PS7621 - PS8171 - PS8202 - Pyramid sales: Antitrust starts investigation on multi-level illegal sales and applies sanctions to Vemma Italia, Asea Italy and Organo Gold Europe for improper commercial practices with fines equal to total 500,000 euros
PYRAMID SALES: ANTITRUST STARTS INVESTIGATION ON MULTI-LEVEL ILLEGAL SALES AND APPLIES SANCTIONS TO VEMMA ITALIA, ASEA ITALY AND ORGANO GOLD EUROPE FOR IMPROPER COMMERCIAL PRACTICES WITH FINES EQUAL TO TOTAL 500,000 EUROS
Penalties totalling 500,000 euros against the companies Vemma Italia (100,000), Asea Italy (150,000) and Organo Golden Europe (250,000) for unfair business practices that have affected tens of thousands of consumers in the field of multilevel illicit sales of beverages. This has been decided by the Competition Authority at the end of three distinct pre-trial proceedings, conducted in collaboration with the Competition Group of the Special Market Protection Unit of the Guardia di Finanza. According to the Antitrust consumers are proposed to purchase products through mechanisms aimed in reality at recruiting other sellers who are asked for an initial contribution or a subscription to a programme of personal purchases. The system essentially provides for the involvement and participation of consumers in a pattern of buying and selling of products: those who join are encouraged at the time of their entry into the system, to involve an increasing number of other consumers/dealers. It is a distributive mechanism considered incorrect by the Consumer Code for which the consumer cannot make a contribution in exchange for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.
The position of Asea Italy and Organ Golden Europe is further aggravated by the fact that the two companies have attributed to their products curative properties that are not adequately substantiated and certified.
Set out below are the practices implemented by Vemma Italia, Asea Italy and Organo Gold Europe sanctioned by the Authority:
1) Start-up of a promotional system of pyramid nature in which the consumer pays a contribution for 'entry' (also in the form of own consumption) in exchange for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale of theoretically marketed products: in fact, the turnover of each professional stemmed mainly from the mechanisms of entry or own consumption and not from the sale of products;
2) Misleading and lack of full information on the earning potential, which appear totally unrealistic and aiming at deceiving consumers to make them adhere to the scheme: the vast majority of persons in charge have not generated and received fees or the latter were of a negligible amount;
3) Only with regard to proceedings against Asea Italy and Organo Golden Europe: the spread of misleading claims about curative capacities of products which were unproven through appropriate certification. In fact, Asea argued that the composition of the mixture marketed was perfectly balanced and able to strengthen the immune system, promote the healing process and limit the harmful effect of free radicals. Organo Golden Europe instead argued that their drink made from the fungus Ganoderma had such properties as to make it effective in the prophylaxis of nervous, vascular and cancer diseases without side effects.
Rome, 10 March 2014