India: The Liability Of Celebrities Endorsing Fast Foods - Indian Scenario!!

Recently enough, the very famous global brand Nestle has been under scanner for their 2-minute Maggi noodles due to the presence of excessive content of lead than the permissible limit and mislabeling with regard to monosodium glutamate (MSG) content on the packets. According to the Food Safety and Standards Rules, 2011, MSG, a "flavour enhancer," is harmful for human health, mainly for children. It is mandatory for companies to specify on the packaging if MSG has been added. The fire for the controversy ignited with the Indian state Uttar Pradesh Food Safety and Drug Administration Association detecting much higher levels of lead than the permitted levels apart from the presence of MSG in its packets.

This was followed by Gujarat, West Bengal, Maharashtra, Uttarakhand, Odisha, Bihar, Assam, Punjab, Karnataka, Haryana, Goa, Delhi, Tamil Nadu, Kerala and other Indian states sending samples of Maggi for laboratory tests to determine safety for the popular brand's noodles and thereafter banning of the same.

After a series of events, the Food and Drug Administration (FDA) in Maharashtra and the Food Safety and Standards Authority of India (FSSAI) issued orders banning all variants of Nestle India's Maggi noodles, terming them as "unsafe and hazardous" for human consumption. Upon approaching the Bombay High Court for interpretation of the Food Safety and Standards Act 2011 and seeking a judicial review of the orders passed by FDA and FSSAI, Bombay HC rejected Nestle's plea for interim relief over the ban on Maggi noodles.

What is more interesting is a Police Complaint filed against Bollywood stars Amitabh Bachchan, Madhuri Dixit and Preity Zinta, for endorsing the brand over the years (even when two among the three endorsed the brand years back!).

In our previous article "Celebrities' Accountability for Misleading Advertisements??" published in April, 2014, we had provided a detailed insight into how far and under what provisions of law the celebrities can be held accountable for the brands they endorse and the advertisements they feature in. Little did we know then, that we would be witnessing such an embroiling issue of Celebrity Endorsement so soon and on such a scaled level!!

The Indian provisions available with respect to holding Celebrities accountable for the endorsements include:


1. Filing a case in a consumer court for 'unfair trade practice' which has been defined under section 2(1)(r) of The Consumer Protection Act, 1986 and includes false claims made for promoting sale of any goods.

2. Specifically in context of food items, Section 24 of Food Safety and Standards Act (FSSA) states that any person who makes false claims about the nutritional value of the product or the efficacy of the product without providing any scientific justification stands in violation of the Act. The FSSAI Act states that whosoever is a party to a misleading advertisement or its publication can be fined up to approx. 15,660 USD.

3. Besides these Acts, if an ad is released in India with false claims, a person can write their complaint to Advertising Standards Council of India (ASCI), a self-regulatory voluntary organization of the advertising industry, and depending on whether the ad is in alignment with the ASCI code and law of the land, the complaint is reviewed and if upheld then the ad is voluntarily either withdrawn or modified.

None of the above-mentioned provisions specifically hold the celebrities featuring in such ads making false claims, accountable for their acts. However, proposed amendments to the Consumer Protection Act has provisions to issue direction for discontinuation of such advertisements and even reporting such violations to police or any other law enforcing agency for criminal prosecution. One of the measures suggested in the proposed amendments is to hold actors accountable i.e. claim compensation for false claims in cases of false claims made in advertisements for products which they endorse.

However, a closer look at the real issue in the present controversy seems to revolve around allegations of a banned substance (MSG) and excess levels of lead being found in a product and NOT a case of misleading advertisement or the brand ambassadors' endorsements. The issue at hand is a purely manufacturing and production issue to be dealt by FSSAI with the manufacturers rather than shifting the blame game on the endorsers. What is to be noted here is that for any failures and transgressions in manufacturing norms, advertising and brand ambassadors are not the ones to be held responsible. The company and government officials who allowed those products to be sold are more liable than the celebrities, who merely lend their names to these products.

Thus, suing the stars for Maggi or any other product for that matter seems completely unjustified. A clear safety certificate by the government is a proof enough that a product is safe and the celebrities further cannot be held liable for endorsement of such a product. However, with the present controversy raising the issue, the advertising agencies and celebrities in the future will become more careful, putting in more effort in due diligence on the safety of the products they endorse. This could well impact the contours of endorsement contracts, which are likely to change, bringing in more due diligence as well as clauses to protect celebrities. All endorsement deals will now undergo more careful scrutiny. There would be no place for verbal or implied conditions, as is common today. Despite presence of 'indemnification' clauses in most major endorsement deals, they would now become watertight to the extent that the endorser could even demand an insurance to cover a crisis, should it occur. This might also lead to some sort of brand speed-dating, celebrities would embrace and discard brands frequently. The case seems to clearly showcase the perils of celebrity engagements in a digitally connected world.

THE AFTER EFFECTS

Despite the Celebrity liability being dragged into this issue, what is more worrying for Nestle is the fact that they have been battling its worst-ever branding crisis in India since this controversy. In addition, what is being termed as the MAGGI EFFECT is a phenomenon catching up as a result of Maggi Controversy where buyers of popular brands like Parle, KFC, Wendy's & others are turning into activists and are over cautious of the food they buy. Brands such as ITC's Sunfeast Yippee, Nissin's Top Ramen, HUL's Knorr and GSK Consumer's Foodies have also witnessed sales dropping by more than three-fourths after the Maggi controversy. The headlines such as "After Maggi, FSSAI to test GSK, ITC fast food brands," "HUL's Knorr Chinese noodles not in FSSAI approved list," "Customer finds earthworm in Wendy's burger" and the like have become more apparent than ever before leading to a mix of heightened concern about food safety and the prospect of being able to benefit from the paranoia that's gripped companies like Nestle and the others by claiming big damages from big companies.

This Maggi effect has now spread its wings to the International market too with United Kingdom's food safety agency deciding to test a few samples of Maggi noodles stressing the same as a move of precaution. Also the Singapore authorities have ordered local importers to temporarily suspend the sale of Nestle's Maggi noodles imported from India. Besides this, precautionary tests have been conducted on Maggi and similar food products in Asian, East Asian Saarc nations and few European countries.

Underlying the "BIG MAGGI BAN" are the hidden positives of the launch of a robust, nationwide process of reassuring consumers and valued stakeholders of food safety. This controversy has also compelled other companies too to take corrective measures on their own. We believe that the FSSAI would now tighten the labelling, packaging and testing norms for the entire sector, which in turn is positive for the consumers.

What emerges from the "BIG MAGGI BAN" is the fact that companies today cannot overlook/compromise with the safety standards of the consumers. However, dragging others for the faults of manufacturers seems unjust on the part of media and consumers and the same should be taken care of in the future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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