Brave and Angry The International Consumer Movement’s Response to Transnational Corporations (TNCs)October 1980. Published in IFDA Dossier 21, January-February 1981
Several weeks ago, I received two reports – one from the United States of America and the other from Hong Kong.
The report from USA1 concerned a popular TV series called “Edward and Mrs. Simpson” which had been brought from United Kingdom by a major transnational and screened in the US. TO get value for money, this corporation screened together with this series, six 3-minute ads – ‘Fables for Now’ in which famous dance troupes like the American Ballet Theatre dance out narrated fairy tales. I quote from the report:
“The fables described a society (pronounced ‘you-sa’) in which selfish environmentalists (portrayed by monkeys) and narrow-minded government regulators (who rub their hands together gleefully while planning new ways to increase their power) join forces to place limits on the good, benevolent and paternalistic animals – the elephant, owl, squirrel and other symbols of (the corporations) industriousness – that provide people with the ‘vim and vigour’ juice that it needs to survive. These good animals cannot do this with their hands tied by the monkeys (that’s us) and regulators who want to abolish profits or bring business effectiveness to a halt, through regulation.
Along the way (this corporation) suggests a number of outrageous things: that oil spills are harmless, rare and easily cleaned up… that growth can be unlimited, to name a few.”
The report from Hong Kong2 gave the results of a test on household insecticides done by the Hong Kong Consumer Council: five brands of the 12 tested by them were found to contain poisons exceeding the limits laid down by the British Insecticides Safety Scheme.
These five brands contained dichlovos (DDVP). Some brands also contained additional toxic chemicals that were considered unsuitable for household use. I was struck by the fact that one of these five brands was manufactured in Holland for the same transnational that was sponsoring the TV series in USA and undermining the credibility of environmental groups and regulatory agencies.
I checked the markets in Penang and discovered that the same brand was being sold in Malaysia, without any statement of its contents whatsoever.
This brainwashing of consumers in the USA and this wanton violence against the consumers in Hong Kong and in Malaysia, and probably elsewhere, has been perpetrated by Mobil Corporation – one of the largest transnationals in the world.
There was a time that transnationals could act like this without anyone being aware of the discrepancy. Now, however, they can and are being found out. There was a time when such discoveries by consumer groups were not possible nor did they have the ability to exchange and act on an international level. Now, some 110 of such consumer groups from nearly 50 countries in all continents at every stage of development, are members of IOCU, which is a non-profit, non-commercial, public interest foundation, based in the Hague, Netherlands. IOCU promotes consumer interests at the international level and provides a variety of services in the area of consumer information, testing and education.
Yet, it was only 10 years ago, at the 6th IOCU, Congress held at Baden, Australia, in June 1970 when IOCU seriously discussed the inability of our economic and political system to protect the consumer from abuses of market power, frequently practiced both by international trusts and cartels and by transnational companies. The following month, IOCU’s representative to the 49th session of the United Nations Economic and Social Council (ECOSOC) proposed “that the ECOSOC or some other United Nations body should develop appropriate international rules and machinery aimed at protecting consumers and indeed the whole economy from abuses in this expanded field of activity.”
In August 1972, at the 7th IOCU Congress in Stockholm, IOCU called for the application of consumer protection laws “not only to the home market but also to exports and the activities of multinational companies”.
The Chloramphenicol Case
As the first response to this call IOCU member organisations cooperated in a case study covering 21 countries. It was probably the first international consumer survey of its kind. The study illustrated in detail how a transnational company can and does market a drug abroad without such warnings of its dangerous, and even fatal side effects as are mandatory in the home country. The drug was chloramphenicol, and the company primarily involved was Parke Davies.
The results were shocking. You could by chloramphenicol over the counter in many countries. Of the 55 brand packs we examined from 21 countries, not one warned against all the conditions in which its use was contra-indicated. Many failed to warn against serious and possibly fatal side effects. Most extraordinary of all, there were wide variations in the warning given with the same brand produced by the same company in different countries.
