Author: Katia Merten-Lentz
Date: Oct 18, 2017
A number of food manufacturers were found earlier this year to be selling products with a lower content of primary ingredients or cheaper substitutes in Eastern European markets. But is it illegal? Katia Merten-Lentz of international law firm Keller & Heckman looks into the issue.
The practice of selling so-called dual-quality products across the EU was strongly criticised by European Commission President Jean-Claude Juncker in his State of the Union speech given in September.
“I cannot accept,” Juncker said, “that in some parts of Europe, in Central and Eastern Europe, people are sold food of lower quality than in other countries, despite the packaging and branding being identical. Slovaks do not deserve less fish in their fish fingers. Hungarians less meat in their meals. Czechs less cacao in their chocolate. EU law outlaws such practices already. And we must now equip national authorities with stronger powers to cut out these illegal practices wherever they exist.”
In response, the food industry has argued that there is no violation of existing EU rules.
That provided fuel for an on-going debate on the so-called dual food quality issue which, as the Commission described it, concerns "goods marketed in the Single Market under the same brand or trademark but with differences in content, composition or quality in individual EU Member States."
A series of studies found evidence of brands containing different ingredients when sold in the newer EU member states. Thus, the tests and evaluations of foodstuffs conducted by the Slovak Republic and Hungary revealed substitution of animal fats by fats of plant origin, use of materials with a lower proportion of fat, lower meat content, added sweeteners instead of sugar, etc. Other studies, such as the ones performed by the Czech Republic and Croatia, displayed similar results.
Over the past few years, the issue of dual food quality had received a lot of public attention. In light of this, it is not surprising that the dual food quality has been extensively discussed in the Council and in the European Parliament.
Moreover, Slovak Prime Minister Robert Fico announced in July that Slovakia would take unilateral measures, such as to instruct public institutions to only purchase Slovak products for their catering services, if the Commission did not take concrete actions.
Hungary went even further and prepared a decree amending its food chain and official supervision law so as to introduce warnings on foods "with different ingredients or a different ratio of ingredients than in countries outside Hungary, but with the same brand name and appearance".
That being said, companies are free to adapt their products to different markets under the current legal framework, provided ingredients are correctly declared. As the industry argues the difference in the composition of foods does not necessarily mean that some Member States are supplied with inferior products.
It is common for food business operators to adapt their recipes to differences in national food legislation, local tastes and the use of local ingredients. This could also be done to reflect technological progress or nutritional reformulation policies, which is not necessarily done simultaneously in all markets. In addition, the composition of products may also be influenced by the price elasticity of local demand.
While the food industry disagrees that dual quality of food is illegal, Junker has confirmed that he will seek to address it as a competition issue. Directive 2005/29/EC on Unfair Commercial Practices (UCPD) prohibits in Article 6(1)(b) a misleading commercial practice if it contains false information or if in any way it deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to the main characteristics of the product.
Against this background, the Commission published in September a notice on the application of EU food and consumer protection law to issues of dual quality of products. In the guidance document, it is made clear that marketing and sale of goods with different composition or characteristics does not violate single market rules provided safety of products legislation or other horizontal or sectoral legislation is respected. Furthermore, the Commission stresses that "(e)ven products under the same brand may have different characteristics."
Therefore, in order to determine whether a commercial practice is in breach of the UCPD would require a case-by-case assessment, which is described in the guidance document published by the Commission.
In its’ guidelines, the Commission indicated that it would wish to ensure full transparency in food composition (beyond the current legal obligations). An option which might be explored in this regard is a Code of Conduct that is currently being discussed with the industry.
In this context, some companies have already chosen to reformulate their products. Alternatively, this situation could push others to rebrand certain foods.
The conclusion is that although the recently published guidelines entirely rely on existing legislation, it appears that the Commission is now keen to see companies justifying discrepancies in the composition of their products. Where they fail to do so, member states may take legal action against businesses.