CCP Concludes Its Show Cause Notices to Ufone and CMPak

Competition Commission of Pakistan (CCP) has passed an Order for the Show Cause Notices it had issued to China Mobile Pakistan and Ufone violating Competition Ordinance in its advertisements (TVCs).

Owing to the conciliatory and compliance oriented approach, and the assurances given on part of both the companies through an undertaking in writing for future compliance with the provisions of the Ordinance, CCP has not imposed any penalty – however, both the companies were warned over the matter.

Show Cause Notice by CCP were regarding Ufone’s UWon while Zong’s 8 Anay per Call advertisements, and CCP had termed both adverts violating Competition Ordinance, 2007.

It merits mentioning here that CCP takes suo moto actions against companies, violating competition ordinance. While anyone can report such violations to CCP, contact information can be found here

Below is the complete press statement issued by CCP

ISLAMABAD – SEPTEMBER 30, 2009: The Competition Commission of Pakistan (CCP) on September 29, 2009 has passed an Order in respect of Show Cause Notices issued to M/s China Mobile Pak Limited (CMPak) & M/s Pakistan Telecom Mobile Limited (Ufone) wherein the subject advertisements by both the undertakings have been held in violation of Section 10 of the Competition Ordinance, 2007. However, owing to the conciliatory and compliance oriented approach, and the assurances given on part of both the companies through an undertaking in writing for future compliance with the provisions of the Ordinance, CCP has not imposed any penalty. Both the companies have been reprimanded that in future CCP will take a very strict view of any or all non-compliances or contraventions under the Ordinance.

In the order passed by Single Member of CCP, Ms. Rahat Kaunain Hassan, Member (Legal/OFT) it has been observed that ‘8 Anay per call’ advertisement was false and misleading and in violation of Section 10 of the Ordinance. The subject advertisement is stated to lack the reasonable basis regarding the price i.e., call rates, exclusive or inclusiveness of government taxes being not specified and its character i.e., the duration of call at which the rates were applicable was not stipulated clearly. While these factors are held as misleading in some way or the other, the Order holds the statement made in the advertisement that ‘call at 907 and say it all’ as an information that is ‘false’ in nature; dialing 907 activated for Zong’s customer/consumer the ‘8 Anay per call’ offer and subjected the customer to an automatic deduction of Rs.15 + tax thereon from the prepaid account – withholding/omission of such information is held material and contrary to facts advertised.

In the matter of Ufone, it has been observed that, the televised advertisement of Ufone’s Uwon Package, did not mention that the advertised rates, to call other networks, are applicable on per minute calls. Although as per the submissions of Ufone the advertisement contains a disclaimer, however, the same is in English and was neither visible nor readable. It has also been observed that, even if an express or implied representation in an advertisement is accompanied by disclaimers or qualifiers; such caveats will nullify a misleading effect only, if they appear, in such a way as to eliminate the advertisement’s tendency to mislead in its overall effect. Although, in the newspaper advertisement and brochures made available at sale points, it was noted that in a very small font it finds mention in Urdu text that rates are ‘exclusive of taxes’ however, this has been held as an inadequate disclosure. The Order further states that, we must recognize that such information must be clearly conveyed to the customer/consumer as the advertised call rates increase, when 21 % FED are included in the advertised call rates. Further more, in the televised advertisement no such clarification appears whether verbal or in print. The advertisement by Ufone has also been held in violation of Section 10 of the Ordinance.

The Order of CCP also lays down general guidelines in relation to enforcement of Section 10 of the Ordinance which deals with the deceptive marketing practices. Regarding the definition and distinction between ‘false’ and ‘misleading’ information, it is held that, ‘false information’ can be said to include: oral or written statements or representations that are; (a) contrary to truth or fact and not in accordance with the reality or actuality; (b) usually implies either conscious wrong or culpable negligence, (c) has a stricter and stronger connotation, and (d) is not readily open to interpretation. Whereas ‘misleading information’ may essentially include oral or written statements or representations that are; (a) capable of giving wrong impression or idea, (b) likely to lead into error of conduct, thought, or judgment, (c) tends to misinform or misguide owing to vagueness or any omission, (d) may or may not be deliberate or conscious and (e) in contrast to false information, it has less onerous connotation and is somewhat open to interpretation as the circumstances and conduct of a party may be treated as relevant to a certain extent.

Regarding as to who is the ‘consumer’ within the ambit of Section 10 of the Ordinance, It is held that, the consumer to whom such information is disseminated has to be the ‘ordinary consumer’ who is the usual, common or foreseeable user or buyer of the product. Such a consumer need not necessarily be restricted to the end user. It has also been emphasized that the ‘ordinary consumer’ is not the same as the ‘ordinary prudent man’ concept evolved under contract law. Unlike the ‘ordinary prudent man’ the thrust on ordinary diligence, caution/duty of care and ability to mitigate (possible inquiries) on the part of the consumer would not be considered relevant factors.

The Order further states that taking peculiar circumstances of the Pakistani consumer into account, more so, in the telecom industry where the consumers range is of widest amplitude, we should not “favour a return to unregulated laissez-faire marketing that would transfer the burden of evidence from the seller, who has the advantage of intimate knowledge of the product, to the buyer, who of necessity must make many, often instantaneous choices in the course of a day.”

Tech reporter with over 10 years of experience, founder of ProPakistani.PK