The Same but Different: EU Explicitly Bans Misleading Marketing of Dual Quality Products

Authors: Sarita Schröder, Elisabeth Vestin

In recent years, EU policymakers and consumer organisations have regularly expressed concern about branded goods, especially foodstuffs and other household products, sold in some Member States being inferior to those sold in other Member States.

Tests conducted by national authorities and research institutions in certain “new” Member States between 2011 and 2017 showed that some goods sold in those Members States under the same or similar branding and packaging as in certain “old” Member States had different ingredients and characteristics. These tests seemed to confirm the belief that branded goods sold in the “new” Member States are often of lower quality, and also more expensive, than those sold in the “old” Member States (see EPRS Briefing, June 2017).

More recent tests conducted in 2018 and 2019 by the European Commission’s Joint Research Centre (the “JRC”), using a harmonised testing methodology throughout 19 Member States, confirmed that the dual quality phenomenon is prevalent on the EU market. In the tests, approximately one third of the 128 products analysed had a composition that differed from one Member State to another. However, unlike the earlier tests, the JRC’s tests did not reveal any geographical pattern that could explain the differences (see EPRS Briefing, November 2019).

Case-by-Case Assessment Required

The Unfair Commercial Practices Directive (the “UCPD”), which the Member States have implemented into their national legislation, prohibits misleading commercial practices that could cause the average consumer to take a transactional decision that they otherwise would not have taken – for example, to buy a product that they otherwise would not have bought.

According to the European Commission’s UCPD guidance from 2016, goods of the same brand and having the same or similar packaging may differ as to their composition depending on the place of manufacture and the destination market. Thus, marketing dual quality products is not unfair as such. However, it may be considered unfair on a case-by-case basis if it misleads consumers as regards the main characteristics of the goods.

In 2017, the European Commission issued a notice providing a recommendation on how national authorities can carry out their assessment. It suggests comparing consumers’ expectations of a locally marketed product against a “product of reference”, which it defines as a product that is marketed under the same branding and packaging in several Member States, and that in the majority of those Member States has a given composition that determines consumers’ perception of its main characteristics. If the locally marketed product deviates substantially from the expectations consumers have regarding it based on the product of reference, if inadequate information has been provided to consumers, and if this is likely to distort consumers’ economic behaviour, the marketing may be misleading and, thus, unfair.

The New Legislation

EU policymakers and consumer organisations have long called for the dual quality of products to be added to the so-called “blacklist” of practices that are always prohibited under the UCPD. However, a more lenient approach was taken in the directive on the better enforcement and modernisation of consumer protection rules (Directive (EU) 2019/2161), which was adopted as part of the “New Deal for Consumers” legislative package and which Member States will have until 28 November 2021 to implement with effect from 28 May 2022.

The new legislation supplements the UCPD with a provision specifically addressing the issue of dual quality products. According to said provision, the marketing of a good in one Member State as being identical to a good marketed in other Member States, despite a significant difference in the composition or characteristics of the goods, may be regarded as misleading unless the difference is justified by legitimate and objective factors. Although dual quality is perhaps most common among foodstuffs and other household products, the provision applies equally to all types of consumer goods.

Practical Implications for Brands

Adapting branded goods to suit the local preferences, purchasing power, and other market conditions of various Member States will continue to be permitted under the new legislation, provided that consumers are not misled about the differences in such a way that could cause them to make a purchase decision that they otherwise would not have made. Whether or not this condition is met will remain subject to a case-by-case assessment.

However, the adoption of an explicit ban on the misleading marketing of dual quality products will increase the importance of brands being able to show that possible national differences in product composition or characteristics are justified by legitimate and objective factors, or that measures have been taken to prevent consumers from perceiving the products sold in different Member States to be identical. This is especially true in light of the recent and partly still ongoing introduction of more effective investigation and enforcement measures in the field of consumer law – including administrative fines of up to 4% of a trader’s turnover for certain types of violations (see our previous blog posts here, here, and here for more information).

Finally, it should be noted that the directive on the better enforcement and modernisation of consumer protection rules requires the European Commission to report to the European Parliament and to the Council by 28 May 2024 on whether the provision on dual quality products has been effective or whether more stringent requirements should be introduced – including whether the dual quality of products should be added to the “blacklist” of practices that are always prohibited under the UCPD.