The Consumer Viewpoint
IOCU interests and position in the subject of transnationals were first fully articulated in November 5, 1973, when Peter Goldman, then President of IOCU, made a statement before a United Nations appointed “group of Eminent Persons.” His statement analysed some inherent contradictions between the global interests of transnationals and those of consumers, and I quote:
“From the consumer viewpoint, marked concentrations of economic power and severe imperfections of competition are always danger signals. Multinational companies in consumer goods industries have readily distinguishable features. These include high profits, and strong emphasis on marketing techniques and product differentiation as alternative forms of competition.”
“…Substantial disparities exist in national rules concerning company taxation, and are sometimes deliberately and competitively created by governments anxious to attract foreign direct investment. By virtue of their structure and geographic spread, multinational companies are able to settle internal transactions at prices so fixed as to produce the largest taxable profits in countries with the lowest rates of taxation. Whatever the scale of this loss of tax revenue, a consequential loss is sustained by consumers whose national governments require to impose taxes on domestic goods, services and incomes heavier than would otherwise be necessary.”
“Manipulation of transfer prices may be put to
other uses besides maximum tax avoidance. When a multinational’s subsidiary has
a very large or dominant position in a domestic market, payments to other
subsidiaries or to the parent organisation for raw materials or semi-finished
products can be artificially high, so inflating the final price to the
“Of more intimate concern to IOCU is the worldwide influence that may be exerted by multinational companies in shaping or distorting consumption patterns. They are normally held to offer advantages to consumers through increased choice and availability of products. Sometimes their goods have been developed less because the consumer needs them than because he can be induced, through excessive and wasteful advertising outlays, to buy them. In the most industrially advanced countries this is not desirable. In the less developed countries, the positive disutilities, economic and social, can be grievous.
“Particularly in less developed countries, and in respect of many manufacturing industries, consumers could gain if production, and marketing were taken over by domestic enterprises supplying items and using technologies that reflected more appropriately their distinctive needs.”
Since the Chloramphenicol case study and since the 1973 statement by the ten President of IOCU, IOCU has continued its research and action on the marketing and promotional activities of transnational companies. Here are a few examples.
Clioquinol is banned in Japan and the USA, but still millions of these tablets are sold every year thoughotu the world, marketed by many drug companies under many brand names. This alarming situation made IOCU to organise a worldwide survey on the availability and instructions for use of drugs containing clioquinol. Besides a survey on the availability in the form of a questionnaire, 107 different samples from 39 countries with 32 different brand names were obtained between August 1974 and January 1975, to compare the instructions for use.
The results were scandalous.
Clioquinol was available in at least 51 countries and in 39 of them without prescription. 15 samples came without instruction leaflets, carrying no or only barest information on the packets. Recommended maximum dosages varied from 400 to 1500 mg daily, and the length of treatment, from three to 28 days. Contra-indications and warnings varied tremendously. Many brands in many countries listed not a single one. None of them, had all! Some brands had widely differing, in some cases even conflicting, instructions in packets sold (and not necessarily manufactured!) in different countries. And again, it was in many Third World countries that the most inadequate instructions were obtained. One over-the-counter clioquinol drug sold in Malaysia, for instance, stated, “Even on prolonged intermittent administration, it is well tolerated by children and elderly people”. No warnings were listed, and the maximum daily intake exceeded international recommendations twice fold. One should keep in mind that all these drugs were freely available and rarely taken under a doctor’s supervision and control!
The report was launched by IOCU in 1975 with a press conference in Geneva. IOCU’s member organisations – consumer organisations all over the world – helped to publicise the problem in their countries and to draw the attention of government authorities to these facts. An update was carried out in South East Asia early this year. In May 1980, IOCU organized a press conference in Geneva to which the update shows that the basic situation has changed only marginally. Ciba-Geigy, the principal firm involved, was invited. The proceedings of this press conference are now available.
IOCU is continuing with this campaigning and has developed an Action Register of Problem Drugs which will form the basis for a continuing campaign in the pharmaceutical area. IOCU is developing an International Hazardous Products Warning Network – a kind of “Consumer Interpol” – to systematically collate and disseminate information on hazardous products.
Insult or Injury
Another study that deserves to be mentioned is the enquiry into the marketing of British Food and Drug products in the Third World. The study was principally funded by IOCU and substantial help was given by the IOCU Regional Office. The Study cites many examples of disgraceful standards of advertising and marketing by UK companies in Third World countries. It mentions as particularly damaging the transfer of inappropriate or over-expensive habits or tastes; the playing in advertisements on nutritional fears and obsessions, and the creating of dissatisfaction as a sense of failure in people.
