Dual quality food products guidance of the EU Commission – Now what?

Consumers from a number of EU countries and several governments (lead by Slovak and Czech representatives) recently complained that the quality of some products is lower in their home country when compared to products sold by the same producer and under the same brand across the border.

The free movement of goods principle, in facts, does not necessarily mean that every product must be identical in every corner of the Single Market. Whilst consumers are free to buy the products of their choice, business operators are also free to market and sell goods with different composition or characteristics, provided that they fully respect EU legislation (whether on the safety of products, labelling or other horizontal or sectoral legislation). Even products under the same brand may have different characteristics, due to legitimate factors such as the place of manufacture, consumer preferences or price variations in the target markets.

However, what can be a source of concern is when different compositions of identically branded goods are marketed in a way that has the potential to mislead the consumer.

The issue of dual quality of food products has been a source of growing concern; as clearly underlined by President Juncker in his State of the Union speech, there cannot be second-class consumers in a Union of equals and it cannot be acceptable that “in some parts of Europe, people are sold food of lower quality than in other countries, despite the packaging and branding being identical“.

The European Commission has taken forward actions on various fronts in order to tackle the issue of dual quality of products, combining dialogue with the parties concerned and practical steps to enable concrete measures by the competent authorities.

To this purpose, the Commission has adopted a Guidance to help national authorities to make better use of existing EU Food and Consumer legislation to identify and address unjustified dual standards.

In facts, several pieces of EU legislation are relevant to tackle the issue of dual quality of products.

The guidance lists and explains the relevant requirements from EU food laws and EU consumer laws to which authorities need to refer when analysing a potential dual quality product issue.

In addition to the ‘General Food Law Regulation’ (Regulation (EC) 178/2002) – which aims at ensuring that only safe food products are placed on the EU market and that consumers are accurately informed and not misled as to the composition and characteristics of the food products offered for sale – the relevant principles are set out by:

  • the ‘Food Information Regulation’ – Reg. (EU) 1169/2011 – which lays down general labelling rules and requirements, including mandatory provision of a complete list of ingredients enabling consumers to be fully informed of the composition of the food products;
  • the ‘Unfair Commercial Practices directive’ – Dir. 2005/29/EC – which prohibits unfair commercial practices, and can be applied to practices such as marketing identically branded products in a way that has the potential to mislead consumers.

Based on this legislation, the guidance establishes a step-by-step approach for the national consumer and food authorities to identify whether the producers are in breach of these laws.

Assessing whether a commercial practice is in breach of the UCPD requires a case-by-case assessment. Marketing goods with the same packaging and branding but with different composition and sensory profile could be contrary to the UCPD if it can be demonstrated, on a case-by-case basis, that:

  • consumers have legitimate specific expectations from a product compared to a “product of reference” and the product significantly deviates from these expectations;
  • the trader omits or fails to convey adequate information to consumers and they cannot understand that a difference with their expectations may exist;
  • this inadequate or insufficient information is likely to distort the economic behaviour of the average consumer, for instance by leading him or her to buy a product he or she would not have bought otherwise.

The following flowchart is provided by the Guidance, in order to assess potentially unfair business practice:

The national consumer and food authorities are responsible for ensuring that companies comply with EU laws. However, as this issue concerns practices of business operators across the Single Market and involves a cross border dimension, competent authorities should seek to conduct the above mentioned investigation, when this is appropriate, in a coordinated manner, under the Consumer Protection Cooperation (CPC) Regulation n. 2004/2006.

The European Commission is committed to helping national authorities – in addition to the adoption of the guidelines – also through other different work strands.

The Commission is working on a methodology to improve food product comparative tests so that Member States can discuss this issue on a sound and shared scientific basis that is the same for all. The Commission has made € 1 million available to its Joint Research Centre (JRC) to develop this methodology.

The Commission is also financing further work on the collection of evidence and enforcement by offering € 1 million to Member States for the financing of studies or enforcement actions.

The Commission has started a dialogue with producers and brand associations, who have committed to developing a “code of conduct” for this autumn.

Moreover, the Commission will organize workshops with consumer protection and food safety.

Some remarks from my side:

  • the legitimate intent of the Commission, in my opinion, will be most likely to be frustrated and to raise concerns due to the different interpretations that will arise in the Member States: we already know that ensuring a consistent enforcement of the EU rules is one of the biggest challenges in the single market, but when it comes to act on the basis of concepts like “legitimate expectations of the consumers”, “adequate information”, “distort consumer behavior” and “average consumer” I foresee troubles. Only the time will tell if this guidance will be a useful tool for the enforcement and the EU/national case law will have to help to define such concepts.

Until then – beside gross misconducts – to proof companies’ unfair commercial practices under this framework, it seems to me what jurists call in Latin “probatio diabolica” (devil’s proof): how to substantiate such requirements? Even to link the concept of “adequate information” to the compliance with FIC Regulation could not be enough to reach such proof…and what about the other concepts (debated from decades), like the “average consumer”?

