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Jotun Slapped on ‘No. 1’ Claims

Tuesday, March 24, 2015

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Jotun Pakistan has no basis for asserting the top position in its market and has been fined for perpetuating the boast in its ads, the government's anti-trust agency has said.

In an order March 17, the Competition Commission of Pakistan found Jotun Pakistan guilty of "deceptive marketing practices" by claiming the No. 1 market ranking for its country without any supporting data.

The practice violates Pakistan's 2010 Competition Act, which prohibits deceptive marketing, the commission said.


A Jotun "Inspiration Center" that opened last year in Qatar proclaimed the company "No. 1 in Paints." In Pakistan, however, the company is no longer allowed to make that claim.

The commission ordered Jotun Pakistan to remove all magazine ads, public and retail sign boards, billboards and other materials that make the claim. The company was also fined 1 million Rupees (about $16,070 USD).

The commission said the "token" penalty reflected Jotun's cooperation with authorities but warned that "future violations may attract stricter penal consequences."

Jotun, based in Sandefjord, Norway, did not respond to a request for comment.

Competitors Complaint

The case originated with complaints to the commission by AkzoNobel Pakistan Limited and Diamond Paints Industries Limited.

AkzoNobel filed the first complaint, saying that Jotun Pakistan's claim to be "No. 1 in Paints" was "disseminating misleading and false information to the consumers that lacks a reasonable basis, related to character, properties or quality of its product and is capable of harming the business interest of" AkzoNobel, according to the commission's order.

Diamond Paints Industries Limited

Diamond Paints was one of two competitors that accused Jotun Pakistan of deceptive marketing practices.

Diamond Paints then "raised the same contentions" in a separate complaint, the order says. A Commission inquiry concluded March 31, 2014, that Jotun Pakistan had no basis for the claim.

During the inquiry, the Commission ordered Jotun "to stop using the claim immediately and to remove all marketing material using such a claim." The report also recommended prosecution under the Competition Act. In hearings that followed, Jotun agreed to remove the materials, some of which were still in use.

Jotun Pakistan "has not provided any survey results or other data to support its claim of being the 'No. 1 Paint' in Pakistan" and did not deny that its claims were deceptive, the commission found.

High-End Appeal

Jotun opened its first manufacturing plant for liquid-applied paints only in 2013, although it had distributed in the country for years, The Express Tribune reported at the time. The company has produced powder coatings in Pakstan since 2003.

AkzoNobel Pakistan

AkzoNobel Pakistan was the first competitor to complain about Jotun Pakistan. Pakistan's Competition Commission takes such claims seriously. In 2012, the panel sanctioned AkzoNobel and 15 other companies for putting monetary takens in their paint packaging.

Pakistan is a "highly competitive" paint market, the news outlet reported. In 2008, it said, Jotun Pakistan made a new push for its decorative paints with higher-income customers. The company focused on premium formulations that carried higher prices.

"People now have more awareness of paints as they are upgrading their lives," Syed Ather, General Manager Commercial of Jotun Pakistan, told The Express.

"Paint market is growing. We do target the premium market, but also have products for the medium market. For lower end, we are not that much concerned for the time being."

'Growing Concerns'

The commission's order warned of the seriousness of deceptive advertising, saying that such pactices, "by shaping the standards and values that determine acceptable business conduct, can have a negative influence on business and the society as a whole."

The panel noted that deceptive marketing practices in the country "have given rise to growing concerns" among the public, consumer advocates and government agencies—leading, among other things, to the creation of the commission's Office of Fair Trade.

In fact, the shoe was on the other foot in 2012, when both ICI Pakistan (a business unit of AkzoNobel), Diamond Paints and 14 other paint companies were reprimanded by the Competition Commission for the longstanding practice of hiding monetary tokens for painters in paint packaging.

Jotun Pakistan was not among the companies sanctioned in that case.


Tagged categories: AkzoNobel; Business operations; Coating Business; Jotun; Marketing

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