THERE is no place for simpletons in bizarre bazaars. Such markets serve tricksters at the cost of unsuspecting consumers and ethical producers. This trend might be more pronounced and visible in product trade but the service sector is not immune from it.

Often customers get less than their money’s worth and reputable producers end up sharing return on investment in their products and brands with crafty free riders.

The problem poses a great challenge to the Competition Commission of Pakistan (CPP) that has a mandate to ensure a fair play in markets, curb anti social tendencies and discipline market players. The regulator accepts that the unethical business practices are deeply entrenched and perpetrators too powerful for it to succeed on its own.

For the commission, a major issue is the legal process. Stay orders obtained from courts against the CPP decisions have frustrated it’s efforts to curb unethical business.

Scattered evidence suggests that not all the ghee makers are observing health standards as they skip a costly procedure of removing nickel that has to be added in the solidifying process of ghee making; many copper cables made with cheaper alloys carry only a thin coating of copper; pharmaceuticals reproduce patented medicines unlawfully; chemical based products are presented as milk and fruit juices; health standards are violated in several food products; and the list can go on and on, an expert on the issue said.

Last week the CCP shared its order in a case of deceptive marketing with the media. “A marketing practice is deemed deceptive when it provides false or misleading information either consciously or owing to culpable negligence.”

The regulator penalised ‘Dawn Foods’ on the charges of deceptive marketing by clamping a fine of Rs20m. Acting on a complaint of K&N, the CCP found that the accused had violated Section 10(2d) of the Competition Act by resorting to ‘parasitic copying’ or ‘copycat packaging’ of K&N products, with the result that ordinary consumers could be deceived into purchasing its products confusing them with that of K&N’s.

In this case the amount of penalty is the highest, but the CCP said it is not the first case of its kind. In a detailed written response, the CPP without quoting any names said “…action has been taken in all sectors, particularly in the fast moving consumer goods, telecom, edible oil, education, banking, paint makers, electric cable manufacturers, courier companies, infant formula industry, automobile, cosmetic, juices and beverages, dairy, real estate”.

“So far the CCP has passed 17 orders on deceptive marketing practices, out of which penalties have been imposed on seven violators and compliance was achieved in seven cases while the rest of the orders are expected to be issued shortly,” the CCP said.

When contacted Dawn Foods Brand Manager Moin Shehzad and lawyer Bilal Ehsan, wary of the media coverage for possible damage to its reputation, informed that the company intends to challenge the decision.

Initially a copy of a Lahore High Court decision was mailed as an evidence of stay order secured in the said case. The short order, however, did not comment on the CCP or its order but granted an “injunction against K&N not to interfere with the use of red colour packaging by Dawn Foods”.

In a mailed message spelling the company position on the CCP order Dawn Foods said, “the CCP decision has come as a surprise as their company has been using red colour for its various products since 1981. The CCP Order also acknowledges this fact…. Our customers identify our products with the brand ‘Dawn’….With regard to penalty imposed, the company is challenging the order and filing an appeal before the CCP Appellate Bench.”

An attempt was made by this writer to solicit opinion of copy right lawyers on the prevalence of the unethical practice in Pakistan as compared to its equals in the region and beyond.

“Yes, issue of deceptive marketing appears to be more rampant in Pakistan than other regional countries except for India. The real bane, however, is the proliferation of counterfeit products in the country, eroding the base of industry and swelling the ranks of traders at the cost of manufacturers,” Ali Kabir Shah, partner at Ali Associates commented.

Khalil Sattar, Chairman of K&N Group of Companies was reached over phone for his comments:“It was an open and shut case as infringement of brand and deceptive design was remarkably obvious. Still it took CCP about three years to give its verdict. For growth of business in Pakistan a fair playing field is absolutely necessary. It serves the interest of both producers and consumers.”

Dr Shehzad Ansar, Member Office of Fair Trade, CCP, explained over phone from Islamabad that misleading representation can have serious economic consequences, especially when directed towards large audiences or when they take place over a long period of time. It affects both business competitors and consumers.

“Our decisions are based on a long exercise of proper market surveys and research but we can’t do it alone. We need help and support of all pillars of democracy to enforce rules of fair play, promote healthy competition for efficient employment of country’s resources in men and material”, he said, defending the current decision and hinting at pitfalls of challenging decision in normal courts not equipped with the required expertise.

The impression that the trend of deception is rife in informal and micro businesses has proven to be incorrect. In services sector such as health, education, courier delivery, there are several cases under scrutiny.

Published in Dawn, Business & Finance weekly, February 22nd, 2016