Italian supplement seizure hints at cross-border e-commerce retail issues

This week, the country’s anti-adulteration and health body, NAS reports​​ a seizure of 12,000 supplements from a company after investigations found it had placed these supplements onto the Italian market without fulfilling declarations outlined in current legislation.

While full details of the authority’s action have not been released, the rise in cases of this nature, exacerbated by the rise in pan-European online retailers, blurs the obligations of firms selling in different regions.

Speaking to NutraIngredients, Luca Bucchini, managing director of Hylobates Consulting, explains that while EU law is clear, the practice of eluding notification requirements will become commonplace as firms seek clarification from the European Commission (EC).

“I think the main issue with a lack of notification is also a lack of enforcement,”​ Bucchini says.

“However, selling online to Member States in terms of language, national flag, etc. is the same as selling physically in that Member State in terms of placing a food supplement on the market is in Court of Justice of the European Union (CJEU) case-law, but not in regulations.​

“The fear here, is that some smaller retailers may ignore the rules. That's why I still hope the EC would produce some guidelines for e-retailers.”​

EU foresight​

Current EU law dictates that Member States may request notification to authorities of food supplements when first placed on the market.

Member States, such as the UK, Sweden, and the Netherlands, choose not to exercise this option.

However, notification of new food supplements is standard practice for anyone selling in France, Spain, Germany, Italy, Belgium, Ireland or other Member States.

Bucchini explains that EU law has foreseen notification for types of foods such as food supplements aiding authorities by negating their need to check these labels in retail shops.

“It is quite obvious that when you sell a food supplement to a Spanish supermarket or distributor, then you have to notify in Spain, as you are placing the product on the Spanish market,” ​Bucchini says.

“If my physical store is in the UK, even if my online store is also in French and I ship food supplements to France, why would I need to notify in France? I do not have a store in France.” ​

National level rule making ​

Company obligations are further complicated by certain rules on food supplements that are set at the national level and not at the EU level.

An example is glucosamine, which has a maximum limit of 1000 milligrams (mg) in France, and 500 mg in Italy.

“If my store is in the UK, I may think I don't need to comply with French rules even if I advertise and sell to French consumers,” ​Bucchini says.

“Some even went to saying that online stores should only comply with EU law, not with national laws.”​

However, as Bucchini goes on to explain the Court of Justice has previously stated that in related matters this is nonsense.

“There are some criteria, including the language, statements such as "We ship to Poland", the currency, etc. that are sufficient to determine if an online retailer has put a certain product in the market of a certain Member State. ​

“In the case above, the food supplement was clearly put on the French market, and all obligations followed.”​

In the case involving Italy’s NAS, Bucchini thinks the authorities concluded that the express mail service was the next business, and the first in Italy.

“The mail service may not have simply stored packages with products, but may have stored individual food supplements and engaged in "picking" and preparing final packages,”​ he speculates.

“The number of units involved is significant, as is the value.  The products are likely to have been seized pending a decision. ​

“The company may now either pay the fines (about €6,000 for each type of food supplement lacking notification) or appeal for judicial review.” ​

Shift in supplement law?​

Bucchini adds that the confiscation could mark a shift in the enforcement of food supplement legislation, which according to the food regulation expert has so far “lacked teeth in the case of non-compliant online retailers”. ​

“Authorities could effectively block market access to non-compliant products, and it tackles the main difficulties food inspectors across Europe have in this case: not having a door to knock on. In this case, they knocked - hard apparently - at the express mail service's door.”​

Bucchini says that some online retailers appear not to yet accepted the consequences of this legal situation, and have not notified products in all relevant Member States.

This means fewer checks to protect consumers, and a big saving in terms of regulatory work and governmental fees, where applicable in countries such as Spain or Italy.

Companies have been fined for this​​ with rulings now final, but some still fail to comply. In some cases, the business model is based on avoiding notification to sell products that would not comply with national rules; in other cases, it is a competition issue.

“The consequence of not notifying is however that the downstream business becomes the food business which failed to notify, and that can be fined for this. ​

“For example, a distributor in France, or the producer in say Spain would normally notify the food supplements to the French authorities, sparing any burden to shops,” ​adds Bucchini.

“But if the online retailer does not notify, then the next business in the supply chain becomes responsible.”​