Hua Run Construction

1285th Commissioners' Meeting (2016)

Case:

Hua Run Construction violated the Fair Trade Law by posting false advertisement to market the "Fen Jiao Xi" housing project

Keyword(s):

False and untrue, misleading, false advertising

Reference:

Fair Trade Commission Decision of June 22, 2016 (the 1285th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105069

Industry:

Real Estate Development Activities (6700)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. Yilan County Government sent a letter to inform the FTC that Hua Run Construction Co., Ltd. (hereinafter referred to as Hua Run Construction) was building a presale home project called "Fen Jiao Xi" and marketing the units. On the layouts the company marked the balconies, the vacant lot outside the ground floor, the space for the management committee office and the terrace on the first-level rooftop for the use of a public bath, hot spring pool or swimming pool, a steam room and a sauna room, and foot-soaking pool respectively. It was inconsistent with the details specified in the building permit and therefore false advertising was suspected.

2. Findings of the FTC after investigation:

   The FTC sent staff members to check out the "Feng Jiao Xi" housing project. It was confirmed that the arrangement and use of space indicated on the layouts and floor plans were indeed as described above and thus inconsistent with the details indicated in the building permit. Since Hua Run Construction was the builder and marketer of the housing project to make a profit. The company was regarded the advertiser in this case.

3. Grounds for disposition:

   (1)

   Hua Run Construction marked some areas on the layouts for the use of a public bath, hot spring pool or swimming pool, a steam room and a sauna room, and a foot-soaking pool and floor plans and also displayed photos of some model homes with such facilities to demonstrate the intended use of space. However, in the building permit, these areas were approved as to be used as balconies, a vacant lot outside the ground floor, the management committee office and a terrace on the first-level rooftop. If Hua Run Construction actually made the changes as advertised without applying for any permission, such facilities would be illegal. In fact, Hua Run Construction confessed that it did not apply for any permission on the change. At the same time, the comments from Yilan County Government and the plans attached to the building permit could serve as evidences. The problem was that whether there would be a public bath, hot spring pool or swimming pool, a steam room and a sauna room, and a foot-soaking pool could really be a decisive factor in consumers’ purchasing decision. For this reason, the company’s advertising practice had to be regarded as false, untrue and misleading in violation of Article 21(1) of the Fair Trade Law.

   (2)

   After assessing the motive of Hua Run Construction to engage in such unlawful conduct, the level of harm incurred, the seriousness of the violation, the scale of the company and the company's attitude after the violation, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed an administrative fine of NT$1.5 million on the company.