India is seeking 6.4 billion rupees ($99 million) in punitive damages from the local unit of Nestle, saying the maker of Maggi instant noodles engaged in “unfair trade practices.”
The Department of Consumer Affairs has filed a class-action suit on behalf of a “large number of consumers” for the sale of “defective goods” and a product without the regulator’s approval, the government said in a statement. Nestle India, in a stock exchange filing earlier Wednesday, said it could comment only after receiving a notice.
The lawsuit deals another blow to Switzerland-based Nestle, which is battling an order to recall its popular Maggi noodles from Indian stores after the local food regulator said lead content in the snack exceeded permissible limits. Nestle India on 29 July reported its first quarterly loss in at least 15 years after halting sales of its best-selling product.
Nestle dominates the noodle market in the world’s second-most populous country, with a 63 per cent share in 2014, six times as much as its nearest rival ITC, according to Euromonitor data.
Maggi noodles have been sold in India for the past three decades. Scores of Indians, who started off snacking on it as kids and then in college, now feed it to their own children.
The government, in its statement, said it was seeking the damages on behalf of Maggi consumers because of “gross negligence, apathy and callousness on the part” of the company.
Himanshu Manglik, Nestle India’s spokesman, referred to Wednesday’s exchange filing, saying the company had nothing more to add. Nestle said it hadn’t received any official notice about the complaint filed with the National Consumer Disputes Redressal Commission.
The Food Safety and Standards Authority of India ordered the recall of Maggi packs from store shelves early June after its tests showed excess lead, findings that Nestle is challenging in the Bombay High Court.
The U.S. Food and Drug Administration said Wednesday its own tests didn’t find unsafe levels of lead in Maggi instant noodles made by Nestle and sold in the US. Other regulators including from Singapore, Canada and the UK have also tested and found India-made Maggi noodles to be safe for consumption.
News by Bloomberg, edited by ESM
