Vellani & Vellani
Vellani & Vellani is a law firm which continues a practice first established in 1937 under the name of Wali Mohammad Vellani & Co and carried on under various names, including Mahmud & Vellani and Fatehali W. Vellani & Co.Show more
Competition & Antitrust
Competition Commission finds that enquiry into deceptive marketing did not comply with Competition ActPakistan | 05 July 2018
The Competition Commission recently found that an enquiry into deceptive marketing practices did not comply with Section 37(2) of the Competition Act, which allows the commission to conduct enquiries only after receiving written complaints from an undertaking or registered association of consumers. As a result, proceedings could not be initiated against the company under investigation.
The Competition Commission recently initiated proceedings against nine animal and livestock feed manufacturers for engaging in deceptive marketing practices under the Competition Act 2010. The commission imposed a penalty of PRs2.7 million on the respondents and ordered them to cease their unauthorised use of the complainant's registered trademark and copycat packaging and file individual compliance reports.
The Competition Commission recently initiated an enquiry into six fruit juice manufacturers for misleading consumers and engaging in deceptive marketing practices under the Competition Act. The enquiry committee concluded that the respondents' marketing of their fruit juice brands to consumers using unjustified claims amounted to the distribution of false and misleading information to the general public, which could harm the business interests of other undertakings in the same industry.
Inconspicuous disclaimers and claims lacking reasonable basis: are they deceptive marketing practices?Pakistan | 28 September 2017
The Competition Commission recently conducted an enquiry and initiated proceedings against Proctor & Gamble Pakistan (Private) Limited following a complaint for deceptive marketing practices filed by Reckitt Benckiser Pakistan Limited. The commission found that the respondent had violated Section 10 of the Competition Act 2010 and imposed a penalty of PRs10 million.
Following a complaint filed by an individual against Kaymu (an online shopping platform) for deceptive marketing practices, the Competition Commission conducted an enquiry and found that Kaymu had been involved in the dissemination of false and misleading information to consumers. These actions had resulted in Kaymu having a competitive advantage over other undertakings in the same line of business, leading to a prima facie violation of the Competition Act.
The ever-expanding digital market has recently established a solid footing in Pakistan, which has seen a growth in digital businesses. At present, the competition authorities take no specific steps to prevent online retailers and service providers from free riding on the investment of bricks-and-mortar retailers and service providers. However, the Competition Commission has undertaken to create awareness of anti-competitive behaviour and deceptive marking practices.
The Competition Commission recently launched its Competition Advocacy Academia Drive campaign, which aims to promote awareness of competition law among university students and faculty members. The commission has also issued a show cause notice against the Pharma Bureau for alleged collusive activities, launched an enquiry into alleged deceptive marketing practices and issued a policy note regarding competition rules in the telecoms sector.
The Competition Commission recently conducted an enquiry into a complaint of deceptive market practices relating to the use of similar logos by motorcycle companies. It found that none of the accused could be held responsible for the alleged deceptive marketing practices, as their conduct and use of the objectionable logos did not amount to the distribution of false or misleading information within the meaning of Section 10 of the Competition Act 2010.
The Competition Commission recently initiated proceedings against the Pakistan Engineering Council following a complaint that it had restricted competition in the insurance market for public civil works. The bidding documents that the council prepared for public sector engineering projects contained provisions restricting insurance cover for public civil works to AA-rated insurers.
The Competition Act 2010 does not cover the concept of parasitic copying or copycat packaging. However, in its recent order against Dawn Foods, the commission broadened the scope of deceptive marketing practices by recognising unfair competition through the practice of parasitic copying and copycat packaging for the first time in Pakistan.
The Competition Commission has established a road show, including seminars in 20 major cities, to help stakeholders to understand the importance of the Competition Act 2010. The commission aims to help companies improve their business practices, which in turn will create fairness for all businesses to compete, innovate and become profitable, and thus help to improve the economy.
The integration of the Karachi, Lahore and Islamabad stock exchanges was recently approved during a hearing of the Phase 2 review of the pre-merger application following the order that the commission had passed in the Phase 1 review. During the hearing, all parties responded at length to the concerns raised in the order and to additional queries posed by the bench. A detailed order providing the commission's reasoning will follow in due course.
