Cang Zhen Construction

Cang Zhen Construction

1276th Commissioners' Meeting (2016)

Case:

Cang Zhen Construction violated the Fair Trade Law when marketing the units of its "Cang Mei One" presale housing project

Keyword(s):

Presale house, important transaction information, deposit, read the contract

Reference:

Fair Trade Commission Decision of April 20, 2016 (the 1276th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105033

Industry:

Real Estate Development Activities (6700)

Relevant Law(s):

Article 25 of the Fair Trade Law

Summary:

The FTC's staff members paid a visit to the site where the presale house units of "Cang Mei One" housing project of Cang Zhen Construction Co., Ltd. (hereinafter referred to as Cang Zhen Construction) were marketed and discovered the sales personnel did not provide important presale house transaction information in writing to its potential buyers. When the potential uyers asked for a copy of the purchase contract to read, the sales personnel either expressed that they had to pay a deposit to review the contract or simply said the contract was not available. The conduct was in violation of Article 25 of the Fair Trade Law.

Findings of the FTC after investigation:

(1) Dong Li International Advertising Co., Ltd. (hereinafter referred to as Dong Li Advertising) was delegated by Cang Zhen Construction to market the units of the "Cang Mei One" project. Dong Li Advertising would get paid for the service as specified in the agreement signed by both sides. Also, Dong Li Advertising hired sales personnel by itself for this sale project.
(2) When the FTC's staff visited the site, they found that the sale personnel did not provide important transaction information, such as the sit location map, the site plan, the general list of share held by the owner of each unit and a photocopy of the building permit. Later, they performed a questionnaire survey on people who had made purchases and the outcome confirmed that the sales personnel indeed had not provided the aforementioned important transaction information and the sales personnel demanded the potential buyers to pay a deposit before they would be given a copy of the purchase contract.

Grounds for disposition:

(1) The FTC's staff members paid two visits to the site where the presale houses were marketed. The sales personnel did not provide the presale housing project base map, the site plan or the general list of share held by the owner of each unit to the potential buyers and the said documents were not openly displayed either. As for the photocopy of the building permit, it was not provided the first time but enclosed in the contract the second time. The questionnaire survey conducted by the FTC's staff members revealed that nearly half of the respondents confirmed that the sales personnel had not provided photocopies of the building permit, the site location map, the site plan and the general list of share held by the owner of each unit. These buyers also commented in the survey sheet that that fact the important transaction information had been withheld had an effect on their transaction decision. For this reason, the FTC concluded that the practice of Cang Zhen Construction and Dong Li Advertising to withhold important presale house transaction information during the marketing process had indeed had an effect on homebuyers' transaction decision; therefore, it was obviously unfair conduct.

(2) The sales personnel demanded a deposit of NT$100,000 before they would provide a copy of the contract to the FTC's staff members or simply replied that the contract could be provided. Three of the eight survey respondents who had made purchases confirmed that they had been requested to pay a deposit to review the contract. This made it evident that Cang Zhen Construction and Dong Li Advertising had indeed demanded a deposit before a copy of contract would be given to the potential buyers. Some of the buyers also expressed that the sales personnel's demand for a deposit before a copy of the contract could be provided had really made it difficult for them to make transaction decisions. The demand for a deposit was obviously unfair conduct that put its potential buyers in a disadvantageous position and the illegal practice obviously had not been a single event. Moreover, for competitors who would provide interested parties with purchase contracts as statutorily required, it did constitute unfair competition. In other words, the illegitimate restriction on the right of the potential buyers to read the contract before making their decisions was obviously unfair conduct able to the affect trading order.

(3) The conduct of Cang Zhen Construction and Dong Li Advertising was in violation of Article 25 of the Fair Trade Law. After assessing the duration of the unlawful act, the business scale of each company, the sales already made in this case and the company's cooperative attitudes throughout the investigation, the FTC imposed administrative fines of NT$150,000 and NT$80,000 on the two companies respectively for failing to provide important presale house transaction information in writing. In addition, NT$150,000 and NT$80,000 administrative fines were imposed on the two companies respectively for demanding homebuyers to pay a deposit to obtain the contract and an order was issued to both companies to immediately cease the unlawful act. The fines totaled to NT$460,000.

Appendix:

Cang Zhen Construction Co., Ltd.'s Uniform Invoice Number: 53915030
Dong Li International Advertising Co., Ltd.'s Uniform Invoice Number: 24683362

Summarized by: Tsai, Hui-Chi; Supervised by: Ho, Yen-Jung

(1)	The FTC's staff members paid two visits to the site where the presale houses were marketed. The sales personnel did not provide the presale housing project base map, the site plan or the general list of share held by the owner of each unit to the potential buyers and the said documents were not openly displayed either. As for the photocopy of the building permit, it was not provided the first time but enclosed in the contract the second time. The questionnaire survey conducted by the FTC's staff members revealed that nearly half of the respondents confirmed that the sales personnel had not provided photocopies of the building permit, the site location map, the site plan and the general list of share held by the owner of each unit. These buyers also commented in the survey sheet that that fact the important transaction information had been withheld had an effect on their transaction decision. For this reason, the FTC concluded that the practice of Cang Zhen Construction and Dong Li Advertising to withhold important presale house transaction information during the marketing process had indeed had an effect on homebuyers' transaction decision; therefore, it was obviously unfair conduct.
(2)	The sales personnel demanded a deposit of NT$100,000 before they would provide a copy of the contract to the FTC's staff members or simply replied that the contract could be provided. Three of the eight survey respondents who had made purchases confirmed that they had been requested to pay a deposit to review the contract. This made it evident that Cang Zhen Construction and Dong Li Advertising had indeed demanded a deposit before a copy of contract would be given to the potential buyers. Some of the buyers also expressed that the sales personnel's demand for a deposit before a copy of the contract could be provided had really made it difficult for them to make transaction decisions. The demand for a deposit was obviously unfair conduct that put its potential buyers in a disadvantageous position and the illegal practice obviously had not been a single event. Moreover, for competitors who would provide interested parties with purchase contracts as statutorily required, it did constitute unfair competition. In other words, the illegitimate restriction on the right of the potential buyers to read the contract before making their decisions was obviously unfair conduct able to the affect trading order.
(3)	The conduct of Cang Zhen Construction and Dong Li Advertising was in violation of Article 25 of the Fair Trade Law. After assessing the duration of the unlawful act, the business scale of each company, the sales already made in this case and the company's cooperative attitudes throughout the investigation, the FTC imposed administrative fines of NT$150,000 and NT$80,000 on the two companies respectively for failing to provide important presale house transaction information in writing. In addition, NT$150,000 and NT$80,000 administrative fines were imposed on the two companies respectively for demanding homebuyers to pay a deposit to obtain the contract and an order was issued to both companies to immediately cease the unlawful act. The fines totaled to NT$460,000.