Monopolies and Restrictive Trade Practices Commission
Kuoni Travels (India) Ltd. vs Thomas Cook (India) Ltd. on 28 September, 2001
ORDER
R.K. Anand, Member
1. The cause of action giving rise to the present proceedings is a full page advertisement which was issued by the respondent, Thomas Cook India Ltd. with the following headlines : "Ever wondered how tour operators pay for those free holidays ? They don't. You do. Beware of incredible offers. Look out for hidden costs". The advertisement goes on to highlight, in a tabular form, the tour prices charged by the respondent and the two applicants/complainants, namely, Kuoni Travels (India) Ltd. (SOTC) and Cox and Kings, respectively, for their tours to Europe and USA. It may be mentioned here that as the applicant/ complainant Cox and Kings does not operate tours to USA the Impugned advertisement gives the tour prices of tours to USA, of the respondent and the other applicant/complainant, SOTC only. The impugned advertisement appeared in the Times of India, in its issue of the 12th February, 2001. The grievance of both the applicants/ complainants, Kouni Travels (India) Ltd. as well as Cox and Kings is that the advertisement, in question, contains false statements and misrepresentations regarding the prices at which the applicants/complainants offer tour packages to Europe and U.S.A. and also makes false claims in respect of the respondent's own tour prices, and thereby, disparages the tours and services of the applicants/complainants. It has also been complained by them that the respondent, in the impugned advertisement, has falsely stated that the tour prices charged by the applicants/ complainants include hidden costs and that there are no free holidays and the customers/ consumers are actually paying for the free holidays offered as a part of the tour packages. In short, their main grouse is that these statements and representations, in the impugned advertisement, are false and misleading and disparage their services and, therefore, constitute an unfair trade practice within the meaning of Section 36A(1) of the MRTP Act, 1969 (the Act for brief).
2. The above two complaints filed under Sections 36A(i), (ii), (ix) and (x) of the Act were considered and as prima facie, a case of unfair trade practices was made out, a notice of enquiry dated the 19th February, 2001 was issued to the respondent in each of the two enquiries UTPE 12/2001 and UTPE 13/2001. At the same time, along with the complaint petitions, applications for interim injunction, under Section 12A of the Act, were also filed by both the applicants/ complainants. After hearing the learned Advocates representing the applicants/ complainants, an ex-parte ad interim injunction order was passed on the 13th February, 2001 and the respondent was "directed not to carry on the impugned advertisement or similar advertisements, aimed at disparaging the tours of the applicants/complainants and making false and misleading claims in respect of its own tours, forthwith."
3. As the cause of action giving rise to the two complaint petitions and the interim relief applications is the same offending advertisement and the respondent is also the same in both the cases, these applications under Section 12A of the Act are being taken up together for disposal by this single order. The respondent, in its reply to both the interim relief applications, has denied the allegations of adoption of and indulgence in unfair trade practices and, in particular, disparagement of the tours and services offered by the applicants/complainants. It has been further stated that there is no misrepresentation in respect of its own tour prices as no extra charges are collected by the respondent from their customers and its tour cost to Europe is US $1599 plus ticket taxes and visa fees of $ 64 and $ 85 respectively while the tour cost of both SOTC and Cox and Kings is US $ 1599 plus additional costs of US $ 99, $ 125, $ 127, $ 25, $ 40 arid $150 on account of high season surcharge, Eurostar Fare, Air fare surcharge. Week-end surcharge, Air show in Paris and Holiday Club Membership respectively, in addition to Visa fees and ticket taxes which are $138 and $ 74 for SOTC tours and $ 138 and $ 60 in respect of Cox and Kings tours. It has been further mentioned that there is no false or misleading representation considering that while the applicants/ complainants SOTC and Cox and Kings collect from a customer/consumer availing of their tour to Europe, a total amount of $ 2377 and $ 2363 respectively, the respondent's tour price is $ 1748 only and a customer spends Rs. 29,000/-less if he avails of the respondent's tour to Europe. It has also been contended that both the applicants/complainants charge holiday club membership of US $ 150 and the additional costs under various heads collected by the applicants/ complainants represent the hidden costs which are utilized for providing the so-called free holidays. It has been further pointed out that the surcharges and add-ons constitute the hidden costs which are paid by the customers in lieu of the free holidays and the free holidays are actually not free but are paid for by the customers. It has been further contended that the respondent does not charge any of these additional costs whereas, in addition to the basic tour price of $ 1599 for tour to Europe, both the applicants/ complainants, collect more than $ 500 and this additional amount represents the hidden cost which the customer pays for the holidays which are actually not free and, therefore, there is no misrepresentation in the impugned advertisement.
