Castel fined K500,000 over aborted promotion

Competition and Fair Trading Commission (CFTC) has fined Castel Malawi for cancelling a promotion without notifying customers about the cancellation.

According to CFTC, it commenced investigations into Castel Group (Malawi) Limited on 1st March this year.

Castel was running a promotion where lucky winners who, after buying “Carlsberg Special” and “Castel” beers and found a symbol of a bottle of beer inside the bottle top, automatically won a prize of one free bottle of that type of beer.

The company indicated that they intended to run the promotion, however, the promotion was cancelled. The cancellation of the promotion was not effectively communicated to customers.

Furthermore, the beer that was being supplied on the market was still bearing the promised (beer) prizes inside the bottle tops.

CFTC’s investigation established that by the time Castel supplied the beer, the promotion had already been cancelled. Castel knew that the prizes inside the bottle tops would not be given out, but proceeded to supply the promotional products onto the market regardless.

The Commission found that the company engaged in the conduct of offering gifts or prizes with no intention of supplying them, which is in contravention of section 43(1)(j) of the CFTA and misleading advertising, which is in contravention of section 43(1)(j) of the CFTA.

The Commission resolved that Castel should pay a fine of MK500,000 over the issue.

According to a statement released yesterday and signed by CFTC Acting Executive Director Apoche Itimu, the Commission has considered, adjudicated and noted a total of 61 cases, which included 56 cases of unfair trading practices and five cases of anti-competitive business practices.

Other companies which have been fined include Be Forward, Agora, Capital Foods and Blantyre Dairy.

One of the cases involved Maula Pharmacy and the case was opened after inspection conducted on 3rd February, 2021 in Lilongwe where the Commission found that Ace Pharmacy was selling Ivermectin drug, at K72,000 per box of 20 tablets (thus K3,600/tablet).

The product’s market benchmark retail price was K500-K1,000 per tablet. Ace Pharmacy submitted that Maula Pharmacy supplied them the product at K68,750.00 per box of 20 tablets, (thus K3,437.50 per tablet). The Commission considered the alleged price of K3,437.50 per tablet to be way above the product’s benchmark retail price.

During investigations, Central Medical Stores Trust told CFTC that a box of Ivermectin containing 100 Tablets was being sold at K10,175.09 (MK101.75/tablet). The benchmark price on the market was around K500-K1,000.

The evidence showed that the product’s selling price by Maula Pharmacy was MK3,437.50/tablet. The pharmacy failed to provide documented evidence or receipts to show that their pricing was not unreasonable and excessive. The Commission resolved that the pharmacy should pay a fine of K500,000.

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