E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy (Studies in European Economic Law and Regulation, 21) 3030795039, 9783030795030

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Studies in European Economic Law and Regulation 21

Maria Jose Plana Casado

E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy

Studies in European Economic Law and Regulation Volume 21

Series Editors Kai Purnhagen, University of Bayreuth, Bayreuth, Germany Josephine van Zeben, Wageningen University & Research, Wageningen, The Netherlands Editorial Board Members Alberto Alemanno, HEC Paris, Paris, France Mads Andenaes, University of Oslo, Oslo, Norway Stefania Baroncelli, University of Bozen, Bozen, Italy Franziska Boehm, Westfälische Wilhelms-University Münster, Münster, Germany Anu Bradford, Columbia Law School, New York, USA Jan Dalhuisen, King’s College London, London, UK Michael Faure, Maastricht University, Maastricht, The Netherlands Jens-Uwe Franck, Ludwig-Maximilians-University Munich, Munich, Germany Geneviève Helleringer, University of Oxford, Oxford, UK Christopher Hodges, University of Oxford, Oxford, UK Lars Hornuf, University of Bremen, Bremen, Germany Moritz Jesse, Leiden University, Leiden, The Netherlands Marco Loos, University of Amsterdam, Amsterdam, The Netherlands Petros Mavroidis, Columbia Law School, New York, USA Hans Micklitz, European University Institute, Florence, Italy Giorgio Monti, European University Institute, Florence, Italy Florian Möslein, Philipps-University of Marburg, Marburg, Germany Dennis Patterson, European University Institute, Florence, Italy Wolf-Georg Ringe, University of Hamburg, Hamburg, Germany Jules Stuyck, Katholieke Universiteit Leuven, Leuven, Belgium Bart van Vooren, University of Copenhagen, Copenhagen, Denmark

This series is devoted to the analysis of European Economic Law. The series’ scope covers a broad range of topics within economics law including, but not limited to, the relationship between EU law and WTO law; free movement under EU law and its impact on fundamental rights; antitrust law; trade law; unfair competition law; financial market law; consumer law; food law; and health law. These subjects are approached both from doctrinal and interdisciplinary perspectives. The series accepts monographs focusing on a specific topic, as well as edited collections of articles covering a specific theme or collections of articles. All contributions are subject to rigorous double-blind peer-review.

More information about this series at http://www.springer.com/series/11710

Maria Jose Plana Casado

E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy

Maria Jose Plana Casado Law Group Wageningen University Wageningen, The Netherlands

ISSN 2214-2037 ISSN 2214-2045 (electronic) Studies in European Economic Law and Regulation ISBN 978-3-030-79503-0 ISBN 978-3-030-79504-7 (eBook) https://doi.org/10.1007/978-3-030-79504-7 © Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Foreword

Effective Enforcement in the E-Food Market This book brings together several fast-moving and growing areas of research including regulation of the (e-)food market, digitization, enforcement, and platform regulation. Rapid technological and market developments in each of these areas have given rise to a vast literature, which makes it challenging to coherently, yet critically, reflect on the ways in which these developments and literature interact with each other—though arguably all the more important. Dr. Marie José Plana Casado’s work successfully faced this challenge in order to provide us with a highly topical book, grounded in solid legal theory and enriched by the inclusion of the latest developments. Its findings regarding enforcement practices in the e-foods market can easily be extended to ongoing developments in other areas of the internal market, where markets also increasingly work as platforms, which require a rethink of classic internal market regulation. How solution based on institutional design theories can help the European Union (EU) in regulating the platform economy is the second important set of insights provided by Dr. Plana Casado’s work. She shows that these new modes of trade can benefit from both new and traditional methods of regulation: for example, by combining classical internal market regulatory approaches such as information regulation with the platform economy in food enforcement. This book is unique in many ways. What makes it attractive to both practitioners and academics is its combination of many dimensions of legal scholarship, including doctrinal analysis, institutional design, comparative law, and theoretical embedding. Importantly, Dr. Plana Casado underlines the EU’s multilevel character as an essential feature of its enforcement practices. By highlighting the different enforcement interactions between the EU and national levels through case studies of Germany and the UK (then still an EU member), Dr. Plana Casado provides new insights into this area. Her findings also pose new questions as to which model may

