Coffeehouse fined Rs5mln for feigning to be Starbucks

ISLAMABAD: The Competition Commission of Pakistan (CCP) on Monday imposed a penalty of Rs5 million on a Lahore-based café, owned by Options International (SMC-Pvt.) Limited (Options) for fraudulently using the official logo of Starbucks Corporation, the international coffeehouse chain.

The CCP in an official announcement said the Starbucks Corporation is registered in the State of Washington, United States of America, and ran an international network of coffeehouses by its authorized operators, licensees, and franchisees operating in more than 66 countries uniformly using the Starbuck marks.

The penalised café was found to have violated the Section 10 of the Competition Act, 2010, the commission said.

Starbucks had sent a formal complaint to the CCP that ‘Options’ was engaged in the marketing, advertising, selling, and offering to sell "Starbucks coffee" using the Starbucks marks on the sign board of its coffee houses and restaurants, including on the packaging material, menus, flyers, its Facebook page, and other promotional material, without any authorisation.

The practice was not only harming the business interest of Starbucks, but also deceiving the consumers.

The CCP’s enquiry established that Options had violated Section 10 of the Competition Act by fraudulently using the official trademark of Starbucks. On the enquiry’s recommendations, a show-cause notice was issued and hearings were held.

During the proceedings, the CCP received another application from Starbucks seeking an interim order in the case to prevent further damage to its business and goodwill until the commission concludes its proceedings.

On August 17, 2018, the CCP passed an interim order directing Options International to immediately stop using Starbucks logo in its products until the conclusion of the proceedings and issuance of the final order.

In the final order, the CCP bench noted that although Options has stopped using Starbucks marks and also filed commitment to comply with its directions; however, since the unauthorised use of Starbucks marks spanned over a substantial period of time, the bench imposed a penalty of Rs5 Million on the company.

The bench directed ‘Options’ to inform the general public through newspaper advertisements for three consecutive days from the date of the order about its fraudulent use of the Starbucks marks.

The CCP is mandated under the Competition Act to ensure free competition in all spheres of commercial and economic activity, to enhance economic efficiency and to protect consumers from anti-competitive practices including deceptive marketing practices.