Fair Trade Commission Disposal Directions (Guidelines) on Handling Cases Governed by Article 21 of the Fair Trade Law

Passed by the 151st Commissioners' Meeting on August 31, 1994
Amended by the 269th Commissioners' Meeting on December 24, 1996
Points 22 and 23 amended, and Point 26 deleted by the 311th Commissioners' Meeting on October 15, 1997
Points 6 and 16 amended by the 387th Commissioners' Meeting on April 6, 1999
Points 16 and 21 amended by the 417th Commissioners' Meeting on November 3, 1999
Amended by the 568th Commissioners' Meeting on September 26, 2002
Promulgated by Order (91) Kung San Tzu No. 0910010812 on November 5, 2002
Amended by the 688th Commissioners' Meeting on January 13, 2005
Promulgated by Order (94) Kung Fa Tzu No. 0940001278 on February 24, 2005
Points 13 and 23 amended and promulgated by Order (94) Kung Fa Tzu No. 0940006949 on August 26, 2005
Amended by the 836th Commissioners' Meeting on November 15, 2007
Promulgated by Order Kung San Tzu No. 0960010188 on November 30, 2007
Amended by the 940th Commissioners' Meeting on November 19, 2009
Promulgated by Order Kung San Tzu No. 0980010463 on November 19, 2009
Amended by the 954th Commissioners' Meeting on February 10, 2010
Promulgated Order (99) Kung San Tzu No. 0990001296 on February 25, 2010
Amended by the 986th Commissioners' Meeting on September 29, 2010
Promulgated Order (99) Kung San Tzu No. 0990007339 on October 13, 2010
Points 1, 20, 22 and Table 1 of point 15 amended by the 1057th Commissioners' Meeting on February 8, 2012
Promulgated by Order Kung Jing Tzu No. 1011460190 on March 3, 2012
Amended by the 1153rd Commissioners' Meeting on December 11, 2013
Promulgated by Order Kung Jing Tzu No. 10214618371 on December 23, 2013
Points 2, 18 and 20 amended by the 1217th Commissioners' Meeting on March 4, 2015
Promulgated by Order Kung Jing Tzu No. 10414601834 on March 12, 2015
Amended by the 1304th Commissioners' Meeting on November 2, 2016
Promulgated by Order Kung Jing Tzu No. 10514613231 on November 14, 2016

Chapter 1 General Principles

  1. The Fair Trade Commission (“the Commission”) has adopted these Guidelines for purposes of ensuring fair competition among enterprises, protecting the rights and interests of consumers, effectively enforcing Article 21 of the Fair Trade Law (“the Law"), and prohibiting enterprises from making or using false or misleading representations or symbols on goods (or in connection with services), in advertisements, or by any other means of making known to the public.
  2. The term “other related matters which have a soliciting effect” used in Paragraph 2, Article 21 of the Law mean any subject matter of trade having economic value and other trade-related matters that are not directly related to the subject matter of trade but having an impact on trade decisions, including an enterprise's identity, qualification, business condition, relationship to other enterprises, non-profit organizations, or government agencies, gifts or prizes attached to such trade by the enterprise, and comparison in product and service to other enterprises. 
  3. The term "other means of making known to the public" used in Article 21 of the Law refers to any act of disseminating information that may directly or indirectly cause the non-specific, general public or the relevant public to collectively see or hear of it.  Examples of "other means of making known to the public" include the following: billboards, business cards, goods or services seminars/presentations, provision of information by an enterprise for publication by the media in the form of reportage, enabling enterprises to collectively see or hear of information by means of mailings, publishing information in publicly sold books, delivering promotional materials to consumers by way of promotion or introduction, and distributing product manuals to professionals for further dissemination of information to the public.
