Controversies of the new rules on labeling milk products – predictions with respect to the fate of Law No. 88/2016

As a result of a legislative effort of 13 months, the Romanian Parliament adopted Law No. 88/2016 regarding additional requirements for labelling fresh milk for consumption and dairy products (“Law No. 88/2016”).

The draft law was initiated by 5 deputies and senators, who grounded their proposal on the following 3 arguments¹:

  • EU Regulation No. 1169/2011 provides that foodstuffs placed on the market starting with 13 December 2014 will have to observe the labelling requirements set forth therein, and that Member States may adopt supplementary labelling requirements for certain countries with the observance of a given procedure.
  • The indications on the packaging of dairy products “Manufactured in Romania” do not correspond to the reality, in the context where the milk is not obtained from cows from Romania, but the dairy products are only packaged in Romania.
  • Romanian population is “generally outwitted” by the use of cow milk or authentic milk indications on the packaging, as the respective foodstuff is not obtained directly from milk cows, but it consists in a mixture of fresh milk and powder milk, with very low nutritional value.

The legislative endeavor is not aimed to transpose a European normative act, but to create a supplementary legal framework in the field of labelling milk foodstuffs.

Were these trammels really necessary?

In its initial format, the draft law comprised 5 articles, that incorporated one main labelling requirement for the producers:

Fresh milk for consumption purposes, as well as diary products, must indicate on their packaging the wording comprising the collocation: “Contains  __% milk powder”.

Failure to observe the above was initially projected as an administrative offence sanctioned with a fine ranging from Lei 5,000 to Lei 10,000.

In its final format, published with the Official Gazette of Romania, the law comprises 13 articles, where – in addition to the labelling requirement mentioned above – additional labelling requirements are imposed, and which mainly refer to the following:

  • the conditions under which the collocations “Natural product” and “Romanian product” may be used for labelling purposes;
  • the specie of the animal  wherefrom the milk was obtained;
  • information on the origine and traceability of the foodstuffs;
  • indication of all content modifications to the milk.

The sanctionatory framework is stricter and with much more impact on the business of milk processors: unless the action is considered a criminal offence under criminal law, the failure to observe the labelling requirements is deemed an administrative offence and shall be sanctioned with a fine ranging from Lei 15, 000 lei to Lei 20,000 .

In addition, production, display for sale and / or sale of fresh milk for consumption, knowing that it is obtained from milk replacements, is sanctioned with a fine ranging from Lei 20,000 to Lei 25,000, and withdrawal of the operating permit of the producer or trader for six months.

The mandatory information to be displayed – as per the provisions of Law No. 88/2016 and the mandatory information to be displayed – as per the EU Regulation No. 1169/2011 are available only in the .pdf format

The controversy of the legal provision regarding the collocation “Romanian Product

According to the EU Regulation No. 1169/2011, the country of origin or place of provenance  must be indicated on the packaging in the following situations:

  1. When this is mandatory as per the specific EU (vertical) (for example: beef, olive oil, honey etc).
  2. For pork meat, sheep meat, goat meat (fresh, refrigerated or frozen), as per the classification provided in Annex XVI.
  3. Where failure to indicate this might mislead the consumer as to the true country of origin or place of provenance of the food, in particular if the information accompanying the food or the label as a whole would otherwise imply that the food has a different country of origin or place of provenance.

For dairy products, the situation described under item III would become applicable.

Member States may impose additional requirements on labelling with respect to the mandatory indication of origin / provenance only where there is a proven connection between certain characteristics of the foodstuff and its origin/provenance.

The evaluation report drawn-up by the European Commission with respect to the necessity of indicating the country of origin or the place of provenance of diary products, published on 20 May 2015, revealed that such indication on the packaging may only be done voluntarily, without imposing additional burdens on food business operators and the authorities.

For sure, the European Commission does not intend to propose any legislative action at this stage. 

4.1. Legislative paralelism

The legislative framework governing the labelling of diary products is currently represented by the following normative acts:

  • Government Decision No. 106/2002 regarding foodstuffs labelling, as further amended an d completed;
  • Government Emergency Ordinance No. 97/2001 on the production, circulation and trade of foodstuffs, as further amended and completed;
  • Law No. 296/2004 on Consumer Code, as further amended and completed;
  • EU Regulation No. 1169/2011 on the provision of food information to consumers,  as further amended.

