recorder report

ISLAMABAD: The Competition Commission of Pakistan (CCP) has observed that the deceptive marketing practices have a direct impact on public at large and companies should be stopped from marketing their products in an unfair and misleading manner and be encouraged to resort to marketing practices which are transparent and give consumers true and correct information.

According to a latest enquiry report issued by the CCP against a company, the deceptive marketing practices have a direct impact on the public at large and therefore, it is in the interest of the general public and fair competition in the market that the undertakings should be stopped from marketing their products in an unfair and misleading manner and be encouraged to resort to marketing practices which are transparent and give consumers true and correct information.

M/s Ferozsons Laboratories Limited (complainant) filed a complaint against a company ('respondent') for alleged violation of Section 10 of the Competition Act, 2010 (the 'Act') i.e., deceptive marketing practices, according to the CCP enquiry report.

It is pertinent to consider that through copycat packaging differentiation among two products from different manufacturers is greatly reduced, thereby making it harder for an average consumer to choose. Consumers base their purchasing decisions on first impressions of the product exterior and do not engage in a considered examination of the product. This suggests, that even a reasonable/discerning consumer would not be able to differentiate between the complainant and respondent's packaging at a cursory glance let alone an ordinary consumer. Since parasitic copying is adopted by copycats with the purpose of boosting sales by passing off its goods as that of the legit manufacturer, the underlying motive not only causes confusion in the mind of an ordinary consumer but also causes loss of sales to the legit manufacturer, the CCP said.

The complainant alleged that the counterfeit product has significantly damaged the complainant's business to an extent where they are requesting the principals to discontinue business with them. It was alleged in the complaint that the counterfeit product may also cause significant harm to the consumer as whereabouts of its manufacturing and product standards cannot be verified. Therefore, in light of the lack of information regarding the safety of the ingredients used in the counterfeit products, not only distribution of the counterfeit products is likely to cause dilution of the complainant's goodwill which the complainant has built over the years in terms of the visual distinctiveness of the product, but it is in the public interest to take cognizance of such unlawful distribution.

The CCP stated that it is pertinent to consider that through copycat packaging differentiation among two products from different manufacturers is greatly reduced, thereby making it harder for an average consumer to choose. Consumers base their purchasing decisions on the first impressions of the product exterior and do not engage in a considered examination of the product. This suggests, that even a reasonable/discerning consumer would not be able to differentiate between the Complainant and respondent's packaging at a cursory glance let alone an ordinary consumer. Since parasitic copying is adopted by copycats with the purpose of boosting sales by passing off its goods as that of the legit manufacturer, the underlying motive not only causes confusion in the mind of an ordinary consumer but also causes loss of sales to the legit manufacturer, the CCP said.

The CCP said that a vast number of population in Pakistan is illiterate or not substantially literate. In such circumstances, many of the patients do not have the knowledge to gauge the quality of medicines in case of OTC drug. They mostly rely on either the doctor or the pharmacist for such information. In this situation, various marketing strategies and incentives help the dishonest elements producing deceptively similar drugs in further increasing their profit margins, the CCP maintained.

Therefore, in light of the findings, it is recommended that the Commission may consider initiating proceedings under Section 30 of the Act against the company ('respondent') for violation of Section 10 of the Act.

This enquiry report aimed at examining whether the allegations of the Complainant against the Respondent for infringing its trademark, product labeling and packaging constitute, prima facie, violation of Section 10(1) of the Act or not.

Therefore, the respondent was not authorized by the complainant to use its registered trademark or a confusingly similar connotation. It can thus be certainly concluded that the respondent is involved in trademark infringement.

Moreover, the respondent is not only copying the complainant's trademark, but is also completely imitating its product labeling and packaging. The slight alterations made by the respondent are insignificant and the packaging by the respondent still resembles greatly to that of the complainant. After analyzing it as a whole, the respondents issuing a similar/identical product labeling or packaging and same or slightly differentiated trademark, due to which its products appear confusingly similar to that of the complainant's products.

Consequently, this behavior of respondent is evidently capable of deceiving the consumers who are looking for the brand Biofreeze, which in turn would also result in causing damage to the business interests of the complainant.

Therefore, even if it is assumed that the respondent in this case chose a slightly modified trademark, the rest of the packaging is so similar to the original packaging of the complainant that the consumer would easily accept one for the other. Therefore, it is clear that the respondent, by imitating not only the complainant's trademark, but also its product labeling and packaging, is trying to in duce consumers into buying its goods instead of that of the complainant's. Thus violating Section 10 2 (d) of the Act.

The act of the respondent is not only involved in distribution of false and misleading information to consumers regarding price of its products but also harming the business interests of the complainant, in violation of Section 10 (1) of the Act, in terms of Section 10 (2) (a) & (b) of the Act.

It appears that the respondent is using a trademark confusingly similar to the registered trademark of the complainant. Therefore, the respondent has, prima facie, entered into deceptive marketing practices in terms of the provisions of Section 10 (2) (a) (b), and (d) of the Act, it added.