Who, really, is the emperor of ice cream? Those who might have encountered the elliptical Wallace Stevens poem might have been stumped by the significance of the titular figure.
But, in the Pakistani market it turns out, it was a much simpler equation. Here, it was, more or less, a case of ‘spot the odd one out’. And a recent decision by the Competition Appellate Tribunal has squarely confirmed this.
Only a few days ago the Tribunal upheld a December 2024 decision by the Competition Commission of Pakistan, which had decided that the two major players in the ice cream and frozen desserts market – namely Unilever and FrieslandCampina Engro had been falsely marketing their products as “ice cream,” while, in fact, they were “frozen desserts”. The Commission fined the corporations Rs 7.5 crore each, with Unilever being slapped with an added Rs 2 crore for a related violation.
These two corporations had taken this verdict up to the Competition Appellate Tribunal, which has now agreed with the findings of the Competition Commission. However, exercising their discretion, they have reduced the fines due to “mitigating circumstances”. The Rs 7.5 crore figure has been reduced to Rs 1.5 crore for each, while the Rs 2 crore sum has been cut down to Rs 50 lakh.
Whatever these reduced sums might mean, the story behind these fines is more interesting. It was a battle fought between giants. Unilever Pakistan, the biggest ice cream and frozen dessert manufacturer in Pakistan, was one. FrieslandCampina Engro Pakistan, the second biggest player in the market, was another. Together, in 2023, they accounted for over 60 percent of the market. Taking these two on was the comparatively modest Pakistan Fruit Juice Company, which had commanded a mere 2 percent share in that year.
The stakes couldn’t be higher: who, in fact, could claim to be producing “ice cream,” let alone claim to be the leading Pakistani player to be doing so.
At its core, it is a tale of three shifty terms – “ice cream,” “dairy ice cream,” and “frozen dessert” – and the sleight of hands that some companies had been relying on, swapping one for the other. Played in front of the Competition Commission of Pakistan, it is also a tale of self-contradictions, brazen denials, and furtive self-exonerations.
Any know-it-all can tell you that the delicious lollies you are biting on are, well akchually, not ice cream. But what made this distinction legally enforceable, and set giants of the desserts industry against each other in head-on collision, we will explore in this piece. We will also see how the Commission went about balancing consumer rights against the marketing strategies of massive corporations, and how and why it decided in favour of the former. In short, we will see how the Commission came to its decision.
The Complaint:
The matter started when Pakistan Fruit Juice Company – the company behind Hico ice cream – lodged a complaint against the respondents, Unilever Pakistan and FrieslandCampina Engro Pakistan Limited. Unilever’s product in question was the Wall’s brand, while for FrieslandCampina Engro, it was Omore.
The Pakistan Fruit Juice Company (let’s call it PFJC for short) brought its complaint before the Competition Commission of Pakistan (CCP) on 21 February 2022. It alleged that Unilever and FrieslandCampina Engro had engaged in deceptive marketing practices. Their products were actually “frozen desserts,” but they had instead falsely advertised them as “ice cream”. In doing so, it was alleged, these two companies had caused harm to the consumers as well as to the business interests of the PFJC.
Now, the PFJC’s supporting claim was that “ice cream” was a category distinct from “frozen dessert”. It asserted that while “ice cream” was primarily made from dairy fats (such as milk, cream, butter, etc.), “frozen desserts” on the other hand were composed of vegetable fats (e.g., palm oil). Moreover, to be considered an ice cream, the product must contain at least 10% milk fat and 10.1% nonmilk fat solids.
The PFJC alleged that by using phrases like “Thand mein ice cream,” “Creamy vanilla ice cream,” “Hey, yaar tu ice cream ho ke kaanp raha he,” and using the word “ice cream” and showing splashes of milk in their advertisements for frozen desserts, Unilever and FrieslandCampina Engro had engaged in deceptive advertising.
Moreover, PFJC claimed, the two respondents had failed to comply with the requirement to clearly indicate on the packaging of the products a phrase i.e. “frozen dessert contains edible vegetable oil”. Thus, they caused consumers to believe that their products were ice cream, which in fact they were not.
Now, this was also, of course, substantiated by a framework of rules and regulations that recognised the significance of this distinction. These were the Punjab Pure Food Rules (2011) and Punjab Pure Food Regulations (2018), which had defined the differences between the two types of products. And since the practices of the two respondents had contradicted these regulations, the PFJC argued, they were in violation of Section 10(2)(b) of the Competition Act, 2010.
This provision defined one type of deceptive marketing practice as “the distribution of false or misleading information to consumers, including the distribution of information lacking a reasonable basis, related to the price, character, method or place of production, properties, suitability for use, or quality of goods.” Section 10(1) just before this provision expressly prohibited any undertaking of “deceptive marketing practices”.
