STUDY OF THE UNFAIR TRADE PRACTICES IN CONSUMER PROTECTION ACT "Unfair trade practice" means a trade practice which,

for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely; (1) The practice of making any statement, whether orally or in writing or by visible representation which, (i) Falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model; (ii) Falsely represents that the services are of a particular standard, quality or grade; (iii) Falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods; (iv) Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have; (v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have; (vi) Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; (vii) Gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof; Provided that where a defense is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defense shall lie on the person raising such defense; (viii) Makes to the public a representation in a form that purports to be (i) A warranty or guarantee of a product or of any goods or services; or (ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out; (ix) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made; (x) Gives false or misleading facts disparaging the goods, services or trade of another person. Explanation. - For the purposes of clause (1), a statement that is (a) Expressed on an article offered or displayed for sale, or on its wrapper or container; or (b) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or (c) Contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained; (2) permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are,

reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement. Explanation .For the purpose of clause (2), "bargaining price" means (a) A price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or (b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold; (3) Permits (a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole; (b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest; (3A) withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme. Explanation. For the purposes of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time, published, prominently in the same newspapers in which the scheme was originally advertised; (4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods; (5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services. (6) Manufacture of spurious goods or offering such goods for sale or adopts deceptive practices in the provision of services. (2) Any reference in this Act to any other Act or provision thereof which is not in force in any area to which this Act applies shall be construed to have a reference to the corresponding Act or provision thereof in force in such area. Case 1: New Pepsodent vs. Colgate case A brief overview of the case In the New Pepsodent v Colgate case , HLL advertised its toothpaste New Pepsodent as 102% better than the leading toothpaste. In the television advertisement, samples of saliva are taken from two boys, one who has brushed with the new Pepsodent while another has brushed with a leading toothpaste. The saliva of the leading toothpaste shows larger number of germs. While the sample was being taken from the boys, they were asked the name of the toothpaste with which they had brushed in the morning. One boy said Pepsodent, the response of the second boy was muted, however, lip movement of the boy would indicate that he was saying Colgate. Also, when the muting was done, there was a sound of the jingle used in the Colgate advertisement. Colgate Palmolive (India) Limited complainant No.1 (hereinafter referred to as 'Colgate') filed a complaint along with complainant No. 2, claiming to be a consumer, before the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as the

"Commission") against M/s. Hindustan Lever Limited complaining that the advertisement campaign of the letter regarding its dental cream New pepsodent disparages the leading toothpaste namely Colgate Dental Cream manufactured by complainant No.1. It was further alleged that M/s. Hindustan Lever Limited was indulging in unfair trade practices. Along with the complaint, an application under section 12A of the Monopo- lies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the 'Act') was filed for interim relief. Analysis: Colgate Palmolive (India) Limited, the complainant filed a complaint, before the Monopolies and Restrictive Trade Practices Commission against M/s. Hindustan Lever Limited complaining that the advertisement campaign of the latter regarding its dental cream New pepsodent disparages the leading toothpaste namely Colgate Dental Cream. It was further alleged that M/s. Hindustan Lever Limited was indulging in unfair trade practices. The following points are against HLL: 1. In course of the advertisement when the child using the leading toothpaste is questioned, the jingle used in the background which closely resembled that of Colgate Palmolive Indias jingle. 2. In course of the advertisement when the child using the leading toothpaste is questioned, he mouthed out the words Colgate which was clearly visible 3. HLL claimed 102% anti-bacterial superiority over the leading brand; however their advertisements gave an overall impression of being better than the leading brand in dental care. Hence other factors like fighting germs, tooth decay could also be verified. 4. The consumer was not interested in the intricate behavior of the toothpaste but was only interested in the overall protection the toothpaste offered to teeth therefore the proceeding could not be confined only to the anti-bacterial statement made by HLL. The following points are in favour of HLL: 1. The term leading brand need not refer to Colgate only even though at that time Colgate was the leading brand in the market with 60% market share. This was because it is not necessary for a consumer to be aware of who is the leading brand in the market. Colgate India along with the complaint filed for an interim relief under article 12A of the MRTP act. The MRTP act is explained as below Section 12A POWER OF THE COMMISSION TO GRANT TEMPORARY INJUNCTIONS (1) Where, during an inquiry before the Commission, it is proved, whether by the complainant, Director General, any trader or class of traders or any other person, by affidavit or otherwise, that any undertaking or any person is carrying on, or is about to carry on, any monopolistic or any restrictive, or unfair, trade practice and such monopolistic or restrictive, or unfair, trade practice is likely to affect prejudicially the public interest or the interest of any trader, class of traders or traders generally or of any consumer generally, the Commission may, for the purposes of staying or preventing the undertaking or, as the case may be, such person from causing such prejudicial effect, by order, grant a temporary injunction restraining such undertaking or person from carrying on any monopolistic or restrictive, or unfair, trade practice until the conclusion of such inquiry or until further orders.

