Ming Jie Construction Co.

1206th Commissioners' Meeting (2014)

Case:

Ming Jie Construction violated the Fair Trade Law for posting false advertisements for its "Shou Yao" housing project

Key Word(s):

Industrial zone, name of enterprise, Urban Planning Law

Reference:

Fair Trade Commission Decision of December 17, 2014 (the 1206th Commissioners' Meeting); Disposition Kung Ch'u Tzu No.103148

Industry:

Real Estate Development Activities (6700)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

In Aug. 2014, Yunlin County Government suspected Ming Jie Construction Co., Ltd. (hereinafter referred to as Ming Jie Construction), a company operating in the county, had violated Article 21 of the Fair Trade Law when marketing its "Shou Yao" housing project and therefore transferred the case to the FTC for an investigation to be launched. When visiting the website indicated in the document from Yunlin County Government, the FTC discovered that Lian Lian Fa Construction Co., Ltd. (hereinafter referred to as Lian Lian Fa Construction) had posted an advertisement for the housing project in question on housetube.tw and the claim of "villas under construction," a terminology for regular residential units, were shown in the advertisement. Living room, bedroom and kitchen schematics for regular residential units were also shown in the same advertisement. However, the FTC's investigation revealed that the project was located in an area classified as "Type B industrial zone." In other words, the advertisement had been posted under the name of another enterprise and the buildings in an industrial zone were being marketed as regular residential units. It was false advertising.

Findings of the FTC after investigation:
Ming Jie Construction had provided the entire funds for the project and designed the advertisement. Therefore, the company had the right to review, approve and finalize the advertisement. The company had paid housetube.com to post the advertisement at issue under the name of Lian Lian Fa Construction, but the truth was Lian Lian Fa Construction had never authorize Ming Jie Construction to use its name in the advertisement, never participated in the financing for the project or planning for the advertisement, and never expected to be given a share of the profit from the sales of those units. In the meantime, according to Yunlin County Government's professional opinion, the project in question was located in a Type B industrial zone and the buildings could only be used by service industries or be used as offices. If buyer used these buildings that had only been approved to be for offices or commercial facilities as private homes, they would be subject to Article 79 of the Urban Planning Act.

Grounds for disposition:

(1) The advertisement was posted on housetube.tw under the name of Lian Lian Fa Construction and consumers would therefore have the perception that the units were built and marketed by Lian Lian Fa Construction. Ming Jie Construction later admitted that it had designed the advertisement alone, paid to have it posted on the website, and had never acquired the authorization to use Lian Lian Fa Construction' company name. The use of another enterprise's name in the advertisement by Ming Jie Construction was a false, untrue and misleading representation with regard to the quality of the product in violation of Article 21(1) of the Fair Trade Law.

(2) In the said advertisement, Ming Jie Construction used the wording of "villas under construction," "discovering the happy home of your dream," "the neoclassic magnificent home of the modern day, like a neoclassic castle, spacious, easy and relaxing," "family men and flower-loving ladies want to be home everyday. The comfortable, user-friendly and bright spacious layout makes it the home of my dream," "with the artistic and scholarly lifestyle here; children will begin to develop unique auras and calibers in the humanistic environment" while pictures of the living room, bedrooms and kitchen that a residential home would have were also provided to give consumers the impression that they could buy a unit and use it as a home as indicated. From the overall connotation of the advertisement, consumers would not be able to know the units could not be used as residences. In this respect, Ming Jie Construction had also violated Article 21(1) of the Fair Trade Law for posting an advertisement that the contents were inconsistent with the facts.

(3) After assessing the motive of Ming Jie Construction's unlawful conduct, the level of its influence on trading order in the market, the duration of the illegal activity, the company's attitude after the violation, the company's use of another enterprise's name and the fact that the units could not be used for private homes since they were in a Type B industrial zone, the FTC concluded that the conduct had created a critical impact on competition order in the market and the interests of consumers. Therefore, the FTC applied the first section of Article 41(1) of the Fair Trade Law and imposed an administrative fine of NT$1.5 million on the company.

Appendix:
Ming Jie Construction Co.'s Uniform Invoice Number: 27580353

Summarized by Chen, Wei-Fan; Supervised by Lai,Mei-Hua

! : For information of translation, click here

(1)	The advertisement was posted on housetube.tw under the name of Lian Lian Fa Construction and consumers would therefore have the perception that the units were built and marketed by Lian Lian Fa Construction. Ming Jie Construction later admitted that it had designed the advertisement alone, paid to have it posted on the website, and had never acquired the authorization to use Lian Lian Fa Construction' company name. The use of another enterprise's name in the advertisement by Ming Jie Construction was a false, untrue and misleading representation with regard to the quality of the product in violation of Article 21(1) of the Fair Trade Law.
(2)	In the said advertisement, Ming Jie Construction used the wording of "villas under construction," "discovering the happy home of your dream," "the neoclassic magnificent home of the modern day, like a neoclassic castle, spacious, easy and relaxing," "family men and flower-loving ladies want to be home everyday. The comfortable, user-friendly and bright spacious layout makes it the home of my dream," "with the artistic and scholarly lifestyle here; children will begin to develop unique auras and calibers in the humanistic environment" while pictures of the living room, bedrooms and kitchen that a residential home would have were also provided to give consumers the impression that they could buy a unit and use it as a home as indicated. From the overall connotation of the advertisement, consumers would not be able to know the units could not be used as residences. In this respect, Ming Jie Construction had also violated Article 21(1) of the Fair Trade Law for posting an advertisement that the contents were inconsistent with the facts.
(3)	After assessing the motive of Ming Jie Construction's unlawful conduct, the level of its influence on trading order in the market, the duration of the illegal activity, the company's attitude after the violation, the company's use of another enterprise's name and the fact that the units could not be used for private homes since they were in a Type B industrial zone, the FTC concluded that the conduct had created a critical impact on competition order in the market and the interests of consumers. Therefore, the FTC applied the first section of Article 41(1) of the Fair Trade Law and imposed an administrative fine of NT$1.5 million on the company.