A São Paulo court has found 99Food guilty of unfair competition against its rival, iFood, in a significant ruling for Brazil's food delivery market. The decision stems from two advertising campaigns that were deemed to have illegally targeted the market leader. As a result, 99Food has been ordered to pay R$ 50,000 in moral damages and halt the campaigns, though the company has already announced its intention to appeal the verdict.
The Court's Ruling on Advertising Practices
The judgment was delivered by the 1st Business and Arbitration Conflicts Court of São Paulo, which mandated the immediate suspension of the disputed advertisements. In addition to the R$ 50,000 fine for moral damages, the court ordered 99Food to compensate iFood for lost profits, with the final amount to be determined in a subsequent phase. The ruling also requires the Chinese-owned company to cover all associated legal costs from the proceedings.
At the heart of the decision was the court's assessment that 99Food's campaigns exceeded the legal limits for comparative advertising in Brazil. The judge concluded that the materials were not objective or verifiable and used depreciatory elements associated with iFood's brand. This approach was characterized as a parasitic exploitation of a competitor's reputation rather than a legitimate and fair comparison of services offered to consumers.
Dissecting the Controversial Campaigns
The first campaign, named “Taxômetro,” utilized visual elements reminiscent of iFood's branding, such as its distinct red and white colors, to display estimated fees paid by customers. However, the court noted that 99Food failed to present its own fee structure, making an objective comparison impossible for consumers. This lack of transparent and equivalent data was a key factor in the court's finding of unfair practices.
The second initiative, titled “Respostas Bem Servidas,” involved using negative social media comments and criticisms directed at iFood within 99Food's own promotional materials. The judiciary classified this tactic as parasitic leveraging, as it sought to benefit from a competitor's negative feedback without providing verifiable data about its own service quality. The court found this approach to be defamatory rather than informative for the public.
Company Responses and Market Context
In response to the verdict, 99Food stated that while it respects the court's decision, it disagrees with the terms and will proceed with an appeal. The company defended its campaigns as part of a mission to bring greater transparency and competitiveness to the Brazilian food delivery sector. It remains confident in the legality of its actions and their role in fostering innovation within the market.
Conversely, iFood celebrated the ruling, reaffirming its commitment to fair, ethical, and fact-based competition. The company expressed its belief that healthy competition benefits consumers, restaurants, and couriers alike. It further stated that marketing practices that distort reality to undermine competitors are detrimental to the entire industry and violate the principles of a free market.
This legal dispute underscores the fierce competition within Brazil's billion-dollar food delivery industry, where dominant players and new entrants are battling for market share. The court's decision serves as a critical reminder of the legal boundaries surrounding comparative advertising and its impact on both corporate rivals and consumers. The outcome of 99Food's appeal will be closely monitored as it could set a precedent for future marketing strategies in the sector.