Food imitating products: risks need to be likely, not certain - Get Fresh Cosmetics (Case C-122/21)

by Marta Dzedyshko

We do not often discuss Directive 87/357/EEC on the approximation of the laws of the Member States concerning products which, appearing to be other than they are, endanger the health or safety of consumers (Directive on food imitating products). The main purpose of this Directive was to ensure that children who most easily could mistake various consumer products for foodstuffs if they would resemble them, are protected from risks of suffocation, poisoning etc. 

Recently, the Lithuanian consumer protection authority found it difficult to apply the rules of this instrument and the matter was referred to the CJEU for elaboration (C-122/21). Get Fresh Cosmetics made bath bombs, which could be mistaken for food. However, when the Lithuanian consumer protection authority claimed that they were not compliant with Directive 87/357/EEC, the company demanded proof of not only possible consumers' confusion as to the character of the product but also of dangers that such confusion could bring about. For example, lab evidence as to whether the products could be broken and posed danger of poisoning when placed in mouth, sucked on or swallowed (para 19). This risk was presumed by the authority (para 20) on the basis of the fact that 'cosmetic products are not intended for consumption'.

The question was then what burden of proof this Directive required as to the causal link between the product's characteristics and risks caused by a product that could be mistaken for foodstuff by consumers. Would the consumer protection authority need to collect and present 'objective and substantiated data' of a hazardous nature of the product at stake?

The CJEU does not interpret Directive 87/357/EEC as requiring such a far-reaching burden of proof, whilst simultaneously also not seeing in it a presumption of a hazardous nature of products that appear to be other than they are (para 29, 35). Thus, the Lithuanian consumer protection authority has to substantiate why they think a given product could bring about risks to consumers by resembling foodstuff (paras 40-41). It can, however, do this by other evidentiary means than presenting 'objective and substantiated data', thus instead of certainty of the risk arising it is enough to prove its likelihood (para 45). The assessment should focus on objective characteristics of the product, e.g. materials and composition (para 42), vulnerability of targeted consumers (para 43)

ESMA imposes first temporary bans on investment products

In June 2018 the European Securities and Markets Authrity (ESMA) for the first time formally adopted new, temporary rules on the provision of contracts for difference (CFDs) and binary options for retail investors. ESMA temporarily banned the marketing, distribution and sale of binary options to consumers (effective from 2 July 2018), and has restricted the marketing, sale and distribution of CFDs (effective from 1 August 2018).

Binary options and CFDs are high risk investment products unsuitable for average consumers. They allow 'betting' on financial indices such as the price of gold, or currency will rise or fall over a fixed period of time, with such an uncertain outcome that they can also be classed as gambling products (see also an interesting article here). Binary options and CFDs became specially dangerous when their online marketing consumers as a way to get rich quickly took up. Unfortunately, instead of getting rich, 74-89% of consumers suffered detriment. As a result, countries around the world started to regulate, and ban these products, and now the EU has joined these efforts.

ESMAs action is landmark because it is the first time that an EU supervisory authority (ESA) has used its product intervention power. The ESAs that have been established following the financial crisis, has been vested product intervention powers to protect EU consumers from the marketing and sale of dangerous products. This power is provided in Article 9 of the regulations establishing the authorities (Regulation 1093/2010, Regulation 1094/2010, and Regulation 1095/2010) and has been concretized in more specific legal acts, such as Regulation 600/2014 of Markets in Financial Instruments (MiFIR). In this case ESMA relied on Article 40 MiFIR.

With its decision from 24 August 2018 ESMA decided to extend the prohibition related to binary options for another 3 months (effective from 1 October 2018), this time refining its approach, and excluding some types of binary options that it found not to impose a sufficient degree of risk onto consumers. The decision is limited to binary options and makes no reference to CFDs, restriction of which came into force a month later than binary options.

While ESMAs actions is undeniably a positive step towards improving the protection of consumers on EU financial markets, one may wonder why are the powers of the EU supervisory authorities limited in time? Binary options (at least some kinds of binary options) are not going to get to be better products. Should the EU supervisory authorities have extended product intervention powers, powers that would enable them to ban products from the EU internal market permanently?

Product safety pledge by online marketplaces

The European Commission has recently liaised with four biggest online marketplaces (Alibaba, Amazon, eBay and Rakuten) to have them agree on taking faster action to remove dangerous products from among their listings. The commitment is to act within 2 working days upon a notification by authorities of the Member States, and within 5 working days - if the notification comes from customers (see further European Commission and four online marketplaces sign a Product Safety Pledge to remove dangerous products). This new arrangement specifies the general 'speedy' notion for removal of such dangerous products that was set in the e-Commerce Directive.

