MNCs are no angels, but government actions on Nestle are not above board
On 11th August, the ministry of consumer affairs filed the first-ever class action suit against Nestlé India seeking Rs640 crore for ‘misleading claims’ by its Maggi noodles brand. But, far from being elated at the government’s proactive aggression on behalf of consumers, most non-aligned consumer activists only felt a sense of dismay. This suit smacks of vendetta. It’s a message to the multinational company (MNC) that the Indian government, and its many regulators and investigation agencies, will never admit to overkill and will get away with selective and motivated action.
So, just as the ham-handed overreach of the FSSAI (Food Safety & Standards Authority of India) in ordering a nationwide ban on the product seems likely to be exposed by test results from other countries as well as India’s premier food testing laboratory in Bengaluru, the government may be looking for ways to force Nestlé to back down and settle a case being argued in the Bombay High Court.
Prime minister (PM) Narendra Modi has gone around the world inviting companies to ‘Make in India’ and offering them ease of doing business. And, yet, the statements by his ministers are in sharp contrast to the action initiated by their ministries. Consumer affairs minister, Ram Vilas Paswan, told the media that the PM asked for ‘maintaining decorum’ on the Maggi issue. Food processing minister, Harsimrat Kaur, had expressed concern about the environment of fear among MNCs after Nestlé was forced to destroy Rs360 crore of Maggi noodles. How does this translate to a class action suit?
If that weren’t enough, we have the usual innuendo, false leaks and speculation by government officials hiding behind anonymity. One hinted that Maggi was in a big hurry to destroy its stock. Isn’t this amazing? Food products have limited shelf-life. Did the official expect Nestlé to hire godowns to stash the noodles in the hope that government would do an about-turn and allow the noodles to go back on the shop-shelves? Another said that product recalls happen around the world and it should not cause fear psychosis. True. But the recall happens after a fair and swift investigation; isolation of affected batches (in this case, if there were any with excess lead) and the labelling issue (such as the Maggi claim that no mono sodium glutamate—MSG —was added) should have been taken up separately for disciplinary action and penalty after a fair hearing. Here, the government mixed two issues to create a serious scare among parents. In fact, FSSAI should tell us how long Maggi tastemaker packets have been carrying the ‘No MSG’ claim.
All this does not mean that Nestlé, as an MNC, can do no wrong. MNCs are no angels and Nestlé has faced action in the past, both in India and abroad, for various serious violations. In 2000, the Consumer Education and Research Society (CERS) successfully complained to the Monopolies and Restrictive Trade Practices Commission (MRTPC) that Nestlé India was selling less quantity of Nescafe instant coffee than was mentioned on its 50gm sachets (beyond the permissible variation). It has been hauled before a Haryana Court for violating the Infant Milk Substitutes Act 1992. It faces similar charges overseas. There is a class action suit filed in a San Francisco court about how its Gerber brand is ‘misleading parents’ into thinking it contains fruits and vegetables when there are only trace amounts. This is happening with many domestic and multinational brands in India as well. They mislead; they bend and stretch the rules to enhance sales; and make their product seem better than it is.
But all countries have developed a fair, logical and transparent way of dealing with such violations and misdemeanours. They cannot take the shape of witch-hunts that force job-creating companies to shut down rather than clean up their act. Nestlé is a big global company that could withstand FSSAI’s actions; but if the same regulatory ferocity is unleashed on a smaller domestic company, it would simply shut down. The government is accountable to its people to ensure that it behaves in a reasonable manner to protect their interests on a regular and on-going basis and not in sporadic bursts of action that carry no credibility and create a scare among consumers. It certainly does nothing to change India’s image as one of the worst countries to do business in.