But this charge was not the whole of the PFJC’s complaint. It singled out Unilever (Wall’s) for another violation of the Competition Act (2010). This alleged violation concerned Section 10(2)(c) of the Act which defined yet another type of deceptive marketing practices as including “false or misleading comparison of goods in the process of advertising”.
PFJC’s basis for this argument was that Unilever had engaged in a false and misleading comparison of “frozen dessert” with “ice cream”, especially claiming that the “frozen dessert” was a healthier choice as compared to the “ice cream”. This behaviour was in the context of an earlier consumer advisory stance taken by the Punjab Food Authority, that had publicised that “frozen dessert” was not a substitute of “ice cream,” and had urged the parents to prefer “ice cream” over “frozen desserts” for their children.
So, there were essentially two issues before the court. The first was to determine whether both the respondents had disseminated false and misleading information to consumers and, in doing so, had violated Section 10(b) of the Competition Act 2010. The second was to determine whether Unilever in particular had engaged in a false and misleading comparison of goods, and had therefore violated Section 10(c) of the same Act of 2010.
Before we move on the how the CCP thought through these two issues, let us examine what Unilever and FrieslandCampina Engro had to say in their defence.
A Defence is Made:
Unilever argued that the food regulations mentioned by the PFJC in their complaint – including Punjab Pure Food Rules, 2011 and Punjab Pure Food Regulations, 2018 – were provincial standards, and not national standards. Only the latter standards were applicable all over Pakistan. It was a question, they argued, of which legal regime they were following. The Punjab rules just weren’t applicable.
Now, the reason Unilever made recourse to the federal standards was that, as framed by the Pakistan Standards and Quality Control Authority (PSQCA), the category “ice cream” was open to some interpretation. The standards for ice cream, i.e. PS 969-2010, identify “ice cream” as a general category, which has as its sub-categories “dairy ice cream” and “frozen desserts”. Therefore, Unilever argued, since their product clearly falls under the general category of “ice cream,” they were not forbidden from using this same category in their marketing campaigns.
Secondly, it was argued that since PSQCA’s regulations for packaging and labelling of “ice cream” products were the once actually applicable in this case, Unilever was not even obligated to provide any disclosure on the packaging. But, in a fervour of thrashing good faith, they had gone one step ahead of the required minimum, and still mentioned on the packaging that their concerned products were “frozen desserts”.
Regarding the second issue – the one regarding false and misleading comparison – Unilever argued that “dairy ice cream” and “frozen desserts” are “compositionally similar in nature,” with one key exception: the former contains only dairy fats, while the latter may consist of dairy or vegetable fats (or both). It argued that contrary of the public announcement of the Punjab Food Authority, there was no good reason to assert that “dairy ice cream” was inherently superior to “frozen desserts,” because the latter are usually lower in trans and saturated fats, but also provide a non-dairy option, which might be preferred for several health and dietary reasons.
As for FrieslandCampina Engro, it essentially said that Unilever’s arguments regarding the primacy of PSQCA’s standards were also applicable in its case. Moreover, it admitted that some of the Facebook posts advertising Omore products were erroneously published without any intention to mislead consumers. Those posts were not shared or advertised again. Here, their approach was to play down the significance of their posts by agreeing that they were wrong, but were mistakenly put out there, and not used again.
How did the CCP think through this Defense?
The CCP recognised, first of all, that there was some need to comparatively review both the Punjab food regulations and the standards set by the PSQCA. And the court reasoned that both were different rules which had different purposes.
The purpose of the PSQCA, the Commission reasoned, was to standardise a wide range of products in various business sectors. The Punjab Food Authority, on the other hand, was designed to enforce food hygiene and quality standards. So, the Punjab food laws were concerned with issues that were different from the concerns of the PSQCA. Their scopes were different; so the argument that the respondents had relied on – that one superseded the other – was not tenable.
Then, the Commission moved on to the main issue: were “ice cream” and “frozen desserts” similar products, or were they distinct enough to nullify the argument that “frozen desserts” were a sub-category of “ice cream”?
And in deciding this issue, the Commission pulled a delicious trick. It turns out Unilever Pakistan’s predecessor, Lever Brothers Pakistan Limited, had in 1992 found itself caught in a similar situation – what was the difference between “ice cream” and “frozen dessert”? The issue moved from the Single Bench of the Lahore High Court to the Division Bench of the same court to the Supreme Court. The Supreme Court finally maintained that “ice cream” would contain at least 10 percent milk fat, while products manufactured using the derivatives of milk fat or vegetable fat or a combination of both, would be called “frozen desserts”.
Lever Brothers had raised no objection to this, and this was one point where Unilever was caught. The Commission reasoned that they had to know the difference between the two products, since they themselves had accepted it – and were there – when the Supreme Court laid down the standard.
