Pakistan: Competition Commission grants damages worth 10 Million Rupees against Proctor & Gamble for engaging in Deceptive Marketing Practices

In a recent order delivered by the Competition Commission of Pakistan, pursuant to a complaint filed by M/s Reckitt Benckiser Pakistan Limited (hereinafter referred to as the Complainant), against M/s Proctor & Gamble Pakistan Private Limited (hereinafter referred to as the Respondent) for violation of Section 10 (‘deceptive marketing practices’) of the Competition Act, 2010 (herein after referred as Act), the Commission imposed a penalty in the amount of PKR 10 Million!! (USD 94899 approx.)

Brief Background

Ø  On November 21, 2014, the Complainant filed the complaint alleging that the Respondent in its marketing and advertising claims has represented Safeguard as ‘Pakistan’s No. 1 rated Anti-bacterial Soap*' along with a disclaimer/disclosure in fine prints '*based on product in use test by AC Nielsen in April 14 amongst 600+ consumers’. The said claim tantamounts to dissemination of false or misleading information to consumers and competitors' and hence, a violation of Section 10 of the Act.

Ø  The impugned advertisement goes like – “the TVC portrays a typical household scene in which two children and (their) mother are talking about how flu and cold (influenza) are epidemics in winters. The conversation between the three characters suggests that the use of 'Safeguard' can protect them from germs causing influenza, among other things. It is then endorsed and further explained by a doctor, who states that the spread of flu and cold is rampant in winters. He then goes on to state that Safeguard is Pakistan's No. 1 antibacterial soap, which provides protection against germs causing flu and cold. The TVC ends on this note with set vocals and image claiming that Safeguard is a well-recognized No. 1 antibacterial soap in Pakistan.”

Ø  The Complainant submitted AC Nielson's data reflecting share of the leading antibacterial soaps in Pakistan:

Ø  The Complainant stated that Nielsen's data reflects the falsity of the Respondent's claim whether taken in value share or volume share. Furthermore, the Respondent lacking any substantial proof or reliable scientific healthcare related evidence in support of its claim is distributing false or misleading information to consumers.

Ø  The Complainant stated that Respondent has violated Section 10(2)(b),(a)&(c) of the Act by disregarding Commission’s Public Notice ‘Business Be Aware Before You Advertise’ dated September 23, 2013.

Ø  On December 04, 2014, the Office of Fair Trade (hereinafter referred to as ‘OFT’) of the Commission sent a copy of the complaint to the Respondent seeking clarification.

Issues raised before the Commission

Ø  Whether or not the advertising claim 'Pakistan's No. 1 rated Antibacterial Soap' and materials submitted by the Respondent have a reasonable basis related to the product's character, properties and suitability for use?

Ø  Whether or not the disclaimer/disclosure 'based on a product in use test by AC Nielsen in April 2014 amongst 600+ consumers' is easily noticeable and easily understandable by consumers to qualify the claim and/or offset the liability arising out the claim?

Respondents’ Submission

Ø  Respondent claimed that their claim ‘Pakistan’s No. 1 rated Anti-bacterial Soap*' is based on number of reliable market surveys such as Neilson's In-Market Usage Test, GfK Brand Health Tracker (BHT), IPSOS Equity Study and IPSOS Doctor's No. 1 Choice.

Ø  Respondent contended that Safeguard is not claiming to be ‘Pakistan’s No. 1 Anti-bacterial Soap’ rather ‘Pakistan’s No. 1 rated Anti-bacterial Soap’. Further contented that the term ‘rated’ has been used to clarify and inform consumers about the Product’s brand rating position in Pakistan as conducted by the Nielsen on 600+ consumer and BHT study.

Ø  Respondent reiterated that the advertising claim is inclusive of disclaimer which is very obvious to a reasonable consumer.

Ø  Finally the Respondent submitted that it is in full compliance with the commission’s notice and there claim is not absolute in nature rather qualified by a limited sample conducted Nielson and confined to the category of antibacterial soaps in Pakistan.

Complainants’ Submission

Ø  First, none of the reports submitted by the Respondent support the claim that 'Safeguard is Pakistan's No. 1 rated Antibacterial Soap'. The claim of the Respondent is not supported by any actual sales data i.e. Nielsen retail audit. Second, if the Respondent's claim is based on BHT (a total base of 1370 Respondents), it is anomalous and not mentioned in the disclaimer.  Moreover, the sample size is less than one percent of Pakistan's population in both studies.  Therefore, the claim of the Respondent is false and misleading the consumers' as well as the competitors to their detriment.

