LG Electronics Taiwan Taipei Co., Ltd.

1247th Commissioners’ Meeting (2015)

Case:

LG Electronics Taiwan Taipei Co., Ltd. violated the Fair Trade Law for falsely advertising its upright inverter washing machines as passing “Energy Label Certification” on its company website

Keyword(s):

Energy Label, washing machine, false advertising

Reference:

Fair Trade Commission Decision of September 30, 2015 (the 1247th Commissioners’ Meeting), Disposition Kung Ch’u Tzu No. 104085

Industry:

Retail Sale of Electrical Household Appliances in Specialized Stores (4741)

Relevant Law(s):

Article 21 of the Fair Trade Law

Summary:

1. LG Electronics Taiwan Taipei Co., Ltd. (hereinafter referred to as LG Taiwan) marketed upright inverter washing machines models WT-D182YG and WT-D182HVG (hereinafter referred to as the products at issue) and advertised the products at issue as passing the “Energy Label certification.” However, the FTC checked the official website of the Bureau of Energy of the Ministry of Economic Affairs and found out that the Energy Label of the products at issue was valid from Feb. 5, 2013 to Feb. 4, 2015. In other words, the validity had expired. Therefore, the wording of passing “Energy Label certification” on the website as mentioned above was false advertising in violation of Article 21 of the Fair Trade Law.

2. Findings of the FTC after investigation:

   According to the Bureau of Energy, the Energy Label on a product meant the energy efficiency of the product was in the top 15% to 30% of all products of the same category in the market. It was intended to help consumers to identify highly energy efficiety products. Meanwhile, according to Point 5 of the “Bureau of Energy Operating Guidelines for Promotion and Use of the Energy Label”, if a business did not renew the usage contract upon expiration of the validity of the Energy Label, the right to use the Energy Label became invalid when expired. LG Taiwan expressed that the company normally applied for the Energy Label and the Water-saving Label for its appliances as soon as it acquired the corresponding import certificates and would post them on the company website after the application was approved. However, the Energy Label for the products at issue was valid from Feb. 5 2013 to Feb. 4, 2015 and the products at issue were old models that would not be manufactured anymore. Therefore, the company did not apply for contract renewal with the Bureau of Energy. In addition, due to the negligence of its employees, the wording about the Energy Label had not been deleted.

3. Grounds for disposition:

   (1)

   LG Taiwan posted the advertisement for the products at issue and claimed that the products had passed the “Energy Label certification” as one of its significant features. This gave consumers the impression that the products at issue had indeed certified by the Bureau of Energy as more energy-efficient than other products that had not been awarded the label. However, the official website of the Bureau of Energy indicated that the validity of the Energy Label for the products in concern was from Feb. 5, 2103 to Feb. 4, 2015. The validity had expired and LG Taiwan still used the wording of passing “Energy Label certification” on its company website. It was a false, untrue and misleading representation with regard to the quality of the product at issue and was in violation of Article 21(1) of the Fair Trade Law.

   (2)

   After assessing the motive and purpose of LG Taiwan’s unlawful conduct, the illegal gains expected, the damage to trading order, the duration of the conduct, the profits obtained, the scale of business of the company, the management condition, the company’s market power, its offense record in the past, remorse shown for the act and attitude of cooperation throughout the investigation, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed an administrative fine of NT$200,000 on the company.