CCP slaps Rs18m fine on cable manufacturers

Updated April 12, 2019

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CCP receives information that cable manufacturers are inserting cash and coupons inside bundle packs of wire. ─ Reuters/File
CCP receives information that cable manufacturers are inserting cash and coupons inside bundle packs of wire. ─ Reuters/File

ISLAMABAD: The Competition Commission of Pakistan (CCP) has slapped a fine of Rs18 million on cable manufacturers for indulging in deceptive marketing practices.

The commission conducted an inquiry against 18 cable manufacturers on receiving information that they were inserting cash and coupons inside the bundle packs of electric wire but did not disclose the presence of these coupons on the packaging or other promotional material.

CCP noted that these practices only benefited electricians who generally open the packs and ended up deceiving end consumers who ultimately pay for the value of the coupons without being aware of it.

The CCP enquiry found Dawn Cables, G M Cables, Fast Cable, Hitech English Cables, Pak Muzaffar Cable, Alfa Plus Wire Cable, Hi Ace English Cable, Gold Royal Cable, Zafar Cable, Nation Cable, Puller Cable, Welcome Cables, Dewan Cables, E-Flux Cables, Hero Cable, Falcon Cable, Lear Cables and Rana Cables inserting cash coupons of various denominations in the packing of their electric cable and wire bundles but did not disclose it anywhere.

During the hearings, cable manufacturers admitted their involvement in the deceptive practice. The commission order imposed a penalty of Rs5m each on Fast Cables and G M Cables and Pipes and Rs500,000 each on remaining 16 cable manufacturers in addition to directing them from refraining in any form of deceptive marketing practices in the future.

The commission ruled the insertion of the token without due disclosure as a violation of Section 10 as the products lack a reasonable basis related to the price printed for the consumer.

These companies have also been directed to disclose the presence and the coupon’s value in their marketing material, and publish four advertisements of A-4 size in two English and Urdu newspapers each of national circulation and inform public about the presence and price value of coupons.

Moreover, they were also directed to visibly print the token’s value on the packaging, and submit a compliance report within 60 days to CCP registrar.

Inquiry against PAL

The CPP has initiated an inquiry against alleged predatory pricing by a leading battery manufacturer to hurt the competition in the industry.

Atlas, Exide, and Millat had filed a complaint against Pakistan Accumulators Limited (PAL) for alleged low prices that other firms cannot compete with. An inquiry has been initiated in the matter under Section 37(2) of the Competition Act, 2010 to ascertain whether there is a prima facie violation of any provision(s) of the Act, the CCP informed the battery manufacturers.

The commission has asked battery manufacturers to provide a list of their models being manufactured and the corresponding models of the competitors, record of product-wise sales per month from 2016 to date along with product-wise prices per month from 2016 to date, list of all the raw material/components used in manufacturing a battery (product-wise), share of each component in cost of battery and cost-wise breakdown for each product, bifurcated data of fixed and variable costs year wise from 2016 to date and audited financial statements for the years 2016, 2017 and 2018. CCP urged the battery makers to provide the above details by April 19.

Sources said this is not the first time that the prices of products are being subsidised through malpractices in sales tax in the battery industry as two battery manufacturers are already under investigation by Federal Board of Revenue on suspicion of sales tax evasion to the tune of more than Rs5 billion.

Published in Dawn, April 12th, 2019