  4. The term "representation or symbol" used in Article 21 of the Law refers to an act sufficient to express or disseminate information or ideas having commercial value by means of written or spoken language, sound, graphics, marks, numbers, images, colors, shapes, actions, objects, or other means.
  5. The word "false" used in Article 21 of the Law refers to a representation or symbol that is inconsistent with the previously stated facts, where the discrepancy is deemed unacceptable to the general public or the relevant public, and sufficient to cause concern about misunderstanding or erroneous decisions.
  6. The word "misleading" used in Article 21 of the Law refers to a representation or symbol, whether or not consistent with the previously stated facts sufficient to cause concerns about misunderstanding or erroneous decisions of the general or the relevant public.
  7. The factors to be considered in determining whether a representation or symbol is false or misleading are as follows:
    (1) The determination of whether a representation or symbol is false or misleading shall be based on the basis of the general public exercising an ordinary degree of care.
    (2) Where the content of a representation or symbol is manifested by comparison or especially distinctive means, and where the major part that is especially distinctive could easily form the primary factor contributing to a consumer's transaction decision, the especially distinctive major part may be observed independently in making the determination.
    (3) Where a representation or symbol, observed in isolation, is factual, but the overall impression and effect it delivers, when observed in combination, is sufficient to cause concern about misunderstanding or erroneous decisions by counterparts involved in a relevant transaction, it shall be deemed misleading.
    (4) The representation or symbol with respect to the content of critical transaction information is disproportionally arranged in its layout, position, and font size, as to cause concern on the misunderstanding or erroneous decisions by counterparts in a relevant transaction.
    (5) The representation or symbol with respect to the conditions of burden or limitation does not fully disclose such conditions as to cause concern on the misunderstanding or erroneous decisions by counterparts in a relevant transaction.
    (6) A representation or symbol objectively having multiple reasonable interpretations shall not be deemed false as long as one of the meanings is true. However, this shall not apply when the intent to mislead is plainly obvious.
    (7) The degree of discrepancy between the representation or symbol and the actual conditions.
    (8) Whether the content of the representation or symbol is sufficient to affect the trading counterparts possessing ordinary knowledge and experience        to make reasonable judgment and trading decisions.
    (9) Effect on the economic interests of competing enterprises and trading counterparts.
  8. Whether an advertisement is false or misleading shall be judged on the basis of the objective circumstances at the time when the advertisement was used by the advertiser.
    Where an advertiser of an advertisement knew or was capable of knowing at the time it used an advertisement that it would subsequently not be able to deliver the content consistent with the advertisement, the advertisement is false or misleading.

