ISLAMABAD: The Competition Commission of Pakistan (CCP) has declared that the fraudulent use of trademark/packaging for the purpose of marketing of similar product comes under deceptive marketing practices and a violation of the Competition Act 2010.

The CCP has highlighted the importance of trademark and its protection from competitors through a new order. The CCP has explained in detail that how the trademark misuse comes under the purview of the Competition Act 2010.

According to an order issued by the two-member bench of the CCP, the order has disposed of the proceedings initiated pursuant to show cause notice No 53 and 54 of2020 issued to M/s Al-Hafeez Oil Mills (Respondent No 1) and M/s Muslim Corporation (Respondent No 2), jointly referred to as Respondents, respectively, for prima facie violations of Section 10 of the Competition Act, 2010 (the Act).

The CCP (the Commission) received a complaint from M/s Nawaba Oil Industries (hereinafter the Complainant) alleging that the respondents have indulged in deceptive marketing practices in violation of Section 10 of the Act.

The order revealed that it is the mandate of the CCP to protect the consumers from anti-competitive behavior, including deceptive marketing practices.

"While it may be argued that one of the companies has developed its own brand name for its products and that the Complainant does not have the sole ownership of use of the particular colour, it is important to note that in instances of deceptive marketing the overall general impression of the products packaging, logo, etc, has to be taken into account, as the overall impression contributes considerably to the risk of consumer confusion. Therefore, it cannot be denied that artistic work of the logo and packaging/trade dress has indeed has significant resemblance with that of the complainant and is clearly copied from the latter".

The CCP observed that the marketers traditionally focus on designing advertising campaigns and other promotional strategies to promote a particular brand name. However, with evolving consumer preferences and laws, presentation; trade dress have become just as essential for making products and services distinctive and for building brand recall and loyalty.

The cultural diversity of the Pakistan market makes a compelling case for the importance of product identification by way of packaging and visual impression. This has resulted in third parties creating look-alikes of popular products with similar packaging in order to grab consumers' attention and generate demand for their own products in the market.

In our considered view, consumers are clearly susceptible and at a serious risk of falling prey to deceptive confusion pertaining to the origin and quality of the products, due to the striking similarity in the trade dresses of these companies.

However, the similarity of the colour scheme, packaging, font and design are likely to allow average consumers to conclude that the products are in fact being produced by the same manufacturer. The effect would be even more pronounced given the uncomplicated nature of the product in question.

Even without going into the financial peculiarities of the matter (e.g. money spent on marketing), it is probable to deduce that a business which has been continuously active in a particular market for almost two decades will have a certain amount of goodwill attached to its name and packaging. In other words, it is highly probable that the copied trademark may be confused for the original, allowing companies to derive benefits from the actions and efforts of the Complainant without paying or sharing the costs, the CCP added.

For the reasons discussed above and in line with our mandate to protect the consumers from anti-competitive behavior, including deceptive marketing practices, we hereby hold the conduct of the Respondent No 2 in violation of Section 10(1) of the Act read with Section 10(2)(a) and (d).

Keeping in view the conduct of Respondent No 2 and the circumstances of the case, we are inclined to impose a penalty of Rs2 million on the former.

The Respondent No 2 is further directed to cease and desist from using the trademark of the complainant, or use the packaging material similar to that of the complainant or any other undertaking, in future. Respondent No2 is further directed to create a mark, packaging, marketing material, etc, that are distinct from Respondent No 1 within 30 days of this order.

Copyright Business Recorder, 2021