Violation of Competition Act 2010: CCP passes order against 16 paint companies

The Competition Commission of Pakistan (CCP) has passed an order in the Show Cause Notices issued to 16 paint companies for violating Section 10 of the Competition Act, 2010, that deals with deceptive marketing practices. According to a statement issued by the commission here on Friday, the CCP issued Show Cause Notices to the following paint companies for inserting tokens in paint packs falling in the decorative paints category for household purposes:
M/s ICI Pakistan (Ltd), M/s Nippon Paint Pakistan (Pvt) (Ltd), M/s Kansai Paint (Pvt)(Ltd), M/s Berger Paints Pakistan (Ltd), M/s Brighto Paints (Pvt)(Ltd), M/s Diamond Paint Industries(Pvt)(Ltd), M/s Mansoor Paint Industries, M/s U.P Paint Industries (Pvt) Ltd, M/s Nelson Paint Industries, M/s Chawla Chemical and Metal Industries (Pvt) Ltd, M/s Brolac Paints (Pvt) (Ltd), Karss Paints Industries (Pvt)(Ltd), M/s Allied Paint Industries, M/s Sika Paint Industries (Pvt) (Ltd), M/s Rafiq Polymer Industries and M/s Black Horse Paints.
This Order was issued by a CCP bench comprising of Ms Rahat Kaunain Hassan, Chairperson of CCP, Dr Shahzad Ansar, (Member), and Ms Vaddiya Khalil (Member) to dispose off Show Cause Notices. The CCP acted on a concern raised by the Consumer Association of Pakistan, that paint manufacturers are hiding tokens or redeemable coupons in paint packs without adequate disclosures, leaving the consumers largely unaware of this practice.
The probe and the hearings led to reveal that this is an industry wide practice that is being carried on for the past many years. CCP found that the value of these tokens ranges from approximately Rs 50 to Rs 500 varying with the size of the paint pack and depending on the brand.
It has been observed that non-disclosure of important information amounts to the distribution of misleading information as to the price of the paint packs under section 10 of the Competition Act. Typically, the painter after purchasing the paint pack, obtains the token which is concealed at the bottom of the paint pack, the painter then en-cashes the token from a shop or company outlet while the end consumer who bears the price of the paint pack does not have any knowledge of this.
The undertakings have all assured and agreed to start disclosing the presence of token in paint packs to the consumer and have shown their willingness to comply with the directions of CCP in this regard. Hence, the undertakings have been directed to modify all advertisements, promotional materials, or instructional manuals pertaining to the undertakings' paints whether electronic, printed or otherwise are to be modified to disclose the presence and price of the token along with its value on each pack within a period of 60 days starting from the date of issuance of the order dated 13-01-2012.
The CCP has directed the undertakings to ensure that disclosure with respect to the token on the paint pack should be made with the use of bright/conspicuous colors distinct from the color of the packaging of the paint pack and should be in clear, bold and legible size for the consumer. The undertakings have also been directed to issue in total four public notices making due disclosures to the public regarding the amount of token and the category of products in which these tokens are found present.-PR