Unfortunately, Law No. 86/2016 generates a legislative paralelism, being construed and adopted as a new normative act in this field, and not as a legislative act modifying the existing framework. Thus, it is for the operators from the milk industry to correlate the provisions of the normative acts indicated above, in view of ensuring conformation and to avoid the application of administrative sanctions by the competent authorities.

4.2 Uncertainty with respect to the date when Law No. 88/2016 shall enter into force

According to the provisions of Article 13 of the Law No. 88/2016, its provisions shall enter into force in 90 days as of the date the European Commission will communicate its decision

Undoubtedly, the aforementioned legal text creates confusion.

By means of explanation, the Member States that intend to adopt supplementary labelling requirements (in addition to the ones provided by the EU Regulation NO. 1169/2011), have the obligation to notify the European Commission and the other Member States with respect to the envisaged measures and to specify the reasons that justify such approach.

Under these circumstances, Romania will be able to fully apply the provisions of Law No. 88/2016 only is the following conditions are cumulatively met:

  • within 3 months as of the date of notifying the European Commission; and only if
  • it has not received a negative opinion from the European Commission / the Commission did not communicate any decision in this  respect.

In case a negative opinion is delivered by the European Commission, an examination procedure will be automatically initiated, in view of verifying whether the respective normative act may be enforced subject to particular amendments. In terms of timing, the examination procedure could be extended to several months.

Otherwise saying, only if Romania will be able to convince the European Commission that the supplementary labelling requirements have a real justification (in the sense that there is a proven connection between certain characteristics of the foodstuff and its origin / provenance), Law No. 88/2016 will enter into force no sooner than in term of 6 months as of its publication with the Official Gazette of Romania – i.e., no sooner than November 2016.

The hypothesis of a negative opinion of the Commission cannot be excluded either (including as a result of the examination procedure), which would mean that Law No. 88/2016 – although adopted and published with the Official Gazette of Romania – will not produce its effects.

4.3. Supplementary investments needed to be carried out by operators from the milk industry

The new regulation in the field of labelling milk products affects dairy and cheese processors, an industry evaluated to Lei 4.1 billion, which counted in 2014 a total number of 544 companies, as per the most recent data made publicly available by the Romanian Ministry of Finances, cited by Ziarul Financiar.

The statistics was generated after more than 50 milk plants from Romania, representing one third of the total, were shut down in 2014, due to the shrinking request of the market and to the increasing production costs, according to Mediafax, that cites sources from the Romanian Dairy Industry Association - APRIL.

According to the data publicly available, in the first part of 2014 there were 183 milk plants authorised in Romania, as per the data collected by APRIL. On 1 Aprilie 2014, the number of milk plants went down to 152, and at the end of 2014 it went down to 130. The main causes that led to this situation were: the increasing production costs, the tendency of the supermarkets to give up to trading Romanian milk in favour of own private labels (originating from countries as Poland, Hungary, Germany, Austria and Slovakia) which were much cheaper and available in larger stocks considering the embargo imposed on Russia.

The re-calibration and new labelling process, imposed as per the provisions of Law No. 88/2016, will invariable imply major investments that need to be carried out by operators from the milk industry. Undoubtedly, such legal provisions will affect the Romanian processors, as well as the foreign processors that activate on the Romanian market.

Unfortunately, this aspect was not considered during the legislative process that Law No. 88/2016 was subject to.  The investment projection becomes more and more sensitive as the term for the entering into force of the new provisions is uncertain, being directly influenced by the decision of the European Commission regarding the applicability of the newly-adopted provisions.

The uncertainty degree rises exponentially, particularly in the context where there is no publicly available information regarding the actions carried out  for the purposes of the notification – whether the notification procedure has already been initiated by Romania, what is its content, the  current status of the institutional discussions between Romania and the European Commission.

As a note, the new legislative act has impact both on producers and traders. All trading channels are targeted, including traditional trading, online and in-stores.

Whereas milk processors must update physical packaging to comply, online retailers must replicate that same information online, taking care to highlight pertinent information required under the new legislative framework.

This article was written by Isabela Delia Popa

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