The Procon consumer agency in Sao Paulo, Brazil, has fined McDonald's 3.2 million reais ($1.6 million) for targeting children with its advertising and toys.
The action against the Happy Meal adds fuel to a global debate about fast food and public health. Much of the debate centers on how McDonald's and other fast-food companies market to children and other young consumers.
While the initial fine may have little effect on the world's largest restaurant chain, the agency said additional citations could arise, more than doubling the cost to McDonald's. Consumer agencies in other jurisdictions could also soon follow the precedent in Brazil's most populous state.
"This is not an isolated case," said Procon's top lawyer in Sao Paulo, Renan Ferraciolli. "There's no need to appeal as they do to children without the maturity or the rationality to enter the market as consumers."
The fine, announced on Monday, stemmed from a 2010 campaign offering meals with toys from the movie "Avatar" and a local television series, Ferraciolli said. Marketing activity since then has followed similar patterns, he added, giving the agency grounds to consider additional fines.
A spokeswoman for McDonald's declined to comment on the case. The company can appeal Procon's ruling in court.
The penalty in the fast-growing Brazilian market is the latest in a series of increasingly aggressive tactics by regulators, who recently have cracked down on big companies for perceived consumer abuses. In recent months, Brazilian agencies have penalized banks, phone companies and private health plans in the name of consumer protection.
In the United States, pediatricians have urged a ban on advertising unhealthy foods to children, but legal measures have gained little traction. A judge last year threw out a lawsuit against Happy Meal marketing.
U.S. regulators have urged companies to voluntarily end food advertising to children unless they are promoting healthy fare, but industry groups have fought such proposals.
In a nod to public health advocates, McDonald's has added apples and reduced the amount of French fries in its children's Happy Meals, which continue to include a toy. The chain also moved to start listing calorie information on menus throughout the U.S. before a national rule requiring such disclosures.