Top Greats Biotech Co. Ltd. & Fujicome Biotech Marketing Co. Ltd.

Case:

Key Word(s):

Award-winning record, false advertising

Reference:

Fair Trade Commission Decision of January 2, 2013 (the 1104th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 101191

Industry:

Other Food Manufacturing Not Elsewhere Classified (0899), Wholesale of Other Food (4549)

Relevant Law(s):

Article 21(1)(2) of the Fair Trade Law

Summary:

1. The FTC received complaints that Fujicome Biotech Marketing Co. Ltd. (hereinafter referred to as Fujicome Biotech Marketing) claimed on the packaging of its "Energizing Honey Ginseng Drink" and the "Health Code Rose and Four-Herb Drink" that the manufacturer was the "Winner of the National Quality Assurance Golden Award" while the actual winner of the award was not the manufacturer of the product, Top Greats Biotech Co., Ltd. (hereinafter referred to as Top Greats Biotech). Therefore, it was likely that the conduct would mislead people into believing the products were made by an award-winning business.
2. Findings of the FTC after investigation:
   

   Top Greats Biotech Co., Ltd. did win the Third National Quality Assurance Golden Award organized by the Industry Commerce Economy Trade Science & Technology Development Association (hereinafter referred to as the ICET) for its "Pearl Collagen Protein Rock Sugar Cubilose", "Healthcare and Nourishing Food Products", and "Ginseng and Caterpillar Fungus Chicken Essence" in 2004. Later, in 2008 and 2009, Top Greats Biotech used the picture of the trophy on the packaging of its "Energizing Honey Ginseng Drink" and the "Health Code Rose and Four-Herb Drink", claiming itself as the "Winner of the National Quality Assurance Golden Award" and gave the products to its affiliate enterprise Fujicome Biotech Marketing to sell as the exclusive agent.

3. Grounds for disposition:
   

   (1)

   For the general public or concerned parties, the labeling on the aforesaid products gave the impression that the two products had won the National Quality Assurance Golden Award. Top Greats Biotech could only uphold the claim by saying the two products in question were part of the "Healthcare and Nourishing Food Products" that had won the Third National Quality Assurance Golden Award. In that case, the award-winning statement on the packaging of the two products would not involve in false, untrue or misleading representation. However, Both Top Greats and the ICET were unable to clarify what the "Healthcare and Nourishing Food Products" included and the definition of "Healthcare and Nourishing Food Products" was vague and unclear. It was difficult to ascertain which products belonged to such a category. Nevertheless, it was reasonable to conclude that the category covered by the award won in 2004 could not have been meant to include a product Top Greats Biotech released in 2010.

   (2)

   The award-winning record of an enterprise or its products often can indicate the efforts of the enterprise and the affirmation it has received. It would become an important a factor when trading counterparts evaluate the products of such an enterprise and make their transaction decisions. Therefore, all enterprises have the obligation to make truthful representations when using their award-winning record to attract consumers. The claim made by Top Greats Biotech had no valid support and the conduct was in violation of Article 21(1) of the Fair Trade Law. Fujicome Biotech Marketing was an affiliate of Top Greats Biotech. The representative of each company was a board member or manager of the other. Both enterprises apparently participated in the management decision-making process and actual operation of each other. Fujicome Biotech Marketing was aware that the labeling on the two products in question was a false, untrue or misleading representation, yet it still went on to sell the products. The conduct was in violation of Article 21(2) of the Fair Trade Law and the FTC therefore imposed an administrative fine of NT$200,000 on each company.

Appendix:
Top Greats Biotech Co. Ltd.'s Uniform Invoice Number: 86956550
Fujicome Biotech Marketing Co. Ltd.'s Uniform Invoice Number: 22277445

Summarized by: Hsu, Tzung-Yu; Supervised by: Chi, Hsueh-Li