Fair Trade Law Q&A - Improper offerings of gifts or prizes

1. A "gift" refers to any product or service with market value that an enterprise provides, on an ancillary basis and free of charge, for the purpose of gaining trading opportunities. Moreover, a "prize" refers to any cash award, or any product or service with market value, that an enterprise provides free of charge, in addition to the product or service being offered, by means of a raffle or other aleatory method for the purpose of gaining trading opportunities.
2. The following activities are not regarded as gifts or prizes for purposes of Article 23:
   1. Free tasting, free trials, and other promotional activities that do not require a transaction as a condition of participation;
   2. Price-discount promotions involving the same type of product or service;
   3. Quantity-discount promotions involving the same type of product or service; and
   4. Promotional package offers involving bundled sales of different products or services.
3. Where an enterprise provides a gift in connection with the sale of a product or service, the value of the gift shall not exceed:
   1. For products or services priced over NT $ 100, the maximum value of the gift shall be 1/2 of the selling price of the product;
   2. For products or services priced less than NT $ 100, the maximum value of the gift shall be NT $ 50.
4. The aggregate annual amount of prizes offered by an enterprise shall not exceed:
   1. For a business whose annual sales for the previous fiscal year exceeded NT$3 billion, the maximum shall be NT$600 million.
   2. For a business whose annual sales for the previous fiscal year exceeded NT$750 million but was less than NT$3 billion, the maximum shall be 1/5 of such sales amount.
   3. For a business whose annual sales for the previous fiscal year was less than NT$750 million, the maximum shall be NT$150 million.
5. When a business conducts a prize-giving activity, the value of the highest prize offered in a promotion shall not exceed NT$ 5 million.
6. Standards for determining the value of products or services, gifts, and the aggregate amount of prizes:
   1. Value of products or services: The reasonable market prices available to the trading counterparts at the time the gift promotion is conducted.
   2. Value of a gift may be determined in the following order:
      1. The value represented directly from the business conducting the gift promotion;
      2. If the gift is manufactured by the business or acquired at a reasonable market price, the value is determined by the business' production or acquisition cost;
      3. If the gift is acquired through non-price consideration or the acquisition cost is unavailable, the retail price of the gift; and
      4. Any other reasonable basis for determination.
   3. The aggregate value of a prize shall be determined in order according to the following standards:
      1. The value represented directly from the business conducting the prize promotion;
      2. If the prize (product or service) is manufactured by the business or acquired at a reasonable market price, the value is determined by the business' production or acquisition cost;
      3. If the prize (product or service) is acquired through non-price consideration or the acquisition cost is unavailable, the retail price of the prize (product or service); and
      4. Any other reasonable basis for determination.

Relevant Provision: Article 23 of the Fair Trade Act