The Competition Commission recently examined a statutory regulatory order issued by the federal government imposing a 15% regulatory duty on imported steel billets. The commission concluded that this regulatory duty on the import of steel billets affected the cascading nature of the tariff structure and recommended a reduction to create a level playing field in the market for steel products.
The Competition Commission recently examined increases in air fares by certain private airlines, which appear to have taken advantage of the ongoing dispute between Pakistan International Airlines and the Airline Pilots Association. The commission will investigate whether the private airlines have abused their dominant position or engaged in anti-competitive practices by taking advantage of the crisis at Pakistan International Airlines.
The Competition Commission recently announced details of a meeting regarding recommendations on the price control mechanism for essential food commodities. The commission will now finalise its recommendations based on the suggestions received from stakeholders and present them at the next meeting of the National Price Monitoring Committee.
The Competition Commission recently concluded its investigation into allegations that the Pakistan Engineering Council (PEC) had restricted insurance coverage of public civil works to AA-rated insurers. The commission determined that the restriction had reduced and distorted competition in the relevant market and recommended that proceedings be initiated against the PEC.
The Competition Commission recently issued show cause notices to eight medical institutions for alleged violation of the Competition Act 2010, which prohibits business undertakings from engaging in deceptive marketing practices. The institutions had misrepresented their Medical and Dental Council recognition on their websites or failed to communicate the restrictions imposed on admissions.
The Competition Commission recently signed a memorandum of understanding for the sharing of information with the Securities and Exchange Commission of Pakistan. Further, the commission issued a policy note that recommended amendments to the Insurance Ordinance 2000 to open up the insurance of public property to the private sector.
The latest in a series of enforcement and advocacy efforts by the Competition Commission is an opinion providing recommendations concerning anti-competitive practices by public sector procuring agencies in relation to tenders for procurement of electrical equipment. The commission's opinion serves as a guideline for procuring agencies when designing tender documents.
The Competition Commission recently dismissed two complaints made under Section 3 of the Competition Act 2010: one filed by Wise Communication Systems Limited against Pakistan Telecommunication Company Limited and the other brought by a manufacturer of bi-axially oriented polypropylene film.
The Competition Commission has issued an opinion to the Oil and Gas Regulatory Authority and the Ministry of Petroleum and Natural Resources eliminating the discriminatory application of the inland freight equalisation margin and creating a level playing field for all refineries and oil marketing companies active in the crude and refined oil markets.
The Competition Commission of Pakistan's efforts in sensitising the government and regulatory bodies to potential competition concerns were recently recognised and commended by the World Bank. The commission won the World Bank Competition Advocacy Contest 2013 for conducting advocacy to increase competition in Pakistan's air transportation market on the route between Pakistan and Mecca, Saudi Arabia.
One of the roles of the Competition Commission is to sensitise the government and regulatory bodies to potential competition concerns by reviewing draft laws, regulations and decisions and issuing corresponding policy notes. As several recent policy notes illustrate, the commission aims to provide advice that is pre-emptive and precautionary in order to deter potentially anti-competitive activities.
The Competition Commission recently issued an inquiry report regarding a complaint against Shangrila (Private) Limited (SPL). The complaint alleged that SPL had claimed that its Shangrila tomato ketchup was "Pakistan's number one tomato ketchup" in its advertising campaigns, but had no reasonable basis to make such a claim and had thus disseminated false and misleading information in violation of the Competition Act.
The All Pakistan Paper Merchants Association recently urged the Competition Commission to turn its attention to alleged cartel activity among paper millers. With regards to the activities of trade organisations and their members, the commission has decided a number of cases in this area, in which it held that price fixing between various members of any trade association violates competition law.
As part of its efforts to protect consumers from anti-competitive behaviour and promote voluntary compliance with the Competition Law, the Competition Commission has issued deceptive marketing guidelines for undertakings that provide telecommunications products and services in Pakistan. The guidelines provide both advice on what may constitute deceptive marketing practices and suggestions on how to avoid violations.
The Competition Commission has imposed a total penalty of PRs25 million (approximately $250,000) on five universities for advertising unaccredited engineering programmes in violation of Section 10 of the Competition Act, which prohibits deceptive marketing practices. A total of 27 universities were reprimanded for falsely claiming to be either accredited or approved and recognised by the Pakistan Engineering Council.
