CCP issues show cause notice to 16 companies

Paint makers accused of indulging in deceptive marketing practices.

ISLAMABAD: The Competition Commission of Pakistan (CCP) on Thursday issued show cause notices to 16 paint companies for violating the anti-trust law by indulging in deceptive marketing practices.

The companies which were issued the show cause notices were ICI Pakistan, Nippon Paint Pakistan, Kansai Paint, Berger Paints Pakistan, Brighto Paints, Diamond Paint Industries, Mansoor Paint Industries, UP Paint Industries, Nelson Paint Industries, Chawla Chemical and Metal Industries, Brolac Paints, Karss Paints Industries, Allied Paint Industries, Sika Paint Industries, Rafiq Polymer Industries and Black Horse Paints.

The notices were issued after it was brought to the notice of CCP during advocacy sessions held with the Consumer Association of Pakistan that paint manufacturers were hiding tokens or redeemable coupons in paint packs. Upon preliminary investigation of the matter, the CCP found that the practice of putting tokens is targeted as a monetary incentive to the painter, ranging from approximately Rs20 to Rs500, varying with the size of the paint pack and depending on the brand.

Typically, the painter after purchasing the paint pack, obtains the token which is concealed at the bottom of the paint pack. The painter then en cashes the token from a shop or company outlet while the end consumer bears the price of the paint pack without having any information in this regard. However, many of the undertakings say that it is intended for the benefit of the end consumer.

This non-disclosure of important information amounts to the distribution of misleading information as to the price of the paint packs. Based on these preliminary findings, in its show cause notices, the CCP stated that the paint companies were misleading end consumers pertaining to the price of the paint in terms of clause (b) sub-section (2) of Section 10 of the Act. These companies have been asked to submit their written arguments within 14 days and to appear before the commission on August 25.

CCP said it has the responsibility and obligation to ensure free competition in all spheres of commercial and economic activity and to protect consumers from anti-competitive behaviour and deceptive marketing practices. Since some of the undertakings gave the assurance that they will start disclosing the presence of the token, a lenient view will be taken towards them, CCP added.

Published in The Express Tribune, August 12^th, 2011.