The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs 150 million on a leading petroleum distribution and marketing company in Pakistan for prima facie involvement in deceptive marketing practices. According to a recently issued order by the CCP three-member bench headed by its Chairperson Vadiyya Khalil, the Commission is aware that the registration of potentially deceptive marks enables undertakings to engage in violation of section 10 of the Competition Act with impunity.
In this regard, the Commission will consider issuing a policy note to concerned authorities under Section 29 of the Act separately. The order has disposed of the proceedings initiated pursuant to show cause notice No 12/2014 dated 02.10.2014 (the "SCN") issued to the said company for prima facie violation of Section 10 of the Competition Act 2010 (Act).
The main issue before the Commission is whether the company's advertisements and marketing campaigns and materials relating to products constitute deceptive marketing practices in terms of section 10 of the Act. The CCP order said that the company is the petroleum distribution and marketing company in Pakistan with petroleum products including motor gasoline (gasoline/petrol), high speed diesel (HSD/diesel), furnace oil (FO), jet fuel (JP-I), compressed natural gas (CNG), liquefied petroleum gas (LPG), kerosene, and lubricants.
For each of the two violations of Section 10(1) read with Section 10(2)(a) and 10(2)(b) of the Act related to the advertisement and marketing campaign and display of brand/insignia post discontinuation of the additives in the products, the Commission hereby imposes Rs 75 million as penalty for a total of Rs 150 million. The penalties and direction hereinabove have been imposed after taking into account the seriousness and length of the violations and its impact on the consumers, competitors, and the market in general, the CCP added.
The Commission is of the considered opinion that a thorough and vigorous inquiry was carried out by the enquiry officer and the inquiry report is well-balanced and well-directed towards the facts of the case, fulfilling the requirements of cogent reasons and sufficient evidence, related to respondent's advertising and marketing practices in question under section 10 of the Act. Thus, after a careful scrutiny of the facts and the applicable law, the Commission finds that the omission by the respondent (company) for not publicising the fact of discontinuation of the use of additives from products while retaining the same insignia/branding of its products amounts to the distribution of materially false or misleading information to consumers related to the products character, method, properties, suitability of use and quality in violation of Section 10(1) read with Sections 10(2)(a) and 10(2)(b) of the Act.
Finally, it is clarified that though the petroleum industry in Pakistan is generally regulated by the MP&NR and OGRA, it remains the exclusive mandate of the Commission to protect the consumers from anti-competitive behaviours, including, inter alia, 'deceptive marketing practices' as are envisaged under Section 10 of the Act. It is also pertinent to note that dominant position of an undertaking is not condemned under the Act. As a principle, the Commission is of the considered opinion that a dominant undertaking may compete to whatever extent; they should nevertheless remain wary of the fact that the core of competition law is that where an undertaking has dominant position in the relevant market it 'has special responsibility not to allow its conduct to impair competition on the market.'
Because of its dominant position, an undertaking is likely to enjoy more trust and therefore a larger consumer base; hence its anti-competitive practices are likely to cause more harm to consumers and damage competition not only in the relevant market but also in the related markets and to the competing undertakings.
The company is further directed to inform the general public regarding the discontinuation of the use of additives in the Products through appropriate clarifications and the company is also directed to file a compliance report with the registrar of the Commission within a period of 45 days from the date of issuance of this order and is reprimanded from indulging in deceptive marketing practices and violation of other provisions of the Act. The Respondent (undertaking) is forewarned that non-compliance of this order and any further violation of any provisions of the Act shall attract stricter penalties and remedies, CCP concluded.