EU Commission on its way to place barriers to the ban of harmful substances from cosmetics

On 22^nd June, the EU Standing Committee on Cosmetic Products met to discuss amendments on Regulation (EC) No 1223/2009 of the European Parliament and of the Council on cosmetic products. The Commission is required to submit its proposed measures to the Committee for scrutiny, as per art.32 of Regulation 1223/2009.

Regulation No 1223/2009 is designed to harmonise the rules as well as terminology on cosmetics in the EU with the double objective of promoting the internal market while ensuring a high level of protection of human health. The Regulation has been revised multiple times; what are the changes brought by this draft regulation and what dangers do they hide for consumers?

One of the proposed changes is on the use of carcinogenic, mutagenic or toxic for reproduction (CMR) substances. CMR substances are highly toxic and present lasting dangers for human health (for more info on CMR see OSH wiki). Relaxing the protection against CMR substances can have profoundly negative effects on the health of consumers, especially in the case of cosmetics which are everyday widely used products.

Art 15 of Regulation 1223/2009 prohibits the use of substances classified as CMR, as those are listed in ANNEX VI of the Regulation with some exceptions, as for example when there is no other suitable alternative or when the substance complies with food safety requirements. As stated in minutes of the Working Group on Cosmetic Products, the Commission now considers that adding a new substance to the CMR list requires amendment of the annex of the regulation via a new act. This presents a departure from the previous position where the ban was automatic as soon as the substance was placed on the list by the European Chemicals Agency.

The opinion of the Committee on the issue is not yet made available; yet BEUC in one of its press releases has drawn attention to the matter and the potential harm for consumers from such a reform. It is not an easy task to balance between innovation and protection of human health, hopefully the EU Commission will in this case demonstrate its commitment to maintaining a high level of protection by not allowing delays in the banning of harmful substances.

New Report on the Rapid Alert System

On 12^th March, the 2017 Report on the Rapid alert system for dangerous food products was published. The first structure for exchange of information between Member States on dangerous products was set up in 2003, and became fully operational in 2004. Its legislative basis is art.10 of the General Product Directive.

The role of the Rapid alert system is to enhance cooperation between national authorities and assist Member States in fulfilling their obligation to ensure that only safe products are placed in the market.

The latest report illuminates the latest trends in product safety. The most notified type of product has been toys with 29%, closely followed by motor vehicles at 20%. The most notified risks are injuries with 28% and chemical with 22%, while injuries are also the category with the most follow-up actions.

The Member States are required to take follow-up action following the alerts, which is set out in the website. Follow-up in this instance refers to feedback received from the countries as to how they treated the alert, with the most common follow-up action being that of finding the product. There is no formal coordination mechanism in the case where national authorities assess a threat differently. Instead the Commission is meant to act as a mediator. Divergent approaches in product safety, such as a product being identified as dangerous in a Member State but not in another, may be better addressed by a formalised system to resolve such disputes. 

Transparency is a key element to the Rapid alert system as the alerts and the subsequent measures taken by the national authorities are set out in the website. This allows consumers to follow developments and be able to find out whether an unsafe product has been found in their country. The Report points out the different parts of the alert website that are designed to be used also by consumers, such as a layman explanation of the alert system as well as the possibility to subscribe to alerts and even personalise them. Yet, what remains unclear is to what extent consumers are aware of and interested in making use of the Rapid alert website, as the Report does not specify that. It would be interesting to see which groups of consumers are more likely to make use of the website and the services offered. Since toys are the most notified products, perhaps parents of young children are more likely to make use of the alerts.

The Report also notes the most important challenges in the field of product safety for the past year. It notes how the Rapid alert system has allowed the exchange of information on fidget spinners which presented a choking hazard to children, so that dangerous products would be removed from the market or stopped at the borders.

Yet the greatest challenge is that presented by the growing popularity of online shopping. The Member States need to devote a large amount of resources in order to monitor online markets. Yet the actions adopted on an EU level are limited to soft law interventions, such as informational campaigns and cooperation with online retailers for them to take voluntary commitments. As the popularity of online shopping is growing and EU consumers are getting further exposed to products from all over the world which may not adhere to EU standards, it may be time to consider new interventions in the field, as well as further strengthening international cooperation.

