Wheat origin on pasta label. Three shipwrecks for fear of antitrust.

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The Italian Competition Authority (AGCM, also known as Antitrust Authority) has concluded its proceedings against five giants in the pasta industry. Transparency operation on the origin of wheat used in semolina, voluntary sinking of three famous industries. Insight.

Made in Italy, meaning

The Common Customs Code, along the lines of the agreement establishing theWorld Trade Organization (WTO), identifies the origin of a product made in more than one country in the one where its last substantial and economically significant processing took place. This criterion applies to aircraft such as kites and foodstuffs and is first and foremost relevant to the application of customs and tariff rules.

The Food Information Regulation, reg. EU 1169/11, c.d. recalls the aforementioned criterion. Made in Italy is thus the food product that has undergone its last substantial transformation in Italy. And it could not be otherwise, since the notion derives from a system of rules that the European Union and its member states have committed themselves to (WTO). Although, from the writer’s perspective, more to the detriment than to the benefit of their respective economies and populations. (1)

Made in Italy, consumer perception

The average consumer-whose protection is provided by both the recently reformed Fair Commercial Practices Directive and Regulation (EU) No. 1169/11 – however, he is not an expert in customs discipline. Therefore, it tends to misunderstand the meaning of Made in Italy and sometimes confuse it with the concept of ‘100% Made in Italy‘.

General confusion can come associated with several factors:

the increasing use of both terms on a multitude of food references, as shown in GS-1 Italy’s 2018 Immagino Observatory report,

the redundancy of news, in labels and advertisements (as well as on websites and social networks), associating the ‘Italianness‘ of products with the adoption of more or less advanced traceability systems, ingredient selection, traditional methods and whatnot.

The Antitrust Authority -in this as on numerous previous occasions, in reporting on various aspects of food-related information (2)-has therefore been concerned with ascertaining the perception of the average consumer. Having regard to the overall market scenario, as well as the business practices put in place by the most prominent players. Also taking into account their respective marketing campaigns and market shares.

Pasta Made in Italy, the antitrust investigation

The antitrust investigation considered a category of foods-medium-priced pasta, lacking specific distinguishing features (e.g., organic), widely advertised and marketed in modern distribution channels-that caters to the widest and most indistinct target of consumers. Regardless of their locations on territories (North-Central-South and Islands, metropolis and small towns), spending capacity, age and education levels.

Such a broad target audience, which includes customs officers as well as pocket washers, must always be able to make informed purchasing choices. Based on the information offered on the label and advertisements, without having to study the Customs Code or spend 10 minutes reading the plethora of information on the six sides of each package on the shelf.

Distinguishing a ‘100% Madein Italy‘ pasta from a ‘Made in Italy‘ pasta with tricolor flags and evocations of traditions, methods, certified supply chains and whatnot, however, is not within everyone’s reach. All the more so in such a complex market scenario, where in recent years have emerged:

– on the one hand, large operators who have invested in interprofessional agreements to guarantee on some product lines supplies of 100% Italian wheat (e.g., Jolly Sgambaro, Granoro Dedicato, Molisana, De Matteis Armando, Rummo, Voiello, De Martino, Alce Nero, Ecor, Girolomoni, Amore Terra, etc., as well as some lines of Coop, Conad, Esselunga, Unes Viaggiator Goloso, etc.),

– on the other hand, purely important operators who have instead invested in advertising Italian pasta with Italian semolina but from wholly or partly non-EU wheat, promoting its links with the territory in equally suggestive ways. Albeit, in formal compliance with EU rules of origin.

Made in Italy pasta with non-EU wheat, the process

The investigation was initiated against five major operators who, in the opinion of the AGCM, emphasized the ‘Italian-ness’ of pasta in ways that could cause confusion among consumers. The words and graphics used-having regard also to positioning on packaging and repetition-could have led the average consumer to believe that the entire production chain, starting with primary agricultural production, had taken place in Italy. Instead, against the use, in whole or in part, of semolina from foreign wheat.

Four operators – Divella, De Cecco, Margherita Distribuzione S.p.A (formerly Auchan S.p.A., ‘Passioni’ brand), Cav. Giuseppe Cocco – have submitted a ‘statement of commitments‘ to the Antitrust Authority, pursuant to Article 27.7 of the Consumer Code. (3) The fifth operator, Lidl Italia s.r.l. (brands ‘Italiamo’ and ‘Combino’), on the other hand, maintained its position, without making specific commitments to correct the information in labels and advertisements. And he was sentenced to a fine in the amount of 1 million euros.

