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A Desperate Mead Johnson Loses $13.5M Jury Verdict Over False Claims

PBM Products has won a $13.5 million false advertising jury verdict against Mead Johnson (MJN), its third successful suit against the rival baby formula maker. Mead Johnson was found to have falsely claimed that PBM's store brand products -- for Walmart, Sam's Club, Target, Kroger and Walgreens -- were not as good as Enfamil, and that Enfamil helped brain and eye development in babies.

The verdict is not a surprise. Mead Johnson is a recalcitrant marketer that has deliberately tempted fate in two previous lawsuits and in a proceeding before the National Advertising Division of the Council of Better Business Bureaus, a sort of advertising industry police force. BNET noted in May that Mead doesn't seem to care whether its ads tell the truth or not, which is not a good reputation for a baby brand to have. Its advertising agency is Saatchi & Saatchi.

The judge's order in the case gives some clues as to why Mead embarked on its kamikaze mission. The company was desperate, the judge said:

Mead Johnson consciously decided that its marketing should be more aggressive and risky as it witnessed a decrease in its sales and an increase in store brand sales. ... The 2008 Mailer and its attack on store brands was the result of that marketing decision.
Mead is now banned from saying things such as "It may be tempting to try a less expensive store brand, but only Enfamil LIPIL is clinically proven to improve brain and eye development," or "There are plenty of other ways to save on baby expenses without cutting back on nutrition."

It had previously advertised Enfamil with print ads and a Web site that featured an alarming blurry picture of a cartoon duck, which suggested feeding infants anything but Enfamil will result in reduced vision and brain development. (Read PBM's complaint here.)

The next question is whether Mead will ignore the judicial process a fourth time as it attempts to boost its sagging Enfamil brand. Abbott Labs (ABT) is also suing the company for similar reasons. And the FTC may take action against Mead for false advertising. Mead was referred to the FTC for action by NAD in February.

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