The Competition Commission of Pakistan (CCP) has directed battery manufacturers that all material information pertaining to the batteries capacity and their utility and any other conditions should be prominently displayed in clear and unambiguous language.
According to a latest order issued by the CCP against six battery manufacturers, the commission has issued detailed policy directions to be followed by such manufacturers. The commission has received a complaint alleging that most of the manufacturers of dry and/or acid-lead batteries doing business in Pakistan are engaged in deceptive marketing practices by not disclosing certain information related to capacity and utilization on their products and/or warranty cards. The omission of this information is critical to consumers in order to choose, compare and make their purchasing decision. Moreover, it was alleged that these companies were printing randomly generated serial/numbers on their battery body, packaging, and warranty cards, which gives the impression that these serial/numbers represent the battery capacity.
Based on the allegation levelled in the complaint and after conducting an initial probe the Office of Fair Trade (the 'OFT') of the Competition Commission of Pakistan (the Commission') initiated an enquiry under Section 37 (2) of the Act.
The undertakings/companies are engaged in the business of manufacturing, distributing and selling batteries and other products to consumers across Pakistan. The undertakings may be referred to as individually as "Respondent" and collectively as "Respondents" in this order.
Under the Enquiry Report, it appears that by omitting material information such as display of battery capacity on marketing material including battery body, the consumers would be unable to compare and contrast the quality, suitability for use and price of the products which may constitute deception in terms of Section 10 of the Act. In terms of the Enquiry Report, it appears that the Undertaking is in prima facie violation of Section 10(1) read with Section 10(2) (b) of the Act, by omitting to disclose material information on its product or packaging or any other marketing material. Furthermore, such marketing practices are capable of harming business interests of the competing undertakings in violation of Section 10(1) read with Section 10(2)(a) of the Act.
This is a deceptive marketing practices case which prohibits distribution of false or misleading information to consumers' detriment and competitive dynamics of the market.
Section 10 of the Act explicitly prohibits deceptive acts or practices which are false or misleading in material respects. Numerous Commission decisions have defined and elaborated on the phrase deceptive marketing practices.
In view of the foregoing, the Commission observes target consumer class of the batteries in Pakistan is, by and large, general populous-a substantial majority of consumers where the product is sold and utilized. Therefore, the Commission is of the considered opinion that the concept of 'ordinary consumer' is applicable in the matter at hand. While evaluating the industry practice, the Commission will consider the totality of practice and net general impression in determining whether an ordinary consumer are likely to respond under the Circumstances.
In cases involving omission of material information, the disclosure of which is critical to prevent the marketing claim, practice or sale from being false or misleading, the sellers may omit such information in their verbal or written representations of from the commercial transactions.
Based on the review of the facts and law in light of the findings of the Enquiry Report, adverting representation/omission/ practices as well as submissions of the of Respondents, the Commission is finds it apparent that from the products packaging, labelling, warranty cards and media campaigns, an ordinary consumer could not make an informed choice/decision to purchase a battery suitable for its use whether as starter/lightening/ignition (batteries used in automotive applications, including car, trucks, buses, etc) or uninterruptible power supply (UPS) products such as backup stationary batteries for home appliances, computers and telecommunication systems. It is simply because the Respondents are not providing, expressly or implicitly, any information pertaining to capacity and utility of the batteries in any form, the omission of such information and marketing is likely to mislead consumers while purchasing these products.
In the matter at hand, the Commission finds that the most problematic feature of the prevalent industry practice is the lack of clarity in evaluating advertising representation/ omission/vagueness on product body/packaging labelling, warranty cards, and media campaigns. There is no standard used by the Respondent to enable the consumers to make an informed choice and purchasing decision keeping in view the suitability for use. Therefore, it is safe to presume that consumers are likely to reach false conclusions about the products in question because of such omission or inaccurate or incomplete information. Furthermore, it is not only the marketing but also point-of-sale practices or transactions that have potential to mislead consumers under the circumstances.
It is on the record in most of the cases a substantial majority of the consumers has to rely on the information provided to them by the retailers and/or mechanics in circumstances. These practices are admittedly confusing for a consumer who wants to make a comparison between the products offered in the market. Hence, it is apparent that consumers could not decide on their own verify the fact about the capacity, characteristics, and utility of these products. Therefore, the Respondents have failed to disclose material information in light of the expectations and understanding of the ordinary consumers.
An assertion which has constantly been made by the Respondent is that the so-called random numbers printed on battery body or its packaging, are not random but based on a certain nomenclature provided in JI Standards. The Commission finds this contention problematic because such representation conveys more than one meaning to consumers and the Respondents are liable for the misleading interpretations.
Therefore, the Commission is concerned with the omission/ambiguity/vagueness and the resulting possibility of the misleading judgment of consumers. Therefore, it is critical to provide accurate and authentic information about the product because omission, vagueness, or distortion of material information impairs consumers'
The Commission, having carefully considered the findings of the Enquiry Report, the briefs and materials submitted by the Respondents, the entire mosaic of marketing and transactions as well as its legislative mandate envisaged under Section 10 the Act, finds that the Respondents have contravened the Section 10(2)(b) of the Act by omitting to disclose material information related to their products capacity and characteristics to consumers on the one hand. The Respondents have also contravened Section 10(2)(a) by engaging in misleading advertisements through various media and hence distorting the competitive fabric of the market, on the other hand. Hence, the Respondents have contravened Section 10(1) of the Act.
During the course of proceedings before the Commission, the Respondents have admitted that information pertaining to capacity and usage of their product is vital for consumers to make informed choices and have submitted to withdraw and modify their current advertising and marketing practices.
Since the Respondents have submitted to stop the subject advertisement and marketing practices upon initiation of proceedings and have expressed willingness to comply with the provisions of Section 10 of the Act, as is evidenced by the commitments made by them the Commission is inclined to take a lenient view and minimum penalty of Rupees one million on each Respondent is being imposed pursuant to Regulation 37 of GER read with Section 38 of the Act. It is pertinent to mention that this lenient approach has been taken because of the Respondents' earnest desire to seek compliance with the provisions of the Act. The Respondents are, however, warned that in the future, if similar contraventions are found to be committed it may entail serious consequences under the Act.
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