Given the wide variety of products of a certain type offered to us in stores, where we shop daily, the battle for the preference of the consumer is truly fierce. The different approaches for reaching the end goal – the consumer walking away with the respective product in their basket – are endless. The label is one of the possible ways of influence. But the rules of the protection of competition apply here as well and there are lines, which must not be crossed. These lines, though, are sometimes thin and unclear. This article has the goal of outlining some of the rules detailing the ability for a certain product to be offered as “homemade”.
In a ruling from last year, a five-member committee of the Supreme Administrative Court (SAC) touches on part of the conditions, which prohibit the branding of a product as “homemade”. The case is about a popular brand of mayonnaise that offers its product with said description, which resulted in a competitor filing a complaint for breaking the rules of fair market competition.
Alongside many grounds of appeal, the accordance with Art.31 of the Protection of Competition Act (PCA) is of particular significance to this question – misleading with reference to substantial properties by means of false information or misrepresentation of facts. The Commission for Protection of Competition (PCA) and the SAC agree on one of the elements – the adjective “homemade” is not capable of misleading the consumer in regard to the place of production. As an argument for this, the presumption is brought forward, that the vast majority of consumers likely don’t assume that the respective product is produced in a homemade environment in the literal sense of the word. Though not explicitly mentioned, logic suggests that such an argument only applies to mass-produced products.
But this is where the commonalities between the rulings end. The act of misleading, according to the court, is represented by the idea of the method of production and, most of all, the contents of the product in the mind of the consumer. Important here is the distinction that labelling does not constitute an advertisement according to the PCA, because the label does not aim to promote and popularize the product, but rather aims to inform about its contents and characteristics.
The act of misleading must be with reference to substantial properties of the goods. Among listed elements, according to EU law, are the products’: nature, identity, properties, composition, quantity, durability, origin/provenance, method of manufacture or production. It is also prohibited to claim that the product possesses special characteristics, when in fact all products of that type possess such characteristics.
To put all of this into perspective with the help of the case at hand, the description “homemade” is capable of misleading consumers in two ways. On one side, such branding leads to the expectation that, although not produced in a homemade environment, the product at least has the contents of a homemade one. As an additional argument in this sense, the misleading portrayal of parts of the contents on the label is also brought forward (an egg is portrayed, when in fact powdered eggs are used). The detailed listing of all the actual contents on the backside of the product label does not mend the situation.
On the other hand, the breaking of rules of free competition with the use of such branding manifests itself in the comparison with other products of the same type that don’t use the description in question. Key here is the above mentioned claimed special characteristic, which, in fact, is present in all products of that type. It can’t be expected of the consumer to comparatively analyse the contents of all products of that type before making their decision.
