Unpacking the Omnibus Directive: the EU’s Response to Dual Quality of Goods

In 2017, the European Commission began investigating the issue of dual quality of goods after receiving complaints from consumers in several EU countries that the quality of some food products was allegedly lower in their home country than in other EU countries. The Commission’s Joint Research Centre (JRC) conducted a series of investigations to determine whether this was indeed the case. The JRC concluded that dual quality practices were indeed taking place and that the issue deserved legislative attention.

While there is no requirement that each product be identical across the entire EU single market, European consumers must be treated equally. According to the European Commission’s Notice of 2021, the goods susceptible to dual quality practices are tangible movable items, as well as water, gas, and electricity. For food products, “significant differences” between the product examined and the reference product indicate a substantial difference in terms of one or more of its essential ingredients or their respective ratios. Put simply, products might exhibit variations in ingredients and nutritional content based on the EU nation of sale. Such differences could potentially influence the buying choices of the typical consumer, who might have acted differently had they known about these differences. However, as highlighted in the 2021 Commission Note, the classification of “significant” and “non-significant” differences cannot be determined in advance as regards, for example, specific ingredients in food; therefore, it is necessary to conduct a case-by-case assessment of the impact of the dual-quality marketing practice on the average consumer.

In light of these market issues, the European Commission introduced the so-called Omnibus Directive, which amends Directive 2005/29/EC’s list of unjust trade practices. A notable addition is letter c), which qualifies as misleading “any marketing of a good, in one Member State, as being identical to a good marketed in other Member States, while that good has significantly different composition or characteristics, unless justified by legitimate and objective factors.” This directive mainly targets entities responsible for product presentation and composition, like producers, owners of “private” brand names and of reseller brands.  As for regular resellers (ie, those not involved in product composition or packaging decisions), where it is confirmed that misleading dual-quality practices have been used with respect to a specific product, authorities may ask said resellers to implement actions to redress the issue. Given the cross-border nature of this issue, authorities from different Member States can co-operate under Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws. (the “CPL Regulation”). In particular, the CPL Regulation establishes clear mutual assistance obligations between the competent authorities, ensuring that the authority of the Member State where the relevant trader is established can take the necessary measures to halt any infringement affecting consumers in other EU jurisdictions.

The rationale of the dual-quality legislation is twofold. First, it seeks to safeguard the purchasing decisions of consumers. Within the single market, consumers might not readily discern that branded products, while looking similar, can differ based on the country of sale. The yardstick for deeming a business practice as unfair hinges on whether a consumer’s purchasing decision could be swayed by it. Hence, to adhere to their duty of care, traders promoting products in the European market must notify consumers about potential variations in seemingly identical products under the same brand.

Second, the directive aims to balance consumer protection with the principles of free movement of goods and the economic freedom of traders. Importantly, a product’s variance in characteristics, despite a similar appearance based on its country of sale, does not always equate to misleading practice. An evaluation of whether such a practice is misleading requires a meticulous, case-by-case approach, considering product differences (food or non-food) within the European market.

Recital 53 of Directive (EU) 2019/2161 provides a partial list of “legitimate and objective factors” that justify differences between products:

Even if a product differentiation is justified by one of these factors, traders must still inform consumers about it. Traders can use a variety of methods to do this, such as displaying information at the retailer premises, on online selling interfaces, on product websites, or in product advertising. The information must be easily and directly accessible for all consumers, including vulnerable consumers.