Background of the Case:

The main issue under consideration was that different electric cable manufacturing companies had adopted the practice of inserting cash/cash coupons of various denominations in the packing of their electric wire cable bundle.

However, the packing of the electric wire cable bundle and other promotional material neither contained any indication of such scheme nor reflected the availability of coupons and their value placed therein.

An enquiry committee was constituted to probe into the instant matter. The enquiry found that 18 electric cable manufacturers including Dawn Cables, G.M. Cables, Fast Cable, Hitech English Cables, Pak Muzaffar Cable, Alfa Plus Wire Cable, Hi Ace English Cable, Gold Royal Cable, Zafar Cable, Nation Cable, Puller Cable, Welcome Cables, Dewan Cables, E-Flux Cables, Hero Cable, Falcon Cable, Lear Cables and Rana Cables inserted cash coupons of various denominations in the packing of their electric cable/wire bundles and not disclosed it anywhere. During the hearings, most of these cable manufacturers admitted their involvement in the deceptive practice and made commitments to stop doing so in the future.

Issues:

1. Whether the practice of inserting tokens in the paint packs without due disclosure constitutes deceptive marketing practices under section 10 of the Act?

Foreign Judgments relied upon:

1. International Harvester Co; 104 F.T.C. 949 at page 1058 (relied upon by Enquiry Committee)

2. Cliffdale Associates, Inc., 103 F.T.C. 110, (1984) (relied upon by the Order),

3. American Home Products, 98 F.T.C. 136, 370 (1981) (relied upon by the Order).

Order:

The Commission held that the insertion of token in the electric cable packs without due disclosure was a violation of Section 10 as the products and lacked a reasonable basis to the price printed for the consumer, and further stated that the practice of omission of material information with respect to the tokens in Electric Cable Packs amounted to misleading consumers ad was deceptive.

The Order imposed a penalty of PKR 5 Million each on Fast Cables and G.M. Cables and Pipes, and PKR 500,000 (five hundred thousand) each on the remaining 16 cable manufacturers and directed them to refrain from indulging in any form of deceptive marketing practices in the future.

Moreover, to rectify the situation the Commission directed the cable manufacturers to modify the advertisements as per their price/value. Furthermore, the Respondents were to issue four (4) advertisements/public notices of A-4 size, to be published at least at fifteen (15) days interval in at least two Urdu and two English newspapers of national circulation, and make due disclosures (in bright/conspicuous legible print and color) to the public regarding the presence and price/value of token/coupon and the category of products in which these tokens were present.

Current Status:

In the instant matter pursuant to the order of the Commission, the Respondents filed Writ. Petition before the Islamabad High Court against the same. The order was consequently suspended. The Respondents have further filed appeal before the Competition Appellate tribunal.