In addition to consumers and the State Food and Consumer Service, the Antimonopoly Committee monitors the correct labeling of goods. The fines imposed by the AMCU on violators range from a few thousand to millions. On the example of several cases, let's understand what can be indicated on the product packaging.
What are they fined for?
The purpose of the Antimonopoly Committee is to protect competition in business. This is directly enshrined in the Law (Article 1 of the Law of Ukraine "On the Antimonopoly Committee of Ukraine"). It would seem that what does product labeling have to do with protecting competition? But under certain conditions, a violation of labeling rules can be seen as a manifestation of unfair competition.
Article 15-1 of the Law of Ukraine "On Protection against Unfair Competition" prohibits the dissemination of misleading information. According to the definition contained in this article, dissemination of misleading information is a message by an economic entity, directly or through another person, to one, several persons or an indefinite number of persons, including in advertising, incomplete, inaccurate, false information, in particular due to the chosen method of presentation, omission of certain facts or vagueness of wording that has influenced or may affect the intentions of these persons to purchase (order) or sell (sell, supply, perform, provide) goods, works, services of this entity.
This article of the Law also contains an approximate list of information that can be attributed to misleading information. This includes information that:
- contain incomplete, inaccurate or false information about the origin of goods, manufacturer, seller, method of manufacture, sources and method of acquisition, sales, quantity, consumer properties, quality, completeness, suitability for use, standards, characteristics, features of sales of goods, works, services, price and discounts on them, as well as the essential terms of the contract;
- contain incomplete, inaccurate or false data on the financial condition or economic activity of the business entity;
- attribute powers and rights that they do not have, or relationships in which they are not;
- contain references to the volume of production, purchase, sale or delivery of goods, performance of works, provision of services, which in fact did not exist on the day of dissemination of information.
The list of this information is not exhaustive and the Antimonopoly Committee has the right to classify and disseminate any other inaccurate information as a violation of competition.
Liability for this type of offense is quite significant - a fine of up to five percent of income (revenue) from sales (goods, works, services) of the business entity for the last reporting year preceding the year in which the fine is imposed.
If you analyze the case law, you can see that the Antimonopoly Committee is more likely to pay attention to food labeling. Although there are many cases involving inaccurate information about the prices of goods (use of the phrases "lowest prices", etc.), incomplete or inaccurate information about the terms of shares and other information about the company and its products.
The prevalence of claims to food products can be partly explained by the fact that the legislation sets out in sufficient detail the requirements for their labeling.
General provisions on food labeling are set out in Article 39 of the Law of Ukraine "On Basic Principles and Requirements for Food Safety and Quality". In particular, this article establishes the features of labeling products with the inscription "GMO-free", as well as general prohibitions that must be observed when labeling food additives.
More detailed requirements for food labeling are contained in the Technical Regulations on the rules of food labeling, which was approved by the order of Derzhspozhyvstandart of Ukraine №487 dated 28.10.2010. It is the reference to this Technical Regulation that the territorial bodies of the Antimonopoly Committee like to use in their decisions.
Paragraph 5 of this Technical Regulation states that the labeling of foodstuffs and the manner in which it is carried out shall not:
a) mislead the consumer regarding:
- characteristics of the food product, in particular its nature, identity, properties, condition, composition, quantity, temporal characteristics of suitability (storage), origin, method of production or production;
- unreasonable indication of information about the properties of the food product, which it does not have;
- reports on the special properties of the food product, although all such products have the same properties;
b) contain information on the presence in the food product (except for natural mineral waters and food products intended for special dietary consumption, functional food products) of properties that contribute to the prevention, healing and treatment of any disease or refer to such properties.
Also, to substantiate its decisions, the Antimonopoly Committee actively uses the provisions of the state standard DSTU 4518-2008 "Food. Labeling for consumers. General rules ". Although the text of this DSTU explicitly states that it is of a recommended nature.
Here are some real examples to demonstrate the violations that can be the basis for bringing the company to justice:
Using images of fruit
The company produced and sold special dietary products "Dragees with sorbitol with the taste and aroma of strawberries + vitamin C" and "Dragees with sorbitol with the taste and aroma of grapes + grape acid".
On the front side of the dragee package there was an image of two strawberries and the inscription "Strawberry", and on the back in small black font it is indicated, in particular: "Food for special dietary consumption - Dragees with sorbitol with the taste and aroma of strawberries + vitamin C ". Information on the composition of the goods is as follows: sorbitol (97.34 g / 100 g); maltitol (E965); acidity regulator - citric acid (E330); dry strawberry juice concentrate (2%); magnesium stearate; vitamin C (50mg / 100g); food flavoring, identical to natural "Strawberry"; artificial dye "Ponso 4R" (E124) ".
