1. A private citizen complained to the FTC about Shin Ruenn Development Co., Ltd. (hereinafter referred to as Shin Ruenn Development) and Hai Yue International Development Co., Ltd. (hereinafter referred to as Hai Yue International) using adhesive tapes to form dotted lines in the model home to mark the area created after the balcony was moved outward when marketing the “Shin Ruenn Feng Cai” housing project. A desk, bookcases and a raised floor were put in to indicate the area as part of the interior to mislead consumers to make wrong associations. The conduct was in violation of Article 21 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   The FTC sent a written request to the complainant for further evidence and also issued written requests for Shin Ruenn Development and Hai Yue International to present their arguments in writing and also provide their statements at the FTC. Opinions and related evidence were also requested from the Public Works Department of New Taipei City Government.
3. Grounds for disposition:
   1. Dotted lines were applied in the model home to include the balcony space as part of the interior. Consumers without knowledge about building regulations had no idea that use of the original balcony space as part of the interior would be in violation of building regulations. Their only impression from the overall advertising was the area indicated with dotted lines could be legally used as interior space. Shin Ruenn Development admitted the area marked as part of the interior space with dotted lines was originally a balcony in the engineering drawing approved. Hence, the advertisement was inconsistent with the approved engineering drawings. The change of design did not comply with related building regulations and the company never applied to the building authority for approval to change the balcony space into part of the interior. Meanwhile, the opinion and related information from the Public Works Department of New Taipei City Government indicated that as set forth Articles 39 and 87 of the Building Act, if the engineering conducted at the construction site did not comply with the engineering drawings approved, the builder had to act in accordance with the aforementioned regulations to make changes to be consistent with the approved engineering drawings or apply for approval of change of design. The statutory floor area ratio of the housing project was 400% and the design floor area ratio was 399.99%. Change of the original balcony space to become part or the interior would involve increase of total floor area, but, according to the approved drawings, there was no extra floor space to accommodate the change. Therefore, the units of the project could not be handed over for homebuyers to use the space as advertised. Besides being inconsistent with the original engineering drawings approved, the advertising also would mislead consumers to believe they could use the space as planned by the builder. The difference between the representation and reality exceeded what the general public could accept. It could also cause consumers to have wrong perceptions or make wrong decisions. In consequence, market competition and order would lose its original function and unfair competition would be resulted. Hence, the conduct was a false and misleading representation in violation of Paragraph 1 of Article 21 of the Fair Trade Law.
   2. After assessing the motive and purpose of Shin Ruenn Development and Hai Yue International for engaging in the unlawful act, the inappropriate profit expected, the level of harm of the unlawful act to trading order, the duration of harm occurring to trading order, the profit gained as a result of the unlawful act, the scale of business of the offenders, their management conditions and market status, types of violation in the past, intervals and penalties received, the level of remorse and cooperativeness throughout the investigation and other factors, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed an administrative fine of NT$700,000 on Shin Ruenn Development and NT$500,000 on Hia Yue International.

Appendix:

Shin Ruenn Development Co., Ltd.'s Uniform Invoice Number: 16318881
Hai Yue International Development Co., Ltd.'s Uniform Invoice Number: 22624873

Summarized by: Wu, Jia-Lin ; Supervised by: Chang, Chan-Chi