Price hike concealed: Iglo found guilty of "shrinkflation" practice
In a groundbreaking decision, the Vienna Higher Regional Court (OLG) has ruled against Iglo, a leading frozen food manufacturer, for engaging in shrinkflation – the practice of reducing the contents of a product while maintaining the same price and packaging. This is the first legally binding case of shrinkflation in Austria, demonstrating that such practices are considered deceptive and carry legal consequences.
Back in February 2023, Iglo reduced the contents of its Atlantic salmon from 250 to 220 grams, a move that has drawn criticism from consumer advocates. The average consumer expects to receive a product with unchanged filling quantity for the same price and unchanged packaging. However, Iglo's spokesperson attributes the change to a relaxation of raw material prices, which they are 'happy to pass on.'
The Association for Consumer Information (VKI), on behalf of the Ministry of Social Affairs, filed a lawsuit against Iglo, arguing that the reduction in product quantity without clear indication is misleading to consumers. The ruling is intended to send a signal against hidden price increases and to ensure transparency at the checkout.
Ulrike Königsberger-Ludwig, the responsible state secretary, stated that the federal government is working on a legislative proposal to ensure such transparency. Meanwhile, Iglo has been selling its frozen fish with the original filling quantity of 250 grams for about two months, unrelated to the previous court proceedings.
Eskimo, a former Iglo sister brand, has also been under scrutiny for reducing the size of its Magnum ice lollies by approximately 10 percent while maintaining the same price. As a result, Eskimo is nominated for the VKI negative award 'Consumer Goose' this year.
Finance Minister Markus Marterbauer wants to advocate against the 'Austria surcharge' at the meeting of EU economic and finance ministers. He argues that international brand companies demand higher prices in smaller countries than in larger ones.
Iglo must pay VKI more than 3,600 euros for the costs of the proceedings within 14 days. The company is seeking legal clarification on how and to what extent a quantity change needs to be additionally indicated. This ruling serves as a reminder to all companies to maintain transparency in their business practices and to avoid deceiving consumers.
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