How FCCPC’s 5 year investigation uncovered misleading practices by Nigerian Bottling Company

By Benjamin Orisemeke

The Federal Competition and Consumer Protection Commission (FCCPC) say it has uncovered misleading practices by Cola Cola Nigeria and Nigeria Bottling Company.

In a report titled “Uncover the Findings: Misleading Practices by Coca-Cola Nigeria & Nigerian Bottling Company”, released on Thursday, FCCPC stated that the NBCL had for long engaged in anticompetitive practices which misled millions of consumers for several years.

The report details the FCCPC investigation into misleading branding and labelling practices and allegations of anticompetitive conducts by Coca-Cola Nigeria Limited and The Nigerian Bottling Company Limited.

The investigation which began in 2019 details how consumers are not able to spot the difference in what they consume from the beverage producing company. According to the Commission, the NBCL packages its different products identically, thus the consumer is not able to spot the different because “Coca- Cola doesn’t want you to know.”

In June 2019, the Commission became aware that Coca-Cola Nigeria Limited (Coca-Cola Nigeria) and the Nigerian Bottling Company (NBC) had produced and introduced Coke Original Taste- Less Sugar (Coke Less Sugar) to the market as a new variant of its Coca-Cola (Coke) drink, without any publicity, nor prior information to consumers.

The report states that “The Commission, through a routine market surveillance in June 2019, became aware that Coca-Cola Nigeria Limited (Coca-Cola Nigeria/CCNL) and the Nigerian Bottling Company (NBC) had introduced Coke Original Taste- Less Sugar (Coke Less Sugar) to the market as a new variant of its Coca-Cola (Coke) drink.

“This new variant was not announced to consumers and is bottled in a packaging that is identical to the packaging of the Coke Original. The only distinguishing factor on the packaging and label design is the inclusion of the phrase “Less Sugar” in an inconspicuous manner after the words “Original Taste”.

“Further, the nutritional information shows that both products have different ingredients and nutritional value. Following a complaint from a consumer in September 2019, the Commission carried out a market survey and discovered that the Limca lemon-lime flavoured drink appeared to have two variants which are not distinguished.

“These products taste different, have different ingredients and nutritional value but were packaged in identical bottles, with identical brand design and the same National Agency for Food and Drug Administration and Control (NAFDAC) registration numbers.

“Furthermore, the Commission received several consumer complaints about the quality of Coke Original drink, specifically, they noted that it tasted markedly different from what they were used to consuming. Preliminary investigation by the Commission showed that these consumers assumed that they purchased and consumed the Coke Original drink, when in reality, they had unknowingly purchased and consumed the Coke Less Sugar drink.

“This new variant was bottled in a packaging that was nearly identical to the packaging of the Coke Original. Subsequently, in September 2019, the Commission also discovered that the Limca lemonlime flavoured drink appeared to have two variants which are not distinguished. These products tasted significantly different, had different compositions and nutritional value, and were packaged in identical bottles, with identical brand design and the same National Agency for Food and Drug Administration and Control (NAFDAC) registration numbers.

“The Commission therefore commenced an investigation into the misleading labelling and branding practices of Coca-Cola Nigeria and NBC. In January 2021, during the pendency of the investigation, the Commission received a complaint alleging that Coca-Cola Nigeria offered its products (particularly Coke) at significantly different prices in different locations across the country and that the product quality varies from location to location.

“This prompted the Commission to expand the scope of the investigation, and as a result, the investigation sought to determine the following issues: 1. Whether the labelling, packaging and branding of Coca-Cola products are misleading or likely to mislead consumers. 2. Whether the Companies provided misleading and or false information to the Commission. 3. Whether Coca-Cola’s product pricing is indicative of an abuse of market dominance.”

The report further notes that during the course of the investigation the Commission requested and received several documentary, visual and audiovisual information from the Companies; conducted a site visit Page 4 of 68 to the NBC Abuja plant on the 2nd of August 2019; and held several meetings with the Companies, including on 11th June 2020, 26th June 2020, 6th February 2023, and 22nd June 2023.

“Notably, on 21st September 2020, the Commission approved a new packaging design for Coke Less Sugar which was presented by the Companies, as being sufficiently distinguished from the packaging design of Coke Original, in a bid to ensure that consumers were no longer misled.

“The Companies subsequently sought and received permission from the Commission to effect the changes by the third week of December 2020, however, they never eventually proceeded to implement this differentiation, and rather communicated to the Commission in January 2021 that they had made a business decision to discontinue all the Coke Original PET SKUs, while continuing to produce the variant in the Can packaging only.

