CCP’s Action Result in Compliance by Sunland Foods, Toyota, with Competition Law

As part of its efforts to promote fair business practices and curb deceptive marketing by firms, the Competition Commission of Pakistan (CCP) has recently taken actions thus resulting in corrective behavior and compliance by the companies under scrutiny.

 

CCP recently took notice of the marketing campaign of Sunland Foods, who claimed that their juice, Fruit Farm, was 100 % pure fruit juice. Upon checking the ingredients at the back of the bottle, it was revealed that the juice contained Preservatives E202, E211 and E224 and Color E 160 therefore contradicting the claim of “100% pure juice”. CCP found the claim of “100% pure juice” to be in prima facie violation of Section 10 of the Competition Act, 2010 and it could not be justified based on the fact that the juice contained additives.

Sunland Foods was required to refer to the order dated 20-06-2012 for Al-Hilal Industries for their product Fresher juice wherein the precedent had been set for the marketing of alleged 100 % pure juices without reasonable substantiation. In addition reference was also made to the case of VIVO juice, the packaging of which bore the claim 100 % pure juice last year without substantiation and complied after CCP took notice of this. 

Sunland Foods agreed to change their packaging and remove the claim of 100 % pure from all forms of marketing for their brand Fruit Farm by October 2013.

CCP received the undertaking on 1-07-2013 wherein it is confirmed that Sunland Foods have removed the claim “100% pure juice” from their billboards and televised adverts and have committed that the packaging would be revised by October 2013. The case stands disposed off in terms of the written commitments given by the Sunland Foods.

Toyota Stops Deceptive Marketing Campaign

In another such case, CCP also took notice of the marketing campaign of Indus Motor Company Ltd. regarding the comparison of used imported cars with new cars in which certain absolute claims had been made of the type “Engine not suited for Pakistani fuel”, “Suspension not durable for Pakistani roads”, “Tampered meter”, “Dented/painted body”, “Expensive spare parts”. CCP directed the company to substantiate their claims as making absolute claims without reasonable justification or basis is prohibited under Section 10 of the Competition Act, 2010.

Indus Motor Company, in its reply alleged that the information regarding the condition of cars, which was present on auction websites, was not available to the final consumer, so this marketing campaign was launched to educate consumers regarding the various aspects to consider when making a purchase decision. They were able to substantiate three of their claims-“Parts not readily available”, “Expensive spare parts” and “Poor resale value” by presenting the results of a company survey that verified the aforementioned claims with data. However, the other claims remained unsubstantiated owing to the fact that they had made generalizations based on standalone examples.

For example with reference to the claim “Dented/painted body” they submitted two images of damaged vehicles at the Karachi Port and with reference to “Suspension not durable for Pakistani roads”, they submitted that all locally manufactured cars were equipped with rough road packages, but they failed to verify that all imported vehicles do not have rough road packages. Further, although tampering of an odometer is an unfortunate occurrence it cannot be assumed that it applies to all used imported cars and hence the claim “Tampered Meter” could not be justified. With reference to the claim “Engine not suitable for fuel available in Pakistan” it was held that through presenting a comparison between an imported Toyota Hybrid Priuss, a car equipped with hybrid technology with different fuel specifications and locally assembled Toyota GLI and XLI, the claim could not be substantiated. 

A meeting was held in this regard sharing Commission concern with respect to violation of Section 10 of the Competition Act, 2010. Following the meeting Indus Motors has submitted that they had opted to discontinue the advertisement campaign upon receipt of the CCP’s initial letter and further gave the assurance that they had duly noted the views of the Commission and will bear them in mind for future campaigns that the company may launch. The case has therefore been disposed off with the receipt of the written undertakings given by the Indus Motors.