  • in the Commission guidance not enough importance has been recognised to prices’ issues (even if price has been mentioned as a reason for changes in the recipes). What about countries where citizens have a very low disposable incomes? It would be better to supply them different products or do not supply them at all because the price paid does not cover the costs? To me this second option is even more classist…
  • an industry voluntary guidance/code of conduct will be most welcomed, and if discussed with the Commission, the national competent authorities and the other stakeholders involved (e.g. consumers’ associations at EU level), could prevent a lot of puzzling question marks to all the actors involved…
  • develop an analytical standard validated and adequate to all the food categories it seems quite optimistic, and the funding devoted by the EU Commission for that purpose quite limited.

In the end this document, much then solve problems, could raise serious issues for enforcement authorities and stimulate a strong opposition from the industry.

Evaluation and fitness check roadmap of EU consumer law

The Commission published today an evaluation and fitness check roadmap of consumer law.

Plans for a Fitness Check of legal acts related to consumer rights and advertising were first announced in the 2013 REFIT Communication . The Commission Work Programme 2015 included, as one of the REFIT actions in the area of Justice, Consumers and Gender Equality, a Fitness Check of key EU directives in the area of consumer rights and advertising:

Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market (Unfair Commercial Practices Directive);

Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees (Sales and Guarantees Directive);

Directive 93/13/EEC on unfair terms in consumer contracts (Unfair Contract Terms Directive). The above-mentioned directives are part of the body of general EU consumer law. For consistency reasons and to ensure comprehensive evaluation the following Directives should also be subject to the Fitness Check:

Directive 98/6/EC on consumer protection in the indication of the prices of products offered to consumers (Price Indication Directive);

Directive 2006/114/EC concerning misleading and comparative advertising (Misleading and Comparative Advertising Directive);

Directive 2009/22/EC on injunctions for the protection of consumers’ interests (Injunctions Directive). The following Directive will be evaluated separately by the Commission in accordance with its Article 30:

Consumer Rights Directive 2011/83/EU. The outcome of this separate evaluation of the Consumer Rights Directive will feed into the conclusions of the Fitness Check.

There will be several types of consultations during the Fitness Check:

• Online public consultation of 12 weeks in order to provide an opportunity for the public to participate in the evaluation;

• Targeted consultation of representative organisations (Member states authorities, businesses and consumer and industry organisations) – by surveys, interviews and case studies performed by the Commission’s external contractor;

• Targeted online consultation of a representative number of consumers in each Member State performed by the external contractor;

• Case studies with businesses in each Member State, in particular SMEs, performed by the external contractor.

In addition, the Commission will organise 2 events for Member States experts and other stakeholders and will inform and consult them through the existing networks.

The overall aim of the Fitness Check is to analyse the  and EU added value of the policy framed by the directives subject to the Fitness Check. The focus of the Fitness Check will be to assess whether the fundamental objectives of these directives have been efficiently achieved and fully delivered.

In particular, it will assess whether these directives have efficiently achieved consumer protection and market integration objectives. It will analyse whether they have usefully contributed to the Single Market by enhancing consumers trust and confidence as well as by removing unjustified regulatory obstacles hindering cross-border trade in goods and services. As already highlighted in the context of the DSM Strategy and in the preparatory works for the above-mentioned proposal for a Directive on online and other distance sales of goods, the differences between national rules based on the minimum harmonisation nature of the Sales and Guarantees Directive have created Single Market barriers that impede businesses from offering goods across the entire EU and – as a result – consumer detriment.

The Fitness Check should also examine whether these instruments capture and reflect the current market trends and, in particular, changes in the markets and the behaviour of consumers. The questions related to redress will be an important part of the exercise. The Fitness Check should further assess how well these legal instruments fit within the overall Union’s legal landscape, taking into account also its international dimension. The Fitness Check will also explore ways to improve the application of the current EU legal framework.

In addition, the Fitness Check should assess the potential for simplification in the current regulatory framework and the reduction of regulatory costs and burdens while guaranteeing a high level of consumer protection. The directives subject to the Fitness Check have been enacted at different periods of time and regulate specific aspects of consumer rights, whilst at the same time pursuing the same common objectives. The Fitness Check will therefore explore whether and to what extent a potential codification of EU consumer law into a single EU instrument could bring added clarity, remove overlaps, and fill any gaps.

For example, the Fitness Check should analyse the interplay between the information requirements provided in the Unfair Commercial Practices Directive, the Price Indication Directive and the Consumer Rights Directive to see if there is a room for clarification or simplification. The Fitness Check will also assess whether the provisions of the Unfair Contract Terms Directive could be reinforced by, for example specific rules on standard terms that are always prohibited (that already exist in certain Member States which have introduced rules beyond the minimum requirements of the Directive) and whether the current minimum harmonisation nature of this Directive constitutes a barrier to the Single Market. As regards the Sales and Guarantees Directive, the Fitness Check should in particular assess its relevance in promoting more durable products and contributing to a circular economy.

Next to their application in the business-to-consumer (B2C) relations, the Fitness Check will analyse the need and potential for the application of the existing consumer rules also in business-to-business (B2B) transactions, in particular the transactions with the SMEs, by taking account of the B2B rules already laid down in the Misleading and Comparative Advertising Directive, and in transactions between businesses and non-for-profit entities that do not qualify as consumers under the current rules. The Fitness Check will also analyse the issues arising in consumer-to-consumer (C2C) transactions (increasingly relevant due to the rise of the sharing economy) and in consumer-to-business (C2B) relations.

The fitness check should be completed in the second quarter of 2017.