“The Commission was however still of the opinion that this did not eliminate the potential for consumers to be misled and rather perpetuated it further. The Commission thereafter shared its preliminary investigation report with Coca-Cola Nigeria.

“Subsequently, the Companies sought a meeting with the Commission, and this took place on the 6th of February 2023.

“At the meeting, the Companies informed the Commission of their intention to reintroduce the discontinued Coke Original variant in PET and sought the Commission’s approval for a new set of designs to be used for the new production.

“The designs, by the Commission’s assessment, overlooked the progress made by the earlier approved design (on 21st September 2020) and raised the exact same concerns as the original designs which the Commission had long determined to be misleading. Therefore, the Commission declined to approve the new set of designs.

“However, on 10th February 2023, the Commission discovered that the Companies had already reintroduced the Coke Original variant in PET and that the designs in respect of which approval was sought by the Companies were already being used for the production, marketing and distribution of both Coke Original and Coke Less Sugar.

“Not only does this deliberate and misleading action appear to ridicule the efforts of the Commission, but more significantly, it demonstrates their lack of regard for Nigerian consumers and the law as it continues to perpetuate the deception of consumers on a larger scale.

“Specifically, market surveillance by Page 5 of 68 the Commission discovered that a batch of Coke Original in the 35cl PET bottle which was produced on 29th January 2023 and a batch of Coke Less Sugar in 50cl PET bottle which was produced on 10th January 2023, were being sold in Victoria Island area of Lagos State. The Commission noted that these products carried the brand designs in respect of which the Companies sought approval on 6th February 2023, and that these products were produced eight days and twenty-seven days, respectively, before the request for the Commission’s approval.

“The Commission having considered all the issues formulated for determination, made its findings. On May 30 and 31, 2023 the Commission issued its Interim Investigation Report and an Order and Notice to Show Cause (ONSC) to the Companies. In response, via letters dated July 3, 2023, the Companies informed the Commission about the commencement of their efforts to enable consumers to clearly distinguish the two Coca-Cola Original Taste variants.

“The Commission therefore set out to assess the sufficiency of these efforts to adequately sensitize consumers about how to distinguish between the two products, and also compare the efforts made by the sensitisation campaign which they tagged “Coke with Meals”, to other campaigns run by the Companies.

“The Commission requested and received information from the Companies regarding the budget and implementation details of the campaign as well as other relevant campaigns. By the Commission’s assessment, the efforts made by the Companies with respect to the “Coke with Meals” campaign pale in comparison when compared to efforts taken in respect of other campaigns, and were also insufficient to adequately alert consumers to the relevant distinguishing factors between the two variants.

“The Commission’s findings include: a) That Companies knowingly and intentionally applied a trade description to the CocaCola Less Sugar variant that could reasonably mislead consumers as to the nature and feel of the drink, in such a manner that consumers would assume that the product was the Coca-Cola Original Taste variant, in violation of Section 116 (1) and (2) of the FCCPA. Page 6 of 68 b) That NBC, by producing and distributing the two variants of Limca Lime-Lemon flavoured drink in the same packaging and brand design, and using the same NAFDAC registration number for both products, impliedly and falsely communicated to the consumer that both products are the same and thus misled and deceived consumers, in violation of Section 123 (1) (a), (b) and (c) of the FCCPA and Regulation 2 (a) of the National Agency For Food And Drug Administration and Control Act (2004), Prepackaged Food (Labelling) Regulations. c) That NBC, on at least four occasions, provided false and misleading information to the Commission, in violation of Section 112 of the FCCPA; and That Coca-Cola Nigeria, on at least one occasion, misled the Commission, in violation of Section 112 of the FCCPA. d) That the available pieces of information regarding the pricing patterns of Coca-Cola products are, by themselves, insufficient to demonstrate any abuse of market dominance, but they however raise some concerns around the pricing in Ebonyi State in 2019.

“Though concerning, the astronomical price increases observed in Ebonyi State cannot (by itself) sustain a finding of excessive pricing, as several factors must be considered in determining whether there was excessive pricing. Therefore, the Commission may conduct further investigations into the issue of whether Coca-Cola Nigeria’s product pricing is indicative of an abuse of market dominance. Having therefore extensively considered all the issues; the Commission concludes this investigation by the issuance of this Report and Order & Notice to the Companies,” the Commission added.