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Foreword

serve as a best practice for other EU Member States or perhaps even a harmonized model of enforcement collaboration between the EU and its Member States. We are happy and proud to include Dr. Plana Casado’s work in our series and look forward to her future work on this and related topics. University of Bayreuth, Bayreuth, Germany Wageningen University & Research, Wageningen, The Netherlands May 2021

Kai P. Purnhagen Josephine van Zeben

Acknowledgements

This book was born out of an intriguing work phone call, an exciting conversation with control staff, and very good advice to change my PhD topic from my (then) external supervisor and (now) dear friend Dr Hanna Schebesta. The book would not have been possible without the many people that shared information and discussed ideas with me since Spring 2015. In this regard, I would like to express my most sincere gratitude to those in food official control positions at the Member States level, for taking time to discuss their pioneering work in the earlier stages of my research. I would also like to especially thank my PhD supervisors at the University of Barcelona: Dr Mirentxu Corcoy and Dr Itziar De Lecuona, as well as my family at the Bioethics and Law Observatory of the University of Barcelona and my dear colleagues at the LAW Group of Wageningen University, for giving me the tools (and time) to get to the finish line and for their years of unfailing and unconditional support. Finally, of course, thank you to the Series editors, and to my family, to my friends, and to all the songs that got me here in one piece.

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Contents

1

Online Marketplaces: A Disruptive Environment for the Enforcement of EU (Food) Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Online Marketplaces in the ‘Platform Economy’ . . . . . . . . . . . . . 1.3 E-nforcement in the ‘Platform Economy’ . . . . . . . . . . . . . . . . . . 1.3.1 Public Enforcement in the European Union . . . . . . . . . . . 1.3.2 The E-nforcement Deficit . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Relevance of the Problem: Unsafe Shopping in the E-Food Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.1 Online Suppliers in the E-Food Market . . . . . . . . . . . . . . 1.4.2 The Compliance Gap in the E-Food Market . . . . . . . . . . . 1.5 Content of the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

1 1 7 11 12 14

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16 17 21 26 27

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33 33 34

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35

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38 43 55 57 58

EU Food Law in the Platform Economy . . . . . . . . . . . . . . . . . . . . . . 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61 61

Part I 2

3

EU Law for the E-Food Market

The Developing History of Online Marketplace Regulation in the EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Evolution of the EU’s Regulatory Policy for Online Retail . . . . . 2.2.1 2000: Regulating ‘Intermediaries’ and Electronic Transactions to ‘Bring Europe Online’ . . . . . . . . . . . . . . 2.2.2 2010–2014: Designing an Ecosystem Favourable to Online Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.3 2015–2019: Regulating the Platform Economy . . . . . . . . 2.2.4 Regulating Enforcement for the Platform Economy . . . . . 2.3 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Contents

3.2

4

Food Information Law Online . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Rules for Food Information in ‘Distance Sales’ . . . . . . . . 3.2.2 Responsibility for Food Information in Online Marketplaces . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Short Supply Chains in the E-Food Market . . . . . . . . . . . . . . . . . 3.3.1 Case 289/16: Can Organic Products Be Sold ‘Directly’ to Consumers Online? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 Are Exemptions for Direct Sales Applicable Online? . . . . 3.4 Facing the ‘Collaborative’ Economy: Are Peer Traders and ‘Sharers’ Food Business Operators? . . . . . . . . . . . . . . . . . . . 3.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .

63 64

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66 71

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73 74

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75 80 80

Regulating Food Official Controls in the Digital Single Market . . . . 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Food Official Controls: Increasingly a EU Matter . . . . . . . . . . . . 4.3 EU E-nforcement Rules Under Regulation 6017/625 . . . . . . . . . . 4.3.1 FBOs Obligation to Notify Online Activities . . . . . . . . . . 4.3.2 EU Regulation of Mystery Shopping . . . . . . . . . . . . . . . . 4.3.3 Official Controls on Parcels from Third Countries . . . . . . 4.3.4 Regulating the Order of Cessation of Online Sales . . . . . . 4.4 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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83 83 84 87 87 89 91 92 93 94

Part II 5

6

Bridging the Enforcement Gap in Online Marketplaces

Facing the Public E-nforcement Challenge in the E-Food Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Structural Challenges to Official Controls . . . . . . . . . . . . . . . . . . 5.2.1 The Identification Gap in Online Marketplaces: . . . . . . . . 5.2.2 Planning Risk-Based Controls . . . . . . . . . . . . . . . . . . . . 5.2.3 The Jurisdiction Puzzle . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.4 Execution of Enforcement Decisions . . . . . . . . . . . . . . . . 5.3 The EU Commission’s Strategy to Bridge the E-nforcement Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Training and Knowledge-Transfer . . . . . . . . . . . . . . . . . . 5.3.2 Coordinated Control Online . . . . . . . . . . . . . . . . . . . . . . 5.4 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany’s Take on E-food Control . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Construction of the German Central Unit for e-Food Control . . . . 6.3 Responsibilities of the Central Unit . . . . . . . . . . . . . . . . . . . . . .

. 97 . 97 . 98 . 98 . 101 . 102 . 104 . . . . .

105 106 107 112 112

. . . .

115 115 116 118

Contents

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6.4

. 119 . 119 . 124

G@zielt’s Surveillance of the Digital Market of Foods . . . . . . . . 6.4.1 Mapping the German Market of E-foods . . . . . . . . . . . . . 6.4.2 G@zielt’s Monitoring of the Digital Market . . . . . . . . . . 6.4.3 Measures in the Event of Non-compliance: The Role of Online Marketplaces . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

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The United Kingdom’s Strategy for Bridging the Enforcement Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 A Note About the Administrative Structure of the United Kingdom and the Scope of the FSA’s Strategy . . . . . . . . . 7.3 The Food Standards Agency’s Strategy for the Digital Market of Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.1 Raising Business and Consumer Awareness . . . . . . . . . . 7.3.2 Capacity-Building to Ensure Enforcement . . . . . . . . . . . . 7.4 Peer-to-Peer Trade Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 129 . 131 . 133 . 137 . 137 . 138 . . . . . .

Bringing EU Food Law and Its Enforcement into the Platform Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Unmasking Online Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Planning Risk-Based Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Solving the Jurisdiction Puzzle . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.1 Domestic Organisation of Official Controls . . . . . . . . . . . . 8.4.2 A German-Inspired EU Unit Monitoring the Digital Single Market of Foods? . . . . . . . . . . . . . . . . . . . . 8.5 Private Execution of Public Enforcement Decisions: Are There No Limits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Addressing Peer-to-Peer and Food Sharing Initiatives in the Platform Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

139 139 141 146 149 150 153 153 155 158 160 160 162 163 166 169 169

Conclusions: EU (Food) Law Is Not Fit for Purpose in the Platform Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Abbreviations

AAC B2B B2C BSE BTSF BVL CCP_efood CJEU CRD EDI FBO FIC FSA FSS GFL HACCP ICT INFOSAN IPR ISSP LFGB MoU NTD ODR PAFF POI

Administrative Assistance and Cooperation Business-to-business Business-to-consumer Bovine spongiform encephalopathy Better training for safer food German Federal Office of Consumer Protection and Food Safety Controls of certain foodstuffs marketed via the Internet Court of Justice of the European Union Consumer Rights Directive Electronic data interchange system Food business operator Food Information Regulation Food Standards Agency Food Standards Scotland General Food Law Hazard analysis and critical control points Information and communication technologies International Food Safety Authorities Network Intellectual property rights Information society service providers Food and Animal Feed Regulations Memorandum of understanding on the online sale of counterfeit goods Notice-and-takedown procedures Online dispute resolution platform for e-commerce transactions Plants, animals, food, and feed Provider of online intermediation service

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RASFF ROPO SME T&Cs

Abbreviations

Rapid alert system for food and feed Research online purchase offline Small- and medium-sized enterprises Terms and conditions agreement

Chapter 1

Online Marketplaces: A Disruptive Environment for the Enforcement of EU (Food) Law

