CCP imposes Rs 20 million fine on Dawn Foods for deceptive marketing practices

ISLAMABAD: The Competition Commission of Pakistan (CCP) has issued an order imposing a fine of PKR 20 Million on M/s A. Rahim Foods (Private) Limited (Dawn Foods) for copying the product packaging and labelling of M/s K&N’s Foods (Private) Limited (K&N’s) frozen and/or processed meat products in violation of Section 0 of the Competition Act, 2010.

The order has been passed by a bench comprising Ms. Vadiyya Khalil, Chairperson, Dr. Shahzad Ansar, Member Office of Fair Trade & Advocacy, and Mr. Ikram Ul Haque Qureshi, Member Cartels & Trade Abuses, and Legal.

The order disposes of the proceedings arising out of the show cause notice issued to Dawn Foods after a CCP inquiry found it to be in prima facie violation of Section 10 of the Competition Act. CCP had initiated the enquiry into the matter pursuant to a complaint filed by K&N’s.

The issue before CCP bench was whether Dawn Food’s packaging and labelling of their frozen and/or processed meat products was deceptively similar to that of K&N’s product labelling or packaging. Other allegations against Dawn Foods made by the complainant were that Dawn Foods’ use of the term ‘Combo Wings’ amounted to fraudulent use of K&N’s trademark, and that this was capable of harming K&N’s business interests.

CCP found that Dawn Foods had violated Section 10 (2) (d) of the Act by resorting to ‘parasitic copying’ or ‘copycat packaging’ of K&N’s products, with the result that ordinary consumers could be deceived into purchasing Dawn Foods products by confusing them with K&N’s products.

It was found that this was misleading and deceptive by its very nature and would lead to the eventual dilution of K&N’s brand identity and goodwill that it had built over the years.

As for the use of the term “Combo Wings”, CCP found that although Dawn Foods was not in violation of Section 10 (2) (d) of the Competition Act, since the term “Combo Wings” was not registered with the Intellectual Property Organization, however when seen as a part of the overall layout and design of the copied packaging, it was determined to be a violation of Section 10 (2) (d) of the Act, for which a separate penalty has not been imposed. Lastly, CCP determined that these actions by Dawn Foods were capable of harming the business interests of K&N in violation of Section 10(2) (a) of the Act.

CCP, while imposing a cumulative penalty of Rs 20 million on Dawn Foods for having resorted to deceptive marking practices in violation of Section 10 of the Competition Act, has further directed Dawn Foods’ to cease use of the contentious copycat packaging within a period of one month from the date of issuance of its order and to submit a compliance report with the Registrar of CCP.