Yesterday the European Commission revealed its New Deal for Consumers, aimed at ensuring all Europeans fully benefit from their rights.
The proposed amendment makes it explicit that businesses are guilty of a misleading commercial practice if they market a product as being identical across several member states if those products have “significantly different composition or characteristics causing or likely to cause the average consumer to take a transactional decision that he would not have taken otherwise”.
The competent member state authorities should assess and address this on a case-by-case basis, it says.
The proposed fine is 4% of turnover for "widespread infringements and widespread infringements with a Union dimension".
This proposal comes after the Commission issued guidance in September last year on how to apply EU food and consumer protection law to issues of dual quality food products but said “enforcement experience” showed that national authorities needed an explicit set of provisions.
Manufacturers accused of selling dual quality products include Ferrero, Nestle, Danone, Dr Oetker and HiPP.
Last year, German baby food manufacturer HiPP said it would reformulate at least one product following the public accusations.
“These are necessary to enable more effective tackling of commercial practices that involve the marketing of a product as being identical to the same product marketed in several other member States, where those products have significantly different composition or characteristics causing or likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.”
A new guidance on the Unfair Contract Terms Directive 93/13/EEC is planned for the end of 2018 and an updated Guidance on the Consumer Rights Directive 2011/83/EU planned for 2019.
First Vice-President Timmermans said the Deal, which will now be discussed by the European Parliament and Council, would deliver a fairer single market that benefits consumers and businesses.
Commissioner for justice, consumers and gender equality Věra Jourová said: "In a globalised world where the big companies have a huge advantage over individual consumers we need to level the odds. Representative actions, in the European way, will bring more fairness to consumers, not more business for law firms.
“And with stronger sanctions linked to the annual turnover of a company, consumer authorities will finally get teeth to punish the cheaters. It cannot be cheap to cheat."
How will the New Deal benefit businesses? A fairer market for honest traders, simpler ways to communicate with consumers… Click here for the Commission’s fact sheet
'The cart before the horse'
However, FoodDrinkEurope, the lobby that represents the interests of food manufacturers, slammed the Commission for putting “the cart before the horse”.
It said it strongly regretted that the Commission did not wait for the results of the European testing of “alleged ‘dual quality’” carried out by the Joint Research Centre (JRC) before recommending additional legislation.
This was echoed by the retail association, Eurocommerce, which acknowledeged dual quality had undermined consumer trust but said there was not enough information available on the scale of the problem.
Its director-general Christian Verschueren said the proposal put retailers at risk of heavy fines for selling goods in one country with different ingredients from those in another. "Retailers are obliged by big brands to buy products from their local distributor, and are barred from sourcing from another territory," he added.
Will it add butter to biscuits?
Senior food policy officer at European consumer rights group BEUC Camille Perrin said: “It remains to be seen what will be deemed a ‘significant’ difference in composition, and we trust national authorities will consult consumer organisations to inform their assessment. Adding an extra food additive in a product may seem as a small recipe tweak, but what if its use allows saving on another expensive food ingredient?
Pete Martin, regulatory affairs director at Ashbury Labelling, who questioned the practicalities of keeping consumers informed.
"In practice what would that mean - 'This pizza contain analogue cheese, however, the same product in Germany contains mozzarella and edam'? And if the consumer is informed of the difference but has no other option to buy what will they do? Buy no pizza at all?"
As to how effective it will be, Martin said this would on the degree to which it is enforced. "Fines are often not a deterrent owing to the commercial realities but bad publicity works more often these days."
Luca Bucchini, food law expert and managing director at Hylobates Consulting, said he saw two important aspects to consider.
"First, a concern is that this provision is hijacked by politicians particularly in countries where independence of the judiciary is challenged. The Commission's proposal may be a populist's dream tool, unless the methodology is objective.
"Second, firms will have to think of a European consumer for compliance purposes; this is relatively new, as many issues have been pushed back to Member States in terms of enforcement, but this is really a significant step towards a truly European marketplace."
Perrin added: “The Commission should also investigate B2B practices, such as when suppliers force supermarkets to source their products from a given factory. It prevents retailers, and consequently consumers, from getting potentially higher-quality products from another country. This kind of practice restricts consumers’ ability to benefit fully from a diverse single market and must end.”