(2) The Provisions of rules 2A to 5 (both inclusive) of Order XXXIX of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall, as far as may be, apply to a temporary injunction issued by the Commission under this section, as they apply to a temporary injunction issued by a civil court, and any reference in any such rule to a suit shall be construed as a reference to an inquiry before the Commission. Explanation 1: For the purposes of this section, an inquiry shall be deemed to have commenced upon the receipt by the Commission of any complaint, reference, or, as the case may be, application or upon its own knowledge or information reduced to writing by the Commission. Explanation II: For the removal of doubts, it is hereby declared that the power of the Commission with respect to temporary injunction includes power to grant a temporary injunction without giving notice to the opposite party. The commission prima facie came to the conclusion that a case of unfair trade practices had been made out against the respondent, and the reference in advertisements to famous toothpaste was to Colgate Dental Cream. Accordingly, an order of interim injunction was passed, retraining the respondent from referring to any Colgate toothpaste in any manner, either directly or indirectly, by means of any illusions, or hint, in TV commercials, newspaper advertisements or hoardings... The commission had then appointed an expert panel to verify HLL's claim by consulting independent experts. Observations: HLL had intentionally used the Colgate jingle and also the mouthing of the words Colgate by the child. Further they also projected their toothpaste to be superior to the leading brand in overall dental care. This was misleading to the consumer since it wasnt verified that Pepsodent was better than other toothpastes in overall dental care. Colgate contented the fact that since at the time of the advertisement, they were the leading brand in the market, the term better than the leading brand used by Pepsodent in their advertisement referred to Colgate. However, this could not be a pointed of contention since the consumer would not know who the leading brand is. Recommendations: HLL was in infringement of the MRTP Act since their advertisement projected that their toothpaste was superior in overall dental care and not only in anti-bacterial protection. This is against the Unfair Trade Practices Act which defines an unfair practice as, falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model. Even though the verdict for this case did not come out, we recommend that HLL was in violation of the MRTP Act, 1969 under Section 36A of unfair trade practices and the advertisement should be banned and suitable compensation to be given to Colgate Palmolive India Ltd. Case 2: HLL vs. Marico Facts: Approximately 55 per cent of the total market for hair oil products are with natural oil brands, such as, Parachute, Shalimar, Cococare, Nihar, Anmol, etc. The balance is with perfumed hair care products, which is further sub-classified as: heavy hair oil (Dabur

Jasmine, Bajaj Amla), light hair oil (Hair & Care, Dabur Special), cooling hair oil (Banphool, Keshraj), hair tonics/creams (Clinic Active, Brylcreem) and coconut based oils (Clinic Plus, Parachute Herbal). Marico, one of the major players in the branded coconut hair oil segment, launched a threeday mass media advertising warning consumers that a particular brand of hair oil (to be read as Clinic Plus Hair Oil from Hindustan Lever Limited) was 'not pure coconut oil'. The ad copy read: "When they say plus, they mean 42 per cent coconut oil plus 58 per cent paraffin"; and "When we say Parachute, we mean 100 per cent coconut oil. When you use coconut oil, don't buy diluted, buy 100% pure." The base line of the ad read: "100% coconut oil. 0% Paraffin." This Plus in the sentence was an obvious indirect reference to Clinic Plus. Though the competition was not named in the ad, it showed a bottle with a plus sign on it, bearing a striking resemblance to Hindustan Lever's Clinic Plus. Marico did not know that this would backfire. HLL complained to the Monopolies and Restrictive Trade Practices Commission (MRTPC). The charge was not against the comparison, but the fact that the two products wereincomparable. Analysis: Hindustan Lever Limited had moved the MRTP, claiming that the advertisement was an unfair trade practice. The 1984 amendments to the MRTP Act brought Unfair Trade Practices under its purview. It was done so that the consumer, manufacturer, suppliers, traders and others could conveniently identify the practices, which were prohibited. The 1984 amendments to the act brought Unfair Trade Practices within its ambit. Essentially, Unfair trade Practices fall under the following categories in the Indian Law: 1. Misleading advertisements and false representations. 2. Bargain sales, bait and switch selling. 3. Offering of gifts or prizes with the intention of not providing them and conducting promotional contests. 4. Product safety standards. 5. Hoarding or destruction of goods. Making false or misleading representation of facts, disparaging the goods, services or trade of another person is also a prohibited trade practice under the Indian Law. Under the Unfair Trade Practices Section 36A clause X, the advertisement propagated by Marico for Parachute not only disparaged another product but was also a false representation of the product. This was because:1. It did not mention that it was a hair oil. It qualified as cooking oil. 2. Marico was trying to portray paraffin as dilutant, though its own product Hair and Care contained higher levels of paraffin than Clinic Plus. Observations: Parachute did not mention on its bottle that the product was for hair application. This was done to put the product in a lower excise bracket. Thus, technically it qualified as cooking oil. So Parachute and Clinic Plus could not be compared. Following this logic, if Marico did want to compare then Clinic Plus could be compared to the companys other product, i.e. Hair & Care. This product incidentally contained 60% paraffin. HLL further argued that paraffin was

