you are being redirected

You will be redirected to the website of our parent company, Schönherr Rechtsanwälte GmbH :

01 February 2017

Romania: Is Romania's Attempt to Protect and Support Local Products Legal?

The adoption of two Romanian laws that envisage the promotion of national products sparked intense debates over their practical consequences.

New requirements imposed on retailers as well as foodstuffs

Law 1502016 (the “Supermarkets Law”) provides that large retailers (ie those with more than EUR 2 million in annual turnover) will be forced to source 51 % of certain cat-egories of products (such as meat, eggs, vegetables, dairy products, etc) from the short supply chain. The short supply chain means a limited number of companies engaged in local economic cooperation and development, with close geographic and social connections between producers, processors and consumers. These provisions enter into force on 15 January 2017.

In addition, the Supermarkets Law states that meat labelling needs to contain information on an animal’s country of origin, place of birth and rearing, place of culling and slaughtering, as well as the trademarks and names of the companies that have carried out these operations. These provisions will come into force 90 days after the publication of the European Commission’s decision.

Law 882016 (the “Dairy Products Law”) provides that labels for dairy products must indicate the country of origin and place of origin of raw milk used as raw material for consumption.

The Dairy Products Law imposes additional mandatory requirements to the ones provided under Regulation (EU) 11692011 (the “FIC Regulation”) to be indicated on the labels of dairy products, such as: the name and identity mark of the packager, the name and address of the processor, particulars such as “natural product” and “Romanian product” (to be indicated under certain conditions), the ratio of powder milk used.

The Dairy Products Law will enter into force 90 days from the date on which the European Commission announces its decision.

Potential impact

Both the Supermarkets Law and the Dairy Products Law have apparently been adopted for the purpose of promoting Romanian products and supporting local producers in a – not coincidentally – electoral year. However, the members of the Association of Large Retailers in Romania (the “Association”) were of the view that the Supermarkets Law does not guarantee support for Romanian producers against external ones, nor does it guarantee consumer access to quality Romanian products. As a result, the Association estimated that the enactment of this law would lead to an increase in prices, job losses and problems with supply. The Supermarkets Law also raises questions about the observance of European legislation, namely the free circulation of goods. Quantitative restrictions on imports and all measures having equivalent effect are prohibited between Member States.

The provisions of the Dairy Products Law are very strict and could have a major impact on processors in the milk industry from a logistical, operational and financial perspective. In addition, certain provisions appear not to be in line with the provisions of the FIC Regulation in matters that have already been harmonised by the latter. As evidence that the Dairy Products Law has resulted in implementation issues, a legislative proposal for the amendment to this law was initiated a month after its adoption in May 2016.

Is there a Single Market anymore?

The consequences of the adoption of the Romanian laws are all the more important, since there is a tendency among Member States to impose new food labelling rules at the national level. Although such initiatives have been firmly blocked by the Commission (eg the Commission asked Slovakia to withdraw requirements applicable to retailers with a large turnover to publish and report information on the origin of foodstuffs), it appears that, in the recent political and geo-economic environment, there is a turning point in this respect.

An example of this turning point is France’s proposal to introduce mandatory country-of-origin labelling for meat and dairy products in processed foods and prepared meals over a two-year trial period. Surprisingly, the Commission did not object, and the proposal was adopted in July 2016, which sparked intense debate causing rifts in the industry. Such decisions may prove to be harmful, as they can break apart the internal market and affect producers and consumers. Moreover, they can also cause a chain reaction as Member States, such as Greece, Italy and others, which had previously tried to impose national mandatory origin labelling rules, may be encouraged to renew their initiatives. It appears as if Romania may follow France’s lead.

It remains to be seen whether and how the two Romanian laws will be adopted, and if they will affect businesses and consumers alike in a seemingly divided European context.

The consequences of the adoption of the Romanian laws are all the more important, since there is a tendency among Member States to impose new food labelling rules at the national level.

authors: Oana Constantinescu, Toma Barbarasă