Zhen An Technology Co., Ltd.

Case:

Key Words:

gift giving, identity concealment, gas valve

Reference:

Supreme Administrative Court (101) Cai-Zi Order No. 1314

Industry:

Retail Sales of Other Household Appliance and Supplies in Specialized Stores (4749)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. Zhen An Technology Co., Ltd. (the appellant, hereinafter referred to as Zhen An Technology) intentionally concealed its identity for the purpose of selling its gas valve. Initially, Zhen An Technology enticed people who had no intention of making purchases of the gas valve to attend its sales presentations with gifts. Then its salespeople followed the attendees to their homes to push them to make purchase decisions while the customers' free will was under suppression. The sales approach was deceptive and obviously unfair conduct able to affect trading order in violation of Article 24 of the Fair Trade Law. The FTC (the appellee) therefore took action in accordance with the first section of Article 41 of the same law and issued on April 14, 2011 the Disposition Kung-Ch'u-Tzu No. 100050 and ordered the appellant to immediately cease its unlawful act starting on the day following its receipt of the said disposition and at the same time imposed on the company an administrative fine of NT$4,000,000. Zhen An Technology found the sanction unacceptable and filed for administrative litigation but was rejected by the original court. It then filed the appeal.
2. Article 24 of the Fair Trade Law stipulates that "in addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order." The term "trading order" refers to decent business behavior in compliance with social morals and competition ethics of efficient market. When assessing whether certain conduct is "able to affect trading order," the impact on the overall trading order of the market has to be taken into consideration (such as the number of victims, the extent of damage, whether the sanction is enough to send out a warning message to other businesses, and whether the deceptive unfair conduct was carried out against specific targets or groups, or whether a large number of potential victims will be affected in the future). In other words, the application of this article is not limited to the impact already created on the trading order of the market. Meanwhile, the term "deceptive" refers to intentional deception or concealment through non-action about important trading information to mislead trading counterparts to make transactions; and in addition, the term "obviously unfair" refers to use of coercion or harassment to push trading counterparts to make their transaction decisions when their free will is under suppression.
3. Zhen An Technology intentionally concealed its identity and enticed people who had no intention of making purchases of its gas valve to attend sales presentations with gifts. Then it made false statements about the prices of the products and sent its salespeople to follow the attendees to their homes and push them to make the purchase while their free will was under suppression. The sales approach was deceptive and obviously unfair conduct able to affect the trading order of the market in violation of Article 24 of the Fair Trade Law. The reasoning of the appeal was overall a pronouncement against the justification of the original verdict, including reiteration of what had been discarded as unacceptable by the original court, or contestation against the original court's decision on the validity of evidence and the execution of authority, or rebuttal against the reasons behind the original court decision. Nothing concrete was mentioned about the regulations applied or the validity of such application in the original verdict. Neither did the appellant cite any of the subparagraphs of Paragraph 2 of Article 243 of the Code of Administrative Procedure in its defense. In other words, there was no concrete accusation of how the original verdict had been against any law and the appeal was therefore rejected by the Supreme Administrative Court.

Summarized by Peng, Chia-Yu; Supervised by Lee, Wen-Show

Appendix:
Zhen An Technology Co., Ltd.'s Uniform Invoice Number: 28302441