Dual quality products are products that are marketed identically by a company but are actually of different quality in different EU countries. In the case of foodstuffs, for example, the compositions can be different (e.g. a higher sugar content in a soft drink).
The marketing of such “dual quality” products may now constitute a misleading commercial act by an entrepreneur pursuant to Section 5 para. 3 No. 2 UWG, the marketing of such “dual quality” products may now constitute a misleading commercial act by an entrepreneur.
When is the marketing of “dual quality” products inadmissible?
The marketing of “dual quality” products is not permitted if (1) they are marketed identically and (2) their composition or characteristics differ significantly (2). The standard is ultimately limited by the fact that identical marketing can be justified if (3) legitimate and objective factors justify this.
1. the identical marketing
There is no legal definition of what constitutes identical marketing. The explanatory memorandum refers to the fact that identical marketing can only be determined on a case-by-case basis. A reason for exclusion should exist if information about existing differences is provided on the label, for example. The benchmark here is that consumers must be able to easily recognize any differences.
2. essential differences
The marketing ban only applies if the differences are significant. The criterion of materiality also requires a case-by-case assessment. The purpose of the regulation is to protect consumers from misleading commercial practices. If this standard is applied again here, one criterion could be the relevance of the composition for the consumer’s purchasing decision. However, a reference must always be made to the order of magnitude of the differences. Even if the composition is relevant for the purchase decision, a comparatively small difference cannot be a significant difference. The decisive factor is ultimately the free conviction of the competent court in accordance with § 286 ZPO.
The scope of application of Section 5 para. 3 No. 2 UWG can be illustrated using the example of a fictitious lemonade from a manufacturer that is sold equally in Spain and Germany. However, the Spanish version of the lemonade has a significantly higher sugar content than the German version. This is where the law intervenes and requires different marketing.
3. justification based on legitimate and objective factors
Marketing that fulfills the aforementioned characteristics may nevertheless be justified. The Omnibus Directive, in the implementation of which Section 5 para. 3 No. 2 UWG was enacted, provides some examples of “legitimate and objective factors” in recital 53. These include “requirements under the respective national law of an EU Member State” or “voluntary strategies to improve access to healthy and nutritious foods, to adapt goods of the same brand to different geographical markets”. The German explanatory memorandum to the law also states the reason of adapting goods to different consumer interests. The justifications are broadly worded and offer companies a correspondingly large amount of leeway. However, it can generally be assumed that, according to general principles of procedural law, companies bear the burden of proof for the existence of a justification.
Using the example of lemonade, the manufacturer could be justified. To do so, it would have to be able to demonstrate that consumer interests on the German and Spanish markets are so different that it is necessary to adjust the sugar content accordingly.
Ultimately, even in exceptional cases, not only the manufacturer may be affected by the prohibition in Section 5 para. 3 No. 2 UWG, but also a retailer. This is the case if the retailer carries out marketing work with its own information – for example on its own website.
This innovation introduces a ban for manufacturers of goods in the EU. However, it remains questionable how the scope of the standard will be interpreted and applied in practice – particularly by the courts. However, the consequences of an infringement can be considerable, as the infringer may be exposed to claims for damages from consumers and competitors. At least according to the wording of Section 19 UWG, an infringement is not subject to a fine.
Focus on competition law
In our focus topic “Requirements in competition law“, we look at the changes resulting from the latest amendment to the UWG and present the challenges for companies and entrepreneurs. So far, this series has included an overview of consumer compensation and fines regulations, influencer case law and the associated changes to the UWG (also) for influencers, necessary adjustments in e-commerce and restrictions on the sale of dual quality products.