This content is from: Local Insights

Fair Trade Act amended

Chun-yih Cheng

Further to our report in the previous issue regarding the proposed amendments to the Fair Trade Act in Taiwan, the legislative body undertook its third reading of the amendments on November 9 2011.

The amendments are mainly in three areas: (i) limited liability of a non-celebrity layman endorser to a false or misleading advertisement; (ii) introduction of a leniency programme; and (iii) increase of administrative fine on a material abuse of monopoly powers or on a material cartel. The key features of these amendments are as follows:

According to the current Fair Trade Act, an endorser to a false or misleading advertisement should be jointly and severally liable with the advertiser if the endorser knew or should have known that the advertisement was false or misleading.

Given that there are many non-celebrity layman bloggers recommending certain products or services without receiving any payment or only receiving a small amount of payment from the product seller or service provider, such unlimited joint and several liability would be too harsh for them. Therefore, in order to lessen their liability, the amendments provide that the liability is limited to ten times the payment received by the non-celebrity layman endorser.

The amendments also introduce a leniency programme to the Fair Trade Act that under specified conditions, and if agreed in advance by the Fair Trade Commission, the administrative fine on the participants to a cartel may be exempted or reduced.

Such conditions in essence require the participants to actively provide concrete evidence and cooperate with the Fair Trade Commission in the investigation. The detailed qualifications and standards for exemption or reduction, as well as the other enforcement rules, will be promulgated by the Fair Trade Commission.

The current administrative fine on the abuse of monopoly powers or on a cartel is only up to NT$25 million ($827,000) or NT$50 million, as the case may be.

As this amount is, on one hand, too small for a material breach and, on the other hand, not enough to encourage a cartel participant to seek leniency, the amendments increase the administrative fine up to 10% of the participant’s annual turnover in the preceding fiscal year in the case of a material abuse of monopoly powers or a material cartel.

Chun-yih Cheng

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