CCP takes legal action against two leading companies

The CCP has consolidated an enquiry report in which it has recommended that Unilever Pakistan and Friesland Campina Engro Pakistan Limited be prosecuted

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Two leading dairy companies have been found engaged in deceptive marketing strategies by disseminating false information about selling frozen desserts as ice cream. In this regard, the Competition Commission of Pakistan (CCP) has decided to file legal action against both companies.

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The difference between ice cream and a frozen dessert is that ice cream is made from dairy fat (e.g., milk, cream, butter, etc.), whereas frozen dessert is made from vegetable fat (e.g., palm oil, etc.). It was submitted that for a product to be regarded as ice cream, it must contain at least 10 percent milk fat and 10.1 percent non-fat milk solids.

The CCP has consolidated an enquiry report in which it has recommended that Unilever Pakistan and Friesland Campina Engro Pakistan Limited be prosecuted.

CCP’s enquiry report stated that product differentiation is challenging for a company when numerous competitors are offering products with similar attributes. In this case, the Complainant is the only company among the top five competitors to be manufacturing a full range of dairy ice creams. The other four competitors, two of whom are Respondents, produce a variety of dairy ice cream and frozen desserts.

Concerning the effect of anti-competitive behavior spilling over the territorial boundaries of other provinces, it is noted that both Respondents’ products are marketed and sold nationwide through all leading retailers, both offline and online.

It was mentioned in report, “in view of the analysis, one of the leading companies is found to be engaged in making misleading comparisons without a reasonable basis regarding the nutrition value of frozen desserts over dairy ice cream, thereby calling frozen desserts a healthier choice in the process of advertising, prima facie, in violation of Competition Act.”

The CCP has also concluded that the two companies are disseminating misleading information by advertising their frozen desserts as ice cream over various media which, prima facie, has the potential to inflict harm on the business interest of the Complainant, in violation of the said Act.

The report also read, “it has also been established, prima facie, that a misleading comparison has been drawn in order to influence a change in the buying behavior of the consumer by portraying frozen dessert as the healthier choice in absence of reasonable substantiation.”

Also, in light of the facts, it is also concluded that the companies are disseminating misleading information to consumers lacking a reasonable basis related to the character, properties and suitability of use of frozen desserts, prima facie, in violation of the Act, said the CCP.

To ensure free and fair competition in the market, both the companies should be stopped from marketing their products in deceptive and misleading manner. The companies should be encouraged to follow transparent marketing practices and provide correct information to the consumers.

Thus, it is recommended that the Commission may consider initiation of proceedings against M/s Unilever Pakistan Limited and M/s Friesland Campina Engro Pakistan Limited.

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