4. We have heard the learned Advocates representing the applicants/complainants as well as the respondent and also considered their written submissions. It has been stated on behalf of the applicants/complainants that there are no hidden or undisclosed costs as falsely represented by the respondent, in the impugned advertisement as these additional charges under various heads are clearly mentioned in their respective Brochures which are made available to the customers, when they book the tours. It has also been clarified that these additional costs, under certain heads', recovered from the customers, are not retained by the applicants/ complainants and are actually paid to the Airlines, Hotels, Embassies etc. Their case is that SOTC's "Let's Go Holiday Club" scheme and "Free Travel Club Membership" offered by Cox and Kings are purely optional and the amount of $150 is collected from only those customers who wish to avail of free holidays and, therefore, it is not a part of the tour cost and in fairness, should have been deducted from the total tour prices indicated in a tabular form, in the impugned advertisement. It has also been stated that Cox and Kings also gives to the customers a "redemption gift voucher" of $ 250, by way of refund, while SOTC contributes Rs. 10,000/- per customer to the Gujarat Relief Fund which is an income-tax benefit to him, but these special features of the tours are not highlighted in the impugned advertisement which is thus not only false but it also misleads the customers into believing that their tours prices for European tour are higher by Rs. 29,000/- than that of the respondent. It has also been stated that the tours to Europe operated by Cox and Kings are of 15 days duration and stay for one more day and night in Europe costs money but in the calculation of the tour price, credit is not given and an unfair comparison of tour prices is made and as a result, the tours of applicants/complainants are disparaged. Similarly, it has been pointed out that SOTC provides all the three meals (breakfast, lunch and dinner) while the respondent does not give lunch but this fact is not reflected in the calculation of tour prices and no credit in given for this additional benefit enjoyed by the customer and the money saved by him. It has been further mentioned that if the costs incurred on additional day and night and free lunches offered by Cox and Kings and SOTC respectively are also computed, the difference in tour prices would be considerably reduced and the customres wishing to avail of the tours would not be misled into believing that the tour, prices of the applicants/ complainants are higher by Rs. 29,000/- which is not the case. Similarly, it has been pointed out that the respondent is falsely representing that its tour to USA costs less by Rs. 34,000/- than that of SOTC whereas actually, the difference in tour prices is much less.
5. Prom the rival contentions and claims and counter claims of the parties, the point which arises for determination, is, whether the impugned advertisement falls foul of the provisions of Section 36A(i), (ii), (ix), (x) of the Act. It is not disputed or dented that like the applicants/complainants, the respondent is also offering tour packages and the impugned advertisement is aimed at promoting its tours to Europe and USA and it is represented therein that these tours carry a price tag and the customers/consumers get certain services and benefits such as travel by top airlines, finest hotels, extensive sight seeing, good food, etc. The impugned advertisement which is in tabular form gives the tour prices charged by the applicants/complainants also and highlights the additional amounts charged under various heads by the applicants/complainants and it shows that while the actual tour cost of the respondent is $1748 ($1599 plus $64 for Ticket taxes and $85 for visa fees), those of SOTC and Cox and Kings are US $ 2377 (US $ 1599 + $ 99 + $ 125 + $ 127 + $25 + $40 + $150 + $74 + $138) and $2363 ($1599 + $ 99 + $ 125 + $ 127 + $ 25 + $ 40 + $ 150 + $ 60 +138) respectively. The impugned advertisement thus makes a comparison of the tour prices and shows that the tour price of the respondent is less by Rs. 29,000/- and at the same time it claims that the services and facilities offered are of a high quality and standard.
