Supreme Administrative Court Judgment finding that Chieh An Construction Company, Ltd. used false and misleading representations in advertising housing structures in violation of the Fair Trade Law

Taiwan

Case:

Supreme Administrative Court Judgment finding that Chieh An Construction Company, Ltd. used false and misleading representations in advertising housing structures in violation of the Fair Trade Law

Key Word:

false advertising

Reference:

Supreme Administrative Court Judgment (91) P'an Tzu No. 132

Industry:

Real Estate Brokerage Industry (6612)

Relevant Law:

Article 21 of the Fair Trade Law

Summary:

1. Chieh An Construction Company, Ltd. (Chieh An), the plaintiff in this administrative litigation case had originally been the target of a complaint to the Fair Trade Commission (FTC) alleging false advertising in connection with the marketing of Chieh An's "Ta Chia Tien Hsia Yi Chia" construction project, which began in December of 1995. Results of investigation at the time by personnel dispatched by the present defendant, the Fair Trade Commission, found that advertising by Chieh An contained false and misleading representations with respect to country-club leisure facilities and the scope of view available from the housing, in violation of Article 21(1) of the Fair Trade Law then in force. Pursuant to Article 41 of the same law, the FTC ordered immediate cessation of the false and misleading advertising on the following day the disposition was served. After an administrative appeal and administrative re-appeal filed by Chieh An were successively dismissed, Chieh An initiated this administrative litigation proceeding.

2. Article 21(1) in force at the time of Chieh An's acts states: "No enterprise shall make or use false or misleading representations or symbols as to price, quality, content, production process, production date, valid period, method of use, place of origin, manufacturer, place of manufacturing, processor, or place of processing on goods or in advertisements, or in any other way making known to the public." Article 41 of the same law states: "With respect to an enterprise that violates the provisions of this Law, the Fair Trade Commission may specify a time period within which the enterprise is required to cease or rectify its conduct or within which it must adopt corrective measures; in addition, the Fair Trade Commission may impose a fine of not less than fifty thousand and not more than twenty-five million New Taiwan Dollars. If within the specified time period the enterprise fails to cease or rectify its conduct or to take corrective measures, the Fair Trade Commission may issue additional orders that the enterprise cease or rectify its conduct or take corrective measures within a specified time period, and impose successive fines of not less than one hundred thousand New Taiwan Dollars until the acts in question cease or are rectified or until the corrective measures are adopted."

In order to attract consumers, the plaintiff Chieh An began advertising in December of 1995 for the "Ta Chia Tien Hsia Yi Chia" property that it was marketing, using wording that set out specifics of the "T'ien Hsia Yi Chia country club facilities" and the adjoining "world-class leisure facilities." The zoning use category for the "Tien Hsia Yi Chia country club" site, however, is listed as a "hillside farming and grazing conservation area," and the land use listed on the building permit application was "farmhouse" construction, and thus under current law, the land should not be developed for use as a country club. Given the plaintiff's professional background, it should have clearly understood from the start that advertisements attempting to attract customers by featuring unlawfully constructed public facilities constituted false and misleading advertising. The advertising also appealed to consumers by describing a "broad view of ocean vistas," with the further enticement of descriptions in eye-catching fonts, such as " 'Tien Hsia Yi Chia,' the only hillside manors on the coastline, a territory of 8,000 pings (one ping is equal to 36 square feet) surrounded on all sides by scenic terrain. Mountain and ocean vistas, nighttime splendor and views of the city: all of Ta Chia spread out at your feet!" One would be mislead by the advertisement into believing that there were no other structures near this construction project, and that one could enjoy a view of the ocean just as the advertisement describes. Onsite investigation revealed, however, that the "Ta Chia Tien Hsia Yi Chia" villas were not the only independent structures on the development site; other structures on the same site had already been completed or were under construction by other builders, and the view directly to the front of "Tien Hsia Yi Chia" was in fact obstructed by the already-completed structure of another developer, thus confirming the false and misleading aspects of the advertising in question in this case. Knowing that these other structures surrounded their building project, the plaintiff nevertheless ran the false and misleading advertising in violation of Article 21(1) of the Fair Trade Law, and was therefore appropriately ordered by the FTC to cease such conduct pursuant to Article 41 of the same law. The administrative appeal and re-appeal decisions were thus upheld, and the administrative litigation case was found to be groundless and was dismissed.

Appendix: Chieh An Construction Company, Ltd.'s Uniform Invoice Number: 30928884

Summarized by Lai, Chia-Ching;

Supervised by Wang, Rong-Ging