An Indian court granted relief to Nestlé SA in a case that has pitted the nation’s food regulator against the Swiss giant over the quality of its iconic Maggi noodles. Shares of the company’s local unit rallied.
The two-judge panel of the Bombay High Court found the 5 June order by the Food Safety and Standards Authority of India to be arbitrary, said A. Sethna, the government’s lawyer. Sales of the snack can resume if new tests done at a certified laboratory were found to be acceptable, and Nestlé needs to submit those test reports within six weeks, the judges said.
“It looks like the court has found fault with the process followed” by the FSSAI, H. Jayesh, a co-founder at law firm Juris Corp., said in a Bloomberg TV India interview after the ruling. “It’s definitely a big positive” for Nestlé.
The incident could become a “big embarrassment” for the Indian government as it makes it appear as if the state’s own laboratories aren’t able to carry out basic tests of food quality, said Naveen Trivedi, an analyst at Trust Financial Consultancy Services Pvt., before the judgment. The government is also seeking 6.4 billion rupees ($99 million) from Nestlé in punitive damages.
In an e-mailed statement, Nestlé said it will comply with the court’s order for fresh tests on Maggi noodles and try to get the products back on sale as soon as possible.
Bloomberg News, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
