The European Parliament has specified areas in which measures are to be taken to prevent unreasonable variation in product quality on the single EU market. Varying quality in this way will be a prohibited market practice. This is the main change planned for 2019, but not the only change.
What is a double standard?
A double standard in foodstuffs (or other consumer goods) exists where a product that is on sale in multiple EU countries under the same name and in the same or deceptively similar packaging has a different composition, and this difference affects the product’s characteristics and quality.
Not every difference is a sign that a double standard is being used. The difference must be a major one. At the moment there are no guidelines with respect to evaluating how significant differences are. This will probably be evaluated in terms of the overall circumstances, taking into consideration not only the local tastes of consumers, but also the impact of particular differences in recipes on their health, for example the content of salt, sugar, fats, and synthetic ancillary substances such as colouring and flavouring). While these may be permitted substances, they are criticised for example for being the cause of diet-derived diseases.
Do local variations on chocolate recipes have to be abolished?
For some time, manufacturers have been preparing to mount a strong defence supporting any possible differences in the composition of products. This is action which is perfectly justified, but the road to testing whether this line of argument proves effective in practice in administrative proceedings still seems to be relatively long. Firstly, the differences have to be proven in credible tests using consistent criteria and a representative sample of products (in particular using the method proclaimed by the Community Research Centre). In practice tests of this kind are expensive and difficult to conduct. Secondly, if differences are proven to exist, it has to be determined whether they are major differences. If this is the case, they may be justified under circumstances such as local tastes of consumers, availability of ingredients in the region, where a product is manufactured, or special features of a particular production plant.
In a resolution of 13 September 2018, the European Parliament did not state what kind of circumstances can provide justification of this kind. It did suggest however that arguments based solely on a product price acceptable to consumers in a particular EU country is not sufficient.
It also stated that a particularly restrictive approach will be taken when evaluating differences in quality of products intended for children (saying that the argument of preferences in taste among babies and small children will not be accepted). This approach might also be applied to products for other special consumer groups, such as the elderly or people who do sport.
Amendment to the unfair commercial practices directive
It was mentioned even in 2016 in the guidelines to Directive 2005/29 on unfair commercial practices that offering a product of varying composition in a number of EU countries under the same name or deceptively similar packaging is not an unfair commercial practice provided that consumers are properly informed of the composition of the product (above all the label must comply with the requirements laid down in Regulation 1169/2011).
This approach is now changing. Under the proposal for Art. 6.2(c) of Directive 2005/29, conduct of this kind will be considered a practice that is misleading to consumers. For a manufacturer to be liable, it would have to be determined that a consumer would not decide to buy the product if the consumer was aware of major differences in quality or characteristics of the product offered to him/her and to consumers in other EU countries.
Importantly, once the amendment to the directive has been passed and implemented in individual countries (in Poland this would be an amendment to the Act of 23 August 2007 on Combating Unfair Market Practices) regulators (in Poland the Office of Competition and Consumer Protection (UOKiK)) would have an obligation to investigate all of the circumstances in which there are derogations from the fixed standard of the product in question (unless of course this practice is blacklisted in legislative works at EU level as a practice that is not permitted under any circumstances). In future, it will be possible for penalties for employing practices of this kind found by a regulator to be unfair to be up to 10% of the revenue of the trader in question in the financial year preceding the year in which the penalty is imposed.
Changes are only just beginning
Moves to combat the use of double standards is part of a broader reform programme, the New Deal for Consumers announced by the European Parliament in 2018. In addition to tough regulatory measures, the European Parliament is encouraging self-regulation, for example foodstuff manufacturer associations drawing up best practices to minimise the risk of double standards being applied. One measure could even be creating an optional logo indicating that a manufacturer has joined the scheme and uses a single standard. The list of measures is open-ended and a lot depends not only on the EU authorities and on regulators, but also on manufacturers and manufacturer associations themselves.
Joanna Krakowiak, attorney-at-law, Life Science & Regulatory practice, M&A and Corporate practice, Wardyński & Partners