Proudly Construction Co., Ltd.

Case:

Proudly Construction violated the Fair Trade Law for its "Li Chi Xiang Xie" housing project advertisements

Key Word(s):

Real estate advertisement, open space

Reference:

Fair Trade Commission Decision of September 24, 2014 (the 1194th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 103113

Industry:

Real Estate Development Activities (6700)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. Proudly Construction Co., Ltd. (hereinafter referred to as Proudly Construction) posted an advertisement for its "Li Chi Xiang Xie" housing project. The schematic for the layout of the entire first floor area included pictures of a basketball court and a playground. However, a written reply dated on Jan. 17, 2014 from the Public Works Department of New Taipei City Government indicated that if the pictures in a housing project advertisement involved unauthorized changes made to the open space (to build a basketball court and outdoor playground), it would constitute a violation of Article 73 of the Building Act. As the content of the said advertisement would give consumers the impression that the basketball court and the playground were public facilities in the community, Proudly Construction was suspected of violating Article 21 of the Fair Trade Law.
2. The schematic for the layout of the entire first floor area in the said advertisement revealed that a basketball court and a playground were available despite that the space for these facilities were marked as open space in the approved floor plan. New Taipei City Government confirmed that the areas where the basketball court and the playground were located in the advertisement had been approved as open space. Changing the open space into a basketball court and a playground would require application for permission according to related regulations. Proudly Construction, however, never filed such an application before or after acquiring the building use permit. The company contested that the basketball court and the playground had not been built to become permanent facilities. There were no barriers to stop people from entering and using the facilities, and the fences around the basketball court would not be locked. Therefore, Proudly Construction asserted, the installation of the basketball court and the playground had not altered the use of this open space. In addition, Proudly Construction emphasized the mechanical equipment in the basketball court and the playground was an environmental improvement for the building and thus there was no need to apply for permission for building use changes. Such facilities could be installed as long as they could pass related inspections. Nonetheless, according to the Public Works Department of New Taipei City Government, when environmental improvements made to statutory open lots in a building site involved changes to the open space and such changes did not meet the regulations for exemption of application for building use change permission from the competent authority in a special municipality or county/city, an application for permission in accordance with the Building Act and the Regulations for Defining and Changing Buildings Classified Use would be required. Moreover, after conducting an onsite inspection, the Public Works Department of New Taipei City Government concluded that the use of open space for the basketball court and the playground was in violation of Article 73 of the Building Act and Proudly Construction had to restore it to the original condition. In other words, the use of open space for the basketball court and the playground indicated in the advertisement was in violation of the Building Act and sanctions could be imposed according to related regulations. Therefore, Proudly Construction’s contestation was invalid. The basketball court and the playground shown in the schematic in the advertisement not only were inconsistent with the approved floor plan but also could mislead consumers to believe that such facilities were actually available. The difference from reality was far greater than what the general public could accept. It could lead consumers to wrong perceptions and decisions, and the result would be unfair competition. Therefore, the FTC decided that the advertisement offered by Proudly Construction was a false, untrue and misleading representation in violation of Article 21(1) of the Fair Trade Law and imposed an administrative fine of NT$500,000 on the company according to Article 41 of the same law.

Appendix:
Proudly Construction Co., Ltd.'s Uniform Invoice Number: 27611047