The grape dragee had a similar labeling and composition (the image of grapes on the package and the available grape juice concentrate in the product).
The Antimonopoly Committee declared the distribution illegal on the front side packages of images of strawberries, bunches of grapes and the inscription "Strawberry", "Grapes" without the inscriptions "with the taste of strawberries", "with the aroma of strawberries", "with the taste of grapes", "with the aroma of grapes".
For this offense, the Antimonopoly Committee imposed a fine on the company in the amount of 34,000 hryvnias for each type of product.
The company tried to appeal the fine to the court, but the courts of all three instances sided with the Antimonopoly Committee (Supreme Court ruling of April 17, 2018 in case №904 / 6505/17).
The manufacturer used in the design of the label of drinks "Fruttela" Orange (Fruttela orange), "Fruttela" Citrus (Fruttela citrus) and "Fruttela" Lemon (Fruttela lemon) image of fruit: orange and lemon and the inscription "with natural juice". Simultaneously the drinks contained apple juice and flavors, without the addition of orange and lemon juice.
The Antimonopoly Committee decided that this label misleads consumers and provides competitive advantages to the manufacturer and imposed a fine of UAH 145,122.74 on the company.
The company tried to appeal the fine to the court, but the court upheld the Antimonopoly Committee (decision of the Kyiv Commercial Court of Appeal of 12.12.2016 in case №910 / 11079/16).
GUESTS / TU
The company produced tomato sauce. In addition to the name "Krasnodar Tomato Sauce", the product labels also contained the inscriptions "GOST", "GOSTyuga" and a diamond-shaped emblem with the inscription "gost". At the same time, the company manufactured its goods in accordance with TU U 15.8-30260000-004: 2010 "Canned food. Tomato sauces "Tomato".
The Antimonopoly Committee declared illegal the reference to GOST when TUs are used instead, and imposed a fine of 68,000 hryvnias on the enterprise.
The company's appeal against the Antimonopoly's decision to the court did not yield the desired result, the court upheld the position of the Committee (decision of the Supreme Commercial Court of Ukraine of April 18, 2017 in case № 904/7958/16).
The company produced a sausage called "Delicacy with cream". For the production of this sausage, the company developed technical specifications, which provided for the possibility of changing the recipe and replacing the cream with powdered milk. The company used this opportunity and produced sausage without cream.
The Antimonopoly Committee acknowledged that the production of sausage called "Delicacy with cream" without the use of cream misleads consumers and gives unjustified advantages to the company over other producers. As a result, the company was fined 68,000 hryvnias.
In the process of judicial appeal against this decision, the court upheld the position of the Antimonopoly Committee. In particular, the court noted that the current legislation does not comply with the provisions of technical conditions that provide for the choice of ingredients - milk powder or cream - in the production of products that in its name already contain a reference to its composition - "with cream". The technical conditions developed by the manufacturers must meet the requirements of the Law and not be used as a formal legal basis for its violation. According to the court, with such a product name, the possibility of replacing cream with milk powder is inadmissible (decision of the Supreme Commercial Court of Ukraine of 26.02.2013 in case №17 / 5005/5821/2012).
Use of trademarks
Entrepreneurs often resort to various "tricks" and in disputes with the Antimonopoly Committee refer to the fact that the part of the mark to which the Committee claims is not really a mark, but a trademark or part of an industrial design or any other intellectual property. .
The courts have repeatedly pointed out that the content of such intellectual property objects must also comply with the law and that such objects cannot be used to mislead consumers and obtain unjustified competitive advantages.
Instead of conclusions
The Antimonopoly Committee regularly prosecutes businesses for misleading product labeling. The defendants are companies of different levels and sizes - from individual entrepreneurs in the regions to all-Ukrainian network companies. Violations are also completely different.
At the same time, the case law is ambiguous. The courts rule both in favor of enterprises and in favor of the Antimonopoly Committee. Each case is individual and requires a separate analysis of both the claims of the Antimonopoly Committee and possible procedural violations on its part, which could have been committed in the process of consideration of the case.
Any dispute is easier to prevent than to win. Therefore, we recommend that when developing the packaging design of your products be guided not only by marketing goals, but also do not forget about the requirements of the law.
The original article was published in the Journal "Quality management“