EU rules against dual food quality to enter into force

For several years, many European member states have complained that the quality of some foodstuffs sold in their country is inferior to products that are marketed as identical but which are sold in other member states. These complaints tend to originate from Eastern European countries, who have been vocal in their disagreement with the alleged state of affairs.

In May 2016, a note from the Czech Republic to the EU Agriculture and Fisheries Council drew attention to the issue of dual quality. The note stated that “a number of tests that have been performed in the Czech Republic and other countries over a long period of time confirmed such a practice of some multinational companies”. In 2017, Hungary notified to the European Commission a draft amendment to regulate the labelling of products placed on the market in Hungary with different ingredients (or with a different ratio of ingredients) than in countries outside Hungary but with the same name and appearance. A couple of months later, the Visegrád Group issued a joint statement of the Prime Ministers of the Czech Republic, Hungary, Poland and Slovakia on dual quality of foodstuffs and other commodities. In this statement, the ministers said that “it is unacceptable that [our] consumers are treated differently and in a discriminatory way” and called upon the Commission to “propose adequate measures urgently”.

Debates have arisen – amongst others – over breaded fish sticks that contain more or less fish on the basis of where they are sold, or Nutella that is allegedly manufactured to be more or less creamy, depending on the country in which it will be marketed. Following various complaints and political pressure, the European Union finally took measures to address the issue of so - called "dual quality" of foodstuffs. The practice refers to manufacturers who knowingly produce non-standard (be it superior quality or sub-par quality) food products on the basis they are destined for certain EU states, even though they are marketed as identical.

Prohibition of dual status

To this end, in September 2017, the European Commission published guidance applicable to alleged cases of double standards. The guidance lays out how to assess these potentially unfair trade practices and introduces the concept of a "reference product." The reference product provides a benchmark foodstuff which the manufacturer effectively commits to producing as standard and of which a consumer can reasonably expect to be sold wherever they are based in the EU.

In April 2018, in the framework of the “New Deal for Consumers”, the Commission made a proposal for a directive on better enforcement and modernization of EU consumer protection rules, which sought to include the dual quality of products in the Unfair Commercial Practices Directive.

In 2019, the prohibition of double quality became a principle of European law: the Omnibus directive was published and amended article 6 (2) of Directive 2005/29/EC by inserting point (c) which defines as a new required commercial practice: "Any marketing activity presenting a good, in a Member State, as identical to a good marketed in other Member States, even though that good has a significantly different composition or characteristics, unless this is justified by legitimate and objective factors."

In effect, this means that manufacturers must consider several factors in succession: if they market products as identical or apparently identical in one or more member states; if these products actually have significantly different composition or characteristics; and if this is done without legitimate cause and in a way that is not easily identifiable by the consumer.

There is no specific description of what would constitute a legitimate and objective justification. According to the Commission, it could be justified by national law or voluntary strategies to improve access to healthy and nutritious food. Consumer preference or local taste could also be legitimate justification provided they are supported by sufficient evidence (e.g., a consumer study).

Penalties for breaches

Under the rules set out in the Directive, it will remain up to the national authorities to assess potential breaches as and when they arise. However, it is specified that the penalties for breaches can amount to up to 4% of the trader's annual revenue in each of the membersStates concerned. This specification is set out in Article 3 of Directive (EU) 2019/2161 of the European Parliament and of the Council of November 27, 2019, amending Article 13 of Directive 2005/29/EC.

The twenty-seven EU countries have until 28 November 2021 to transpose this provision into their national law. The law will then need to come into force at national level at latest on 28 May 2022. A report of the National Assembly of 13 July 2021 indicated that an ordinance by empowerment will be issued at latest by 3 February 2022. Even in the absence of the laws already being applicable in some countries, knowing the laws will soon come into effect (along with the associated penalties), operators would be well advised to act with prudence when it comes to adapting their recipes to local tastes, otherwise they will be heavily sanctioned.

If most countries are lagging behind, some have already implemented the directive into their national law. For example, the Czech provision came into force on 12 May 2021. The content is slightly different from the text of the directive and reads as follows:

“the placing on the market of foods seemingly identical to food marketed in the other Member States is prohibited if the food placed on the market in the Czech Republic has a significantly different composition or characteristics unless justified by legitimate and objective factors and if the food does not have easily accessible und sufficient information on this different composition or properties.”

We can expect an acceleration of national transpositions in months to come. Until then, food business operators should prepare for this significant change and exercise caution when planning to adapt their recipes to local considerations.