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September 28, 2022
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CCP to Initiate Legal Proceedings Against Dairy Companies for Selling Frozen Desserts Under Ice Cream Category

The Competition Commission of Pakistan (CCP) has decided to initiate legal proceedings against two leading dairy companies for committing deceptive marketing practices by disseminating misleading information of selling frozen desserts under the category of ice cream.

The CCP has compiled an enquiry report which recommended action against Unilever Pakistan and FrieslandCampina Engro Pakistan Limited.

The enquiry report of the CCP stated that it is very difficult for a company to differentiate its product when many competitors have similar attributes to their product’. 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 which are the Respondents, are manufacturing a mix of dairy ice cream and frozen desserts.

As regards the effect of anti-competitive behavior spilling over territorial limits of other provinces is concerned, it is noted that the products of both the Respondents are marketed and sold nationwide through all leading stores. offline and online.

“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,” said the report.

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.

“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,” it added.

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.

“If the same finding is applied to not just the use of TV but a collection of various media, the impact would multiply manifold. In this instance, the Respondents have been engaged in the use of TVCs, YouTube advertising, Facebook videos and posts, Instagram advertisements, E-Commerce platforms and webpage, to disseminate misleading information, thereby increasing the frequency of impacts. Therefore, any misleading information imparted reached multitudes of people, young and old alike, based on personal preferences for the use of different media,” added the CCP.

The CCP stated that “To ensure free and fair competition in the market undertakings should be stopped from marketing their products in a deceptive and misleading manner. The undertakings should be encouraged to resort to marketing practices that are transparent and give consumers/customers true and correct information.”

‘It is evident that consumer behavior will become indifferent to the nature of the two products as the frequency of the misleading message increases since the message intends to eliminate the differentiation of the two product categories. This will in turn cause a change in the buying behavior of the consumers,” said the CCP.

The misleading information being imparted by the Respondents, in this matter, relates to the character, properties and suitability for use of the frozen desserts, it added.

Therefore, in light of the above-mentioned findings, 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 under Section 30 of the Act for, prima facie, violation of Section 10 of the Act, CCP enquiry report concluded.

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