Towards stricter standards for endocrine disruptors

On 4^th October, the European Parliament issued an objection to the Draft Commission regulation amending Annex II to Regulation (EC) No 1107/2009 by setting out scientific criteria for the determination of endocrine disrupting properties. The European Parliament took issue with the last paragraph of the Draft Regulation, which allowed for excluding a substance with an intended endocrine mode of action from being identified as an endocrine disrupter for non-target organisms. According to the European Parliament, this exception was not based on scientific criteria as required by the Court; instead, the EU Commission took into account other criteria such as economic ones, thereby exceeding its implementing powers.

Endocrine Disrupting Chemicals (EDCs) are an exogenous substance or mixture that alters function(s) of the endocrine system and consequently causes adverse health effects in an intact organism. They are widely used and can be found in food and in a variety of consumer products, including toys and cosmetics. Even though the study of the effects of EDCs is ongoing, there are numerous studies showing the association between EDCs and human diseases, ranging from reproductive and endocrine to autoimmune and cardiopulmonary (see e.g. on World Health Organisation's website). Children are particularly vulnerable and their exposure to EDCs is linked to increased incidences of reproductive diseases, endocrine-related cancers, behavioural and learning problems amongst others.

Given that EDCs pose a real threat to the health of consumers and especially children, it is imperative that they are effectively regulated. The EU is leading the way in regulating EDCs, as it is in the process of adopting legally binding criteria to determine what is an endocrine disruptor, something that no country has done so far (see Commission's communication).

When regulating endocrine disruptors consumers' health and protection of the environment are the priority rather than the internal market. This was the message sent by the European Parliament to the EU Commission which now has to modify and resubmit the Draft Regulation. This development was welcomed also by BEUC, which urged for higher standards in relation to EDCs.

In anticipation of the EU Commission’s revised Draft Regulation, it is reassuring that its new direction will be towards a stricter standard for regulation of endocrine disruptors to the benefit of consumers.

Surveillance of dangerous products and plastic bags' use

In its fight to increase product safety in the EU the European Commission published a yearly overview showing that ca 2500 products have been stopped from entering the EU market or removed from it in 2014 ("2014 Keeping European Consumers Safe"). In 2014 toys (28%) and textile and clothing products (23%) dominated among the products against which safety measures were taken. The predominant risks notified as associated with these products were these of injury, chemical risks and choking. Unfortunately, China remains the number one offender, despite increased cooperation between the European and Chinese authorities in this area (Keeping consumers safe: nearly 2500 dangerous products withdrawn from the EU market in 2014).

***********

Aside protecting consumers from dangerous products, the EU intends to protect the environment from some dubious consumer products, such as plastic bags. European consumers on average throw out ca 200 plastic bags a year and the particles in these bags may enter water or even the food cycle. If the Parliament votes for the proposal on this new law EU countries would either need to bring down the number of lightweight plastic bags used by a person to 90 bags pp per year (until 2019; in 2025 - 40 bags) or prohibit these bags from being given away for free (until 2018). (EU restricts the use of plastic bags to protect the environment)

Strict product liability for recall of medicinal devices - CJEU in Boston Scientific Medizintechnik GmbH (C-503/13 and C-504/13)

5 March 2015: CJEU judgment in Boston Scientific Medizintechnik GmbH (C-503/13 and C-504/13)

Previously, we discussed the opinion of AG Bot in this case (see Medicinal product recall allows to claim damages for surgical removal thereof? - AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)). Briefly, the case brought up interesting issues of whether the special product liability regime introdued by the Product Liability Directive could apply in cases of product recall. That is to say, when a specific product has not (yet) proven to be defective (but the group of products to which it belongs showed a tendency of particular defect appearing) nor did it cause any damage due to its defect (but certain damage was caused as a result of this product's recall). It may be important that this case pertained to a specific class of products, namely, medicinal devices that have been installed inside human body, and, therefore, their recall involved surgical procedures. 

The Court of Justice agrees with AG Bot that the notion of 'defect' should be broadly understood, in accordance with Recital 6 of the Directive that requires that not only expectations of the consumers as to the safety of the product would be taken into account, but also of the public at large (Par. 37). With regard to medicial devices, this safety threshold is quite high, since their defect may cause significant damage to consumers (Par. 38-40).

"Accordingly, where it is found that such products belonging to the same group or forming part of the same production series have a potential defect, it is possible to classify as defective all the products in that group or series, without there being any need to show that the product in question is defective." (Par. 41)

 Whether the patient could claim compensation for the costs of the surgery removing the malfunctioning device and installing a new one, would depend among other on whether such a surgery was "necessary to eliminate harmful consequences and to restore the level of safety which a person is entitled to expect" (Par. 49).

