Tai Tuo International Industrial Co.

Case:

The Supreme Administrative Court overruled the appeal by Tai Tuo International Industrial Co. over the FTC's decision

Key Word(s):

Fireproofing material, business reputation

Reference:

Supreme Administrative Court Judgment (2014) Pan Tzu No.131

Industry:

Retail Sale of Other New Goods in Specialized Stores (4853)

Relevant Law(s):

Article 22 of the Fair Trade Law

Summary:

1. Gredmann Taiwan Ltd. (hereinafter referred to as the "Complainant") complained to the FTC that Tai Tuo International Industrial Co. (hereinafter referred to as the "Appellant") sent letters to its clients Huang Hsiang Construction Corp., Cardinal Tien Hospital, and the construction company of Tainan Landmark shopping center buildings in July 2009 and December 2010. The letter alleged that the sprayed fireproofing material MonokoteMK-6/HY produced by Grace Construction Products Ltd. and sold by the Complainant contained cancer causing substances and combustible materials not reaching Grade 3 Incombustibility, and that the accelerating agent used in coordination was toxic. The letter attempted to mislead clients into believing that the fireproofing material was hazardous and was a combustible low quality product at the same time. It was aimed to unfairly cause trading counterparts of the Complainant to trade with the Appellant. The conduct damaged the Complainant's business reputation, and the FTC concluded after investigation that the Appellant disseminated false accusations with the purpose of having unfair competition with its competitors and violated Article 22 of the Fair Trade Law. The FTC therefore imposed an administrative fine of NT$600,000 in Disposition Kung Ch'u Tzu No.101079. The Appellant found the Judgment unacceptable and appealed. The Appellant's appeal was overruled and the Appellant filed an administrative litigation, which was overruled by the original court. The Appellant thus filed the appeal in this case.
2. The Appellant was a distributor of the fireproofing material TYPE300 manufactured by Berlin Co., Ltd. and licensed by Isolatek International. The Complainant was also in the business of distributing fireproofing materials and its company registration information supports this fact. Hence, the FTC concluded that the Appellant and Complainant were competitors in the same market. The letter sent by the Appellant was directed to the clients of the Complainant, and its contents alleged that the fireproofing materials sold by the Complainant were hazardous to the human health and building safety. The letter also recommended that recipients choose the fireproofing material TYPE300 developed by Isolatek International and sold by the Appellant, or use the fireproofing material CAFCO manufactured by Isolatek International in the United States. The Appellant's conduct was sufficient to damage the trading counterparts’ trust in the business reputation of its competitor. The FTC therefore concluded that the Appellant disseminated false accusations that damaged the business reputation of others with the purpose of unfair competition and violated Article 22 of the Fair Trade Law.
3. The FTC found that Grace Construction Products Ltd. sent a letter to the Appellant on October 15, 2010 demanding that the Appellant immediately cease the dissemination of false information on the fireproofing material MonokoteMK-6/HY. However, the Appellant did not restrain itself at all and continued to disseminate false accusations to mislead its competitor's clients into believing that the fireproofing material was hazardous and a combustible low quality product. The conduct severely damaged the Complainant's business reputation and violated business ethics and market competition. Therefore, the FTC had grounds to believe that the Appellant's conduct had damaged the business reputation of the Complainant and violated Article 22 of the Fair Trade Law. Based on the above, none of the Appellant's allegations were accepted by the original court and the original disposition was maintained. According to the Supreme Administrative Court, the reasons presented by the Appellant were unacceptable at all. The Appellant's accusation that the original court's Judgment was inappropriate had to be discarded.

Appendix:
Tai Tuo International Industrial Co.'s Uniform Invoice Number: 84913753

Summarized by Lai,Chia-Ching; Supervised by Ren,Han-Ying