Sweetened Condensed Milk
In 1979, the IOCU Regional Office conducted a survey on the promotion of sweetened condensed milk (SCM) in 8 Asian countries. We found SCM was widely promoted as a suitable infant food; and Friesland Holland (a multinational cooperative), the Australian Dairy Corporation (a multinational government corporation), Nestle and Carnation Company, USA, were directly or indirectly implicated in its promotion.
The survey found that all of these multinationals practiced double-standards, promoting its use as infant food in one country and warning against such use in another.
It is significant that as a result of this IOCU campaign, changes to the labels have already been made by a number of these companies. The issue was a major controversy in Australia, where our member, the Australian Consumers Association, campaigned on this issue, basing its campaign on the IOCU finding.
The Infant Formula – a New Phase
No issue demonstrates better the muscle of the international consumer movement than the campaign agains the promotion of infant formulae. One of the hightlights of the campaign was the public agreement in October 1979 by the principal transnationals to stop promotional advertising practices. What was outstanding about this campaign, which has implications for the whole direction and strategy of the consumer movement at the international level was that:
- It brought together a variety of social and development action groups, each independent and yet acting in complete empathy and concert. Networking of this kind may be the model for other international campaigns.
- We learnt a great deal about transnationals, their responses, their strength and their influence on political, governmental systems, and on the professions and the United Nations itself.
- It was an issue that brought into sharp focus the dynamics of so-called “developed” world and “developing” world relations on consumer issues and how the third system, the citizens of the world, could unite and change the irresponsible and inappropriate technology that infant formula represents.
- A new “organisation” emerged during the event in October 1979. The International Baby Food Action Network (IBFAN), which includes INFACT (Infant Formula Action Coalition), ICCR (Interfaith Center on Corporate Responsibility), War on Want, Geneva Infant Food Association (GIFA), among others, coordinates activities in the international arena.
- We learned a great deal about the United Nations System – it provided the unique meeting of October in which the third system had a voice that really participated and was heard.
- “Choice”, Hong Kong Consumer Council, July 1980.We learnt and are learning a great deal about international codes and regulatory machinery.
The international consumer movement moves into the 1980’s with a new confidence and muscle in dealing with transnational corporations. The infant formula campaign, the worldwide concern about dumping, IOCU “Consumer Interpol” – an international hazardous product warning network- the increased research and action ability of Third World consumer groups, all these indicated that the international consumer movement is alive and well.
We need to strengthen our link and build new networks, to bring closer those who believe in value for money to the view that value for people is even more important, that it is not enough to talk about the cost of living, when it is the cost of survival that is the problem for most.
The infant formula issue shows how consumer groups can exert pressure both at the marketplace and at home and how necessary it is that consumer groups in developed and developing countries cooperate.
Concern for consumer protection at an international level must be a characteristic of every consumer advocate.
Only if the consumer movement is truly international and carries with it the same brave and angry spirit that moved the consumer advocates who laid the basis of the movement will we see real change. Only then will we see less violence, and less manipulation of the consumer. Only then also will it mean real things to real people.
IOCU’s existence in some 50 countries, with one-third of its membership in the Third World, and its concrete activities such as the infant formula campaign have shown that the third system can work on consumer issues at the international level. We have shown we can provide a real response to the transnational corporations.
1 “Not Man Apart”, Friends of the Earth, USA, April 1980
2 “Choice”, Hong Kong Consumer Council, July 1980.
 International Consumer, Vol. XIV, No. 3 – Autumn 1973.
 Clioquinol: Availability and Instructions for Use”, an international survey carried out for IOCU by the Research Institute for Consumer Affairs, London. Published by IOCU, The Hague. (July 1975).
 “Clioquinol in South East Asia” Foo Gaik Sim, IOCU Regional Office, April 1980.
 Geneva Press Conference on SMON, Proceedings.
 See “Dangerous Drugs”, Wolfgang Howorka, IOCU Regional Office, 1979, which is based on this Register.