Nestle Takes Fight With India’s Food Regulator to Court

Updated on
India's noodles market
Nestle is the undisputed leader with a 63% market share

Nestle SA’s Indian unit has filed a case in a local court challenging an order by the country’s food safety regulator for the Swiss food-maker to recall its Maggi instant noodles.

Nestle India Ltd. has approached the Bombay High Court to raise issues with the regulator’s interpretation of the law dealing with food safety, it said in a statement Thursday. The company is also seeking a judicial review of last Friday’s order by the Food Safety and Standards Authority of India, in which it said the noodles were “unsafe and hazardous”.

The challenge by Nestle is the latest development in a deepening crisis that started when a routine government test found excessive lead in its popular Maggi noodles. The company has maintained that its products are safe, and its position was bolstered after Singapore’s food regulator said June 8 that its own tests found that Maggi met safety standards.

Nestle India’s shares have slumped about 9 percent so far this month amid the noodle crisis. They rose 0.4 percent to 6,085 rupees as of 3:37 p.m. in Mumbai.

At least 12 Indian states have banned the products so far, according to the Press Trust of India. Nestle, in its court challenge, is also seeking a review of the noodle ban by Maharashtra state, where Mumbai is based. The court will hear the plea on Friday, the news agency said in a separate report.

Nestle spokesman Himanshu Manglik declined to provide further details on the case. Calls to the office of Yudhvir Singh Malik, the chief executive officer of the federal food regulator, weren’t answered.

Intensive discussions

The U.S. Food and Drug Administration has also taken samples of India-made Maggi noodles from importers for testing, Nestle said in a e-mailed statement. The results of the tests are yet to be released.

Nestle doesn’t sell Maggi noodles in the U.S., though the product is imported by third-party traders and sold in stores there, especially in chains that specialize in Indian groceries such as those run by Patel Brothers Inc.

The ongoing crisis in India has been a public relations nightmare for Nestle, and Chief Executive Officer Paul Bulcke met with regulators in New Delhi last week. Stopping short of challenging the government, the executive said there was “confusion” about testing methodologies.

“We have had intensive discussions with the authorities to clarify our argument, and to show the tests we have done,” Bulcke said June 5.

According to the regulator, company officials said the state labs didn’t follow test protocols, and the noodles and seasoning shouldn’t have been tested separately.

The agency rejected the company’s arguments, saying every component within the package needed to conform to the limits. Bulcke told reporters at the time that Nestle isn’t challenging the tests and is working with authorities on their testing methodology.

Nestle dominates the noodle market in the world’s second-most populous country, with a 63 percent share in 2014, six times as much as its nearest rival ITC Ltd. Following the Maggi incident, the food regulator ordered state authorities to carry out similar tests on noodles made by ITC, Bambino Agro Industries Ltd. and six other companies.

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