Pakistani company fined for fake Starbucks hit with higher penalty

June 01, 2024 (MLN): The Competition Appellate Tribunal (CAT) has dismissed the appeal filed by Options International (SMC-Pvt.) Limited, a Pakistani company penalized by the Competition Commission of Pakistan (CCP) for the fraudulent use of the international coffee chain STARBUCKS' branding in its restaurants.

In its decision, the CAT increased the penalty from the originally imposed Rs5 million to Rs6m.

STARBUCKS lodged a formal complaint that the Lahore-based restaurant, Options International, was selling “Starbuck Coffee” while fraudulently using “STARBUCKS MARKS,” in their branding thereby deceiving consumers and harming its business interests. STARBUCKS clarified that it had not opened any franchise in Pakistan.

The CCP’s inquiry concluded that Options International had prima facie violated Section 10 of the Competition Act by disseminating false and misleading information, deceiving consumers, and harming the business interests of the complainant.

During the inquiry, Options admitted to the violation.

During proceedings, CCP passed an interim order on STARBUCKS’ request, directing Options International to stop using the labeling and packaging bearing the STARBUCKS trade name and logo without authorization.

In its final order, CCP's bench noted that although Options had stopped using STARBUCKS MARKS and committed to complying with its directions.

Yet, the unauthorized use of the STARBUCKS MARKS spanned a substantial period. Consequently, the bench penalized Rs5 million on the company.

Additionally, the bench directed Options International to inform the general public through newspaper advertisements for three consecutive days about its fraudulent use of the STARBUCKS MARKS.

Options International filed an appeal against the CCP’s order before the CAT, which dismissed the appeal and increased the penalty amount.

This decision underscores the CCP’s commitment to curb deceptive marketing practices through fraudulent use of trademark, firm name, or product labeling or packaging of a local or foreign business concern.

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