ISLAMABAD: The Competition Commission of Pakistan collects a court-certified fine of Rs30 million from a major multinational corporation following a decision by the commission’s Appellate Tribunal regarding a five-year-old decision that the firm had misled its customers into believing that its product was medicinal in nature.
The hefty price has been paid by one of the multinational FMCG companies operating in Pakistan for deceiving its consumers. After an appeal made to the Competition Appellate Tribunal (CAT) against the initial decision of the CCP against the said multinational FMCG company, CAT ruled against the appeal, thereby affirming the original ruling of CCP’s deceptive marketing of FMCG violations by making it appear to have medicinal qualities even when it was actually not medicated.
Findings from the CCP Deceptive Marketing FMCG Case
In the CCP deceptive marketing FMCG case, it is alleged that the firm in question marketed a consumer good in a way that indicated that it was capable of acting like medication. However, it has been established that the item in question has registration in the food category and not in the medication or pharmaceutical category. Therefore, according to Section 10(2)(b) of the Competition Act, 2010, the claim is misleading as it gives false information regarding the nature of the product.
The decision was first handed down by CCP on February 9, 2021, against the company. However, the company decided to file for appeal through the Competition Appellate Tribunal, which subsequently upheld the findings made by CCP and ordered the firm to pay the penalty amounting to Rs30 million and adhere to other corrective measures outlined by the Commission. The payment of this amount ends the financial aspect of this CCP deceptive marketing case.
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The necessary steps that need to be taken by the company in public
- Apart from the monetary fine, the CCP deceptive marketing FMCG case ruling contains compulsory action steps that directly impact the company’s communication with consumers henceforth. The necessary action steps include the following:
- Non-Medicated warning label: A prominent “Non-Medicated” label displayed in English and Urdu language in packaging as well as in blisters packs. This was reported to be one of the changes made by the company at the time of proceedings for CCP.
- Public newspaper announcements: Announcements placed in popular English and Urdu newspapers regarding the change in status of the product from being in the category of medicated/drug to food.
- Timeframe for compliance: All remedial steps were to be completed within the specified time period decided by the commission.
Pre-existing changes made to packaging
According to the Tribunal, the firm had made substantial changes to its packaging and consumer disclosures even prior to the judgment made in this case. The “Non-Medicated” statement in both languages was among these changes. Although the early changes were unable to save the company from penalties, they imply that they will be considered when regulators will judge future actions of the company regarding CCP deceptive marketing FMCG issue.
Why is this judgment significant beyond the imposed penalty?
The imposition of an Rs30 million penalty for the misleading marketing campaign of a multination FMCG company by the CCP is more than a matter of financial consequences. The ruling sets a precedent regarding the ability of Pakistan’s competition regulator to investigate and impose penalties on international companies under the provisions of the consumer protection law, which can be pursued to conclusion through appeal even years after its initial issuance. To other FMCG corporations in Pakistan, it sends out a warning that any kind of marketing claim about their products mixing up the boundaries of food and medicine will result in investigations, legal challenges, and costly publicity campaigns.