Ø  The word 'rated' is too small as compared to other words in the advertising claim, which reflects the Respondent's intention to showcase and market Safeguard as 'No.l' antibacterial soap in Pakistan. Even according to Nielsen's report, it is clear that in the leading antibacterial soaps category, Safeguard is not of the highest in the volume of sale or value.

Ø  Mere presence of a disclaimer in an advertisement does not suffice as the purpose of disclaimer is its likelihood to be read and that it is also likely to alter the general impression of the overall advertisement. Even if it is read, the question is what is the overall impression of the advertising claim without the disclaimer? Whether the 'main message' is strong enough that it allows the disclaimer to alter the same? Since the advertising claim and disclaimer/disclosure in question have been placed in a perfunctory manner, it does not reflect the essence and spirit in which disclaimers are required to be placed. The main advertising message overshadows the statement in the disclaimer.

Ø  Additionally, the Complainant highlighted that since Commission's notice, the Respondent has removed all hoardings carrying the advertisement.

Commissions’ Decision

Ø  The Respondent has clearly disregarded the Commission's public notice, in specific making claims, 'No.1 in Pakistan' or 'No.1 Selling Brand'. The claim of Safeguard 'Pakistan's No. 1 rated Antibacterial Soap' in which the word 'rated' is written or displayed in significantly smaller font at the bottom of the ad/TVC, the advertising claim thus creates an impression and/or conveys the message that Safeguard is 'Pakistan No. 1 Antibacterial Soap' in violation of Section 10(2)(b) of the Act. In view of the foregoing, the Respondent's claim is both false as well as misleading.

Ø  The Respondent's reliance on Nielsen's and BHT study/survey to rank itself as Pakistan's No.l antibacterial soap is irrelevant and misleading for two main reasons: firstly, the study reveals that Dettol ranks much higher in terms of value share and volume share than Safeguard. Secondly, the main message contained in the Respondent's marketing and advertising campaigns involves health and safety claim that Safeguard purportedly prevents cold and flu in winters. The claims involving health and safety need to be backed up with 'competent and reliable scientific evidence’. Therefore, the rule is that strong product claims require strong evidence to back them up.

Ø  Section 10(2)(a) of the Act states 'the distribution of false or misleading information that is capable of harming the business interests of another undertaking' constitutes deceptive marketing practice for the purposes of Section 10(1) of the Act. With regard to harm caused to competing business undertakings, the Commission has in its Order in the matter of Jotun Pakistan (Pvt) Limited, held that: "[...] to prove conduct under Section 10(2)(a) of the Act, it is not necessary to show actual harm to a competitor. It is sufficient to show the existence of a deceptive marketing practice that has the potential to harm the business interest of the competitors […]". Therefore, the Commission is of the view that the Respondent has violated Section 10(2)(a) of Act by engaging in deceptive marketing practices.

Ø  Respondent's disclaimer placed at the bottom of the advertisement was neither easily noticeable/legible nor easily understandable by an ordinary consumer. Furthermore, the most part of the TVC and other marketing and advertising campaigns material was in Urdu, whereas the disclaimer/disclosure was in English and appeared for not more than 2 seconds (momentarily) out of a total of 30 seconds TVC, which was inadequate to correct the deceptive impression. In the Zong Order, the Commission has observed that 'Even if express or implied representation in an advertisement is accompanied by disclaimers or qualifiers (i.e. disclosures); Such caveat will nullify a misleading (practice) only, if they appear, in such a way as to eliminate the advertisement tendency to mislead in its overall effect'. Therefore, the Commission is of the considered opinion that the disclaimer/disclosure used by the Respondent in its marketing and advertising campaigns itself tantamount to the distribution of false and misleading information to the consumers in violation of Section of the Act.

Ø  In view of the above, the Commission imposes following penalties:

1.          For violation of Section 10 of the Act related to the advertising claim and associated disclaimer, the Commission hereby imposes a penalty in the amount of PKR 10,000,000 (USD 94899 approx.)
2.        With regard to the advertisements, the Respondent is directed to inform the public at large, the falsity of its claim that Safeguard is Pakistan's No. 1 rated Antibacterial Soap through appropriate clarifications in all Urdu and English dailies and through TV channels for a period of one (1) week from the date of this order.
3.     The Respondent is directed to file a compliance report with the Registrar of the Commission within the period of forty-five (45) days from the date of issuance of this order and is reprimanded from indulging in deceptive marketing as well as other anti-competitive practices provided in the Act.