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CCP imposes Rs 150mn penalty on Reckitt Benckiser

3 min read
Reckitt Benckiser
Strepsils was de-registered as drug when acquired by Reckitt from boots in 2005, and then re-launched with the disclaimer, “Non-medicated Lozenges

ISLAMABAD: The Competition Commission of Pakistan (CCP) has passed an order imposing a total penalty of Rs 150 million on Reckitt Benckiser Pakistan Limited (Respondent) for violation of Section 10 of the Competition Act, 2010 for making advertising/marketing claims about its product ‘Strepsils’, which have been found capable of misleading and deceiving under the Act.

M/s Square Distribution & Marketing System (Pvt) Limited sent a formal complaint alleging that M/s Reckitt Benckiser Pakistan Limited has been disseminating misleading information to the consumers by creating an impression of its product ‘Strepsils’ as a drug for sore throat and cough.

It was further alleged that Strepsils was de-registered as drug when acquired by Reckitt from boots in 2005, and then re-launched with the disclaimer, “Non-medicated Lozenges.” However, the company made no effort to educate and inform the consumers regarding the discontinuation of medicinal ingredient in it.

The CCP’s enquiry concluded that the marketing campaign of the respondent appears to be deceptive in terms of Section 10 of the Act in general, read with sub-section 10(2) (b) of the Act which prohibits distribution of false and misleading information to consumers.

Moreover, marketing campaign of the Respondent demonstrates that the public was actually deceived into perceiving that ‘Strepsils’ was still a medicated sore throat remedy. The Respondent’s misleading campaign was also capable of harming the business interests of other undertakings in, prima facie, violation of Section 10(1) in general, and in particular, Section 10(2)(a) of the Act.

The order stated that branding has a significant role in marketing the products, and therefore, the change in formula of the Product has changed the character from being a medicine to a non-medicated product. Keeping in view, the history of the brand ‘Strepsils’ and also the fact that, internationally, it is known and marketed in various jurisdictions as a medicinal product, the disclosure of such fact becomes material for its marketing in Pakistan.

The bench found itself in agreement with the finding of the Enquiry to the extent that the marketing campaign was capable of misleading consumers and capable of being harmful to the businesses. It also observed that the disclaimer on the box of the Product was not adequate.

The bench in its order held that the Respondent has not been able to substantiate neither before the Enquiry Committee nor this Bench as to how and to what extent efforts have been made to inform the general public about change in the formula of its product ‘Strepsils’.

Barely printing ‘Non-Medicated Lozenges’ on the product box and that too in a very small font does not discharge the onus of making due and sufficient disclosures of such material change in the character of the Product.

The order, passed by the bench comprising Ms. Rahat Kaunain Hassan, Chairperson and Ms. Bushra Naz Malik, Member, stated that the marketing claims by the Respondent can potentially deceive consumers with respect to the characteristics, formulation and intended use of ‘Strepsils’, hence, deceptive in nature within the meanings of Section 10(2) (b) of the Act.

In view of the findings for each of the violations of Section 10 read with Section 10 (2) (a) and (2) (b) related to deceptive marketing practices, the bench imposed a total penalty of PKR 150 million [PKR 75 million for each of the violations].    

The Bench has, inter alia, further directed the Respondent to stop misleading marketing practices of the Product, and required the Respondent to print the disclaimer/disclosure, ‘NON-MEDICATED’, in English and also Urdu in bold words, on the Product box as well as on the strips in print and/or in electronic advertising/marketing and also has to place in Urdu the disclaimer “ye dawa nahi, dawa ke liye doctor se ruju Karen”.

The bench has given 40 days to the Respondent, starting from the date of the order, for compliance and meanwhile directed the Respondent to publish advertisements in at least three English and Urdu newspapers having nationwide circulation regarding the change in the character of the Product from medicated/drug to food category in Pakistan. Such advertisements to be given once a week until compliance is ensured within the time specified.