Chapter 2 Procedures

  1. For cases that are submitted for interpretation, the supervisor of the Department in charge of the cases is authorized to process and respond in accordance with the existing interpretations made by the Commission in archived examples, or to find the answer when it is clearly provided in the law, posing no controversy and thus no further interpretation is required. The handlings of the cases will later be submitted to the monthly Commissioners’ Meeting for ratification.
  2. When the Commission receives a complaint alleging a false or misleading representation or symbol of an enterprise, the complainant shall describe the following items for the purposes of clarifying the facts of the case and gathering evidences for the investigation:
    (1) The complainant shall be requested to describe the specific details of the case and to provide his or her full name and address in writing. Where an oral complaint is made, the Commission shall make a written record of the complaint and, after reciting it to or having it read by the complainant to verify the accuracy of the content, shall annotate the year, month, and day, and then have the complainant sign or chop it.
    (2) The complainant shall provide relevant evidences and materials such as goods, packaging and/or advertisements, and explain in what way the representations or symbols made by the enterprise is sufficient to give rise to a relevant trading counterparty’s reasonable suspicion, judged by a rule of thumb, that it is false or misleading and has caused damage. An authorization letter is required when the complainant asks someone to file the complaint for him/her.
  3. After receiving a letter or an e-mail of complaint, the Commission shall first conduct a review of the following matters in accordance with the complaint reporting procedures:
    (1) The determination of its compliance with Point 10: If the complaint fails to comply, it will not be accepted, and the complainant shall be asked to comply with the complaint reporting procedures and resubmit his/her filing.
    (2) The determination of whether or not the complaint received is under the jurisdiction of this Commission: If the complaints received are involved in civil cases, under the jurisdiction of another government agency, the department handling the case shall respond by letter that the case is not under the jurisdiction of the Commission or forward the case to the relevant competent authority.
    (3) The determination of whether the case has exceeded the time limit prescribed for imposing sanctions: If it is obvious, based on the submitted information provided by the complainant, that the case has exceeded the time limit prescribed for imposing sanctions, the case shall not be accepted.
    (4) The determination of whether the complainant was harmed or disadvantaged by the alleged representation or symbol: If the complainant is not a competing business or a party involved in a related transaction, the Commission shall inform the complainant by letter that another written complaint that provides specific evidence of the harm or disadvantage suffered by the complainant must be submitted.
    Regarding the handling and reply of complaints that do not comply with the above reporting procedures, the head of the supervisory department is authorized make the final decision and then report monthly to the Commissioners' meeting for ratification.
    Where the reported case involves Article 21 and other articles, and falls into the application of paragraph 1, the case shall be handled in accordance with the provisions of the preceding two paragraphs.
    If the complaint has an impact on a significant public interest, the Commission shall, ex officio, take the initiative to investigate it, even when it is insufficient to meet the procedural requirements described in Subparagraph 1 or Subparagraph 4 of Paragraph 1.
  4. If any one of the following conditions applies to the complaint case, the department undertaking the case may write comments and submit the case to the commissioner on rotation duty for review without investigation. Once the way of the case was handled is approved by the chief commissioner or the Deputy Commissioner, it will be submitted collectively to the monthly Commission's Meeting for ratification:
    (1) The alleged facts and reasons obviously do not meet the criteria of the Law;
    (2) The complaint case is concerned with only the harm or disadvantage suffered individually by the complainant thus having a minor effect on transaction order or public interest;
    (3) It is impossible to proceed the investigation because the reported party is out of business, dissolved (passed away) or has moved to an unknown location;
    (4) The representation or symbol has ceased or been corrected prior to the investigation on the reported party;
    (5) The facts reported by the complainant have already been subject to disciplinary action by the Commission;
    (6) Following the withdrawal of a reported case, no new evidence is submitted by the complainant and only the same incident is reported again.
    After the above preliminary review, if it is sufficient to substantively determine that there is no violation of this Law, the department undertaking the case may write comments and submit the case to the commissioner on rotation duty for review without investigation. Once the way the case was handled is approved by the chief commissioner or the Deputy Commissioner, it will be submitted to the Commission's Meeting the next week for ratification.
  5. Point 10 to Point 12 shall apply mutatis mutandis to cases transferred from other government agencies.
  6. If any one of the following conditions applies to a complaint case during its investigation, the investigation may be terminated, and the department undertaking the case may write comments and submit the case to the commissioner on rotation duty for review. Once the way the case was handled is approved by the chief commissioner or the Deputy Commissioner, it will be submitted collectively to the monthly Commission's meeting for ratification:
    (1)  Where any one of the conditions as described in Subparagraph 2 to Subparagraph 6, Paragraph 1 of Point 12 applies to the case;
    (2)  Where the case falls under the jurisdiction of civil or criminal court, or the jurisdiction of other government agencies;
    (3)  Where the case has exceeded the time limit prescribed for imposing sanctions;
    (4)  Where both parties of the case have reached a settlement agreement, and the case has a minor impact on trading orders or public interests;
    (5)  The complainant has been requested by letter to make a supplementary report because of the complaint not complying with the reporting procedure but fails to do it in time;
  7. The Commission and other competent authorities allocate cases with regard to Article 21 of this Law in accordance with the principle of special law prevails over general law.
    According to the allocation of responsibilities mentioned in the previous paragraph, the case types administered by competent authorities are as Table 1.
  8. The following principles shall be considered in determining "effect on trading order or public interest":
    (1) Numbers of victims;
    (2) Whether such a practice is a prevalent phenomenon in the given industry;
    (3) Reprehensibility in terms of commercial ethics;
    (4) Degree of impairment to effective competition on the marketplace;
  9. As for the examples that representation or symbol is "false or misleading", please refer to Table 2. The term "objective circumstances" used in in the first paragraph of this Point refers to the advertiser's ability to subsequently deliver, the governing laws and regulations, the supply of a product or service, and so forth.

