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□ Eastern Media International (EMI) Violates Article 21, Paragraph 1 of the Fair

Trade Law with Misleading Representation in the Advertisement of Its Lian Lian
Hot Spring Resort Project【October 20, 2005】

During its 728th Commissioners’ Meeting on October 20, 2005, the FTC determined that
EMI’s project advertisement on the hot spring facilities of EMI Lian Lian Hot Spring Resort
contained misleading representation, which violated Article 21, paragraph 1 of the Fair Trade
Law. In addition to ordering EMI to discontinue the aforementioned unlawful act, the FTC
also imposed a fine of NT$6 million.
Since August 2004, EMI has used “hot springs” and “scenic view in every unit” as the
main selling points in the advertisement for its EMI Lian Lian Hot Spring Resort. The ad
attracted consumers, who, in general, considered the legal use of the hot springs an expected
fact. Therefore, whether the “hot springs” in the project could be lawfully developed, whether
there was the right to use, or whether there was an administrative permit was vital trade
information and could significantly impact the consumers’ interest. EMI was obliged to reveal
such vital information on its own initiative to allow consumers to make informed decisions
and avoid having to make decisions based on misleading information. EMI claimed that it had
drawn water from wells in different lots both within and outside the project site in Yangmei
Township in Taoyuan County, and that the waters were tested to be of hot spring water quality
and could be used as hot spring water for the project in question. However, the water right
certificate issued by the Taoyuan County Government showed that the scope of water usage
was irrelevant to the Lian Lian Hot Spring Resort project, and that the water was registered
for agricultural use. EMI admitted that it had privately installed pipeline to convey the water
into the project site for use by the community. The Taoyuan County Government also wrote
the FTC alleging that EMI’s action had violated Article 95 of the Water Act, and that the
County Government had revoked EMI’s water right.
EMI drew water from the well within the project site for use in the Lian Lian Hot Spring
Resort project. The Hot Spring Act, which was promulgated on July 2, 2003, contains
regulations on the development, use, and collection of fees for hot springs, as well as fines for
“any person who extracts or uses hot spring water without a legitimate hot spring water right
or mining right” and “any person who develops hot springs without a legitimate license.”
Prior to the implementation of the Hot Spring Act, EMI had applied to the Taoyuan County
Government to draw water for community use. However, the Taoyuan County Government
said that EMI had not applied to use the water for other purposes such as hot spring bathing,
and that the application for water right registration had yet to be approved because of disputes
between stakeholders. Evidently, when EMI placed ads for the Lian Lian Hot Spring Resort
project in August 2004, it knew that the water rights could not be obtained due to on-going
disputes between stakeholders. However, since EMI did not provide such information in its
advertisement; such inaction was sufficient to mislead consumers into believing that the
project had obtained a legitimate right to use the hot spring. Although the Hot Spring Act took
effect only on July 1, 2005, the law had already been promulgated when EMI placed the
advertisement. EMI should have been aware of the regulations governing the development
and use of hot springs after the law took effect. There remained foreseeable, uncertain factors
as to whether the Lian Lian Hot Spring Resort project could obtain the hot spring water right
or the right to develop and use the hot spring in accordance with law, but EMI proceeded to
develop, construct, and sell the independent project without disclosing to consumers that the
right to hot spring water or the permit to develop the hot spring had still not been obtained.
Such action was sufficient to mislead consumers into thinking that the competent authority
had approved and kept records on the use of the hot spring, and caused the consumers to make
erroneous trade decisions. Therefore, EMI’s action violated Article 21, paragraph 1 of the Fair

Trade Law.
After taking into account EMI’s motive, the degree of damage, the details of violation,
the scale of business, and conduct after the violation, the FTC imposed the aforementioned
fine in accordance with Article 41 of the Fair Trade Law.