used to help dense oils flow well. So if Marico tried to portray paraffin as a dilatants, that was unfair. The arguments were too strong and what Marico tried to depict as their product superiority fell flat on its face. Within four days of filing a complaint, HLL obtained an exparte interim stay order on the Marico campaign. The campaign had to be stopped by Marico under the MRTP Act. And it issued a notice in public interest by the first week of August with the head line: "Misleading advertising by Parachute Coconut Oil stopped by the MRTP Commission." Recommendations: The judgment was rightfully in favour of HLL. Under the section 36A, no false claims regarding their products should be made by a company. Marico, in this case, is a well established company which had already positioned Parachute in the minds of the consumers. There was no need for Marico to malign another competitors product. Also, their main point of contention was that Clinic Plus contained high levels of paraffin while their own product Parachute Oil was a pure coconut based product. This comparison was invalid because Parachute Oil did not qualify as hair oil. On the other hand, Maricos own product Hair and Care was found to contain even higher levels of the chemical. Maricos strategy failed miserably because it was not left with any lawful reason for defending its product. Case 3: Reckitt & Colman of India Ltd. v. Kiwi T.T.K. Ltd Facts: In Reckitt & Colman of India Ltd. v. Kiwi T.T.K. Ltd., the plaintiff company is engaged in manufacture and sale of consumer products and one of the products of the plaintiff is liquid shoe polish being manufactured and marketed by them under the name and style of Cherry Blossom Premium Liquid Wax Polish. Defendant is also engaged in the manufacture of polish and one of the brands being manufactured and marketed by the defendant is "KIWI" brand of liquid polish. It is alleged that the liquid polish being marketed by the defendant and some other manufacturers have much less wax contents and more acrylic contents as compared to the liquid polish of the plaintiff. The acrylic base allegedly tends to form a film on the footwear which over a period of time is liable to crack and thus damage the footwear. It is, therefore, stated that the liquid polish of the plaintiff having wax rich formula is better than the other polishes. The liquid polish of the plaintiff is sold and marketed in angle neck bottles which are alleged to have easy application of the polish to the footwear. An imported applicator is alleged fitted on to the bottle which is strengthened by chemical flocking on the surface as also by riveting the sponge on to the plastic applicator base. The plaintiff has claimed its product to be superior to the similar product of the other competitors in every respect and it is stated that the plaintiff has 68% market share of the liquid shoe polish whereas the defendant has only 20% of such share. The defendant with a view to promote its product is displaying an advertisement through the electronic media. The advertisement of the defendant shows a bottle of "KIWI". From which the word "KIWI" is written on white surface which does not drip as against another bottle described as "OTHERS" which drips. The product shown to have been flowing from the bottle of "OTHERS" is from a bottle marked "Brand X" and allegedly looks like the bottle of the liquid shoe polish of the plaintiff for which the plaintiff allegedly has a designed registration granted in 1993 under design No. 165756. The bottle of "OTHERS" marked "Brand X" also has a red blob on its surface, which allegedly represents "CHERRY" which appear on the bottle of the plaintiffs product. Besides the advertisement in the electronic

