- Competition regulator orders paint manufacturer to withdraw stocks, inform customers including a Karachi hospital
- ISLAMABAD: Paint that keeps you safe from COVID-19? That may sound far-fetched to you now, but at the height of the COVID-19 pandemic, people were willing to try anything to keep themselves safe – including sterilising their groceries.
With little information and lots of panic there were all sorts of outlandish claims made – including by corporations and manufacturers. Many of them turned out to be false. One of them, according to a ruling in Pakistan, was the claim of Nelson Paint Pakistan Limited (Private) Limited which claimed that their product provided protection against COVID-19.
The ruling was made by the Competition Commission of Pakistan (CCP) in an order on December 1st, which noted in its order that “The marketing practices of the respondent [Nelson Paint], when taken holistically, are to the prejudice and injury, not only of the consumers, but also to other businesses.” It had, hence, violated section Section 10 of the Competition Act, 2010, which protects the business interests of other undertakings, as well as, consumers from misleading information.
A two-member comprising the CCP Chairperson, Ms Rahat Kaunain Hassan and Mr Mujtaba Ahmad Lodhi, passed the order.
Nelson Paint was imposed with a token fine of Rs 10 million, with the bench saying it was keeping in view commitments made by the company that it has discontinued deceptive marketing practices and would not repeat any such activity in the future. The order was to deter companies from engaging in deceptive marketing practices, most importantly where it relates to health or safety claims.
The bench also directed Nelson Paint to withdraw batches of the products that may have been sold or are still available in stock with distributors and to inform distributors or buyers regarding the inefficacy of its claims. Nelson Paint was strongly reprimanded to avoid deceptive marketing practices in the future.
Some of the facts in the case are startling.
The saga began when M/s Nippon Paints Pakistan (Private) Limited, a competitor of Nelson Paints, sent a formal complaint that the company 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 Paint 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, it said.
Some question why it took a competitor to uncover this information, and where consumer protection groups and government authorities were on the matter. Indeed, the complainant was able to move against the alleged deceptive marketing practice by Nelson Paint because Section 10 of the Competition Act, 2010, 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, M/s. Nelson Paint 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 antibacterial efficiency of its product was 99.9% and it has performed all necessary tests after the development of the products.
After analysing the findings of the inquiry and hearing the arguments of parties involved, the bench said in its order that BKC protects only against bacteria and microbes, 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, it does not substantiate the alleged claim, i.e., protection from COVID-19.
The bench observed that there is a higher bar on undertakings making health claims and that they must substantiate their claims using competent and reliable scientific evidence.
This was not all. According to the order, it was found that a significant portion of the sale of the “protective paint” was made to a “hospital located in Karachi”. The sale of one-third of the quantity – about 100 gallons – was sold to the hospital on a 50% discount and purportedly as a Corporate Social Responsibility (CSR) initiative.
