AGCM fines Balocco and Chiara Ferragni's corporations for unfair commercial practices

8 Jan

The Italian Antitrust Authority fined the companies Fenice S.r.l. and TBS Crew S.r.l., which manage the trademarks and rights relating to the personality and personal identity of the well-known influencer Chiara Ferragni, and Balocco S.p.A., for the combined violation of their duty of professional diligence, pursuant to Article 20 of the Consumer Code, and unfair commercial practice, characterised by elements of deceptiveness, pursuant to Articles 21 and 22 of the Consumer Code.

The proceeding was based on deception, with respect to how information was disseminated concerning Balocco's 2022 initiative called 'Pandoro Pink Christmas', which related to the production of a Pandoro, created under a Chiara Ferragni Brand license, in a collaboration between Balocco and Ms. Ferragni. In particular, it was found that the press release issued by Balocco on November 2022, and the information disseminated through the packaging of the pandoro, which included the details:

"Chiara Ferragni and Balocco support the Regina Margherita Hospital in Turin, financing the purchase of a new machine that will explore new avenues for the therapeutic treatment of children suffering from Osteosarcoma and Ewing's Sarcoma",

alongside posts, reposts and stories published by Chiara Ferragni on her social channels, led consumers to believe that by purchasing the 'Pandoro Pink Christmas' they would contribute to raising funds for the financing of the Regina Margherita Hospital in Turin.

In reality, it emerged, during the preliminary investigation, that the charitable initiative had originated within the company Balocco, which only subsequently shared it with Chiara Ferragni. In fact, according to the brand license agreement, signed with the company Fenice on 11 November 2021, in order to regulate part of the arrangement concerning the initiative in question, only Balocco was obliged to make a donation of EUR 50,000 in favour of the Regina Margherita Hospital in Turin. In reality, this payment was made on 2 May 2022 and, therefore, before the sales of the 'branded' Pandoro had even begun.

Despite that, both the Balocco company and the companies connected to Chiara Ferragni advertised the initiative in a deceptive manner. In particular, the press release issued to present the initiative, the cartouche placed on the product packaging, the posts, reposts and stories created by Ms. Ferragni to advertise the aforementioned pandoro, as well as the extent of Chiara Ferragni's role in the charitable initiative, presented the public with an incorrect representation of the charitable initiative to raise funds to finance the purchase of a new machine for the Regina Margherita Hospital - contrary to their duty of professional diligence. This deception led the consumer to falsely believe that by purchasing the branded Pandoro (at a price, moreover, much higher than the 'traditional' Pandoro Balocco) that they would have been able to contribute to the initiative. This conduct was found to be inappropriate by the AGCM under Articles 20(2), 21 and 22 of the Consumer Code. The AGCM also found that Chiara Ferragni presented herself to her numerous followers (approximately 30 million) as a co-creator of the charitable project, as a supporter and directly involved in said project and in the donation, which was not true, but which, however, helped to strengthen her image as a supporter of charitable projects.

As a result of the above, the Authority fined the companies involved: €420,000 for Balocco, €400,000 for Fenice S.r.l. and €675,000 for TBS Crew. The fines were quantified pursuant to Article 27, paragraph 9 of the Consumer Code, taking into account the gravity of the infringement, the work performed by the company to eliminate or mitigate the infringement, the personality of the agent, and the economic conditions of the company itself. With regards to the seriousness of the infringement, in particular, they noted how the messages were disseminated on Balocco's website and through Chiara Ferragni's social channels, which were capable of reaching a considerable number of consumers and could significantly affect their economic choices by appealing to their particular sensitivity. Furthermore,, with reference to the economic dimension of the organisations, in 2022 Balocco recorded revenues of more than EUR 206 million, while Chiara Ferragni's two companies exceeded EUR 14 million. Lastly, with reference to the economic bias of the consumers, it noted the expenditure incurred by the latter, in believing they were contributing to the charitable donation by paying the higher price for the purchase of the 'Pandoro Pink Christmas' (€ 9.37, on average, against € 3.68 for the traditional one).

Moreover, in the case of Balocco, it was taken into account that the company nevertheless made the (modest) donation to the Turin hospital for the purchase of the machine, and that it suffered losses from the commercial initiative. For Fenice, it was taken into account that it substantially imposed both the content of the press release issued on the initiative, which linked the sales of the branded Pandoro to the donation to the hospital, and the entire line of communication with the media, consumers, and anyone who asked for clarification on the initiative. TBS Crew was considered to be the creator of the posts and stories falsely emphasising that Chiara Ferragni was an active participant in the charitable donation project.

Chiara Ferragni has already announced that her associated companies will appeal the decision, which is deemed disproportionate.

For more on misleading advertising and online advertising rules, please visit our previous articles here (https://www.martinimanna.it/blog/agcm-e-la-pubblicita-occulta-tramite-social-network-il-caso-british-american-tobacco) and here (https://www.martinimanna.it/blog/3q9og99jdxtrzuvhwc45ihmqcclvf8)