CCP Takes Action Against Leading Dairy Company for Fraud - Android

The Competition Commission of Pakistan (CCP) has decided to initiate legal proceedings against a leading dairy company for committing deceptive… Read More

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The Competition Commission of Pakistan (CCP) has decided to initiate legal proceedings against a leading dairy company for committing deceptive marketing practices by providing false and misleading information to their consumers about three milk products.

The CCP has finalized an enquiry report against the company for further proceedings.

The report revealed that M/s Parents Pakistan (SMC-Private) Limited (complainant), filed a complaint against the said dairy company with the CCP (the “Commission”) for alleged violation of section 10 of the Competition Act, 2010 (Act), pertaining to the deceptive marketing practices.

Before the CCP, it has been alleged in the complaint that the company has distributed information in the form of its product packaging, labeling, television commercials, advertisements, and statements made by it on its official website and social media platforms in respect of three of its products, which are not backed by reliable scientific data and is misleading consumers into believing that the product is milk and, as such, constitutes deceptive marketing.

After attaining the preliminary facts, the Competent Authority of the CCP has initiated an enquiry in accordance with subsection (2) of Section 37 of the Competition Act by appointing Enquiry Committee to conclude the enquiry. The Enquiry Committee was directed to conduct the enquiry on the issues raised in the complaint and to submit the enquiry report by giving its findings and recommendations.

The CCP concluded that as regards the effect of anti-competitive behavior spilling over territorial limits of other provinces is concerned, the packaging and other promotional materials of the company was circulated via nationwide TV Commercials and Facebook page.

Hence the scope of the TVC and Facebook was not restricted to a particular area or province, in fact. it is available to ordinary consumers around the country. The advertisement by the company has a nationwide effect because the ordinary consumers can excess the TVC’s via Television and Facebook page.

Therefore, keeping in view the overall marketing campaign of the Respondent regarding the products along with the technicality of the issue concerning the various categories of milk and dairy-based/milk products, the enquiry Committee is of the view that the general public has been misled by the company believing that this product is milk, enquiry report said.

Additionally, the company has also portrayed these products to be a better alternative of milk without a reasonable basis as the deliberation on efficacy and necessity of these products compared to natural/regular/loose milk is still being studied and under debate. Whereas till a final opinion is endorsed by all relevant expert national and international organizations, to make any such claims which imply the superiority of these formulae over milk for a child’s health appears to be unsubstantiated and hence, false and misleading.

As a result, the Respondent company has been found involved in the distribution of false and misleading information to the consumers that lack reasonable basis related to character, method of production, properties and quality of goods which, prima facie, constitutes a violation of section 10 (1) in general and section 10 (2) (b) in particular. Furthermore, the Respondent is also found involved in the false and misleading comparison of goods in the process of advertising in, prima facie, violation of sections of the Competition Act.

In conclusion, deceptive marketing practices as discussed in this enquiry report have a direct impact on the public at large as well as the principles of fair competition. It is, therefore, in the interest of the general public and other players in the market that the undertakings should be curtailed from advertising their products/services in a deceptive manner and be encouraged to resort to the advertising practices that are transparent and give consumers true and correct information.

“It is further imperative to emphasize that even though the latest packaging of these products do not explicitly refer to these products as milk, however, once the Respondent’s overall marketing of the product is examined, it is undeniable that it has the effect of misleading the ordinary consumer into thinking the products are milk and that that they are essentially necessary for the growth and upbringing of their children owing to their fortification.

It is safe to conclude that the overall effect of the campaign is that ordinary consumers do perceive the said products as milk which they are not. These consumers are the ordinary consumers who have been misled to feed their children the aforesaid products instead of milk-based on the high sounding claims and representations made by the Respondent”, CCP report revealed.

Consequently, prima facie, violations under the Competition Act in terms of the findings of this enquiry report warrant initiation of proceedings against the company under Section 30 of the Competition Act, CCP added.

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