6. The next question which now arises for determination whether the representation made by the respondent in the impugned advertisement is false and misleading and whether it reflects a true picture of the tour prices, services and facilities offered by the applicants/complainants. While it is not denied by the applicants/complainants that both of them charge high season surcharge of $ 99, it is clarified that this charge is levied in respect of tours departing from 16th April to 30th June only and not for tours departing prior to 16th April or after 30th June, in the months of July, August and September. It is also not denied that the applicants/complainants charge $ 125 additionally on account of Euroster Fare. As regards air fare sucharge, it has been clarified by the applicants/complainants that it is not collected in dollars but in rupees amounting to Rs. 8,990/- and it is a misrepresentation to show this amount in dollars as it gives the impression to the customers that this amount is to be paid in dollars whereas actually it is not so. With regard to the weekend surcharge of $ 25, it has been clarified that it is collected on 7 out of 58 departures only leaving on weekends and on the tours commencing on week days, there is no weekened surcharge. As regards the additional cost of $ 40 on account of Air Show in Paris, it has been explained that it is levied for a limited period from 28th May to 20th June, as Hotel accommodation, during this time in Paris, is difficult to get and costs more and this additional amount is paid for booking Hotel accommodation in Paris but these salient facts are not indicated in the impugned advertisement and a misleading impression is created on the minds of the customers that for all tours to Europe, these additional amounts are charged whereas actually it is not so.
7. It may be noted here that these features of the tours of the applicants/complainants are not disputed by the respondent and yet there is no reference to these features in the impugned advertisement. It may be mentioned here that the respondent has categorically denied collection of any such additional costs on account of high season surcharge. Euroster Fare, Air Fare Surcharge, Weekend surcharge and Air Show in Paris. It has been clarified on behalf of the respondent that even though in its Brochure it is so mentioned, it is not charging these amounts from its customers. It has been further clarified that it has been erroneously printed in the Brochure and Instructions have been issued to the travel agents not to collect these additional charges. As regards Ticket taxes and Visa fee, both the applicants/complainants as well as the respondent collect the amounts indicated in the advertisement, in question, though the amount collected by the respondent is slightly less. It thus appears that the claim of the respondent in respect of its own tour prices is not false but it certainly does not present a true picture of the tour prices of the applicants/complainants. A true representation of the tours of the applicants/ complainants would be to indicate the tour price a customer will be required to pay if he does not depart on a weekend or takes the tour after the period of Air show in Paris or in the period from July to September and as a result he would save $ 99 + $ 25 + $ 40 on account of high season surcharge, weekend surcharge and Air Show in Paris.
8. The holiday club membership charge of $ 150 is optional according to the applicants/ complainants and is collected from a cutomer who wants to avail of free holidays. It has been clarified that the free holiday offer includes air fare and two nights' hotel accommodation with breakfast at certain foreign locations of tourist attraction. While it is not denied by the applicants/ complainants that the additional cost of $ 150 is collected, their grievance is that the impugned advertisement does not specify that the holidays club membership is completely optional and is charged only from those customers who wish to avail of free holidays. Similarly, the impugned advertisement does not specify that the weekend surcharge is levied on departures leaving on weekends only and those customers who wish to save this amount have the option of travelling on week days. It also transpires that the amount of $ 40 is on account of air show and is paid to the hotels in Paris and is applicable only during the period 28th May to 20th June when the Air Show is held and the hotels tariffs go up. Viewed in this light, the impugned advertisement appears to be false in certain respects as mentioned above and has the effect of disparaging the tours of the applicants/complainants. It gives the impression that the applicants/complainants are unjustifiably charging higher amounts for the same or similar tours to Europe whereas actually, the tours of both the applicants/complainants have certain special features and if comparative tour prices are to be indicated to arrive at the amount of saving, as has been sought to be done by the respondent, in the impugned advertisement, credit must be given, in fairness to SOTC for the income-tax rebate on contribution of Rs. 10,000/- per customer to the Gujarat Relief Fund as well as for the free lunches provided as a part of the package, and also to Cox and Kings for the additional one day and night of the tour besides, the refund of $ 250, in the form of redemption voucher. It must also in fairness, have been stated, in the advertisement, that the surcharges or add-ons are on account of certain specific reasons and are levied on tours during a certain period only and the Free Holiday offer is optional and the tour price is less by $ 150 in case this offer is not availed of. By not highlighting these features of the tours of the applicants/complainants, the respondent can be said to have falsely represented the amount of Rs. 29,000/- as saving by comparing its tour price with those of the applicants/ complainants.
9. When the respondent claims to provide top airlines, finest hotels, expensive sight seeing, great Indian food on its tours, it not only projects that standard and quality of its own services is superior, by implication, it also suggests that the tours of the applicants/complainants are of an inferior quality and standard and thus it runs down the tours of the applicants/complainants. The impression, the advertisement conveys, is that not only the tour prices of the applicants/ complainants which include surcharges and ad-ons, are much higher, the services and facilities are also of an inferior quality or standard as compared to those of the respondent. What is projected in the impugned advertisement is that the tours of the respondent are not only cost-effective in comparison with those of the applicants/complainants but also of a superior quality. The impugned advertisement also conveys the impression that the surcharges and add-ons are not justified but are being collected surreptitiously as payments for the free holidays. As discussed above, this representation of the respondent is not borne out by facts and it can, therefore, be said to be false and misleading and has the effect of disparaging the tours and services provided by the applicants/appellants.
