Nestlé lawsuit sets labelling precedent

Trading standards officers claim to have scored a landmark victory in the battle against misleading food labels.

Shropshire’s trading standards officers are jubilant after winning a court case against Nestlé on May 23 after it claimed – in a joint campaign with the British Heart Foundation on 10 million boxes of Shredded Wheat – that eating the cereal reduced the risk of coronary heart disease.

Nestlé was fined &£7,500 for making an illegal medicinal claim and ordered by Shropshire stipendiary magistrate Philip Browning to pay &£13,600 costs. Browning said: “It is clear beyond doubt that the statements about Shredded Wheat… invite an irresistible inference that eating it will reduce the risk of coronary heart disease.”

Nestlé insists it hasn’t made any misleading claims. A spokesman says: “We maintain that we never intended to mislead consumers in any way and we are considering an appeal.”

The company’s courtroom defeat marks an important victory for trading standards chiefs, who are emerging as the main enforcers of food labelling legislation.

They claim it is a “test case” which could pave the way for local authorities across the UK to challenge medicinal claims made by major food companies.

However, they remain cautious about the possibility of future courtroom successes.

Tony Northcott, a spokesman for the Institute of Trading Standards Administration (ITSA), the professional body which represents trading standards officers, comments: “Obviously, the bigger the manufacturer the better lawyers it has. The Nestlé case sends a message to local authorities that they can prosecute big companies.

“But obviously there’s no guarantee of winning, and some local authorities have withdrawn cases because of the cost.

“We are pressing for more resources. We want to be in a position where cost isn’t a consideration if we feel a prosecution is necessary.”

Other multinationals have left themselves open to criticism when making dietary claims about their products. Cereal giant Kellogg has come under fire from nutrition watchdogs for an on-pack campaign, “The Two-week Challenge”, which suggests people can lose weight by replacing lunch or an evening meal with a bowl of cereal.

But a Kellogg spokeswoman says: “We are not making any health claims at all on the packaging. The ‘Two-week Challenge’ was developed with the British Nutritional Association, which is supportive of its message.”

The Nestlé case is not the first time a local authority has taken on a major food company over its labelling claims. In the most high-profile case of the past four years, Cheshire County Council took Mornflake Oats to court over claims that its cereal reduced the risk of heart disease – and won. But the Shropshire case is significant because it marks the first time that the new Joint Health Claims Initiative (JHCI) code of practice has been used in court.

The JHCI is a panel of industry, consumer and trading standards representatives set up to monitor claims such as Nestlé’s.

The voluntary code of practice is to be published in the next few weeks. It will include provision for all food claims to be open to scrutiny by independent scientists, who will be able to block their introduction.

Shropshire’s chief trading standards officer David Walker, who led the case against Nestlé, believes the case could bring a flood of similar prosecutions. He says: “The JHCI code of practice is being introduced as a means to resolve what type of health claims can and can’t be made.

“Food companies are not allowed to suggest that products can reduce the risk of disease, and this case has clarified the law in that respect.”

Walker hopes a greater understanding of the code – provided by the judgment – will give trading standards officers more fire power and confidence to take on multinationals.

A Food & Drink Federation spokeswoman agrees that the JHCI should clear up the confusion over labelling: “Manufacturers don’t want to be in a situation where they need to remove products or redesign packaging – it’s expensive and bad publicity.

“At the moment, the law is a grey area, but hopefully the JHCI will create a situation where all sides know what’s legal and what’s not allowed.”

One trading standards insider claims food companies intend to make more and more health claims to take on rivals.

But they may change their ad strategies on the strength of the Nestlé case. The source continues: “Companies were going to make these types of claims more frequently. But their advisers have contacted trading standards and hopefully they will take heed and consider their position.”

Despite the verdict, many industry insiders feel the bodies responsible for enforcement are under- staffed and under-funded, meaning they have to pick and choose which cases to take on.

And the lack of a coherent strategy from central government, with trading standards chiefs reporting to several departments, is further hindering legal action. Trading standards officers report to the Ministry for Agriculture, Fisheries & Food; Office of Fair Trading; Department of Trade & Industry; and Department of the Environment, Transport & the Regions.

The Food Standards Agency (FSA) – which was set up with a remit that included the policing of food labelling – appears to have muddied the waters. In fact, it seems to have shifted the burden of dealing with false food labelling to trading standard officers.

Grant Meekings, the FSA’s head of food labelling standards and the consumer protection division, recently told Marketing Week that responsibility for labelling prosecutions lies with trading standards officers at a local level (MW April 27). At the time, he admitted: “It may be that current procedure doesn’t offer a strong enough chance to beat the multinationals.”

Meekings was not available for comment on the Nestlé case.

There are 2,500 trading standards professionals in the UK, although they do not all have enforcement powers. They handle 800,000 consumer enquiries a year and can bring prosecutions without having received a complaint.

Recent fragmentation caused by the restructuring of local government has left 200 separate bodies attached to councils across the country – more than twice as many as five years ago.

The Local Authority Co-ordinating Body for Food & Trading Standards (LACOTS) is designed to oversee the disparate bodies and develop a coherent strategy.

While the launch of the FSA was widely welcomed by the ITSA and LACOTS, which consult the agency on legislation and enforcement issues, both organisations feel there needs to be a lot more financial and legislative input from the Government.

But with clearer food labelling guidelines in place, brand owners may resist the temptation to make exaggerated claims.