The compressed natural gas (CNG) sector is an important part of the national economy. However, following mass closures of CNG stations throughout the country and allegations raised of the collusive role of CNG associations in the industry, the Competition Commission has commenced an enquiry into the associations' conduct and authorised investigations of their premises.
Wyeth Pakistan Limited filed a complaint with the Competition Commission that Veet depilatory cream manufacturer Reckitt had claimed in advertisements that "9 out of 10 women prefer Veet" with no reasonable basis for this claim. The commission held that the advertisements violated the Competition Act and recommended that proceedings be initiated against Reckitt.
The Competition Commission recently raided the offices of the Pakistan Poultry Association in Lahore and Islamabad on suspicion of alleged anti-competitive activities, including exorbitant and parallel increase in prices of poultry feed by feed mills in the domestic market.
The Competition Commission has reached conclusions on the role played by 1-Link (Guarantee) Limited, one of two suppliers of automatic teller machine cash withdrawal services in Pakistan, and a number of its member banks in relation to certain fees paid by customers for cash withdrawals. It has also imposed conditions on future decision making on customer charges.
In Pakistan, automatic teller machine (ATM) cash withdrawal services are provided by two networks. The Competition Commission noted that 26 banks were charging a uniform amount for ATM cash withdrawals, despite having different business dynamics. An inquiry committee has set out its conclusions and is reviewing whether to investigate the possible role of the Pakistan Banks' Association.
Following its investigation into alleged collusive bidding by manufacturers of electrical power equipment, a committee of the Competition Commission has announced that Siemens (Pakistan) Engineering Co Ltd has become the first company to file for leniency with the commission under Regulation 3 or 4(1) of the Competition (Leniency) Regulations 2007.
The Competition Commission has passed an order on a show cause notice issued to Pakistan Vanaspati Manufacturers Association for contravening the Competition Act 2010. Among other things, the commission considered whether the association had discriminated between its members and commercial importers by charging different rates for the same service.
The Competition Commission of Pakistan has formed the Department of Cartels and Trade Abuses to conduct enquiries and investigations into possible contraventions of Sections 3 and 4 of the Competition Act. Among other things, the department intends to focus on relatively unexplored areas of public procurement, bid rigging and collusive tendering, and build up a coordination and information-sharing mechanism with other competition/antitrust organisations.
Pakistan has a clear framework of merger thresholds and first and second-phase reviews. In certain recent transactions the commission has considered that if one of the merger parties meets the threshold requirements, a clearance application must be filed; on this analysis, the threshold requirements are not limited to either party's turnover or assets in Pakistan.
Following the signing of the Competition Bill 2010 by the president, the Competition Law has been revived. It is similar in nature and scope to the Competition Ordinance 2010, but changes have been made to the penalties for abuse of dominance, certain prohibited agreements and deceptive market practices, among other things. The law also creates a new appeal tribunal.
Advertising can be legitimately used to persuade consumers to choose a particular brand, but it is sometimes used to mislead them into using products or services on the basis of false or deceptive claims. Protection is provided by, among other things, the Trademarks Ordinance and the Competition Act, and the Competition Commission is empowered to address, prohibit and penalise misleading representations.
The Competition Commission recently issued the Competition Compliance Code. An undertaking wishing to comply with the Competition Ordinance may voluntarily adopt the code by implementing its essential features and registering with the commission, which will adopt a more lenient attitude towards such undertakings and may even reduce penalties in the event of a violation.
The Competition Commission provides advisory services to undertakings through the Acquisitions and Mergers Facilitation Office, which helps parties contemplating merger or acquisition that want to obtain the commission's view on the matter. The Office of Fair Trading, which has been established to act as a watchdog, identifies and provides solutions to potential issues and handles grievances.
The Competition Commission has ruled that a company's manufacture, marketing, sale and export of leather jackets that bore other parties' trademarks without authorization were fraudulent acts and constituted deceptive marketing practices under the Competition Ordinance.
Appeals against decisions by the Competition Commission or its appellate bench are heard by the Supreme Court - a rule that has been challenged by numerous business and trade bodies. The federal government has issued a corrigendum order to make the High Court the first court of appeal, only for the commission to contest the order before the Supreme Court.
