PRESS RELEASE

“MIRACULOUS” PILLS: ANTITRUST IMPOSES A FINE OF OVER ONE MILLION EUROS TO A NETWORK OF COMPANIES, INCLUDING FOREIGN COMPANIES, THAT SOLD PRODUCTS WITH FALSE PROPERTIES

From slimming pills that guaranteed “7 kilos lighter in less than 7 days” to a product that will cure Alzheimer and cancer, to a pill that would guarantee youth.

Fines amounting to more than one million euros to a network of companies that advertised and sold products with false properties: slimming pills that would make a person lose 7 kilos in 7 days, pills, patches and creams that could cure cancer and Alzheimer and guarantee youth – this was the decision taken by the Antitrust Authority at the end of proceedings that involved six operators of different nationalities which together organized the advertising and sale of about  40 of these products and 13 internet sites.

From information gathered in inspections by officials of the Antitrust Authority, it resulted that the people involved completely invented the contents appearing in the advertising material concerning slimming products and therapeutic treatments.

The texts, the images chosen as well as the fanciful testimonies were in fact merely the result of a collage of information specifically designed to induce customers to buy the products.

The results that were promised and the indications that were given regarding therapeutic products also lacked any scientific basis and this information seemed particularly serious because it was directed at people who, suffering from severe conditions, seem more vulnerable and susceptible to advertising.

An indication of the ability of the system to mislead consumers is the considerable number of product packs that were sent, around 270,000 in the last two years.

The investigation revealed a complex scheme that involved six companies, one incorporated under English law, two Swiss companies, one from San Marino and two from Italy, at the centre of a common strategy meant to deceive consumers about the properties of the products sold through websites and by mail orders. In particular, the strategy was artificially conceived and segmented in a way to attribute it to one foreign organization, the company Xenalis incorporated under English law, and so hide the operations of others companies, including Italian firms, with the aim of making it objectively difficult for a consumer to find out who was actually responsible for the sale.

At the centre of the “network” there is Xenalis Ltd, a company that was involved, among other things, precisely in the field of direct sales to private consumers of slimming products, personal health services and body care products. On the other hand the Italian company Cento Srl deals with the retail sale of goods by mail order, also by means of the internet site www.centoshop.eu. The Italian company New Service Media Srl (NSM) is involved in the provision of technical information services and manages and provides technical support to Xenalis and Cento for the recording of the different websites. Quadratum SA, incorporated under Swiss law, provides technical information services while Royal Marketing Management SA (RMM), also a Swiss company, is responsible for analysis, accounts, marketing, licensing of trademarks, website management and software. Finally, Centum spa, incorporated under the law of San Marino, is involved in the distance selling of supplements, body care products and health care products.

The mechanism that was identified by the Antitrust Authority and meant to encourage consumers to purchase products with false properties revolves around Xenalis which, by means of the use of single-product sites, presents itself in the first instance as an organization that provides and promotes the products. On the other hand Cento and NSM prepare messages and operate a call centre and send newsletters with contents that are misleading and that leave out information. Centum is responsible for the forwarding of packages to the households of consumers and is the reference point for consumers as the organization that has sent these goods and serving in this way as the cornerstone of the practice carried out to the detriment of consumers. Finally Quadratum and RMM deal with the promotion of products on the Italian market, the management of stores and inventories as well as management procedures and the provision of general guidelines.

All the companies that are involved are bound by contractual relationships that confirm the coordinated strategy: however, promotional activity of products among Italian consumers by Xenalis, Cento, Centum and NSM falls under a larger marketing organization for the whole European market.

It should be noted that the Authority had immediately suspended the activities of these operators by means of its measures in June 2013, including the internet sites and the call centre of the companies involved, and had maintained that their existence constituted a serious and irreparable damage to consumers.  Below are the sanctions imposed on individual operators, taking into account the role of each company and economic conditions:

Centum Spa: a penalty of €300,000 (three hundred thousand) each;

Xenalis Ltd: a penalty of €150,000 (one hundred and fifty thousand)

New Service Media Srl: a penalty of €150,000 (one hundred and fifty thousand)

Quadratum Sa: a penalty of €150,000 (one hundred and fifty thousand)

Royal Marketing Management Sa: a penalty of €150,000 (one hundred and fifty thousand)

Cento Srl: a penalty of €120,000 (one hundred and twenty thousand)

Rome, 09^th December 2013