CCP serves show cause notice on paint company

Alleged deceptive marketing practices the reason behind action

ISLAMABAD: The Competition Commission of Pakistan has served a show cause notice to a paint company for alleged violation of section 10 of the Competition Act, 2010, which prohibits businesses from engaging in deceptive marketing practices.

The CCP served the notice to Master Paints Industries (Private) Limited after receiving complaints from competitors, Nippon Paint Pakistan (Private) Limited and Buxly Paints Limited, regarding the company’s print and television advertisements. In the complaint, it was stated that Master Paints is propagating that all other paints were of inferior quality as their manufacturers were selling low quality products by luring consumers through a coupon scheme.

The complainants alleged that in the advertisements, Master Paints misleadingly compares the quality of paints made by different manufacturers on the basis of tokens, and implies that those that contain a token is harmful to buildings, according to a handout issued by the CCP.

In this year, it was the second case against paint manufacturers as in April the CCP had imposed a penalty of Rs1 million on a paint company, Jotun Pakistan (Pvt) Limited, for violation of section 10 as well. It was the only case where the CCP slapped a fine on a paint manufacturer.

Before that, the CCP had taken a lenient stance. In 2012, the anti-trust watchdog had passed an order against 16 paint companies for violating Section 10 of the Competition Act 2010.  It had limited its action only to the extent of reprimanding violators. The CCP had advised the companies to ensure behaviour that is more responsible in future with respect to marketing of their products and directed to file a compliance report on implementation of the directives.

The CCP had warned that continuous violation and non-adherence to the directives by any of the companies would entail penal action. At that time, Consumer Association of Pakistan had raised alarm bills that paint manufacturers were hiding tokens or redeemable coupons in paint packs without adequate disclosure, leaving the consumers largely unaware of this practice.

The CCP said on Tuesday that its inquiry report found that Master Paints, prima facie, could not substantiate claims of superior quality paint and as such the advertisements constitute dissemination of false and misleading information as well as false and misleading comparison of goods, which amounts to deceptive marketing practices.

Through the show cause notice, Master Paints has been asked to respond in writing within fourteen days and to avail an opportunity of being heard before the CCP, it added.

Published in The Express Tribune, June 17^th,  2015.

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