media, defendant had also been circulating a "point of sale" poster material at shops and marketing outlets selling similar products. It is alleged that in the said poster material circulated by the defendant, the bottle shown, as "OTHERS" with a faulty applicator allegedly resembles the applicator of the plaintiff. The advertisement was regarded as comparative advertisement and can be defined as advertising that compares one product or service with another or that states that one product works with or is compatible with another. Five principles were laid down by the Court to decide as to whether a party is entitled to an injunction were as under: 1. A tradesman is entitled to declare his goods to be best in the words, even though the declaration is untrue. 2. He can also say that my goods are better than his competitors', even though such statement is untrue. 3. For the purpose of saying that his goods are the best in the world or his goods are better than his competitors' he can even compare the advantages of his goods over the goods of others. 4. He, however, cannot while saying his goods are better than his competitors', say that his competitors' goods are bad. If he says so, he really slanders the goods of his competitors. In other words he defames his competitors and their goods, which is not permissible. 5. If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation. It was held that a manufacturer is entitled to make a statement that his goods are the best and also make some statements for puffing of his goods and the same will not give a cause of action to other traders or manufacturers of similar goods to institute proceedings as there is no disparagement or defamation to the goods of the manufacturer so doing. However, a manufacturer is not entitled to say that his competitor's goods are bad so as to puff and promote his goods. Analysis: The Monopolies and Restrictive Trade Practices, 1984 (MRTP Act) (amended in 1984 to include unfair trade practices) and the Trade Marks Act, 1999 (TMA) work in tandem to provide the basic structure that governs comparative advertising in India. The Trade Marks Act had replaced a 1958 law, and it was seen as an attempt to balance the conflicting interests of the rights of registered trade mark owners and a compelling consumer interest in informative advertising. Statutory protection for trade mark owners was extended to cover services and not just goods as was previously the case. However, s. 30(1) has provided an escape route for what would otherwise have been an infringing act. Section 30(1) of the Act read as: Nothing in Section 29 shall be preventing the use of registered trademarks by any person with the purposes of identifying goods or services as those of the proprietor provided the use: a) Is in accordance with the honest practices in industrial or commercial matters, and b) Is not such as to take unfair advantage of or to be detrimental to the distinctive character or repute of the trade mark. This is subject to certain limitations, which are provided Section 29(8) of the Trade Marks Act, which read as: A registered trademark is infringed by any advertising of that trade mark if such advertising:a) Takes unfair advantage and is contrary to honest practices in industrial or commercial matters; or

b) Is detrimental to its distinctive character; or c)Is against the reputation of the trade mark. To infringe, the use must (a) be otherwise than in accordance with honest practices in industrial or commercial matters and (b) without due cause take unfair advantage of, or be detrimental to, the distinctive character or repute of the mark. Comparative advertising is also subject to certain other limitations contained in the definition of unfair trade practices, under s. 36A of the Monopolies and Restrictive Trade Practices, 1969. The ambit of the provisions has increased to include unregistered trademarks. The proprietor of an unregistered trade mark can institute an action of passing-off in case of comparative advertising disputes. The aforesaid amendments in the Indian trademarks law draw inspiration from Section 10(6) and 11(2) of the 1994 UK Trade Marks Act. Conclusion Government body MRTP too agreed that the bottle shown in the advertisement was that of Cherry Blossom and the ad was ruled a case of disparagement. Subsequently, Kiwi was asked to discontinue the same. The vast majority of the viewer of the commercial advertisement on electronic media are influenced by the visual advertisements as these have a far reaching influence on the psyche of the people, therefore, discrediting the product of a competitor through commercial would amount to disparagement as has been held by the High Courts and the Supreme Court of India as well as the Law laid down by Courts in U.K. & U.S.A. Whereas now the position of law in India in respect of disparaging advertisements of rival products is well settled. Although a tradesman is entitled to make an untrue declaration that his goods are the best, better than his competitors, and for that purpose can even compare the advantages of his goods over the goods of the others; he cannot say that his competitors goods are bad. Further, such use generally/specifically of a proprietor's product for a comparison with the rival product of another proprietor violates the first proprietor's intellectual property rights. But if a competitor makes the consumer aware of his mistaken impression, the Plaintiff cannot be heard to complain of such action. Recommendations Kiwi was rightfully was asked to discontinue the advertisement in accordance with the five principles laid down by the court that govern comparative advertising in India. According to these principles, a tradesman can claim his product to be better than his competitors but he cannot claim that his competitors product is bad. Kiwi tried to portray that Cherry Blossoms product is inferior to their and so was granted injunction.