Taipei High Administrative Court finds that Asia Almighty Projects Co., Ltd. made false and misleading representations in its advertising in violation of the Fair Trade Law
Taiwan
Case:
Taipei High Administrative Court finds that Asia Almighty Projects Co., Ltd. made false and misleading representations in its advertising in violation of the Fair Trade Law
Key Words:
Tai Ji Wealth and Honor Project, false advertising
Reference:
Taipei High Administrative Court Judgment (91) Su Tzu No. 3945
Industry:
Other Recreational Services (9009)
Relevant Law:
Article 21 of the Fair Trade Law
Summary:
1. The defendant, the Fair Trade Commission, found that the plaintiff (originally named Tai Ji Construction Co., Ltd. and subsequently merged into the surviving company Asia Almighty Projects Co., Ltd. on 15 March 2002 with the approval of the Taipei City Government) had made false and misleading statements in an advertisement, in violation of Article 21(1) of the Fair Trade Law, applied mutatis mutandis under Article 21(3) of the of the same article, when it included statements involving an allied hotel of another enterprise in its "Tai Ji Wealth and Honor Project – Charter of Project Rights and Benefits" brochure. The Fair Trade Commission therefore ordered the plaintiff to cease the offending conduct and imposed an administrative fine under the fore part of Article 41 of the Fair Trade Law. The plaintiff objected to the disposition, and filed an administrative appeal. The administrative appeal was dismissed by the Cabinet, and the plaintiff then filed the administrative lawsuit summarized here.
2. Articles 21(1) and 21(3), of the Fair Trade Law provide respectively as follows:
No enterprise shall make or use any false or misleading representation or symbol as to price, quantity, quality, content, production process, production date, valid period, method of use, purpose of use, place of origin, manufacturer, place of manufacturing, processor, or place of processing on goods or in advertisements, or in any other way communicate to the public.
The two preceding paragraphs shall apply mutatis mutandis to the services of an enterprise.
The plaintiff was found to have printed the "Charter of Rights and Benefits" at issue and to have used it in promoting its Tai Ji Wealth and Honor Project. Page 1 of the Charter contains the following statements: "Qualifications to participate: adults aged 20 and above, no limitation on nationality…." and "How to apply to participate: Fill out the project application form. Annex a photocopy of the applicant's personal identity card." According to the statements it is evident that the Charter was used for purposes of attracting and soliciting prospective customers.
Lin Mei-Cen, an agent of the plaintiff who the plaintiff sent to appear before the defendant and give explanations stated as follows:
Apart from other promotional literature describing the project, the primary method used to introduce the product was to use the "Project Contract" and "Charter of Project Rights and Benefits" to describe the quality and features of the product and the rights and benefits that customers would enjoy. The primary appeal of the product was that customers would obtain rights to enjoy accommodations at various allied hotels. The "Project Contract" covered only broad-stroke stipulations concerning the quality and substance of the "Tai Ji Wealth and Honor Project" product, and detailed supporting content was set out in the appended "Charter of Rights and Benefits.
These statements are contained in a 30 November 2001 record in the case file, further evidencing that despite its name, the "Charter of Rights and Benefits" was in fact treated by the plaintiff as promotional literature that it gave to nonspecific consumers and thus distributed to the public at large. The defendant's argument that the "Charter of Rights and Benefits" constitutes an advertisement under Article 21 of the Fair Trade Law thus has merit.
Furthermore, the plaintiff did not dispute that it lists the following six hotels in the "Guide to Allied Hotels" on page 5 of the Charter of Rights and Benefits: Le Midi Hotel Chitou OK Hill Hotel Kenting, Grand Hi-Lai Hotel Kaohsiung, Grand Hotel Taipei, Grand Hotel Kaohsiung, Hotel National Taichung. However, the plaintiff's Managing Director Hung Shui-yuan gave detailed statements before the defendant on 28 March 2001 that the plaintiff had merely purchased discount coupons toward accommodations in these hotels. These statements are contained in a 28 March 2001 record in the case file.
A determination of a violation of Articles 21(1) and 21(3), of the Fair Trade Law shall be based on whether the content of the representation (or statement) or symbol is sufficient to affect the reasonable judgment of a typical member of the public possessing ordinary knowledge and experience and cause them to make a decision about a transaction, or to affect economic interests of competing enterprises or trading counterparts. The plaintiff's representation or statement of "allied hotels" would likely be taken by the public as a basis for making judgments, based on the sense in which it would conventionally be understood in society.
3. What the disputed "project" offers trading counterparts is certain rights and privileges that can be enjoyed and acted upon within a certain period in the future. The main factors that prospective trading counterparts will consider in regard to whether to buy the plaintiff's project is the services offered in connection with it and the content of the rights and interests in resort vacations. However, the sales price is not insignificant, and there is some indeterminacy to the rights and privileges to be enjoyed. It is not a short-term or petty transaction. It is a planned-out transaction of considerable cost. Trading counterparts must give detailed consideration to reliance factors such as the plaintiff's goodwill, operational scale, future development potential, and partners and methods of cooperation, before making a decision about whether to enter into a transaction with the plaintiff. For the plaintiff then to list well-known, well-established large hotels as its "allied hotels" constitutes a false and misleading representation concerning material trading information. No credence can be given to the plaintiff's claims. There is no defect in the determinations of fact or application of law in the original disposition. The disposition was appropriately upheld in the administrative appeal. The plaintiff's administrative lawsuit requesting to reverse the administrative appeal decision and the original disposition is in lack of legal grounds and is dismissed.
Appendix:
Asia Almighty Projects Co., Ltd.’s Uniform Invoice Number: 12862278
Summarized by Lai, Chia-Ching; Supervised by Wang, Rong-Ging