Chapter 3 Simplified Procedures for Minor Cases

  1. If any one of the following conditions applies to a violation, and each person being penalized is fined for less than four hundred thousand New Taiwan dollars, the case may be processed in accordance with the simplified procedures.  However, this does not apply to cases that fall under the purview of the second half of Article 42 of this Law:
    (1) Minor cases where it is apparent that the representation or symbol are inconsistent with the previously stated facts;  
    (2) Disciplinary precedents exist, and the case is in violation of the policy statements or disposition guidelines set forth by the Commission or falls under the unlawful behavior category in Article 17.
    If the results of an investigation find the case in question is not in violation of the law, or in spite of the violation, the case has only a minor impact on trading orders or public interests, the simplified procedures shall be applied and no penalty shall be imposed in the case.
  2. When a penalty case is handled in accordance with the simplified procedures, the department undertaking the case must prepare the Simplified Disciplinary Order and a reply form, submitting to the commissioner on rotation duty for review. Once the way the case was handled is approved by the chief commissioner or the Deputy Commissioner, the written order of the case may be issued first, followed by a report submitted to the Commission's Meeting the next week for ratification.
    When a non-penalty case is handled in accordance with the simplified procedures, the department undertaking the case must prepare a comment on its handling of the case and a reply form, and follow the procedures described in the preceding paragraph so as to receive the ratification from the Commission.  
  3. The format and content of the simplified disposition document are as follows:
    (1) The letters of "The Fair Trade Commission" and disposition Number;  
    (2) The names and addresses of the disciplined individuals, his/her representative (person-in-charge) or agent;
    (3) The text;  
    (4)  The facts: Using succinct terms to describe, item by item, the unlawful facts considered by the Commission;
    (5) The reason: Succinctly explains the reason why the facts for the conditions of the case are affirmed by the Commission. If the defendant applies for investigation or the facts or evidences rendered by him/her is not approved or adopted, the reasons for not approving or adopting his/her facts or evidences shall be stated paragraph by paragraph;
    (6) Evidences: Enter the related evidences obtained through the investigation process, such as complaint letter, name of the advertisement, the defendant's opinion, the information rendered by the defendant, the information obtained by investigating the defendant's office, other information gathered from the Commission's investigation (such as photos, statistic information, actual products, and response letters to the Commission's inquiry from relevant organizations or groups), the information provided by other organizations or groups (such as judgment, indictment and appraisal opinions); 
    (7) Applicable laws: Paragraphs 1, 2, 3 and 4 of Article 21, and Article 42 of the Law;
    (8) Footnotes: The instructions for administrative proceedings and other matters should be entered orderly.
  4. For cases falls into the category of Point 18, if there is an instruction of submitting the case to the Commission Meeting after differences in opinion arise,    the Commission Meeting must review the case in accordance with the contents of the instruction.

 

Table 1 Case Types Administered by Competent Authorities

 

Conduct

Competent Authority

1

The advertising contents of the goods or services that claims, implies or insinuates medical effectiveness.

Ministry of Health and Welfare

2

Labels and advertisements for food, health food, retail dairy products, cosmetic products and medicine.

Ministry of Health and Welfare

3

Advertisements for medical treatment

Ministry of Health and Welfare

4

Advertisement for human organ preservation databases

Ministry of Health and Welfare

5

Labeling of general merchandise

Ministry of Economic Affairs

6

Labels for selling seedlings

Council of Agriculture, Executive Yuan

7

Labels and advertisements for pesticides, fertilizers, feed, livestock and poultry breeding and genetic resources, drugs for animals, and pet food.

Council of Agriculture, Executive Yuan

8

Agricultural product labels for the wholesale market, retail packaged rice labels, product traceability labels, and organic food labels and advertisements.

Council of Agriculture, Executive Yuan

9

Agricultural product advertisements, agricultural product labels for the retail market, and advertisements of retail packaged rice

Ministry of Health and Welfare

10

Veterinarians' advertisements for the promotion of their businesses

Council of Agriculture, Executive Yuan

11

Tobacco and alcohol labels, advertisements for alcohol

National Treasury Administration, Ministry of Finance

12

Advertising by government authorized continuing education schools

Competent educational authority in special municipality, county or county-level city governments

13

False advertisements with respect to employment placement or employee recruitment

Ministry of Labor

14

False recruitment advertisements or brochure contents of vocational training institutions

Ministry of Labor

15

Travel services advertisements

Tourism Bureau of the
Ministry of Transportation
and Communications

16

False or misleading advertisements by securities or futures enterprises

Financial Supervisory Commission

17

Advertisements causing people to wrongly assume that an advertiser who has not duly obtained certified public accountant credentials has such credentials

Financial Supervisory Commission

18

Finance-related advertisements

Financial Supervisory Commission

19

Immigration Advertisements

Ministry of the Interior

20

Real Estate brokerage Advertisements regulated by the Real Estate Broking Management Act

Ministry of the Interior

21

Cross-nation marriage matching advertisements

Ministry of the Interior

22

Cases that have been determined to be handled by other government agencies after coordinating with other agencies, or applying the "special law takes precedent over common law" principle

Other competent Authorities

 

Table 2 Examples of Types of False or Misleading Representation or Symbol Cases

 

Types of Conducts

1

A representation or symbol causes people to wrongly assume the enterprise is the (sole) agent, (sole) distributor, branch, maintenance center, or service station of another enterprise, or so forth, and so has certain qualifications, credibility, or other qualities sufficient to persuade trading counterparts to do business with it.

