Deceptive Marketing Practices in Competition Law

In the case of A. Rahim Foods (Pvt) Limited vs. Competition Commission of Pakistan (PLD 2023 SC 516), the Supreme Court of Pakistan addressed crucial issues concerning deceptive marketing practices and the interpretation of key provisions under the Competition Act, 2010. This case revolved around allegations of copycat packaging and the use of misleading information that potentially harmed the business interests of a competitor.

Key Issues:

Deceptive Marketing Practices: The primary issue in this case was whether A. Rahim Foods' packaging and use of the term "Combo Wings" constituted deceptive marketing practices as defined under Section 10(2)(d) of the Competition Act, 2010. K&N’s Foods (Pvt) Limited alleged that Rahim Foods had engaged in "fraudulent use" of their product labelling and packaging, which led to consumer confusion and an unfair competitive advantage. The Supreme Court upheld the findings of the Competition Commission and the Competition Appellate Tribunal, which determined that Rahim Foods had indeed engaged in deceptive marketing by copying the packaging of K&N's products, thereby misleading consumers.

Distribution of False or Misleading Information: Another critical issue was whether the actions of Rahim Foods amounted to the distribution of false or misleading information under Section 10(2)(a) of the Act. The Competition Commission had originally imposed penalties under this provision, arguing that the copycat packaging also constituted misleading information capable of harming K&N’s business interests. However, the Competition Appellate Tribunal disagreed, and the Supreme Court upheld this view, finding that there was no direct evidence that Rahim Foods had distributed false or misleading information regarding K&N’s products. The Supreme Court clarified that Section 10(2)(a) requires a direct misrepresentation about another's goods, which was not established in this case.

Codification of Common Law on Passing-Off and Injurious Falsehood: The Supreme Court also explored how the Competition Act, 2010, has codified elements of the common law actions of passing-off and injurious falsehood. It was noted that while the common law requires proving "malice" in cases of injurious falsehood, the Competition Act does not. Conversely, the Act introduces the concept of "fraudulent use" in cases of passing-off, which requires demonstrating an intention to deceive, thus adding a subjective element that was not present in the common law.

Case Law: The case of Pasquali Cigarette vs. Diaconicolas & Capsopolus (1905 T.S. 472) was referenced to underline the principle that no one is allowed to pass off their goods as those of another, a principle central to both common law and the statutory framework under the Competition Act. The case of Wafaqi Mohtasib vs. SNGPL (PLD 2020 SC 586) was cited regarding the role of quasi-judicial bodies like the Competition Commission and their lack of locus standi in challenging decisions made by appellate forums or courts.

Court's Conclusion: The Supreme Court dismissed the appeals of both A. Rahim Foods and the Competition Commission of Pakistan, thereby upholding the Competition Appellate Tribunal’s decision. The Court concluded that A. Rahim Foods had indeed engaged in deceptive marketing practices under Section 10(2)(d) by using packaging that could easily be confused with K&N’s, but did not distribute misleading information as per Section 10(2)(a). This decision reinforces the importance of fair competition and the prohibition against deceptive marketing practices, highlighting the need for businesses to avoid actions that could mislead consumers or unfairly damage a competitor’s business.

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