The Fair Trade Commission (hereinafter, the "FTC") promulgated, via the FTC Kong-Zhi-10313606551 Circular of November 14, 2014, the Amendments to the Principles of the Fair Trade Commission on Handling Domestic OEM Cases (whose original title is "the Principles of the Fair Trade Commission on Handling Illegally Commissioned Domestic OEM Cases) (hereinafter, the "Handling Principles"), which came into effect on the day of promulgation.

Article 24 of the Fair Trade Law provides: "In addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct sufficient to undermine trading order." Under Article 41, Paragraph 1 of the same law, the FTC may order the offenders to desist or correct their acts or take necessary corrective measures and may impose a fine of NT$50,000 to NT$25,000,000. In case of no correction within the required period, a fine of NT$100,000 to NT$50,000,000 may be imposed continuously.

The Handling Principles are amended by the FTC in accordance with Article 24 above with the following main provisions:

  1. Point 2 gives definitions.

An "enterprise that commissions domestic OEMs" is defined as an enterprise that solicits unspecific multitudes through advertising or other means that inform the public to engage in domestic OEMs of products and pays remuneration after the OEM work is completed.

  1. Point 3 specifically prohibits an enterprise that commissions domestic OEM from engaging in any deceptive or obviously unfair act:

This includes (1) causing an OEM to sign an OEM contractthrough active deception or passive concealment of vital trading information relating to the OEM in any misleading manner; (2) causing an OEM to enter into an OEM contract by directly or indirectly distributing OEM materials or equipment or charging fees in other names as the main revenue source; (3) causing an OEM to enter into an OEM contract under the condition that the free will of an OEM regarding whether to trade is suppressed bycoercing or bothering the OEM.

It is also pointed out that the condition of "directly or indirectly distributing OEM materials or equipment or charging fees in other names as the main revenue source" will be deemed satisfied in any of the following circumstances: (1) obvious inconsistency between the OEM materials or equipment so distributed and the purchase cost, (2) refusal to recover finished OEM products without justified reasons; or (3) no distribution channel for the finished OEM products or obvious inconsistency between the distribution revenue and the fixed expenditure.

  1. Point 4 provides for legal effects.

It is specifically stipulated that if an act which violates Point 3 is engaged to an extent sufficient to undermine trading order, this will constitute a violation of Article 24 of the Fair Trade Law. To wit, penalties may be imposed in accordance with Article 41 of the same law.