Samsung Electronics Co. (005930) ended an online campaign in Taiwan amid a local regulator’s probe into whether the company broke the law by paying for positive reviews of its products and negative comments about rivals.
Taiwan’s Fair Trade Commission is gathering information after receiving e-mails earlier this month alleging posts to online forums were suspicious, Sun Lih-Chyun, a commissioner at the regulator, said in a telephone interview yesterday. Samsung said in a statement the situation was “unfortunate” and it ceased using anonymous comments in online marketing last year.
Samsung, which has overtaken Apple Inc. (AAPL:US) and Nokia Oyj (NOK1V) to lead the $294 billion smartphone market, last month unveiled its new Galaxy S4 handset during an event in New York’s Radio City Music Hall. Taoyuan, Taiwan-based HTC Corp. (2498), which released its flagship HTC One for sale last month, has lost market share amid competition and delays in shipments of own products.
“These are the two star products at least for the first half of this year,” said Warren Lau, an analyst at Kim Eng Securities Ltd. in Hong Kong. “So I would suspect that some sales marketing people will try their very best to market their products.”
Posts to online forums are alleged to have included criticism of rival smartphones, including those made by HTC, and praise of Samsung’s products, Sun said. HTC has been asked to provide information, while Samsung has yet to be contacted by the commission, he said.
Samsung Electronics, which announced its online communications credo in 2011, said it remains committed to engaging in transparent and honest communications with consumers.
The Suwon, South Korea-based company’s credo prohibits criticisms of competitors and their products and it voluntarily ceased using anonymous comments last year, it said in a statement today.
The situation “occurred due to insufficient understanding of these fundamental principles” of transparent and honest communications with consumers, Samsung said yesterday.
The commissioners discussed whether the posts would breach one of the articles of fair trade regulations relating to false advertising, with penalties of as much as NT$25 million ($837,000) an incident, said the FTC’s Sun.
A more serious breach of a separate article on defamation is also being investigated and could lead to criminal charges with imprisonment of as long as two years per case, Sun said. A defamation case would first require a victim to file a formal complaint, he said.
“We are disappointed that a competitor would resort to misleading consumers to discredit our innovation,” HTC said in a statement yesterday.
To contact the reporters on this story: Tim Culpan in Taipei at firstname.lastname@example.org; Jungah Lee in Seoul at email@example.com
To contact the editor responsible for this story: Michael Tighe at firstname.lastname@example.org