Local restaurant Fined Rs6m for fraudulent use of "STARBUCKS" name

August 13, 2024 (MLN): The Supreme Court of Pakistan upheld the Competition Appellate Tribunal's (CAT) order imposing a penalty of Rs6 million on a local restaurant chain for deceiving consumers by fraudulently using "STARBUCKS" branding for selling its coffee.

STARBUCKS, a globally recognized chain of coffeehouses registered in the State of Washington, filed a formal complaint that the Lahore-based restaurant, Options International, was selling “Starbucks Coffee” while fraudulently using “STARBUCKS MARKS” in its branding.

The Supreme Court ruled that the appellant, “Options International,” unfairly promoted its products by selling them under the international brand name Starbucks and using its logo.

This practice distorted competition in Pakistan, disadvantaging local vendors who sold similar products, as consumers would perceive them as genuine Starbucks products.

The CCP’s inquiry concluded that Options International had prima facie deceived its consumers and harmed the business interests of their competitor by disseminating false and misleading information.

During the enquiry, Options admitted to the violation. In its order, CCP's bench noted that although Options had stopped using STARBUCKS MARKS and committed to complying with the Commission's directions, the unauthorized use of STARBUCKS MARKS spanned a substantial period.

The CCP bench, besides baring M/s Options International from using STARBUCKS MARKS, imposed a penalty of Rs5m on Options International. Additionally, the bench directed Options International to inform the general public through newspaper advertisements for three consecutive days about its fraudulent use of STARBUCKS MARKS.

Options International filed an appeal against the CCP’s order before CAT, which dismissed the appeal and increased the penalty amount from Rs5m to Rs6m and modified the daily penalty.

Subsequently, M/s Options International has filed an appeal to the Supreme Court of Pakistan against the CAT’s order, which the court dismissed.

Using distorted or misleading information and trademarks for marketing of products violate competition laws as it can influences consumer decisions and may prevent them from considering alternative products.

The CCP is committed to safeguarding consumers and businesses from deceptive marketing practices through spreading awareness and strict enforcement of competition laws.

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