Such situations most often arise when the marketing department either fails to seek legal advice or ignores its recommendations to avoid misleading consumers.
Often, in order to achieve immediate market advantages and oust competitors in a particular niche, marketing departments of manufacturing companies resort to such seemingly innocent actions as
– the image on the packaging, label or bottle of a product, as well as in advertising materials, of the flag of the country or area with which they want consumers to associate the product (most often this happens with alcoholic beverages, pasta, confectionery);
– the image on the product’s packaging, label or bottle, as well as in advertising materials, of the country or area from which the product may originate;
– indication on the product’s packaging, label or bottle, as well as in advertising materials, of the language of the country from which the product may originate;
– indication on the product’s packaging, label or bottle, as well as in advertising materials, of traditional national elements of clothing, interior, utensils, food, etc. that are associated with a particular country or area in the minds of consumers.
Unfortunately, the quick advantages achieved through such actions often come at a high cost, as competitors are not asleep and monitor such things, allowing them to file unfair competition claims with the Antimonopoly Committee. In some cases, the Antimonopoly Committee initiates such investigations on its own.
If a violation is proved, the AMC authorities may impose a fine of up to 5% of the income (revenue) from the sale of products (goods, works, services) of a business entity for the last reporting year preceding the year in which the fine is imposed, in accordance with the Law of Ukraine “On Protection against Unfair Competition”.
At the same time, failure to pay such a fine immediately leads to the accrual of a penalty, which in most cases reaches 100% of the fine in addition.
One of the most recent examples of such cases was the completion of the consideration by the Antimonopoly Committee of Ukraine of a case in which WINAL LLC was fined for disseminating misleading information about the origin of Ukrainian cognacs under the ADJARI designation, which could have influenced the intentions of an indefinite number of persons to purchase these wine products, considering them to be Georgian.
Thus, during the consideration of the case, the AMC of Ukraine found that VINAL LLC, through third parties, disseminated information about Ukrainian wine products “ADJARI”:
– by means of television
– by radio broadcasting channels;
– on the Internet.
In particular, videos dubbed in Ukrainian under the codename “Adjari” were distributed on television and on the Internet.
Based on the results of the analysis of the content of such videos, the AMC of Ukraine found that they disseminated information that could influence the intention to purchase these products as Georgian.
This is evidenced by the results of a consumer survey conducted by the Committee.
According to the law, it is prohibited to pass off Ukrainian wines, Ukrainian cognacs and mixtures (blends) with foreign wines (wine materials, cognacs, cognac spirits) as foreign wines.
Taking into account the totality of the evidence in the case, the Antimonopoly Committee of Ukraine decided to recognize the actions of WINAL LLC as a violation under Article 15-1 of the Law of Ukraine “On Protection against Unfair Competition”.
WINAL LLC was fined UAH 10 million.
Based on the current practice in Ukraine, with a high probability of more than 99%, I can predict that the company will appeal the decision of the AMC of Ukraine, so we will follow this case and hope that this expensive experience will be taken into account by other manufacturers in developing marketing and advertising strategies.
(information on the case from the official news on the website of the AMC of Ukraine https://amcu.gov.ua/news/za-vvedennya-v-omanu-spozhivachiv-shtraf-10-mln-grn)
