Should Ferrero, the producer of Nutella, be hindered to produce a Swiss-style Nutella just for the Swiss market with more cocoa powder than the "normal" Nutella? On the assumption that Swiss consumers have a special taste, can Nestlé adjust its Nesspresso capsules for the Swiss market?
Recently, producers of branded food products have been confronted with the accusation of selling products of different composition and/or qualities under the same brand name in Western European and Eastern European countries, respectively. This issue is also called "Nutella gap". There might be legitimate reasons for a food manufacturer to differentiate in this way. One reason being simply that local consumers have different tastes, for instance regarding the sweetness or the acceptable fat content of a product. The fact that the purchase power is still lower in some countries than in others is undeniably another motivation for developing differing products under the same brand name for different markets.
After an intervention of the ministers and presidents of the Visegrad countries (Poland, Czech Republic, Slovakia and Hungary) at the beginning of this year, the EU Commission decided to tackle the subject in the course of the recently established "High Level Forum for a better functioning food supply chain" (for more information on the Forum see here). In September, the EU Commission made it clear that all foodstuffs in the European market do have to comply not only with the EU Regulation (EU) No 1169/2011 on the provision of food information to consumers but also with the Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market. In the Commission’s view the latter prohibits the marketing of different products under the same brand name in a misleading manner. In addition, the Commission presented guidelines for the application of these provisions on the sale of dual quality food products in the internal market (for more information see here).
What is the Swiss legal approach to market adjustments of food products? Considering the comparatively high purchasing power of Swiss comsumers, the reduction of production costs is unlikely to be the motivation for producing a Swiss market-specific food product. However, such market customisation might be motivated by different tastes or different regulatory requirements.
It is self-evident that all food products to be marketed in Switzerland have to comply with Swiss foodstuffs law. The main act is the Federal Act on Foodstuffs and Utility Articles ("FAFU", SR 817.0). Based on this Act, the Swiss Federal Council, the Federal Department of Home Affairs and the Federal Food Safety and Veterinary Office issued an extensive set of ordinances (for more information see here). Swiss foodstuffs law may provide for different – often stricter – rules for the production and composition of food products than its counterparts in other markets, including the European Union. Even though Switzerland is not a Member State of the European Union, the so-called "Cassis de Dijon" principle is equally applicable. This allows for the marketing of food products in Switzerland which comply with EU foodstuffs regulation but not with Swiss law. However, this principle is somewhat limited and does not apply automatically but needs a general order by the Federal Food Safety and Veterinary Office. Furthermore, it does not apply where the Federal Food Safety and Veterinary Office assumes that public health and safety and/or fair competition of trade are at stake. Therefore, the composition of a food product bought in an EU Member State is not necessarily identical to the "same product" in the Swiss market.
To comply with Swiss law, all relevant information, in particular, an exact list of the ingredients, has to be placed on the product (article 12 FAFU). Furthermore, all information on foodstuffs must be accurate and the presentation, labelling and packaging of the products and any advertising for them must not be misleading to costumers. Something is considered to be misleading if it is likely to lead to misconceptions on the part of the consumer e.g. about the manufacture, composition, quality, country of production, origin of raw materials or components of the product (article 18 FAFU). Interestingly, according to one provision contained in one of the many ordinances, information or presentation in respect of a foodstuff product indicating that it has a value which is higher than its actual nature is forbidden (article 12 paragraph 2 litera e of the Federal Ordinance on Foodstuffs and Utility Articles [SR 817.02]). The scope of this prohibition has not yet been fully clarified by the courts. Compliance with this and the other relevant provisions has to be constantly monitored by those manufacturing, handling, storing, transporting, importing, exporting or transiting foodstuffs (article 26 FAFU). Compliance with the foodstuffs regulation is also monitored by the enforcement authorities (30 et seq. FAFU).
Also, misleading labelling or advertisement in respect of the composition or origin of a product may constitute an act of unfair competition (article 3 paragraph 1 litera b of the Federal Act against Unfair Competition ["FAUC", SR 241]). This raises the important question whether a difference between a consumer’s expectation (based on familiarity with the product in other markets) and the actual product sold under the identical brand name and packaging in Switzerland may be considered misleading.
This is in our view not the case if the difference is caused by compliance with, potentially more stringent, Swiss foodstuffs regulation. The situation is less clear if the producer adjusts the product to local taste without any legal or regulatory requirement and does so in full compliance with labelling requirements. Is there such a thing as a legally relevant Swiss consumer expectation regarding the composition of a product based on global brand characteristics?
For this to be the case under Swiss law against unfair competition, the manufacturer would have to make some kind of incorrect and/or misleading statement when marketing its global product in Switzerland (article 3 paragraph 1 litera b FAUC). The question, therefore, is whether the mere circumstance that a product is sold in different countries under the same brand name and packaging already constitutes a representation with regard to the uniformity of the product’s composition in the eyes of the relevant Swiss consumer. So far this question has never been answered by a Swiss authority or court. In our view, it is questionable whether a producer’s offer outside of Switzerland can be said to amount to a legally binding representation in Switzerland which may serve as a basis for consumer expectation under the FAUC. In addition, unlike some other consumer products, such as designer furniture, food products are often produced locally or adjusted to local taste, which may vary considerably from country to country. It is arguable that at least the well-informed and well-travelled Swiss consumer should be aware of this fact when buying a product on the Swiss market. Therefore, we see little room for the argument that it can be considered misleading for a global foodstuffs manufacturer to sell its products with a locally-adjusted composition on the Swiss market.