Violation of Section 10: CCP issues show-cause notices to major food companies

The Competition Commission of Pakistan (CCP) has issued show-cause notices to M/s Shakarganj Foods Products Limited, M/s Haleeb Foods Limited, M/s Noon Pakistan Limited and M/s Engro Foods Limited for alleged violation of Section 10 of the Competition Act, 2010 by advertising tea whiteners as milk. According to the enquiry report of the CCP, the CCP conducted an enquiry of the various undertakings for marketing their products of dairy drinks and tea whiteners as milk thus misleading the consumers.
In its enquiry, the CCP evaluated the packaging, marketing practices including the television commercials & website disclosure, and other marketing material of the abovementioned products, to see whether the companies violated Section 10 of the Competition Act. The enquiry found that the undertakings were involved in distributing false and misleading information that is capable of harming the consumers' interests as well as the business interest of other undertakings in terms of the Competition Act.
It said that it is important to mention here that there are a set of standards defined by Pakistan Standards and Quality Control Authority (PSQCA) and Punjab Food Authority (PFA) for dairy products such as milk, dairy drinks and tea whiteners for dairy manufacturers to follow. In accordance with the scope of this enquiry, it is important to develop a better understanding of the said standards in terms of 'Milk', 'Dairy Drinks' and 'Liquid/ Powdered Tea Whiteners'.
It is evident from the definition of a dairy drink that it is a 'milk or milk based product" reduced in constituents up to a certain prescribed level, as given within the definition. Therefore, a dairy drink can be processed from 'Milk' as defined by the standards given by PSQCA or from any derivative of 'Milk' as per the definition. 'Milk Products' are defined under Punjab Pure Food Rules, 2011. From the definitions under PSQCA and Punjab Pure Food Rules, 2011, it is clearly not specified or mandatory whether liquid tea whiteners should be sourced from milk or milk based products or any other source can be used. Hence, even if any other source qualifies for the defined constituency in the standard, it can be termed as a liquid tea whitener.
However, in order to draw a conclusion regarding the, prima facie, violation of Section 10 of the Act it is important to consider the packaging, marketing practices (including the TV Commercials(TVCs)) and the overall net general impression taken by the ordinary consumer after going through the advertisements/ marketing by the Respondents, CCP added.
The enquiry report recommended the initiation of show cause notes to Shakarganj Foods Products Limited for their product 'Qudrat' (liquid tea whitener), Haleeb Foods Limited for their product 'All Max' (dairy drink) and 'Dairy Queen' (liquid tea whitener), Noon Pakistan Limited for their product 'Dairy Rozana' (dairy drink) and Engro Foods Limited for their product 'Dairy Omung' (dairy drink), for the prima facie violation of Section 10 of the Competition Act.
It is evident that Shakarganj Foods Products Limited, Haleeb Foods Limited, Noon Pakistan Limited and Engro Foods Limited are, prima facie, engaging in deceptive marketing practices in violation of Section 10 (1) of the Act. They are, prima facie, distributing false and misleading information that is capable of harming the business interest of other undertakings in terms of Section 10 (2) (a) and are also distributing information to consumers that lacks reasonable basis about the character, properties and quality of their product in terms of Section 10 (2) (b) of the Act.
Whereas, Engro Foods Limited in advertising their product 'Omung' is also prima facie involved in the false and misleading comparison of products in terms of Section 10 (2) (c) of the Act.
Deceptive marketing practices have a direct impact on the public at large. The undertakings should disclose correct information regarding their product to the consumers. False and misleading advertisements induce the consumers to purchase the product and hence it gives the undertaking a competitive edge over other competing undertakings. Hence, it is in the interest of the public that the undertakings should be stopped from advertising their products in a deceptive manner and be encouraged to resort to advertising practices that are transparent and give consumers/customers true and correct information about the products, rather than making misleading and false claims, the CCP added.