Belgian court overrules in Herbalife’s favour

Belgian consumer group, Test-Aankoop took Herbalife to task, accusing it of operating a pyramid scheme that defrauded distributors further down the distribution chain.

Despite a lower court initially ruling in the consumer group’s favour, the manufacturer appealed, stating that the judgment contained factual errors and was based on misinterpretations of its direct-selling sales method.

Thereafter; the higher court ruled the company’s sales model as being in full compliance with Belgian law, an lengthy appeal process that has clearly paid off for the cosmeceuticals maker.

“Herbalife continues to focus on supporting its independent distributors and their customers in Belgium, and the company remains committed to an open and transparent relationship with those distributors and customers, as well as regulatory authorities and all other stakeholders​,” the company said in a statement.

Shares are on the rise again...​

This ruling comes nearly a year after Wall Street hedge fund manager Bill Ackman accused Herbalife of operating a pyramid scheme and said he had been shorting shares. As a result, this triggered a knock on effect on the company’s stock, but analysts report a rebound on the horizon as of this latest ruling.

Going forward, the company says it will continue to focus on supporting its independent distributors and their customers in Belgium, and that it remains committed to an open and transparent relationship with those distributors and customers, as well as regulatory authorities and all other stakeholders.

Herbalife moved into the cosmetics field back in 2004.

At the time, the company said it would cash in on its' expertise in vitamins and botanicals to develop skin care lines using the same ingredients that are already known to benefit the body, to protect the skin.

The move turned out to significantly reduce the company's debt level, allowing it to extend beyond the supplement market, into both the personal care and energy drink categories.