Class action against Nestle is shot in the dark; compromise is the best solution for all

The Union consumer affairs ministry’s decision to launch a class action suit against Nestle, makers of Maggi noodles, in the National Consumer Disputes Redressal Commission (NCDRC) will be an important test case for such actions in the future. However, it is in the best interests of the regulators, Nestle and consumers to come to a compromise solution rather than litigate endlessly. Nestle was forced to withdraw its Maggi stocks from all over the country in June this year following the discovery of lead above acceptable levels in some samples, and a label that said “No added MSG”. While tests of Maggi noodles sent outside the country to Singapore, Canada and the US appear to have passed their more stringent food safety tests, Nestle’s real battleground is India, where it is contesting the Food Safety and Standards Authority of India’s (FSSAI’s) order and claims that Maggi can be hazardous to health. The class action suit, which seeks Rs 640 crore in damages from Nestle on behalf of consumers, has two dimensions – one positive, and the other negative. The positive one is the message it sends out about stronger government action on food safety standards. But this will be credible only if the government follows up the action against Nestle with similar actions involving other food products. Also, class action suits have not had a track-record in India; the suit by the ministry may thus be a shot in the dark. [caption id=“attachment_2277206” align=“alignleft” width=“380”]  Nestle. Reuters[/caption] The negative dimension is the possibility that the government may have chosen to make its point with the wrong company – a multinational that is normally known to follow higher standards than domestic producers. It can have implications for how foreign companies view India as a fair and safe place to do business in. It is possible that the class action suit launched by the consumer affairs ministry was intended to pressure Nestle to settle the case out of court so that there is no inordinate delay in the reintroduction of a suitably relabelled and reformulated Maggi. The salutary effects of the action against Maggi are already visible in the area of milk, where the FSSAI and milk cooperatives have agreed to increase checks and quality standards for milk delivered. According to this Business Standard report, the FSSAI and representatives of the National Dairy Development Board (NDDB) have agreed to implement better quality checks and the government testing facilities needed to enforce those standards. This is critical, for the key element in ensuring quality is not just the care taken by food manufacturers at their end, but the quality of the testing facilities available with the regulators in states and the FSSAI. Nestle, for example, has raised doubts about the accuracy of FSSAI’s testing laboratories. Despite failing tests in some labs in India, Maggi jumped over the hurdles in Singapore, USA and Canada. Since it cannot be anyone’s claim that India’s food safety standards, regulation and supervision are better than that of the US, Canada and Singapore, the class action suit seems more like an effort to push Nestle to compromise in order to spare our regulator the blushes in case Nestle gets the courts to lend it a more sympathetic ear. However, the negative fallout of trying to pressure Nestle is that no one outside India will believe that the regulatory process here is fair and transparent. This will damage the country’s efforts to tell the world that we are a safe place to do business in. The concurrent agreement reached with the NDDB will also suggest that when it pleases the regulator and government, deals will be done in consultation with industry. Is there a way out for the FSSAI, the government and Nestle? The only answer is a compromise where Nestle is allowed to restart production and marketing of Maggi after proper testing and reformulation of its products, and a simultaneous agreement between the two on how the products will be inspected and tested in future, and with what equipment. The real problem of food safety lies not in our laws, but in our inability to create enough testing systems with adequate manpower to do the job consistently and fairly. We do not have a regulator who can regulate effectively. As a result, it is the oddball result – as in the case of Maggi – that is seen as a great achievement. As this writer has noted before , Indian food is largely unsafe for human consumption. Toxic food is sold everywhere, from contaminated milk to fruits and vegetables that bear an overdose of pesticides, to bhujias and junk food that are simply unhealthy for all people, leave alone kids. Nowhere is the problem worse than in the case of milk – a product fundamental to Indian children’s health, especially those born in vegetarian families. Many producers and distributors adulterate milk to increase profits and to make the product look thick. In Maharashtra, the Food and Drug Administration found that 24 percent of the samples tested in Pune division some time back were either unsafe or did not conform to the standards set by FS&SAI. But we continue to drink this poison in the name of health. Some diaries inject hormones or insulin into buffaloes because this helps make the milk thicker. But insulin also gets into the milk, which makes it unsafe for women and children. In Andhra Pradesh, milk samples tested by a private laboratory found traces of urea, coliform, e-coli and salmonella (many of them harmful bacteria), but the milk diaries faced no action. Unlike Maggi, which is being withdrawn at huge cost, how many milk producers have been ordered to throw their milk away because it is sub-standard? And it isn’t about milk alone. The New Delhi-based Centre for Science and Environment found that junk food – like burgers and bhujias – contains high levels of trans-fats (very harmful), salt and sugar, which could lead to problems like obesity, diabetes and heart disease. Most ordinary hotel kitchens are unhygienic, and street food is often sold next to gutters and garbage in big cities. Branded Kurkure may be made in hygienic factories, but potato chips and namkeen are often made inside slums or dirty factories, often with low-quality ingredients and oil, in order to sell them cheap. We pay a price in terms of health for buying and consuming “cheap” food. The short point is this: food and health safety, despite the existence of standards and regulations, is badly in need of strong supervision and enforcement of the law. The states are the real culprits, as food safety has to be enforced by them. The Maggi problem was discovered by a food inspector in Barabanki in Uttar Pradesh, but the chances are this discovery was an accident or an exception. The reason why bad and unhygienic food goes unchecked is corruption. It is simply too easy for food manufacturers to bribe inspectors and continue doing what they are doing: selling poison for profit. For small food sellers, the cost of complying with the law is simply too high compared with the ease of paying a bribe. There are only three ways to combat food adulteration. First, the public must be educated on this. Second, packaged food makers and hotels must be sensitised to improve hygiene standards by the use of better technology and safer ingredients. And third, we simply need many thousands of food inspectors and foolproof testing equipment of the highest quality to ensure fair and effective quality standards. We need quality standards in our testing equipment as much as in our food.