The Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato – AGCM) has fined Chiara Ferragni-linked companies over €1 million and Balocco S.p.A industria Dolciaria €420,000 following accusations of unfair commercial practices in relation to the ‘Pandoro Pink Christmas’ campaign.
In a collaboration between the popular Italian influencer and pandoro producer Balocco, ‘Pandoro Pink Christmas’ was a promotional campaign which suggested to consumers that by buying the Ferragni branded pandoro, they would be contributing to a donation to the Regina Margherita Hospital in Torino, Italy. The proceeds would be used to purchase equipment/machinery required for the therapeutic treatment of children with osteosarcoma.
It, however, transpired that the Ferragni companies, Fenice and TBS Crew, received over €1 million for licensing Ferragni’s IP rights and brands, and for creating content, without contributing to the advertised charity.
The Italian Competition Authority (AGCM) established that:
• Press releases announcing the initiative misled consumers by suggesting that purchasing the ‘Pandoro Pink Christmas’ for over €9, instead of the non-branded Balocco pandoro at around €3.70, would contribute to the charitable donation. It, however, resulted that Balocco had only made a fixed donation in May 2022, months before the initiative’s launch in November 2022;
• The labelling on each Ferragni-branded Balocco pandoro, misled consumers into erroneously thinking that buying the product would contribute to the advertised charitable donation;
Misleading advertising can lead to investigations, enforcement actions and potential fines
• The stories posted on Ferragni’s social media suggested that the ‘Pandoro Pink Christmas’ would contribute to the charitable donation, misleadingly implying that the same Ferragni would be directly involved in the donation. This was untrue even though her companies received over €1 million in licensing fees;
• The price of the ‘Chiara Ferragni’ pandoro, sold at €9 instead of €3.70 (the price of the classic Balocco pandoro) further contributed to misleading consumers into thinking that they were contributing to the charitable donation by purchasing the ‘Pandoro Pink Christmas’;
• The AGCM concluded that this practice significantly limited consumers’ freedom of choice by appealing to their sensitivity to the advertised charitable donation, especially given that it purported to donate to children with serious illnesses. This was found to constitute an unfair commercial practice characterised by deceptive elements under Articles 21 and 22 of the Italian Consumer Code.
In light of the pandoro case, the AGCM is now also investigating a similar ‘Easter Egg’ collaboration between the same Ferragni and Dolci Preziosi, with proceeds allegedly going to charitable association I Bambini delle Fate which is active in the social integration of children with autism.
Similarly to Italy, the Maltese Consumer Affairs Act, Chapter 378 of the Laws of Malta, provides that a commercial practice shall be regarded as “misleading” if it contains false information or if inter alia, it in any way, including its overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to elements such as the extent of the traders’ commitment and the motives for the commercial practice, which is likely to cause the consumer to take a transactional decision that he would not have taken otherwise.
Misleading advertising can lead to investigations by the Maltese Competition and Consumer Affairs Authority (MCCAA), enforcement action and potential fines following such investigation.
It is, therefore, extremely important to ensure that any marketing content or promotional campaign which links the purchase of a product to a charitable initiative is clear, unambiguous and completely transparent about the contribution being made to the charitable cause, without misleading consumers into taking transactional decisions which they otherwise would not take.
Thomas Bugeja is a senior associate at Fenech & Fenech Advocates, specialising in competition, consumer and commercial law matters.