The Supreme Administrative Court rendered the 105-Pan-209 Administrative Decision of May 5, 2016 (hereinafter “the Decision”), holding that a tobacco merchant’s engagement in public interest activities such as donations to promote or advertise tobacco products is illegal regardless of whether the appeal is direct or indirect.
According to the facts underlying the Decision, the Plaintiff in the rehearing action (hereinafter Òthe PlaintiffÓ) had sponsored a foundation to conduct project promotion. However, the people petitioned on the ground of the Plaintiff’s alleged violation of the Tobacco Hazards Prevention Law, and the Defendant in the rehearing action (hereinafter Òthe DefendantÓ) subsequently concluded that the Plaintiff resulted in direct or indirect promotion or enhancement of the image of smoking by improving its corporate image through its sponsorship program involving donation of money and volunteering services and through its messages conveying its sponsorship on the media to leave positive impression with the people and improve their identification with its products and their willingness to purchase the products. Since this violated Article 9, Subparagraph 8 of the Tobacco Hazards Prevention Law, a fine of NT$5 million was imposed in accordance with Article 26, Paragraph 1 of the same law. After its administrative appeal was rejected, the Plaintiff filed a complaint for rehearing on the ground that the application of law in the final decision was obviously erroneous.
According to the original decision, restrictions under Article 9 of the Tobacco Hazards Prevention Law are based on whether the objectives of a tobacco merchant’s engagement of specific activities under the subparagraphs of the article are to promote or advertise tobacco products. Therefore, if a tobacco merchant engages in public interest activities such as donations not to promote or advertise tobacco products, there is no need to restrict such activities. Conversely, if a tobacco merchant engages in public interest activities such as donations to promote or advertise tobacco products, such engagement is not legally allowed regardless of whether the appeal is direct or indirect. If an event is sponsored by conspicuous means, the possibility that the sponsor may be promoted so that its goodwill and market value can be improved cannot be ruled out. As far as the consumers are concerned, their consumption in the products of the sponsor may increase to demonstrate their support of, or identification with, the operating philosophy of the sponsor. If a tobacco merchant sponsors an event with its name conspicuously disclosed while achieving the objective of indirect tobacco advertising, the Tobacco Hazards Prevention Law is violated.
In this Decision, the original trial court had the following findings: (1) when sponsoring the program at issue, the Plaintiff indeed had used its company name in the activity; (2) the Plaintiff violated the Tobacco Hazards Prevention Law by sponsoring the event at issue with its name conspicuously disclosed; (3) since the Plaintiff was clearly aware of special restrictions under laws and regulations on tobacco merchants, it should have timely informed or reminded the media during press interview not to disclose the company’s name in an event reported by the media, such reminding act was still different from supervisory examination; and (4) in view of major public interests such as the safeguard of national health, since tobacco product sponsoring acts in which the name of the tobacco merchant is specified is sufficient to result in the promotion or advertisement of tobacco products, such act was interpreted as an act prohibited under Article 9, Subparagraph 8 of the Tobacco Hazards Prevention Law, and the minimum statutory penalty imposed by the Defendant was upheld. This did not go beyond the scope of necessity and violate the requirement for protecting the freedom of speech under Article 11 of the Constitution and the principle of proportionality under Article 23. Therefore, it was held that the assertions of the Plaintiff were its subjective biases and accused the final decision of inappropriate exercise of authority in fact findings and application of law. Since the application of law was not obviously erroneous, there was no valid ground for rehearing action and the rehearing complaint was rejected.