Mega Beverage Corporation will launch its new twelve-hour energy drink called the Viva in a few weeks. The company suggests a retail price of $3 for a 3-ounce bottle; however, the retail buyers must agree not to sell the drink for less than $2.75. Although Mega offers the product for sale to retailers at the same price, large discount stores, such as Value-Mart, and businesses that cater to teenagers are often offered free cases of the product if they purchase a certain amount of Viva.
Mega plans to sell Viva in South America, but they are not sure if the product will require any special licensing or government approvals. Your brother-in-law says that he knows someone in the South American government that could help you bypass any regulations for a small fee.
Nicole is a mother of two young boys. She works full time as an accounts receivable clerk and takes classes online to finish her degree in public administration. While glancing at the television late one night after putting the kids to bed, she hears about a new energy drink that helps people stay awake longer with more energy. The commercial promotes the supplement as containing natural ingredients, which include niacin, vitamin B6, vitamin B12, and a blend of various elements, including caffeine; however, the amount is not specified.
The advertisement claims Viva is safe and consuming the product would not result in any negative side effects. The drink comes in two flavors, coffee and grape. Nicole believes this new product might help her stay awake longer so she will have time to complete her chores, spend time with her kids, and finish her homework.
The next day, Nicole purchases twelve bottles of the coffee flavored Viva. Nicole consumed a bottle every day around noon for a whole week and felt the rush of energy. She was able to stay up late and felt like a superwoman. After several weeks, Nicole found that she needed to drink two bottles a day to maintain the same energy levels. However, on the days she consumed the drink, she started to suffer from severe headaches and nausea. Nicole begins to wonder if the drink is safe and firmly believes the advertising was misleading. She considers filing a lawsuit, but remembers something from her business law class about two government agencies that might be able to help her and prevent others from being tricked into buying this dangerous product.
Using the South University Online Library or the Internet, research and read about the lawsuits filed against energy drink manufacturing companies or other deceptive advertising lawsuits such as weight loss supplements.
Based on your research, understanding, and the scenario, answer the following questions:
- What violations has Mega Beverage Company committed in its dealings with the retailers?
- Is Mega Beverage Company's current plan to distribute products in South America legal and ethical? Why or why not?
- Which are the two government agencies that might be able to assist Nicole? How would they be able to help Nicole?
- How would an administrative agency handle Nicole's complaint? What would be the possible challenges by Mega Beverage Company and the possible outcome?
- In one paragraph, summarize the case you found related to energy drinks or deceptive advertising of other products.