The Competition Commission conducted an enquiry into Kaymu.pk (an online shopping platform) following a complaint received by an individual consumer and found that Kaymu.pk had been involved in deceptive marketing practices in violation of Section 10 of the Competition Act 2010 (for further details please see "Competition Commission finds that online shopping platform violates Competition Act").

Facts

While relying on Kaymu.pk's assurance that it would act as a mediator in the event of any dispute arising between buyers and third-party sellers, the complainant ordered a wristwatch from a third-party vendor through Kaymu. The complainant alleged that Kaymu had failed to take any responsibility to resolve the matter when a different wristwatch was delivered.

As a result of its findings – and in the interest of the public at large – the Competition Commission initiated proceedings and issued a show cause notice to Kaymu on the ground that:

  • Kaymu had been involved in disseminating false and misleading information to consumers that lacked a reasonable basis regarding the character, properties and quality of its services under Section 10(2)(b) of the Competition Act; and
  • such conduct was capable of harming the business interests of competitors under Section 10(2)(a) of the Competition Act.

Without deliberating on the merits of the case, the Competition Commission focused on the maintainability of the proceedings under the Competition Act, issued the show cause notice and observed the following:

  • The Competition Act was enacted by Parliament with the primary aim of protecting consumers from anti-competitive practices and through Section 37 of the act the legislature has enabled the commission to exercise its jurisdiction in that regard.
  • Section 37 is unambiguously clear that the commission is empowered only to undertake an enquiry:
    • on its own;
    • following a federal government request; or
    • following a complaint filed by an undertaking or a registered association of consumers.
  • The proceedings were initiated following a complaint filed by Umair Ali as a consumer and not an undertaking. The act defines an 'undertaking' as:

Any natural or legal person, governmental body including a regulatory authority, body corporate, partnership, association, trust or other entity in any way engaged, directly or indirectly, in the production, supply, distribution of goods or provision or control of services and shall include an association or undertakings.

  • The term 'consumer' is not used in the definition of an undertaking nor defined in the act. However, the term is used in other provisions in the act. While relying on the definition of consumer under the provincial consumer protection laws, it was established that a 'consumer' can be defined as "a user of a good or beneficiary of a service" and that it "does not include a person who obtains such goods for resale or for any commercial purpose or is rendering services". As such, the legislature has excluded consumers from any other legal entity which is engaged in the provision of goods or services.
  • The terms 'undertaking' and 'consumer' have been used distinctively in the Competition Act and cannot be used interchangeably. Therefore, the term 'undertaking' excludes consumers.
  • With regard to whether an enquiry can be initiated following a complaint filed by a consumer under Section 37(2) of the Competition Act (which allows the Competition Commission to conduct enquiries only after receiving written complaints from an undertaking or registered association of consumers), the commission relied on the guidelines issued in National Feeds Limited v The Competition Commission of Pakistan (reported at 2016 CLD 1688). The provision is instructive of the legislative intent and sets out the pre-conditions for initiating any such enquiry. The commission also relied on the principle upheld by the courts that "when a law requires a particular thing to be done in a particular manner, it can only be done in that manner and in no other manner, particularly when it may affect the rights of a person".

Decision

The Competition Commission found that the enquiry did not comply with Section 37(2) of the Competition Act and, as a result, proceedings could not be initiated against Kaymu. The enquiry report and the show cause notice were thus set aside and the complaint was remanded back to the commission registrar. However, the order also stated that it must not preclude the commission from authorising a de novo enquiry into the matter in accordance with the law.

For further information on this topic please contact Sanaya F Vachha at Vellani & Vellani by telephone (+92 21 3580 1000) or email ([email protected]). The Vellani & Vellani website can be accessed at www.vellani.com.

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