The CJEU had no doubt that the costs for the replacement of the defective pacemakers should be paid by its producers, but with regard to defribillators it left the decision to the national court - since pursuant to the producers these defective devices instead of being replaced could have also been just deactivated. The national court needs to determine whether that would be sufficient to "overcome the defect in that product, bearing in mind the abnormal risk of damage to which it subjects the patients concerned". (Par. 54)

Medicinal product recall allows to claim damages for surgical removal thereof? - AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)

21 October 2014: Opinion AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)

Imagine you had a pacemaker installed. It's already quite a stressful and invasive procedure, but then you find out from your doctor that the type of pacemaker that was used in your surgery has been found out to fail "from time to time". Since the producer of the pacemaker advises your doctor to think about exchanging your pacemaker due to a defect in their design for another one, with less chances of a failure, you agree to a new surgery. Who's going to pay for it though? The German courts were pretty certain that it should be the producer of the faulty product (a faulty pacemaker in case C-503/13 and a faulty defibrillator in case C-504/13) but some questions have been asked to the CJEU to ascertain the rules of the Product Liability Directive in such cases.

First, to claim damages under the Product Liability Directive the consumer needs to prove that the product he acquired was faulty. In the given case, there was a presumption that the medical products could fail working at one point (based on the extensive testing of copies of this product) and due to the increased risk of such a failure these products were deactivated. This means, however, that in these specific cases the defect did not manifest itself, since the removal of the medicinal products prevented this occurrence. The AG Bot nonetheless considers such medicinal product to fulfill the requirements posed in the Product Liability Directive to a faulty product. (Par. 26) Art. 6 of this Directive states that when the product does not offer consumers expected by them safety standards, it should be perceived as faulty. Recital 6 determines that "to protect the physical well-being and property of the consumer, the defectiveness of the product should be determined by reference not to its fitness for use but to the lack of the safety which the public at large is entitled to expect". The AG Both is, therefore, convinced that the test is an abstract one, not necessarily relying on the specific consumer's case, but rather during which it is justified to assume that if a consumer has a product identical to the one that already showed serious defects, he may reasonably question the safety of his product as well. (Par. 29, 33) Additionally, AG Bot claims that effective consumer protection requires that consumers could claim liability for defective products also prior to these products causing any damage. (Par. 38) While this statement is true, it needs to be said that this effective protection could be granted to consumers through measures other than Product Liability Directive, which is very much focused on compensating consumers for specific damage that was caused by a defective product. This opinion seems to be broadening the scope of application of the Directive, which until now was very narrowly interpreted.

Second, as mentioned above, the Product Liability Directive is meant to facilitate easy compensation of consumer's damage resulting from the defective product. The question was whether the costs of a surgery to remove a defective product (removal of a pacemaker or a defibrillator) could be seen as damage caused by personal injury. (Par. 56) While not all language versions of the Directive used a term with the same meaning of a 'personal injury', the theological interpretation points out that the Directive aims at protecting, in general, the 'health' of the consumer as well as his 'physical integrity'. (Par. 61) Therefore, excluding from the scope of the notion of 'damage' such damage that is caused due to a surgical intervention to remove a defective medical product would undermine this legislative purpose. (Par. 63) The causal link between the damage and the defect would then be for the national courts to prove (Par. 70) but the fact that the producer of the defective products recommended their removal to the doctors could be perceived as such evidence. (Par. 71)

It's a very interesting case that may influence the scope of application of the Product Liability Directive. Considering its limited application in practice and the fact that in such important cases as product recall due to increased risk to consumer health the compensation rules in the EU should be harmonized, it is clear why the AG Bot took the stand he did. It remains to be seen whether the CJEU shares this point of view.

Synthetic weed not a 'medicinal product' - CJEU in D (C-358/13)

10 July 2014: CJEU judgment in case D (C-358/13)

Mr. D. sold in his shop ("G.- All about hemp") small bags of herbs with added synthetic cannabinoids as air fresheners, not meant for human consumption. There was no information on the bags as to either fixed quantities of any active substances or dosage guidance. Mr D. was, however, supposedly aware that his customers used these bags as a substitute for marijuana and was sentenced to prison due to introducing 'unsafe medicinal products' on the market. Synthetic cannabinoids has been classified as an unsafe medicinal product in German law, where its potential negative side effects were taken into account. The question referred to the CJEU is whether this product could be considered to be a 'medicinal product' as defined by the Directive 2001/83 on the Community code relating to medicinal products for human use, which the German law was implementing. What is the issue here?