10. While it is true that advertisement is a legitimate means of promoting sales of goods and services, (tours in the instant case), it should not be false or misleading. It may be mentioned here that while there can be no objection to an advertisement as it is an expression of commercial speech as has been argued by Mr. Kapil Sibal, learned Senior Advocate for the respondent, and freedom of speech including commercial speech is guaranteed under Article 19(1)(a) of the Constitution of India, it is also to be borne in mind that commercial speech should not be false, deceptive and misleading or else it will fall foul of the MRTP Act which has been legislated to prevent false and misleading advertisements. In this context, it may be stated here that Section 36(A) of the Act was inserted, on the recommendations of the Sachar Committee, as it was felt that as in other countries, there was need to protect the consumer from the effects of unfair trade practices and advertisements and representations to the consumers should not be deceptive and misleading. In this instant case, as discussed above, the impugned advertisement issued by the respondent contains a misrepresentation or a false representation, and while highlighting the attractive tour prices and other features of the toures of the respondent, it suppresses certain benefits, concessions and services offered by the applicants/complainants, and as a result, also disparages the tours of the applicants/complainants and thereby attracts the provisions of Section 36A of the Act. In this context, we are guided by the ruling of the Hon'ble Supreme Court in the case of Lakhanpal National Ltd. v. MRTPC and Anr., (1989) 3 SCC 251 at 255. It appears that the real test of whether a trade practice as manifested in an advertisement is to be condemned as unfair and deceptive is whether the representation contained in it is truthful or whether it has the effect of misleading a gullible consumer. The relevant extract of the judgment is reproduced below :
"A representation containing a statement apparently correct in the technical sense may have the effect of misleading the buyer by using tricky language. Similarly a statement which may be Inaccurate in the technical literal sense can convey the truth and sometimes more effectively than a literally correct statement It is, therefore, necessary to examine whether the representation, complained of, contains the element of misleading the buyer. Does a reasonable man on reading the advertisement form a belief different from what the truth is ?"
Judged by this touchstone, the impugned advertisement can be said to use tricky language and it has the effect of misleading a consumer into making a wrong choice of tours and, therefore, the impugned advertisement can be construed to be an unfair trade practice within the meaning of Section 36A(1)(i), (ii), (ix) and (x) of the Act. Although, a plethora of judgments and rulings were cited by the learned Advocates representing the applicants/complainants as well as the respondent, it has not been considered necessary to refer to the same in our order as in view of the facts brought on record, there is no escape from the conclusion that the impugned advertisement is actionable under Section 36A(1) of the Act.
11. With economic liberalisation, restrictions on tours and travel abroad have also been practically done away with and, as a result, more and more tourists are availing themselves of the tours offered by the travel agents such as the parties to the present proceedings. It is in this context, that it is imperative that any advertisements regarding such tour packages must not contain any false representation or misrepresentation which may mislead a tourist into making a wrong choice or cause loss of business or damage to goodwill and reputation of the rival tour operator. It stands to reason that the impugned advertisement if it is permitted to appear in the print media or other media will cause irreparable loss and damage to the applicants/complainants as it takes long time and sustained efforts to build up goodwill and reputation and if as a result of trade rivalry, false representations about tour prices and services offered by the applicants/complainants are made, they are bound to suffer loss of business ant damage to reputation, There/ore, the impugned advertisement or similar advertisements deserve to be and have been rightly injuncted.
12. As regards balance of convenience, it weighs in favour of the applicants/complainants as while no prejudice in likely to be caused to the respondents if the injunction order passed against them is confirmed, the applicants/complainants will suffer loss of business and damage to their image as reputed tour operators if the interim relief prayed for by them is not granted. However, as mentioned above, the respondent is free to continue to advertise and publicise its tours so long as its advertisements do not make any false or misleading statement, claim or representation or disparage the tours of the applicants/ complainants.
In view of the above, the injunction order passed against the respondent on the 13th February, 2001, in the above mentioned proceedings is confirmed and shall remain in force during the pendency of the proceedings or till further orders.
13. A copy of this order may be placed in each of the two case files.