2

A representation or symbol causes people to wrongly assume that a government agency or non-profit organization is a sponsor or co-sponsor or that it is related to a government agency or non-profit organization.

3

A representation or symbol causes people to wrongly assume that a name of another enterprise or brand name of a good has changed.

4

A representation or symbol exaggerates the scale of business operations, the time of founding, or duration of existence of an enterprise or brand of goods (services), where the discrepancy is excessive.

5

A representation or symbol falsely claims the technological cooperator, or the licensee, of another person.

6

A representation or symbol causes people to wrongly assume an enterprise has been awarded a certain prize, to enhance the status of its goods (or services).

7

A representation or symbol causes people to wrongly assume an enterprise has been licensed patent or trademark or other intellectual property rights.

8

A representation or symbol causes people to wrongly assume an enterprise is the sole vendor of specific goods (or services).

9

A representation or symbol causes people to wrongly assume an enterprise's goods (or services) are covered by liability insurance.

10

A representation or symbol of list price differs for an extended period from actual selling price, where the discrepancy is excessive.

11

Price is labeled long-term as "discounted," or a similar pretense, where the marked price is actually the original price.

12

Minimum prices or favorable price are represented, where there are no, or too few, goods (or services) available at the minimum price or favorable price, and where such circumstances would be unacceptable for the general or relevant public.

13

A representation or symbol causes people to wrongly assume that the goods (or services) claimed can be obtained upon payment of a certain price.

14

A representation or symbol contains specific numbers inconsistent with the actual numbers, where the degree of discrepancy exceeds the acceptable level for the general or relevant public.

15

A representation or symbol claims to provide service items or grades inconsistent with those actually provided, where the degree of discrepancy exceeds the acceptable level for the general or relevant public.

16

A representation or symbol claims goods (or services) of a certain quality, where the degree of discrepancy exceeds the acceptable level for the general or relevant public.

17

A representation or symbol causes people to wrongly assume goods (or services) have been awarded certification or approval by a government agency or a professional organization.

18

A representation or symbol cites the content of an official document, causing people to wrongly assume the quality of the goods (or services).

19

A representation or symbol causes people to mistake the identity of the actual presenter or author of publications or persons involved in the work of preparing them.

20

A representation or symbol causes people to wrongly assume goods are of specific functions, where the degree of discrepancy exceeds the acceptable level for the general or relevant public.

21

A representation or symbol fails to clearly indicate the conditions, burdens, expiry, or other restrictions that actually apply.

22

A representation or symbol describes collectively goods (or services) having different qualifications, natures, or qualities, causing people to wrongly assume that the goods (or services) mentioned all possess the same qualifications, natures, or qualities.

23

Labeling/indications representing or symbolizing a place (country) of origin of a product cause people to wrongly assume it was produced or manufactured in such place (country) of origin; provided, this shall not apply where the name of the place of origin is already in general use as a description of such products.

24

A representation or symbol provided by an enterprise engaged in the marketing of investment products or services which causes people to wrongly assume its franchisees or distributors earn high incomes.

25

A representation or symbol claims the effect of a product (or service) without any scientific theory or experimental basis.

26

A representation or symbol of a rate of interest/yield is inconsistent with rates of interest/yield in actual transactions, where the degree of discrepancy exceeds the acceptable level for a typical trading counterpart.

27

A representation or symbol causes people to wrongly identify the producer or supplier of the goods (or services).

28

A representation or symbol causes people to wrongly assume that the government will hold examinations for specific credentials, examinations for the selection of public servants, or certification tests for specific professions.

29

Advertisements that use the descriptive terms of superlative, such as “No. 1”,”Champion”,”the maximum”, or “the biggest”, without sales numbers or surveys to support them, or pointing out the source in the advertisements.

30

A representation or symbol that does not disclose the trading risks, or the method of the disclosure causes people to wrongly assume that the provisions of such goods (services) are legal.

31

A representation or symbol, in which the description of the rules of participation in a gift-give-away (or a prize or a sweepstakes) event, is inconsistent with the actual event; or, its conditions, burdens or other limitations are not clearly indicated.