Pasta Made in Italy, 3 voluntary shipwrecks.

Well did the Antitrust Authority–within the scope of its powers–to address the issue of consumer information in its broadest sense. Focusing on the general criteria of transparency, clarity for the average consumer and non-ambiguity of voluntary information provided by operators in food labeling and advertising. (4) Without neglecting the details of the news and representations that go to make up the information picture as a whole, the legitimacy of which must precisely be verified in terms of non-misleading the consumer.

Woe bet ide the consultants of De Cecco, Cocco and Divella for suggesting to glorious Made in Italy pasta industrialists that they deny their history and the value of their productions, which is independent of the origin of the wheat used. And De Cecco’s commitment-presumably, with no time limit-to remove the words ‘De Cecco Method‘, ‘recipe for over 130 years‘ and ‘Made in Italy‘ from the front of its product packaging is resounding. As if the method or recipe or location of the facilities did not correspond to truth (!!!). Even, the tricolor logo will be removed and replaced with the words ‘The Best Italian, Californian and Arizona Grains.’ (5)

Everyone is a smith of his own fate, and bad advice, after being accepted by the AGCM, has become mandatory. The dignity of large industrial groups thus goes up in smoke, along with multimillion-dollar advertising and promotional investments. They could have reviewed the information offered and corrected it so as to ensure its crystal-clear, ‘Voghera housewife-proof‘ clarity. Instead, they pulled the infamous news of an excessive and disproportionate mea culpa on themselves, picked up by all the newspapers. Not because of an Authority-which simply did its job, in a timely manner-but because of the cowardice of those who should have assisted the skippers in keeping the helms on course even in rough seas. Instead, he hid on the deck until he was shipwrecked on the rocks.

The calm after the storm

The calm after the storm-that is, legal certainty, in the matter at hand-is found just after the rocks where the frigates of Italy’s historic industries crashed. Indeed, the Supervisory Authority has declined to define the concept of ‘transparent information‘ on the origin and/or provenance of the primary ingredient in the simple terms already described by the European Commission. In view of the imminent implementation of the regulation that introduces the requirement, among other things, precisely as of 1.4.20.

The Guidelines for the Application of Regulation (EU) No. 2018/775, which we have just outlined in their latest draft, require that the origin or provenance of the primary ingredient must be displayed and repeated whenever the origin of the product is highlighted. (6)

The correct (and imminent) application of reg. EU 2018/775 is therefore worthwhile to fulfill the duties of transparency on the origin of raw materials that are relevant, by quantity and/or quality, in most food products. Without the need to disown history or the processes and locations of processing of any product. Rather, with attention to law (in being and becoming) and the help of capable sailors to hold the rudder.

Dario Dongo

Notes

(1) Globalization fomented by the WTO agreement soon revealed its darker and in some ways predictable side, the exploitation of workers and ecosystems and socio-environmental dumping. To the detriment of local economies, employment and development. In the quarter century since the founding of the WTO, inequality has increased to a tragic extent and neo-colonialism has taken full course again. In the food sector, one example above all is the globalization of meat,

(2) See the review of the AGCM’s food-related pronouncements in the period 2008-2016 in the previous article

(3) ‘With the exception of cases of manifest unfairness and seriousness of the commercial practice, the Authority may obtain a commitment from the responsible trader to put an end to the infringement by ceasing its dissemination or modifying it so as to eliminate the profiles of illegitimacy. The Authority may order publication of the statement of commitment in question at the practitioner’s expense. In such cases, the Authority, having assessed the appropriateness of such commitments, may make them binding on the trader and settle the proceedings without proceeding to a finding of infringement.‘ (Legislative Decree 206/05 as amended, so-called Consumer Code, Article 27.7)

(4) See reg. EU 1169/11, Articles 7 and 36

(5) See documents attached to press release 17.1.20 of the Competition Authority, at https://www.agcm.it/media/comunicati-stampa/2020/1/PS11383-PS11384-PS11385-PS11387-PS11416

(6) NB: The guidelines also clarify the need to have regard to the consumer’s perspective. Resulting in the requirement to indicate the origin of the grain instead of the origin of the semolina (or the origin of the meat instead of the origin of the hamburger)