The Commission, in fact, doubled down on this line of reasoning. It argued that the behaviour and practices of both the respondents in the past shows that they were actually fully aware of the difference between the categories of “ice creams” and “frozen desserts”. In fact, it highlighted, the PSQCA issues separate license certificates bearing specific nomenclature i.e. specific licence for “frozen dessert” and a definite and separate licence for “ice cream”. This meant that the PSQCA itself recognizes “ice cream” as “dairy ice cream” as the same category.
And both Unilever and FrieslandCampina Engro knew of this difference because they had, in fact, obtained separate licences for different products! To top this all, both these companies were, in fact, branding and labelling their products as “frozen desserts” …
In order to really drive deeper the dagger, the Commission considered how the category “ice cream” was used in global food standards. And it turned out – examining the American, Indian, and Australian regulations – that it was used exclusively to refer to products containing milk fats. For similar products containing other kinds of fats, other categories like “mellorine” or “frozen desserts” were used.
So, this issue was a slam dunk for the Commission, really.
It found, therefore, that the respondents weren’t justified in using the generic term “ice cream”. And, here they also brought in something you might not have heard of: General Standards for the Labelling of Pre-packaged Foods. Yes, they exist, and stipulate that the name of the product “shall indicate the true nature of the food and normally be specific and not generic”. If their claim – that they were allowed to use the supposed general category of “ice cream” – were to be respected, even then the respondents had run afoul of this rule as well.
Then, the Commission concerned itself with the issue of the disclosures – that those products were “frozen desserts” – both respondents had made on the packaging of their products, Here, the Commission relied on zingers from past cases such as: “It is a settled principle that ‘fine print disclaimers are inadequate to correct the deceptive impressions’. In fact, such disclaimers are, in themselves, a deceptive measure.” The precedents stated that the disclosures had to be clear and conspicuous.
It turns out they were anything but. Unilever had placed these on the extreme right corner of the bottom of the wrapper, and FrieslandCampina Engro too had failed to prominently or appropriately place these proclamations. Both had failed to meet the requirements for appropriate disclosures here, as well.
Someone was watching out for the customers who barely care for the fine print, especially when the prospect of an ice cream looms in the instant future.
Decision and Coronation:
So, the Commission moved to decide upon the two issues highlighted earlier.
As for the violation of the Section 10(2)(b) of the 2010 Act, it decided that both Unilever Pakistan and FrieslandCampina Engro had violated the section in question by “marketing, branding, promoting and selling” their “frozen dessert” products as “ice cream”. In this regard, FrieslandCampina Engro’s argument that they had “erroneously” put up those posts, was deemed weak. The Commission said that their intent did not matter. The fact was that those posts were made where the public could access them.
Regarding the violation of the Section 10(2)(c) of the 2010 Act, the court set out to determine whether Unilever had made a false and misleading comparison of goods during the course of its marketing activities.
Here the commission pointed out that Unilever had not submitted any satisfactory evidence that proves ‘objectively’ that “frozen dessert” is healthier than “ice cream”. Since, the claim of being healthier was open to many variables and interpretations, the lack of any methodical research to substantiate their claim meant that they failed to establish its veracity. The mere fact that Unilever had claimed that their product was healthier than “ice cream”, and that the burden of proof was on the Enquiry Committee to prove otherwise, was not enough.
In fact, the Commission recognised that the burden of proof always lies on the one making the claim. It is they who must substantiate support of their claims, and not the Complainant or the Enquiry Committee. Unilever had merely provided information regarding the nutritional value of the components , which is at most a description of what the product is actually composed of or what the nutritional value of the product is. This nutritional information on its own is not enough to show how their product is objectively healthier than dairy ice cream.
Unilever had also tried to make a defence that their claim was directed against the announcement by the Punjab Food Authority, given that their claim came after that. The Commission was ready for this line too. Even if their claim was directed at the Authority, it didn’t change the fact that their claim was posted on social media, and the targeted audience of the post were ordinary consumers and not the Authority. They should have taken it up with the Authority, and not have tried to advertise their product to the general public.
And here, the Commission pulled out yet another dagger from its ankle straps. The fact that they were comparing their “frozen dessert” products to “ice cream,” and claiming that their products were healthier meant that while advertising their products as “ice cream,” they were preying on consumers for whom “ice cream” and “dairy ice cream” were one and the same thing. They knew all about it!
Unilever could not be allowed – in the words of the Commission – to “blow hot and cold in the same breath,” and was therefore liable for violation of this section as well.
All in all, the Commission fined both Unilever and FrieslandCampina Engro Rs 7.5 crore each for the breach of Section 10(2)(b) of the 2010 Act. In addition, it fined Unilever an additional Rs 2 crore for the violation of Section 10(2)(c) of the 2010 Act. And now, the Competition Appellate Tribunal has upheld the Commission’s findings, though it has reduced the fines.
And this is the story of how the brands Wall’s and Omore – which were the primary challengers of Hico’s position in the ice cream market – were dethroned from their ice cream thrones. You gotta be in the game to win the game. The former two were in some other game altogether, according to the Commission. And there was only one ice cream among these three.