Shortly before the Competition Ordinance 2007 was due to expire - while still under review and with a number of issues unresolved - it was replaced by a new ordinance. Although on substantially similar lines, the Competition Ordinance 2009 has a broader scope of application. It must now be ratified by both houses of Parliament.
The Competition Ordinance 2007 dissolved the Monopoly Control Authority and established the Competition Commission. New concepts and practices were introduced by the ordinance for which there is no precedent in Pakistan and which may directly affect commercial transactions that take place in, or are related to, markets in Pakistan; questions also remain about mergers abroad.
The Patent Cooperation Treaty (PCT) provides the best option for obtaining an international patent. Pakistan plans to accede to the Madrid Protocol in 2019 and become a contracting member of the PCT in 2020. In this regard, the Intellectual Property Organisation of Pakistan is in the process of updating its IP laws, including the Patent Ordinance 2000, to incorporate the relevant PCT provisions.
In a recent case, the appellant challenged the Additional District Court's decision to dismiss a permanent injunction issued against the respondent for its adoption of a mark that was confusingly similar to that of the appellant. The decision reflects that unregistered trademark rights can be protected through a passing-off claim where it can be established that the trademark has gained distinctiveness as a result of its continuous use over time.
An appellant filed an appeal in the High Court challenging a district judge's decision dismissing an application for the grant of a temporary injunction against the respondent's use of a trademark. The appellant had registered a similar mark subject to a disclaimer regarding exclusivity. However, the court found that such a disclaimer limits the extent of the exclusive rights that a registration may provide a rights holder and dismissed the appeal.
Intellectual Property Organisation consults with enforcement agencies to improve Pakistan's IP imagePakistan | 16 October 2017
IP enforcement agencies recently held a meeting at the Intellectual Property Organisation to discuss how to improve Pakistan's international IP image. At the meeting, certain proactive approaches were adopted, including improving coordination between different government organisations and providing timely IP reports to Pakistan's missions abroad. These measures will allow Pakistan to keep up to date with progress in the protection of IP rights and provide a basis for comparison with other international standards.
High court uses 'moron in a hurry', Lapp and classic trinity tests to decide trademark infringement casePakistan | 31 July 2017
When deciding an appeal regarding infringement and passing off of the appellant's mark, the Sindh High Court applied the standard 'moron in a hurry', Lapp and classic trinity tests to determine the get-up and similarity of the marks in question. The high court decided in favour of the appellant and overruled the lower court's decision by disallowing registration of the defendant's competing mark.
A new chapter regarding IP rights enforcement has been added to the Customs Rules 2001. The new chapter provides a mechanism by which rights holders with valid grounds for suspicion that infringing goods are being imported into Pakistan can make an application (in the prescribed format) to the Directorate General of IP Rights when the goods arrive at the notified customs station.
Following consultation with stakeholders, the Intellectual Property Organisation of Pakistan recently published the Draft Geographical Indication Protection Bill 2016 on its website for discussion. As there are minimal provisions relating to geographical indication protection in existing IP legislation, there is a need for comprehensive legislation to provide improved protection and public awareness of geographical indication products in Pakistan.
The Intellectual Property Organisation recently announced that it has signed a memorandum of understanding with the Federal Board of Revenue for data sharing and further cooperation. The memorandum of understanding marks a major collaboration with the Federal Board of Review's IP rights enforcement agencies and aims to address the violation of IP rights and issues of piracy and counterfeiting in Pakistan.
A recent Supreme Court case found that adding a prefix to an existing trademark or the dominant feature of an existing trademark is not enough to prevent a trademark registration being refused. The court noted a growing tendency to misappropriate trademark rights by seeking protection under copyright law. The decision highlights the proactive approach that the Pakistan judiciary has adopted towards protecting IP rights in trademarks.
The federal government recently established IP tribunals in Punjab, Sindh and Islamabad Capital Territory to adjudicate on IP disputes under presiding officers selected from high court, district and session court judges or attorneys who qualify for appointment through their expert knowledge of IP law. The act also provides that in cases of a technical nature, tribunals may be assisted by IP rights experts.
