Competition law and tofu – the denomination of products


 by Filipa Afonseca, member of CEDU

Competition law does not have a strict goal that is objectively qualifiable and quantifiable. This is an old debate, but it has subtly brought new life to the discussion about the functions of competition law. So, what does it have to do with veganism and vegetarianism? Everything, as shown by the Tofu Town’s ruling of the CJEU, Case C-422/16, of 14th June 2017.

The issue was that the 100% plant-based products of Tofu Town were marketed under the denomination of “milk”, “yoghurt” or “cheese”. The Court of Justice ruled favorably on the German company Verband’s argument that such expressions are reserved for products of animal origin, so that even an auxiliary expression such as “oat milk” or “soy yoghurt” would not exempt the risk of consumer confusion. According to the Court, consumers’ expectations could be affected as well as concluding that the proper identification of a product is a form of fair competition in the European Union.

In fact, this argument is not new. It reminds us of the well-known distinction of whisky and wine in the Port Charlotte case, in which the Court stated that white Oport wine does not run the risk of being confused with whiskey.

However, in the present case, the Court of Justice seems to allow the creation of a new language to denominate these new products. Is it necessary? From my point of view (and in the way I see competition), no.  Indeed, the creation of a new vocabulary brings the need of the creation of a “new spirit” in the average consumer to identify this kind of products, which ultimately may create an unfair competition or even an excessive competitive effort to the implementation of vegetarian and vegan products in the single market.

Clearly, this is also contrary to the rules of competition. The consumer’s expectations are not at stake here. It is only about the identification of a product in a generic way so that in the consumer’s mind these products are distinguished. The concept of competition that is at issue in the EU is a “workable competition” concept, i.e., practicable competition that is the possible competition at a given time and in a certain context. Effective competition is a concept first proposed by John Maurice Clark, then under the name of “workable competition,” as a “workable” alternative to the economic theory of perfect competition, as perfect competition is seldom observed in the real world. The problem is that the overly technical case-law on fair competition, of which this judgment is purely exemplary, makes us forget the true purpose of the competition function so often repudiated in the constitutional constructions of the European Union.

Picture credits: Slice the tofu… by 621hjmit.

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