog apparently was untrue.
3. Grounds for disposition:
   1. Taiwan Secom was unable to provide any scientific statistics or research data to support the claims that the company's security systems accounted for 60% of the total market share and the company was "the first enterprise in world to use ‘AGPS' in commercial applications." The conduct was against the obligation of advertisers to make truthful claims. It was a false, untrue, and misleading representation with regard to the quality of service in violation of Paragraph 3 of Article 21 of the Fair Trade Law and Paragraph 1 of the same article was applicable mutatis mutandis.
   2. The list of comparisons in the "Dr. ID Access Control and Attendance Record System" catalog between the system and the services of competitors in "management methods," "economic benefits," "product warranty," "depreciation modes," "maintenance and problems," and "maintenance fees' were merely results of the company's subjective conjectures and were inconsistent with the facts. Therefore, the descriptions provided in the said list of comparisons about "competitors" were false, untrue, and misleading representations with regard to products of other businesses. By providing such descriptions, the company acted against the business ethics of fair competition. It was obviously unfair conduct able to affect trading order in violation of Article 24 of the Fair Trade Law.
   3. After assessing the extent and duration of the damage to trading order from the illegal conduct of Taiwan Secom, the scale, management condition and market status of the company, as well as the level of its cooperation during the investigation, the FTC acted according to the first section of Paragraph 1, Article 41 of the Fair Trade Law and ordered Taiwan Secom to immediately cease its aforesaid unlawful acts and also imposed on the company an administrative fine of NT$600,000 for its violation of Paragraph 3 of Article 21 of the Fair Trade Law where Paragraph 1 of the same article was applicable. For the company's violation of Article 24 of the same law, the FTC imposed upon it an administrative fine of NT$300,000. The total fine came to NT$900,000 in total.

Summarized by Lai, Chien-Sheng; Supervised by Chi, Hsueh-Li

Appendix:
Taiwan Secom Co., Ltd.'s Uniform Invoice Number: 12148598