The Competition Commission of Pakistan (CCP) while concluding an enquiry has issued a show-cause notice to Proctor & Gamble Pakistan (Pvt) Limited for indulging in alleged deceptive marketing practices in violation of Section 10 of the Competition Act, 2010.
According to the enquiry report of the CCP finalised here Monday, the CCP received a complaint from Reckitt Benckiser (Pakistan) Limited alleging that Proctor & Gamble had launched a marketing campaign for one of its products, 'Safeguard', wherein the company claimed without reasonable basis that Safeguard is "Pakistan's No 1 Rated Anti-bacterial Soap."
An enquiry conducted by the CCP Office of Fair Trade (OFT) into the matter concluded that Proctor & Gamble failed to provide substantial justification for its product 'Safeguard" being "Pakistan's No 1 Rated Anti-bacterial Soap." According to the enquiry, the false claim has thus resulted in distribution of false and/or misleading information to consumers related to the quality of their product, Safeguard in violation of Section 10 of the Competition Act.
It further stated that due to this claim, the general public may interpret Safeguard to be Pakistan's No 1 anti-bacterial soap, in contrast to the facts, leading them to prefer Safeguard over other competing anti-bacterial soaps. This conduct is capable of harming the business interests of its competitors including Reckitt Benckiser (Pakistan) Limited, which is a violation of Section 10 of the Act. Therefore, a show cause notice has been issued to Proctor & Gamble Pakistan (Pvt) Limited, and the company has been called upon for hearing on a given date.
CCP is mandated under the Competition Act, 2010 to ensure fair competition in all spheres of commercial and economic activity to enhance economic efficiency and to protect consumers from anti-competitive practices including deceptive marketing. It said that the decision made by the Commission to accept the Respondent's (Procter & Gamble Pakistan (Pvt) Limited) previous claim regarding its product Head & Shoulders was based on an AC Nielsen sales report which showed the ranking of the product while giving quantitative numbers regarding market share and volume share of the product category. Hence, to say that presenting any AC Nielsen report would be appropriate to make a claim is not correct whereas a quantitative report presented by AC Nielsen is acceptable for a quantitative claim. This also brings us to distinguish a statement from being mere puffery or being a claim is that a claim such as "No 1" in any category can be proved quantitatively, as shown in the example above, and to prove such an absolute claim it is necessary to provide a quantitative proof rather than reports based on highly subjective elements such as AC Nielsen and GfK reports, reflecting brand ratings, presented by the Respondent in this case.
Furthermore, the Complainant (Reckitt Benckiser Pakistan Limited) in this matter presented AC Nielsen reports based on sales data comprising of market share and volume shares of the antibacterial soaps and Safeguard neither held the highest market share nor did it have the highest volume share. There was also no proof submitted by the Respondent displaying superiority of their product pertaining to its anti-bacterial activity in comparison to the competing products via scientific laboratory tests. Therefore, on the basis of considering the findings of a relevant and quantitative report presented by the Complainant, it is safe to say that the product, Safeguard, is not the no.1 anti-bacterial soap and adding the term "Rated" even with a disclaimer does not hold any significance to a consumer when they are looking for an anti-bacterial soap. The statement, thus, could be proven false which fulfils the first requisite of qualifying it as an absolute claim rather than it merely being a puffery statement.
The Respondent replied stating that it has not distributed false or misleading information to consumers, which lacks reasonable basis in relation to the product's character, properties and quality, neither is its claim of being "Pakistan's No 1 Antibacterial Soap" without reasonable substantiation. The Respondent brings to the attention of the Commission the fact that in making claims with regard to 'Safeguard', it has relied on a number of reliable market surveys which include AC Neilson and the GfK Group, Germany. The AC Neilson report was conducted on more than 600 consumers in April 2014 and the Brand Health Tracker (BHT) study which was conducted by the Gfk, which is Germany's largest market research institute and the fourth largest market research organisation in the world. It was further submitted that throughout the marketing of its product, the Respondent does not claim that 'Safeguard' is the No 1 antibacterial soap but it is "Pakistan's No 1 'Rated' Anti-bacterial Soap". The term "Rated"
is specifically used to clarify and inform consumers about the product's brand rating position in Pakistan as concluded by the reports produced by the aforementioned organisations. The Respondent places emphasis on the fact that it has not claimed to be no. 1 in Pakistan in terms of value or volume share as described by the Complainant.
The CCP said that it is also pertinent to mention that the Respondent, by relying completely on survey data that is based entirely upon ratings of the product is basing its "No 1" claim on only one attribute of the product, ie what doctors/consumers have rated the product to be. However, there is no reliance on the market share, volume share or actual sales of the product. The claim would be far more justifiable if it was backed by the fact that Safeguard has the highest market share or highest number of sales in Pakistan.
As mentioned before, in case of Shangrila Pvt Ltd, even a source such as Brand of the Year Award, an award that employs a comprehensive methodology to establish its results and is supervised by Brands Foundation of Pakistan (BFP) was not accepted as a valid defence for the claim. BFP is an independent and authoritative platform that has a legal mandate to perform several tasks which includes conducting brand audit rating. This further substantiates the reasoning that brand ratings and brand awards have very little relevance as far as the actual use and characteristics of the products are concerned and this aspect should not be used to influence consumers' decision making process. Therefore, it can be positively concluded that to use brand ratings to represent superiority of a product is a misleading practice, the CCP added.
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