The Competition Commission of Pakistan (CCP) has penalized M/s. Nelson Paint Pakistan (Private) Limited with a token penalty of Rs. 1 million for violation of Section 10 of the Competition Act, 2010.
Nelson Paints was using deceptive claims in their marketing material that their product provided protection against Covid-19.
A two-member bench comprising CCP Chairperson Rahat Kaunain Hassan and Member Mujtaba Ahmad Lodhi passed the order. However, keeping in view the commitments made by M/s. Nelson Paint that it has discontinued deceptive marketing practices and shall not repeat any such activity in the future, the Bench took a lenient view and imposed only a fixed token penalty of Rs. 1 million to deter companies from engaging in deceptive marketing practices, importantly, where it relates to health or safety claims.
The bench also directed Nelson Paints 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 their distributors or buyers regarding the inefficacy of the subject claims. Nelson Paints was strongly reprimanded to avoid deceptive marketing practices in the future.
M/s Nippon Paints Pakistan (Private) Limited sent a formal complaint that Nelson Paints was distributing false and misleading information to consumers through social media about their products. The complainant cited two major claims that were allegedly violative of Section 10, i.e., “Nelson Extra Stainless (Covid-19 Protection)” and “Nelson Extra Klick Special Matt Enamel (Covid-19 Protection).” Nelson Paints 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 Nelson Paints attracted invocation of Section 10(2)(a) (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, Nelson Paints contended that it manufactured the impugned anti-bacterial paint, which contains a substance called Benzalkonium Chloride (BKC) 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 anti-bacterial efficiency of its product was 99.9 percent and that it had performed all necessary tests after the development of the products.
After analyzing the findings of the inquiry and hearing the arguments of the parties involved, the bench held in its order that the 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, they do not substantiate the alleged claim, i.e., protection from Covid-19.
The bench observed that health and safety claims are always looked at heedfully by the Commission. There is a higher bar on the undertakings making such claims, and they must substantiate their claims using competent and reliable scientific evidence.
The bench held that the marketing practices of Nelson Paints, when taken holistically, are to the prejudice and injury, not only of the consumers but also of other businesses, hence in violation of Section 10(2) (b) along with Section 10(2) (a) of the Act.