Where is this food from? - the issue of origin

I. BGH’s referral for a preliminary ruling

On 29 September 2017, the German Federal Court of Justice (Bundesgerichtshof - BGH) referred certain questions on the interpretation of European provisions in relation to the indication of origin of products in the fruit and vegetable sector to the Court of Justice of the European Union (CJEU) for a preliminary ruling. The referral is pending at the CJEU under case number C-686/17.

1. Background

The questions arose in a dispute between a German association fighting unfair competition (Zentrale zur Bekämpfung unlauteren Wettbewerbs – Wettbewerbszentrale) and a producer of cultivated mushrooms.

The mushrooms were labelled with “Origin: Germany” without any further explanations. However, the cultivation took place in several steps and the mushrooms were only brought to Germany shortly before harvest. First, the raw materials for the substrate were mixed and blended for 7 to 11 days in Belgium and the Netherlands. In a second step, the substrate was pasteurized and further processed for another 5 to 6 days in the Netherlands. Thereafter, the fungal spores were injected into the substrate for another 15 days – again in the Netherlands. In a fourth step, the formation of the fruiting bodies was induced in boxes on a peat and chalk layer growing for a further 15 days in the Netherlands. Only thereafter were the boxes shipped to Germany, where the mushrooms were harvested for the first time after 1 to 5 days and for the second time after 10 to 15 days.

In view of the fact that various steps did not take place in Germany, the Wettbewerbszentrale challenged the indication of Germany as the country of origin without any further explanations as misleading.

In the first instance, the Regional Court of Ulm (LG Ulm) dismissed the action. This result was confirmed by Higher Regional Court of Stuttgart (OLG Stuttgart) upon appeal. However, this court admitted further revisions proceedings to the BGH, who in turn decided to suspend the proceedings and submit several questions to the CJEU for a preliminary ruling.

2. Referred questions and BGH’s pre-assessment

Question 1: Has the term “country of origin” in Article 76(1) of Regulation (EU) No 1308/2013 been determined in accordance with the principles set forth in the Union Customs Code [Regulation (EU) No 952/2013]?

According to the BGH, this question would need to be answered in the affirmative. There are various referrals to terms of the Union Customs Code. Most notably, Article 2(3) of the FIC [Regulation (EU) No 1169/2011] also expressly refers to the customs regulations for determining the country of origin.

Question 2: Are mushrooms harvested in Germany wholly obtained in Germany within the meaning of Article 60(1) of the Union Customs Code if substantial production steps were carried out in other EU Member States and the mushrooms had only been brought to Germany a few days prior to their harvest?

In the BGH’s view, this question also needs to be answered in the affirmative. The BGH points out that according to Article 31(b) of Delegated Regulation (EU) 2015/2446 supplementing the Union Customs Code, vegetable products harvested in a country shall be considered as wholly obtained in this single country within the meaning of Article 60(1) Union Customs Code. In view of the clear content of this provision, there is no room for the application of other provisions concerning the determination of the origin of goods produced in more than one country. Besides, different from animal products for which special provisions exist on the labelling of products made from animals brought up and slaughtered in different countries, there are no such provisions for vegetable products.

Question 3: Is the prohibition of misleading statements on the country of origin following from Article 7(1)(a) FIC also applicable to mandatory indications of origin under Article 76(1) of Regulation (EU) No 1308/2013?

Apparently, the BGH is of the view that the mandatory indication of origin made in compliance with the Union Customs Code may be misleading in cases as the present one. However, the BGH points out that it is controversially discussed in German legal literature whether the prohibition of misleading information following from the FIC also applies to cases of mandatory information. According to Article 1(4) FIC, this Regulation shall apply without prejudice to labelling requirements provided for in specific Union provisions applicable to particular foods. Some scholars now argue that this means that the FIC provisions apply nevertheless, while others consider it as priority of the more specific labelling requirements which are therefore not subject to the general prohibitions of misleading practices. The BGH did not provide any indication towards what direction it would tend to decide.

Question 4: May the indication of origin required under Article 76(1) of Regulation (EU) No 1308/2013 be supplemented by explanatory additions in order to prevent a misleading of consumers that is prohibited under Article 7(1)(a) FIC?

The BGH explains that, if Article 7(1)(a) FIC is applicable, it needs to be clarified whether Article 76(1) of Regulation (EU) No 1308/2013 allows explanatory additions, such as pointing out the other countries involved in the production process. A clarification on this issue is necessary in order to avoid that producer deviating from the mandatory indication of origin by adding explanatory notes that could be challenged for a violation of law for non-compliance.

II. Draft Commission Implementing Regulation

On 4 January, the European Commission published a draft for a Commission Implementing Regulation laying down rules for the application of Article 26(3) of Regulation (EU) No 1169/2011 of the European Parliament and of the Council on the provision of food information to consumers, as regards the rules for indicating the country of origin or place of provenance of the primary ingredient of a food where different to that given for that food. The draft Implementing Regulation can be as well as the feedback already provided by various stakeholders can be accessed here.

Read our article here for a full analysis.

III. Practical Implications

Both the BGH’s referral to the CJEU as well as the upcoming Implementing Regulation, illustrate the importance of a food’s origin, and show that – in an integrated world economy – even if an indication of origin is compliant with the current law, there might still be a need for additional clarifying notes in case a legitimate indication was misinterpreted by consumers. Besides eventual consumer protection aspects, the BGH’s referral is also important for food manufacturers. With this referral, the CJEU is supposed to provide clarity on whether mandatory information on food packaging may be supplemented by additional explanatory notes – thereby giving more guidance for a compliant labelling. The Implementing Regulation and also Article 26(3) FIC show that the legislator apparently takes the view that clarifications are appropriate and necessary.