CCP chairperson directs firms to refrain from entering into RPM arrangements

ISLAMABAD: The Chairperson Competition Commission of Pakistan (CCP) Rahat Kaunain Hassan has directed the companies/manufacturers to refrain from entering into arrangements of retail price maintenance (RPM), as it is a form of price fixation and anti-competitive practice.

The CCP held a learning and awareness session with the members of Overseas Investors Chambers of Commerce & Industry (OICCI) hosted by one of its members, Unilever Pakistan. The purpose of the session was to sensitise OICCI member firms on the importance of fair marketing practices and the repercussions of violating Section 10 of the Competition Act, 2010 for consumers, businesses, and the economy in general.

The Chairperson, CCP, Rahat Kaunain Hassan, who was accompanied by CCP Member, Mujtaba Ahmed Lodhi, and other senior officers, addressed the session while the General Secretary, OICCI, Abdul Aleem, and CEO of Unilever Pakistan, Amir Paracha, along with his senior team members, and member undertakings of OICCI attended the session.

Speaking to the marketing firms, Rahat Kaunain Hassan particularly highlighted that undertakings must refrain from entering into arrangements of retail price maintenance (RPM) as it is a form of price fixing and globally, in the majority of the jurisdictions (EU, China, UK Australia, and various States in America), it is taken to be by object/nature anti-competitive, and, unless exempted for any particular efficiency grounds, it is generally taken as violative of competition law. She referred to the recent case of RPM amongst electronic home appliance manufacturers where CCP imposed a total penalty of more than PKR 1 billion.

She further added that the choice to offer forms of discount or package deals is an important part of the negotiating process with consumers, which should be left to dealers as per their own independent commercial decisions. This, coupled with the manufacturer fixing prices, diminishes consumer bargaining power.

Addressing the session, the chairperson said that deceptive marketing practices have a direct impact on consumers and businesses and therefore, firms that are engaged in the business of marketing and selling consumer goods and services must avoid deceptive marketing practices while advertising their products and services.

The objective of the Office of Fair Trade at CCP is not merely deterrence but encouraging compliance and corrective behaviour in enforcing the provisions of Section 10. The Chairperson shared that guidelines in light of the Commission’s decision/precedence will be issued shortly to lend clarity and help understand the precautionary principles relating to deceptive marketing.

Responding to several questions from the participants, the chairperson informed that under the Act, the undertakings can seek advice and clarity from CCP on any actual competition matter where any potential violation is apprehended to avoid such violation. She urged businesses to come forward and flag all aspects where any practice or policy is resulting in competition infringement or market distortions as CCP is committed to provide fair play to businesses.

On this occasion, Abdul Aleem acknowledged that the CCP is playing an active role in ensuring a competitive business environment, which is a prerequisite for conducive foreign investment climate. Amir Paracha, CEO Unilever Pakistan, and his team thanked the CCP for arranging the advocacy session and acknowledged that CCP plays a critical role in keeping the industry grounded, fair and objective while protecting the interests of the stakeholders.

At the session, the CCP representatives emphasized that while designing the marketing campaigns, firms must not make deceptive claims, hide important/material information, and/or use the competitors’ patent designs, firm name, colour scheme, and registered trademark. Another presentation was also given on the overall framework of the Competition Act.

Copyright Business Recorder, 2022