Carrefour fined for bogus ads

Carrefour Taiwan, the nation's largest hypermarket operator, was fined NT$4.44 million (US$136,800) by the Fair Trade Commission yesterday for fraudulent and misleading advertising.

This is the biggest fine a retailer has received for a deceptive ad campaign, said Chen Jung-lung (陳榮隆), the Cabinet-level body's commissioner.

The commission said the case stemmed from early last year when a consumer in Changhua County filed a complaint to the commission, saying that Carrefour's lowest-price promise was not honored.

The retailer, which runs 43 stores nationwide, has placed extensive advertising on its Web site, in direct mails, on TV commercials and inside outlets, trumpeting that it would check on competitors' prices every day and immediately adjust down its retail prices to match other players' moves even at the cost of margins.

However, following investigations at Carrefour's two outlets in Taipei, one in Changhua and one in Kaohsiung, the commission found that "not all of Carrefour's commodities are cheaper than those of rivals" as it has claimed, according to its press release.

Its acts violated Article 21 and Article 41 of the Fair Trade Act (公平交易法), it added.

This has been the fifth time Carrefour has been punished for misleading advertising. Previous fines ranged from NT$50,000 in 2003 to NT$2.14 million in May.

"We imposed such a large fine because Carrefour is a repeat offender," Chen said, adding that cracking down on misleading advertising has been the commission's major task over the last few years.

The giant retailer yesterday expressed surprise and protested the punishment.

"We have offered explanations to the commission but it didn't accept them. We will appeal this case to the commission after the document arrives," public relations manager Lillian Lee (李莉莉) told the Taipei Times.

Carrefour clarified in a press release that it has refunded the consumer in Changhua the price difference he demanded even though the local grocery store which he cited in price comparisons did not belong to the "major hypermarkets" category Carrefour had declared.

Carrefour, a joint venture between the French retailer and Uni-President Enterprises Corp (統一企業), the nation's largest food conglomerate, launched the "everyday low price" campaign in 1999 and began price-checking four years ago to undercut the competition.

Early last year, it announced plans to pump NT$1 billion, accounting for 2

percent of its revenues in 2004, to solidify its “leader in price” image,

triggering small competitors to follow suit.

Hard hit by the cut-throat competition, Tesco Stores (Taiwan) Co withdrew

from the local market early last month, with its six stores taken over by

Carrefour.