Mercedes-Benz Taiwan Ltd.

Case:

Key Words:

Mercedes-Benz Taiwan, Smart car, Fuel Economy Guide

Reference:

Fair Trade Commission Decision of April 18, 2012 (at the 1067th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 101040

Industry:

Retail Sales of Automobiles in Specialized Stores (4841)

Relevant Laws:

Paragraph 1 of Article 21 of the Fair Trade Law

Summary:

1. The FTC received a complaint from a citizen who had purchased a Smart car in 2010 accusing Mercedes-Benz Taiwan Ltd. (hereinafter referred to as Mercedes-Benz Taiwan) of posting false advertisements on the website, in car catalogs and through various media outlets claiming that the average fuel consumption of the Smart car, as the reported result of a test conducted by a laboratory, was 22~23km/? while the actual fuel consumption was 12~14km/?. The average fuel consumption indicated in the car specifications that came with the complaint letter was 22.22km/?, yet on the website the company posted "average fuel consumption: the number of kilometers driven on each liter – 23.26". The advertisement was false and in violation of the Fair Trade Law.
2. Findings of the FTC after investigation:
   Mercedes-Benz Taiwan expressed that the average fuel consumption figure for the Smart car had been established after tests by the TUV Nord Laboratory which had been commissioned by the German Mercedes-Benz. The FTC's investigation showed that the said figure was compatible with the fuel consumption test value announced by the Bureau of Energy (hereinafter referred to as the BOE) of the Ministry of Economic Affairs in the "Fuel Economy Guide." Both figures had been obtained from tests run in laboratories and under specific conditions. The BOE explained that the weather influence and road conditions had been excluded in such tests which were conducted in laboratories where there was temperature and humidity control. Specialists conducted driving tests on the chassis dynamometer according to regulations and in the process all the accessories such as lights, air conditioner, and stereo that could affect the fuel economy evaluation were turned off in order to acquire the objective fuel economy of cars of different models. In other words, as a result of the weather, road conditions, traffic jams, use of air conditioner, and the driver's driving habit, the actual number of kilometers per liter of gasoline or diesel of a car had to be less than the fuel economy test value listed in the Fuel Economy Guide.
3. Grounds for disposition:
   (1) The average fuel consumption indicated in the car specifications was 22.22 km/? while on the website the company posted: "average fuel consumption: the number of kilometers driven on each liter – 23.26". Without any further explanation, consumers would generally have the impression that the figure was the average of driving in the city, on the highway, and in non-urban areas under normal circumstances. However, the advertisements contained no description of the environment of the laboratories where the tests had been conducted. This was important information to be disclosed for consumers to be aware of the differences between the results of such tests and in their own normal driving. Consumers had no way of knowing the results of such tests were often the maximal fuel consumption performance. The impression the advertisements gave obviously was significantly different from reality and it could easily lead consumers to have the wrong perception or make the wrong decision. It was indeed false advertising.
   (2) The claim of Mercedes-Benz Taiwan in the advertisements that the Smart car had the" average fuel consumption of 22.22 km/?" and" average fuel consumption: the number of kilometers driven on each liter – 23.26" was a misleading representation with regard to quality of product in violation of Paragraph 1, Article 21 of the Fair Trade Law. The FTC imposed on the company an administrative fine of NT$1,500,000 and ordered it to cease the unlawful act.

Summarized by Wang, Horng-Shiuan ; Supervised by Chen, Jun-Ting

Appendix:
Mercedes-Benz Taiwan Ltd.'s Uniform Invoice Number: 12681620