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The Concrete Evidence is required for Fair Trial and Proportional Penalties --- Appellate Tribunal Competitive Commission of Pakistan

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The Concrete Evidence is required for Fair Trial and Proportional Penalties --- Appellate Tribunal Competitive Commission of Pakistan

Islamabad 01-08-2024: In a significant ruling, the Competition Appellate Tribunal has issued a mixed verdict on multiple appeals filed by electric cable manufacturers against the Competition Commission of Pakistan's (CCP) decision, which imposed hefty fines for deceptive marketing practices. The judgment, delivered by Mr. Justice Raja Saad Sultan, Member Technical, has resulted in reduced penalties for some companies while upholding fines for others.

The case revolved around the practice of including cash coupons inside electric cable bundles without disclosing this promotional offer on the packaging. The CCP took Suo-Moto action under Section 37(1) of the Competition Act, 2010, initiating an enquiry under Section 37(2) to investigate potential violations. The enquiry report concluded that this practice misled consumers and provided an unfair advantage to the companies, thereby contravening Section 10 of the Act.

On the recommendation of the enquiry committee, the CCP initiated proceedings under Section 30 of the Competition Act, 2010, issuing show cause notices to the manufacturers. The Commission found the omission of material information to be deceptive and imposed penalties of Rs. 5 million on M/S Fast Cables and M/S G.M Cables & Pipes (Pvt) Ltd, with a lesser penalty of Rs. 500,000 on the other appellants.

The appellants challenged the CCP’s order, arguing that there was no concrete evidence against them and that proper disclosure had been made on the packaging. They also contended that promotional schemes are not prohibited under the law and that the CCP had exceeded its authority.

After hearing arguments from both sides, the Tribunal made the following determinations:

Fast Cables: The appeal was allowed, and the penalty was reduced to Rs. 500,000. The Tribunal found that the CCP had not provided adequate reasons for imposing a higher penalty compared to other appellants who had filed similar commitments.

G.M Cables & Pipes (Pvt) Ltd: The appeal was allowed, and the penalty was reduced to Rs. 500,000. The Tribunal noted the lack of documentary evidence supporting the CCP’s assertion of increased sales due to deceptive practices.

Gold Royal Cables, Alpha Plus Cables, Falcon Cables, and E-Flux Cables: The appeals were dismissed, and the penalties were upheld. The Tribunal concluded that the commitments filed by these appellants were rightly considered by the CCP, leading to minimum penalties.

Hero Cables/Ali Electric Store: The appeal was dismissed due to procedural issues, including the lack of a fair hearing and adequate notice.

The judgment reaffirmed key legal principles, including the necessity for concrete evidence in regulatory decisions, the importance of fair hearings, and the requirement for proportional penalties. It also underscored the regulatory framework provided by the Competition Commission (General Enforcement) Regulations, 2007, guiding the process of enquiry, imposition of penalties, and acceptance of commitments.

This ruling highlights the Tribunal's commitment to ensuring fair regulatory practices and proportionality in penalties. It also serves as a reminder for businesses to adhere to transparent marketing practices and the importance of proper disclosure to consumers.

The Tribunal's decision marks a significant development in competition law enforcement in Pakistan, setting a precedent for future cases involving deceptive marketing practices.