By: Ramesh Vaidyanathan
The firestorm triggered by the investigation against Nestlé India and Maggi has evoked both shock and disbelief. While there is unanimous opinion that Nestlé is liable as a manufacturer to comply with applicable regulatory standards, are celebrities like Madhuri Dixit, Amitabh Bachchan and Preity Zinta who endorsed Maggi liable for alleged lapses of the manufacturer?
The reach and appeal of celebrities endorsing brands and products can’t be overlooked. These endorsements are negotiated by professional entities and representatives of celebrities and brand-owners. Detailed contracts are executed between the two parties. It is also fairly common for both parties to provide contractual representations to each other.
The celebrity’s representations are mostly restricted to non endorsement of competing products, while the brand-owner provides specific representations about the product quality. Celebrities also seek extensive indemnities from the brand-owners to protect them against any civil liability.
The arena of criminal liability is a different ballgame. A court in Bihar invoked the Indian Penal Code’s Sections 270 (malignant act likely to spread infection of disease dangerous to life), 273 (sale of noxious food or drink), 276 (sale of drug as a different drug or preparation) and 420 (cheating and dishonesty) against Maggi’s celebrity endorsers.
A bare reading of the law will show that the charges filed under Sections 420 and 276 are likely to fall apart in court as they deal with “cheating with regard to property” and the “sale of drug as a different drug or preparation” respectively, which is not the case here. The other two sections specifically require the accused to have done the act with a clear intent, which looks very difficult to prove in this case.
While Indian laws are silent on the liability of endorsers in general, the Food Safety and Standards Act, 2006, expressly provides that “any person who is party to an advertisement” that falsely describes any food, or is likely to mislead as to the nature or quality of the food, can be held liable for a penalty of Rs 10 lakh.
The monetary penalty stipulated is mostly a pittance for the celebrities, typically picked up in the contractual indemnities provided by the brand-owner. A celebrity endorser, contractually bound to promote a product, can’t be held guilty for the omissions of the product manufacturers.
One can argue that in a country like India with millions of impressionable consumers, a celebrity has a duty to conduct due diligence before entering into any advertising contract. Can these celebs wash their hands of the mess? Perhaps.
In the US, the Federal Trade Commission holds liable the ‘product endorsers’ (the person who promotes the product on screen) but not ‘mere’ actors or performers in the advertisement if the product is found wanting in quality. The ads must also reflect the “honest opinions, findings, beliefs or experience of the endorsers”. However, there is still no criminal liability in such situations and only civil liability.
The Centre is aiming to bring changes in the law to hold celebrities liable for false advertising. As of now, though, the letter of the law seems to be in the actors’ favour.
This article was first published in http://blogs.economictimes.indiatimes.com/et-commentary/maggi-noodles-controversy-are-celebrities-liable-for-alleged-lapses-of-the-manufacturer/