Same Brand, Different Quality: The EU Commission gives Guidance on Dual Quality Products
Purpose of the Guidelines
In an effort to help national authorities assess and challenge unfair commercial practices, the EU Commission has issued guidelines on 26 September 2017 on the application of consumer and food laws in relation to "dual quality products" (http://ec.europa.eu/newsroom/just/item-detail.cfm?item_id=604475) ("Guidelines").
The Guidelines attempt to address complaints received from consumers in respect of products which are being sold in multiple EU Member States under the same brand and packaging, but which are of inferior quality and composition in one EU Member State compared to another. Such complaints have highlighted the fact that a consumer may have taken a different transactional decision had they known of the significant differences prior to purchase.
The intention of the Guidelines is to assist national authorities in their practical application of relevant food and consumer laws, in particular, sector specific legislation, such as the EU Food Information Regulation, as well as the applicability of the EU Unfair Commercial Practices Directive. As such the Guidelines include common investigation guidelines and a flowchart to help with the assessment of potentially unfair business practices. The flowchart asks the following questions:
- Does a product comply with sector specific legislation?
- Is the product promoted under the same brand and packaging?
- Is the product's composition significantly different from the version sold in other parts of the Single Market?
- Is a consumer sufficiently informed about this difference?
- Key transactional decision: If the consumer had been informed, would he/she buy the product?
In summary if a product is promoted in different jurisdictions under the same branding and packaging, but any compositional and quality differences are not made apparent to the consumer, then the key test is whether a consumer would have still proceeded with the purchase if they had received been informed of the differences. If the answer is "no", it could be a potential breach of the EU Unfair Commercial Practices Directive because it is clear that they were not sufficiently informed and were led to buy a product they may not otherwise have bought.
The Guidelines emphasise that this should be considered on a case by case basis and that national authorities would need to consider the main characteristics of a specific product, including, whether the information on the main characteristics are unclear or are missing and whether such information is likely to alter the average consumer's transactional decision.
Why do international brands need to know this?
Products may have different characteristics and there are many reasons why consumers purchase particular brands. However, many brands rely on brand loyalty and a key requisite to brand loyalty is that consumers expect consistency in quality regardless of where they purchase the product. Therefore, whilst it may be acceptable to adjust products to local tastes or preferences, consumers would expect to be made aware of any compositional changes from one jurisdiction to another. A failure to do so could be viewed as an unfair commercial practice and may breach relevant food and consumer laws.
The EU Commission has also announced its intention to spend €2 million on studies to further explore the issue, including gathering evidence to further understand what countries and products are being affected. There is also the potential that the studies could look into products in other sectors, such as cosmetics and detergents.
For international brands, it serves as a reminder to ensure that their commercial practices are fair, including that they can answer the assessment questions and be comfortable that if their products have any differences in composition from one country to another that such differences are disclosed to consumers to allow them to be sufficiently informed prior to making a purchase.