The Sindh High Court recently refused to grant interim injunctive relief to Aldo and allowed a local company to sell shoes under the brand The Aldo Shoes. In its decision, the court gave due weight to the fact that Aldo has no stores in Pakistan and that the defendant's shoes are sold only through its own store; therefore, the goods concerned reach the market through different trade channels.
The Directorate General of Intellectual Property Rights (Pakistan Customs) was recently established. This body will primarily focus on the enforcement of Pakistan's IP laws – in particular, the import or export of counterfeit products. It will also be the Federal Board of Revenue's centralised contact office for national and international organisations working for the promotion of IP rights.
The High Court of Sindh has issued a significant decision addressing company trademark applications that are filed in all classes of the Nice International Classification of Goods and Services. The case confirms that the classes of goods and services for which registration is sought must relate to the objects clause of the applicant's memorandum of association.
Following Coca-Cola Pakistan's launch of the sixth season of its Coke Studio music programme, the plaintiff in a recent case claimed that the copyright for his unique idea of having foreign and local artists perform together in a musical programme had been infringed. The court's refusal to accept this claim constitutes an important development with respect to copyright protection for ideas in Pakistan.
With the establishment of a Pakistani domain name registry and the introduction into the Trademarks Ordinance of provisions dealing with domain names, effective mechanisms for the registration and protection of domain names as trademarks are now firmly in place. Resolution procedures for domain name disputes also help to keep the unauthorised adoption of trademarks as domain names in check.
The Copyright Ordinance and corresponding Copyright Rules are in place to extend protection to various copyright works in Pakistan. Since its inception, the ordinance has been amended periodically to conform to international agreements and conventions, extend copyright protection to new technologies and provide better remedies for copyright infringement.
A high court decision has accorded protection to the well-known trademark LUMINARC under the Trademarks Ordinance and granted an injunction restraining use of the infringer's LUNIMARC mark. The case shows that with the introduction of new provisions extending protection to well-known trademarks, the judiciary has taken a more proactive role in protecting IP rights for trademarks.
As a signatory to both the Paris Convention for the Protection of Industrial Property and the Agreement on Trade-Related Aspects of Intellectual Property Rights, Pakistan recognises the concept of a well-known trademark and is bound to extend protection to such marks. The Trademarks Ordinance 2001 contains several important provisions relating to well-known trademarks.
The Trademarks Ordinance recognises words, letters, devices, figurative elements, colours, sounds and combinations thereof as trademarks as long as they can distinguish the goods or services of one undertaking from those of other undertakings. This is a broad definition of what may constitute a trademark and is arguably wide enough to include three-dimensional shape marks, such as package designs.
The president recently promulgated the Intellectual Property Organisation of Pakistan Ordinance 2012. Among other things, it provides that the Trademarks Registry, the Patent Office and the Central Copyright Office will become part of the Intellectual Property Organisation of Pakistan. The ordinance also creates new tribunals to conduct trials of IP offences.
The Competition Commission has ruled that a company's manufacture, marketing, sale and export of leather jackets that bore other parties' trademarks without authorization were fraudulent acts and constituted deceptive marketing practices under the Competition Ordinance.
The registrar of trademarks has rejected an application to register the trademark ASTELIN following opposition by the original proprietor, Medpointe Healthcare, which was unable to show registration or use of the mark in Pakistan, but had prior registrations and use abroad. Among other things, the registrar ruled that the applicant's adoption of the mark had been dishonest, making its use of the mark in Pakistan irrelevant.
Pakistan is making ongoing efforts to revise and upgrade its IP legislation. The statutory powers are in place, but the problem of effective enforcement remains. However, the agencies concerned are now empowered to uphold IP rights and eliminate piracy and counterfeiting. This update considers the legislative basis for IP rights enforcement and the entities involved.
Parties that import, export, sell or produce pharmaceutical products must consider the Drugs Act and other sector-specific rules alongside the IP ordinances. Pakistan's framework of regulations on such products sets out rules and guidelines on issues such as parallel imports and repackaging, anti-counterfeiting enforcement and generic substitution.
The Patents (Amendment) Ordinance 2006 recently came into force. The amendments essentially remove the time limits within which the Patent Office must review applications for the grant of patents. The amendments thus seem to provide greater flexibility for the patent application system; however, applicants are exposed to an unpredictable and discretionary legal environment.