BACKGROUND FACTS:

M/s Nippon Paints Pakistan (Private) Limited filed a formal complaint against M/S Nelson Paint Industries (Pvt) Limited alleging that the Respondent was distributing false and misleading information to consumers through social media about their products. The complainant cited that the respondent was using deceptive claims in their marketing material that their product provided protection against COVID-19. The Respondent was alleged to have taken undue advantage of the prevalent health concerns at the time of the COVID-19 pandemic and attempted to increase its sales through false slogans.

The alleged deceptive marketing practice by M/s. Nelson Paint attracted invocation of Section 10 (2) (a) & (b) of the Competition Act, 2010 which protects the business interests of other undertakings, as well as, consumers from misleading information. CCP initiated an inquiry to investigate the complaint.

During the inquiry, the Respondent contended that the impugned anti-bacterial paint contains a chemical substance that provides protection against microbes and bacteria, and the Products are duly checked by the Pakistan Council of Scientific & Industrial Research Laboratories Complex (PCSIR). It further claimed that the product has performed all necessary tests after the development of the products.

After analyzing the findings of the inquiry and hearing the arguments of parties involved, the Commission held in its order that BKC substance is only against bacteria and microbes, but not against viruses, in particular COVID-19. Furthermore, the documents relied upon do not adequately mention the effective role of BKC in paint products, hence, it does not substantiate the alleged claim, i.e., protection from COVID-19.

ORDER:

The Commission held that the marketing practices of M/s. Nelson Paint, when taken holistically, are to the prejudice and injury, not only of the consumers but, also to other businesses, hence, in violation of Section 10(2) (b) along with Section 10(2) (a) of the Act.

The Commission has passed an order and keeping in view the commitment and cooperative behaviour made by M/s. Nelson Paint that it has discontinued deceptive marketing practices and shall not repeat any such activity in the future, the Commission took a lenient view and imposed only a penalty of PKR 1 million, to deter companies from engaging in deceptive marketing practices, importantly, where it relates to health or safety claims. The Commission observed that there is a higher bar on the undertakings making such claims and they must substantiate their claims using competent and reliable scientific evidence.

Moreover, the Commission also directed M/s. Nelson Paint to withdraw any or all batches of the products that may have been sold or are still available in stock with their distributors and to inform its distributors or buyers regarding the inefficacy of the subject claims.

CURRENT STATUS:

Penalty recovered. Nelson also filed appeal before CAT.