CCP imposes penalty on 18 electric cable makers for deceiving consumers

The Competition Commission of Pakistan (CCP) has imposed a total penalty of Rs18 million on 18 electric cable manufacturers for deceiving consumers by not disclosing to them the presence of cash/cash coupons inside the packaging of electric wire cable bundles. According to an order issued by the CCP here on Thursday, the CCP conducted an enquiry on receiving information that many electric wire manufacturing companies were inserting cash/cash coupons inside the bundle packs of electric wire but they were not disclosing this on the packaging or other promotional material. The practice only benefits the electricians who generally open the packs and deceives the end consumers who ultimately pay for the value of the coupons but are unaware of it.
The enquiry found 18 electric cable manufacturers including Dawn Cables, G.M. Cables, Fast Cable, Hitech English Cables, Pak Muzaffar Cable, Alfa Plus Wire Cable, Hi Ace English Cable, Gold Royal Cable, Zafar Cable, Nation Cable, Puller Cable, Welcome Cables, Dewan Cables, E-Flux Cables, Hero Cable, Falcon Cable, Lear Cables and Rana Cables inserting cash coupons of various denominations in the packing of their electric cable/wire bundles and not disclosing it anywhere.
During the hearings, most of these cable manufacturers admitted their involvement in the deceptive practice and made commitments to stop doing so in the future. "Careful perusal of the evidence gathered by the Enquiry Committee during the enquiry reveals that none of the Respondents have made a disclosure about the existence of token inside the cable packs. Further, none of the Respondents have denied placing of token inside the cable packs," the order said.
The Order stated that the insertion of token in the electric cable packs without due disclosure is a violation of Section 10 as the products lacks a reasonable basis related the price printed for the consumer.
"It has been established that the closure of tokens in electric cable packs, is deceptive in that it creates and is found lacking in having a reasonable basis as to the price borne by consumer. Consumers are not informed about the presence of token and its value, and it is placement in the centre of the cable makes its access to such information further difficult. The onus is on the Respondents to ensure that no deception results through their marketing practices. This could also have the adverse effect of giving an unfair competitive edge to Electric Cable Manufacturing offering higher token values without disclosures to the consumer who bears the price, as the technician would naturally have an incentive to purchase the cable containing higher token values, and other factors such as quality, durability may pale in comparison to this consideration. The practice of omission of material information with respect to the tokens in Electric Cable Packs amounts to misleading consumers, hence, is deceptive and in violation of section 10 of the Act.
The Order imposed a penalty of Rs 5 Million each on Fast Cables and G.M. Cables and Pipes, and Rs 500,000 (five hundred thousands) each on remaining 16 cable manufacturers, directing them to refrain from indulging in any form of deceptive marketing practices in the future.
About the practice of inserting token in the products, the order said: "While the Commission is empowered to prohibit deceptive marketing practices, it is not our mandate to require abandoning of any particular practice if due disclosures are in place. We consider it the Undertakings' prerogative to adopt or not to adopt any marketing practices; the Commission only has to ensure that such practices are compliant with Section 10 of the Act."
The Commission has also directed these companies to disclose the presence and the coupon's value in their marketing material, and publish four advertisements of A-4 size in 2 English 2 Urdu newspapers of national circulation informing the public about the presence and price value of coupons. Moreover, they were also directed to visibly print the token's value on the packaging, and submit compliance report within 60 days to Registrar of the Commission. The Commission appreciated the cooperative attitude of the companies.