METRO's position on EU-Commission proposal revising the Unfair Commercial Practices Directive / Dual quality of food
On 11 April 2018 the European Commission published a draft Directive seeking to amend 4 existing EU consumer protection directives. The stated purpose of the Directive is to ensure all European consumers benefit fully from their rights under EU law. Some amendments shall reflect the recent public debate on alleged "Dual quality of food".
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).
Nevertheless several governments of EU members states recently complained that the quality of some products is different, from "lower quality" in their home country when compared to products sold by the same producer and under the same brand across the border.
METRO has on several occasions contributed to the debate providing facts and arguments to allow EU decision makers to find a reasonable solution to the addressed complaints.
The Proposal by the EU Commission
The revised Unfair Commercial Practices Directive (UCPD) as proposed by the Commission would read:
Art. 6.2 c)
“A commercial practice shall also be regarded as misleading if, in its factual context, taking account of all its features and circumstances, it causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise, and it involves: (...) c) any marketing of a product as being identical to the same product marketed in several other Member States, while those products have significantly different compositions or characteristics;”
More information on this topic:
Metro's Position on UCPD Amendment regarding "dual quality" of food
We believe that such amendment is not the right way to create benefit to consumers. The assumption of such amendment is that where a customer buys a branded product he or she may be misled in case the branded product has a different composition in another country. However, it must be noted that:
- METRO business is predominantely B2B related as for the Cash&Carry sales line in 26 countries, while the Retail sales line is related to Real and only operating in Germany has no issue in relation to the Dual Quality topic.
- We serve B2B customers that have a professional notion of product characteristics and ingredients well above the average end-consumer, since their purchase activity is business driven.
For the above reasons, the purchase decision is fact based, also for the aspect that in Private Label there is very much lower advertising investment that A-brands, hence the “emotial” drive is minor.
The decision relies on the individual trust of the customer for the store Banner Brand as pre-requisite, to choose the private label.
Considerations that led to our position:
- The product label on the packaging indicates exactly what is the content (it is a legal requirement).
- Quality parameters, and ingredients' percentages are in some cases also ruled by local laws.
- Producers, during product development, run local surveys to better match the local consumer tastes and culinary traditions.
The proposal disregards the reality of consumer choice, and will inhibit innovation and product development
Customers are not misled since they generally do not have any notion one-on-one whether a product from their country is identical to a product sold in another country. Customers compare a product they buy with other products on the shelf sold in their country. This is their benchmark. They buy what they like. If at all, a customer may have an idea about the taste or consistency of particularly well-known A-brands beyond national borders. However, even regarding A-brands customers are in a position to test and compare products and in the end decide whether they want to buy it.
Regarding own brand, customers have no such “cross border” expectation at all. Own brands compete with discount products in each respective country, and customers benchmark such products with each other.
In addition to having price-entry level products, which provide the legal minimum requirements in the country, these products may also have some upper-tier segment focused on special ingredients. Since each own-brand product in a country competes with local products, the compositions of these products along countries may also differ. The contributes to diversity and innovation in the food market.
Forcing uniformity violates the freedom for customers
We have some serious concerns how the enforcement authorities will define what is identically marketed, as this is way too open for the interpretation that in the end will lead to dictating unique taste and prices. This will not allow manufacturers to have a legal certainty in product development.
That’s why we call for abandoning the idea of amending the UCPD regarding alleged “dual quality” as it is against the interest of European consumers. The minimum requirement would be to put the legitimate reasons mentioned in the recitals for which products can be different into the legal text and limit the applicability of the amendment to well known A-brands.