IN THE MATTER OF SHOW CAUSE NOTICE ISSUED TO MIS COLGATE-PALMOLIVE FOR DECEPTIVE MARKETING PRACTICES

Pakistan

10.08.2017

MRTP/ Competition Laws

Distribution of false or misleading information that is capable of harming the business interests of another undertaking constitutes a deceptive marketing practice

In facts of present case, the Complainant is engaged in the manufacturing and marketing of consumer household, antiseptic, and pharmaceutical products. Respondent is also primarily engaged in the manufacturing and sale of detergents, personal hygiene and care and other related products. To the extent of product under consideration, i.e. "Max All Purpose Cleaner"(MaxAPC) as manufactured and marketed by the Respondent, the Complainant and the Respondent are competitors in the relevant market comprising of household surface cleaning products used to sanitize and disinfect surfaces and floors. The Complainant vide its Complaint alleged that, Respondent is making false/ deceptive claims on the packaging of its product, Max APC claiming 24 hours Long-Lasting Freshness (front packaging of bottle); 99.9% Bacteria Free(front packaging of the bottle); Protects against: Cold and Flu; Skin Infections; Food Poisoning (bottle neck tag); Disclaimer: Based on laboratory testing with concentrate usage. Present proceedings were initiated pursuant to show cause notice issued to M/s Colgate Palmolive Pakistan Limited (the "Respondent") for prima facie violations of Section 10 of the Competition Act, 2010/Act. The SCN was issued pursuant to an enquiry carried out by the Competition Commission of Pakistan. The enquiry which was concluded vide Enquiry Report was initiated.

The Respondent has made Advertising Claim in an absolute manner with no disclaimer, disclosure or qualifier for the knowledge, awareness, and consumption of consumers. Such an absolute claim relating to the long lastingness of fragrance of a household cleaning product is highly effective in drawing the attention of an ordinary consumer when making a transaction decision to purchase. The Respondent having failed to provide a recognizable substantiation or reasonable basis as to the character, properties, and suitability for use of Max APC through material sweeping claim of long lasting, freshness, said Advertising Claim No. 4 is in clear violation of Section 10(1), 10(2)(b) of the Act.

Advertising Claim being false and misleading, is in fact capable of harming the business interests of the Complainant as well as other competing undertakings operating in the relevant market. Furthermore, such claims are likely to cause eventual dilution of the Complainant's brand identity and goodwill which it has built over the years, as well as other competing undertakings who do not indulge in such deceptive marketing practices. The effect of engaging in such practices is the diversion of customers to the Respondent's product, thereby inflicting financial losses to competitors. Hence, the Respondent has acted in violation of Section 10(2)(a) of the Act. Further, a claim which purports to provide ample protection from infections and viruses, even in the presence of its disclaimer which the Commission believes is illegible and not clear and conspicuous must be based on competent scientific evidence for it to be acceptable. In the absence of the same, Commission finds the said claim to be deceptive under Section 10(1) in terms of Section 10(2)(b) of the Act.

Section 10(2)(c) of the Act prohibits the 'false or misleading comparison of goods in the process of advertising' and also constitutes a deceptive marketing practice in terms of Section 10(1) of the Act. Similar to the preceding sub-section, a comparison of goods lacking a reasonable basis will be considered to be false and misleading in terms of this provision. A comparison is made whenever the qualities of two or more products or services are judged against each other. The fact and admission on part of the Respondent that, the trade letter was circulated among persons responsible for marketing Max APC is sufficient for the Commission to conclude that a violation has in fact been made out due to the inclusion of deceptive comparisons therein. Even if the trade letter was meant solely for the viewing and consumption of its distributors, the deceptive comparisons have no doubt created an impression in their minds as to the harmful effects of Dettol SC, which impression is eventually passed onto the consumer by sales force marketing Max APC, especially at the promotional stage of launch of the product. According to Section 10(2)(a) of the Act, 'the distribution of false or misleading information that is capable of harming the business interests of another undertaking' constitutes a deceptive marketing practice.

In Matter of M/S. MIL Pakistan (Pvt.) Ltd, the Commission observed that, 'it is important to recognize that part of any business' identity is the goodwill it has established with consumers, while part of a product 's identity is the reputation it has earned for quality and value'. In its Order In The Matter Of M/S Jotun Pakistan (Pvt) Limited, the Commission held that 'To prove conduct under Section 10(2) (a) of the Act, it is not necessary to show actual harm to competitors. It is sufficient to show the existence of a deceptive marketing practice that has the potential to harm the business interests of the competitors'.

In the event that, there exists a contravention of Section 10(2)(b), (c) and/ or (d) of the Act, a concurrent violation of Section 10(2)(a) is also made out. The consequence of distribution of information to the public that is false or misleading, is that it is capable of harming the business interests of and resulting in fatal consequences for the competitors of the undertaking making such deceptive claims. It may also be clarified at this point that the scope of Section 10(2)(a) is much wider and far reaching than the other sub-sections of section 10(2). It was observed by Commission in its Order in the Matter of Show Cause Notice issued to M/s A. Rahim Foods (Private) Limited that, "While there are innumerable instances of misleading information that an undertaking may distribute to the targeted potential consumer and hence be culpable under Section 10(2)(a), a contravention of Section 10(2)(d) will almost in every circumstance lead to a consequent contravention of Section 10(2)(a) of the Act, unless there exist exceptional circumstances in a particular case that warrant otherwise".

Tags : Deceptive marketing practices Provisions Violation

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