CCP fines 3M Pakistan Rs10mn over Scotch-Brite ‘deceptive marketing’
- CCP held that a comparison of competing products made without a reasonable basis or recognisable substantiation may constitute false or misleading advertising
The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs10 million on 3M Pakistan (Private) Limited for deceptive marketing through a false or misleading comparison of its Scotch-Brite product with Colgate-Palmolive Pakistan Limited’s Max Scrub, in violation of Section 10 of the Competition Act, 2010.
According to a CCP statement released on Tuesday, the proceedings originated from a complaint filed by Colgate-Palmolive Pakistan Limited, alleging that during a marketing campaign for Scotch-Brite, a video showed a comparison in which, after washing with Scotch-Brite and Max Scrub for 20 minutes, Max Scrub was shown to have deteriorated significantly while Scotch-Brite remained in comparatively better condition.
Following an enquiry, CCP issued a show cause notice to 3M Pakistan. The company challenged the authenticity and reliability of the video and maintained that the demonstration was carried out by an employee in his personal capacity without company authorization, read the statement.
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CCP, however, found that Muhammad Imran, then Regional Sales Manager of 3M Pakistan, had acknowledged before the enquiry committee that he made the comparison. As the demonstration was closely connected with his official duties and occurred in the context of a marketing campaign commissioned by 3M Pakistan, the CCP held that his conduct was attributable to the company.
CCP held that a comparison of competing products made without a reasonable basis or recognisable substantiation may constitute false or misleading advertising.
The order found that 3M Pakistan failed to substantiate the comparison. It also considered a third-party laboratory report submitted by the complainant, which concluded after testing that the two products were of similar quality and was not rebutted by 3M during the proceedings.
CCP also rejected 3M’s contention that the demonstration did not constitute advertising because it was shown to third-party channel partners rather than directly to consumers, noting that these partners were engaged to promote Scotch-Brite, increase its market visibility and enhance sales.
“Accordingly, the commission imposed a penalty of Rs10 million on 3M Pakistan for violation of Section 10(1) read with Section 10(2)(c) for false or misleading comparison of goods in the process of advertising,” read the statement.
3M Pakistan has also been directed to refrain from repeating the same or similar conduct concerning Max Scrub or any other undertaking’s comparable product and to submit a compliance report regarding payment of the penalty within 60 days.
Failure to comply will attract an additional penalty of Rs50,000 per day from the date of the order, it added.