The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs. 40 million on Al-Ghazi Tractors Limited (AGTL) for violating competition laws by promoting a misleading claim about fuel efficiency.

The verdict was delivered by a CCP bench comprising Chairman Dr. Kabir Ahmed and Member Salman Amin.

In January 2022, AGTL published a front-page advertisement in a prominent Urdu-language newspaper, asserting that its New Holland tractor models delivered “up to 30 percent extra diesel savings compared to any competitor’s tractors.”

The company cited a report from the Agricultural Mechanization Research Institute (AMRI), Multan, as the source of its claim. However, the CCP investigation revealed that AMRI had not issued any report supporting the 30 percent savings claim. In fact, AMRI had formally warned AGTL to stop misusing its name and demanded the retraction of the advertisement.

The report AGTL referenced only included performance tests between AGTL tractors and those of a single competing brand it did not provide a market-wide comparison.

Furthermore, AMRI clarified that its report only offered general guidance on energy efficiency and did not serve as an endorsement of any specific model’s fuel performance.

Despite these facts, the company presented the claim as if it applied universally across the market, leading to complaints from stakeholders. The CCP subsequently issued a show cause notice to AGTL in January 2024.

AGTL’s legal counsel contested the notice, arguing that the Commission had neither conducted a complete inquiry nor accurately interpreted the advertisement.

Nonetheless, the CCP bench ruled that sufficient evidence existed to proceed under Section 30 of the Competition Act, and that a formal inquiry under Section 37 was not required.

In a country where over 60 percent of the population is directly or indirectly dependent on agriculture, misleading advertising can have severe consequences, according to the press release issued today.

For small-scale farmers, a tractor is a critical and long-term investment. Being influenced by an exaggerated claim of fuel efficiency could lead to higher costs over time, undermining their already vulnerable financial stability.