India is seeking 6.4 billion rupees ($99 million) in punitive damages from the local unit of Nestle SA, 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 Ltd., in a stock exchange filing earlier Wednesday, said it could comment only after receiving a notice.
The lawsuit deals another blow to Vevey, 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 July 29 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 percent share in 2014, six times as much as its nearest rival ITC Ltd., 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.
US FDA Tests
Nestle India shares fell 1 percent to 6,252.30 rupees as of 2:06 p.m. in Mumbai, after dropping as much as 4.9 percent earlier. The S&P BSE Sensex index fell 1 percent.
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 U.S. Other regulators including from Singapore, Canada and the U.K. have also tested and found India-made Maggi noodles to be safe for consumption.