The definition of a medicinal product in Article 1(2) of the Directive requires it to treat or prevent diseases in human beings or to have a beneficial effect on their physiological functions (according to the settled case law - Par. 33-38). The synthetic marijuana has not been proven to bring any benefit to human health but is only confirmed to modify physiological functions in humans (not necessarily for the better), and is being used to induce a state of intoxication, which as such is considered harmful to human health (in an objective manner). (Par. 26) If the definition of a medicinal product is limited only to such products that are supposed to contribute to consumer's immediate or long-term well-being the synthetic cannabinoids may not, therefore, be classified as such. The CJEU concludes that such products as mentioned in this case may not be seen as a medicinal product and are, consequently, not subject to the rules governing the introduction of medicinal products to the market. Even if it means that selling such products may, therefore, not bring about any criminal sanctions, this does not undermine this conclusion, pursuant to the CJEU. (Par. 48)

European Parliament's last stands

Last week, the European Parliament voted in its plenary session on a few proposals that are important for consumers and their fate needs to be set prior to the end of term of the current Parliament. Let us take a short look at the results of last week's session:

Roaming fees and open access internet

In the first reading on the new Telecoms package, the European Parliament consolidated work conducted so far and is ready to give a further go at it to the new Parliament after the elections (see previously: MEPs say NO to roaming and YES to open internet). The package not only aims at abolishing roaming charges in Europe as of December 2015, but also at prohibiting internet access providers from blocking or slowing down selected services ensuring more net neutrality. (Ensure open access for internet service suppliers and ban roaming fees, say MEPs)

Clinical trials

We have previously mentioned on this blog the need for ascertaining more transparency of clinical trials' data, so that it could be more thoroughly tested and so that its' results could be subjected to more academic, objective scrutiny (see e.g. Who's keeping the score?...). This would increase patients' safety. On 2nd of April the European Parliament voted for a new proposal amending the existing Clinical Trials Directive. Pharma companies and academic researchers will now have to post the results of all their European clinical trials in a publicly-accessible database. The new law is also supposed to facilitate easier cross-border cooperation, which is expected to enable bigger, more reliable trials. The European Commission will be authorized to do the checks of reporting procedures, which themselves are simplified. (Clinical trials: clearer rules, better protection for patients) The proposal has already informally been agreed with by the Council so it should not take long to adopt it as law. This new proposal is welcomed by the European Ombudsman who often had to deal with complaints that citizens were refused access to clinical trials data (Clinical trials vote is a triumph for transparency in EU healthcare).

Medical devices

The MEPs voted in the first reading on the proposal for a new Regulation on medical devices in order to consolidate the existing various projects of that law and pass it on to the new Parliament. (see our previous post: New European rules on medical devices) We discussed the need for this law previously, mentioning the scandals with faulty breast implants, for example. New provisions are to enforce stricter monitoring and certification procedures of medical devices, therefore, increasing consumer safety. (Medical devices: better controls and traceability to ensure patients' safety)

Consumer payments

The European Parliament adopted also last week the proposal to cap bank fees for processing consumers' payments in the EU (at 0.3% of the transaction value for credit card transactions and at a maximum of seven euro for debit cards). (MEPs push for card payment fee caps and online payment safeguards) The caps will apply to both domestic and cross-border transactions and in time should lead to lower prices for card users. They will enter into force one year upon this law's adoption. Moreover, the MEPs decided to strengthen online payment safeguards by, among others, introducing a uniform set of information that would clearly state all charges, execution times, contact information and exchange rates. Unauthorized payment will need to be refunded within 24 hours of their being noticed. Consumers should not bear losses of illegal use of their stolen or lost cards above €50. (see our previous post: Money, money, money...)

What will the future bring? The new consumer programme 2014 - 2020

With some delay, the EU announced its priorities in consumer law for the period from 1st January 2014 to 31st December 2020.  The consumer programme takes the form of a Regulation based on Art 169 TFEU and explains how the Union will complement, support and monitor the Member States' policies. This is mainly achieved through financing actions taken either by national authorities or thirds, such as consumer organisations, e.g..

The consumer programme details four main objectives (Art 3): product safety (I), consumer information and education, and support of consumer organisations (II), rights and redress (III) and enforcement (IV). The short Regulation (only 19 articles) as well as its Annexes elaborate these objectives and the types of actions to be taken. Although not directly granting rights to consumers, the Regulation is an important indicator of the EU's current view on and future priorities in consumer law.