Fair Trade Law Q&A - False or Misleading Advertising

1. Paragraphs 1 and 2 of Article 21 of the Fair Trade Act, as amended on February 4, 2015, provide: "No enterprise shall make or use false or misleading representations or symbols on the matter that is relevant to goods and is sufficient to affect trading decisions on goods or in advertisements, or in any other way make it known to the public. The matter, referred to in the preceding paragraph that is relevant to the goods, and is sufficient to affect trading decisions, includes: price, quantity, quality, content, production process, production date, valid period, method of use, purpose of use, place of origin, manufacturer, place of manufacturing, processor, place of processing, and any other relevant item that has touting effects." Paragraph 4 of the same Article further provides: "The preceding three paragraphs shall apply mutatis mutandis to services provided by an enterprise."
2. In false advertising cases, enterprises attract transaction counterparts with not only representations concerning the price, quantity, quality, content, and other characteristics of goods to, but also frequently advertise matters relating to the enterprise itself-such as its identity, qualifications, or business conditions-that are connected with the goods and are sufficient to affect purchasing decisions. Accordingly, the phrase "the matter that is relevant to goods and is sufficient to affect trading decisions" was expressly added to Paragraph 1 of Article 21 to clarify that enterprises may not make false, untrue, or misleading representations or symbols regarding such matters. In addition, administrative remedy practice had long reflected differing views as to whether the listed items, such as "price, quantity ... place of processing," constituted an exhaustive list or merely examples. To avoid uncertainty in the application of the law and to clarify the scope of "the matter that is relevant to goods and is sufficient to affect trading decisions," the amended Paragraph 2 expressly provides "price, quantity ... place of processing" as examples. Therefore, the references in Article 21 to the price, quantity, quality, content, production process, production date, valid period, method of use, purpose of use, place of origin, manufacturer, place of manufacturing, processor, place of processing, of goods (or services) are illustrative rather than exhaustive.The provision encompasses all transaction objects possessing economic value, as well as other transaction-related matters that are not themselves transaction objects but have promotional effect, including an enterprise's identity, qualifications, business conditions, relationships with other enterprises, public-interest organizations, or government agencies; gifts, prizes, or promotional giveaways offered in connection with a transaction; the odds of winning or prize items associated with chance-based promotional activities; and comparative claims regarding the goods or services of other enterprises.