Important ruling by Administrative Court – retailer responsibility under food labelling law

Article 8 FIR

The question of who bears responsibility for ensuring that food is labelled in compliance with the law is an issue of practical importance: Is it the manufacturer or the retailer? The Food Information Regulation (FIR) regulates this issue - somewhat vaguely - in Article 8. We have reported on this before (see here). In October 2020, the Administrative Court ruled on this issue in a landmark case.

In that case, a retailer was fined for holding an improperly labelled food product in its central warehouse in Upper Austria for the purpose of sale. The food product bore the name of a German company on its label. Against this backdrop, the Administrative Court has interpreted Article 8 FIR as follows:

- Article 8(1) FIR stipulates that the food business operator under whose name or company name the food is marketed (“marketer”) bears primary responsibility. In the case at hand, this was the German company indicated on the product, which had however not been fined by the administrative authority.

- Article 8(3) FIR prohibits “food business operators, which do not affect food information” (such as retailers) from supplying food which they know or presume to be non-compliant with the relevant provisions of food information law. In the case at issue, this provision was not relevant because the retailer only “held” the food in question “for the purpose of sale” but had yet to “supply” it (for more information, see again here).

- However, in the view of the Administrative Court, Article 8(5) FIR provides for a comprehensive responsibility for each distribution level and thus also for the retailer of a third party product: "Any food business operator in Austria within the distribution chain ... may be prosecuted (under administrative criminal law) for any infringement relating to the placing of a product on the market or which constitutes a formal breach of the Food Safety and Consumer Protection Act… This even applies if the infringement is primarily attributable to a breach of due diligence by a food business operator at an upstream stage of distribution".

The Administrative Court, therefore, rejects the notion that each distribution level is liable (only) for certain infringements attributable to it. Rather, it takes the view that there is a “chain responsibility” where the retailer is also liable for food labelling violations of third party brands that are not subject to its direct control. This is not only the case with “supply” as in the context of Article 8(3) FIR, but with any form of placing a product on the market, including “holding a food product for the purpose of sale” such as in the case at hand.

At the same time, the Administrative Court expressly emphasises that the liability of the retailer presupposes that it is at fault. Therefore, if the retailer has set up an effective control system to ensure compliance with the labelling requirements, it does not act negligently and will not be liable if a breach occurs nevertheless. (Although enforcement practice and case law often place excessively high demands on such control systems from a practical point of view.)

The decision brings long-awaited clarification regarding the responsibility in food labelling law, which has been a subject of debate in the legal departments, by law enforcement agencies and in the legal literature. In our opinion, there are certain arguments that would have suggested a different reading of Article 8 FIR; for example, the purpose of the retailer responsibility under Article 8(3) FIR is questionable if the retailer is responsible to a much more comprehensive extent under Art 8(5) FIR anyway. Also in view of the particular proceeding and the infringement as defined and prosecuted by the administrative authority, the outcome was not exactly evident. It remains to be seen whether (or when) the CJEU will have an opportunity to interpret Article 8 FIR and what conclusion it will reach.