1.1

Introduction

In the 30 years since the Internet revolution, computer and information technologies have brought about immense economic, social, and regulatory change. Today, the Internet of Things, cloud computing, data analytics, and robotics have brought with them the appearance of online platforms with many different forms and functions,1 and have led to the advent of the so-called ‘platform economy’,2 an economic, social and political development causing profound changes in the context of the ‘fourth industrial revolution’.3 The proliferation of online platforms in every economic sector and social sphere is shaking global economies to their core. As pointed out by Kenney and Zysman (2016), If the industrial revolution was organized around the factory, today’s changes are organized around these digital platforms, loosely defined. Indeed, we are in the midst of a reorganization of our economy in which the platform owners are seemingly developing power that may be even more formidable than was that of the factory owners in the early industrial revolution.4

With e-commerce ‘still in its infancy’,5 online transaction platforms enabling third parties to trade goods are at the heart of this phenomenon. Also known as ‘online marketplaces’ (or simply, ‘marketplaces’), these platforms have become the digital equivalents of brick-and-mortar market squares. Marketplaces have the

1

See Commission staff working document guidance on the implementation/application of Directive 2005/29/EC on unfair commercial practices, COM 2016/320 final (2016), para 5.2.1. 2 See, among many others, the EC Communication A digital single market strategy for Europe, COM 2015/192 final (2015), para 3.3.2, and Kenney and Zysman (2016). 3 See Schwab (2015). 4 See Kenney and Zysman (2016), p. 62. 5 Lodder and Murray (2017), p. 8. © Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_1

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

ability to centralise and foster a highly volatile style of trade; and bring together traditional retailers and disruptive businesses alike. Because of their ability to reduce interaction and transaction costs for both suppliers6 and consumers, these platforms have transformed e-commerce in less than a decade.7 Like other types of online platforms (such as payment services or social networks), online marketplaces have led to the disruption8 not only of markets, but also of known legal categories.9 But, as pointed out by Finck (2018b), ‘their regulatory dimension remains relatively little understood.’10 Marketplaces have not traditionally been a ‘regulatory unit’,11 in either e-commerce regulation, consumer law12 or sector-specific legislation in the European Union.13 This is partly due to the fact that most of the regulatory framework which applies to online marketplaces and the transactions they enable was designed before these platforms even emerged, but it’s also due to regulatory choices. From a compliance perspective, the functioning of online marketplaces appears to be ill-suited to longstanding information and responsibility arrangements established in European Union law: for instance, pre-contractual information rules established in consumer protection legislation usually address ‘traders’, regardless of the fact that, in an online marketplace, a significant portion of that information is displayed—and even sometimes shaped—by the platform.14 As the platform economy becomes mainstream, legislators and policymakers are addressing the question of whether (and how) to regulate these players ubiquitous to

6 Inspired by Hatzopoulos (2018), in this book, the term ‘supplier’ is used to refer to those offering goods in online marketplaces. It encompasses traders acting in their professional capacity as well as prosumers and those engaging in any type of online trade of goods, regardless of the nature of the transaction. 7 See EC Communication The single market in a changing world: A Unique asset in need of renewed political commitment COM 2018/772 final (2018). 8 See Katyal (2014). 9 See Twigg-Flesner (2016), Hatzopoulos (2018), Hatzopoulos (2019) and Katz (2015). 10 Finck (2018b), p. 2. 11 As identified by Savin (2018), the regulatory unit in EU law is usually the ‘information society service provider’ (ISSPs), within the meaning of Art. 2 Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce in the Internal Market, O.J. L 178/2000, pp. 1–16. See Chap. 2. 12 When it comes to e-commerce regulation, the regulatory unit determining the rights and responsibilities of such platforms was established in 2000 in the e-Commerce Directive as ‘information society service providers’ (ISSPs), and, more specifically, ISSPs providing intermediary services such as hosting. When it comes to consumer protection law, the unit has traditionally been that of ‘traders’. 13 Based on the Treaty on the Functioning of the European Union (TFEU), European Union has wide competences to regulate the Internet’s infrastructure and online transactions. As examined by Savin (2017), the most widely used legal basis to regulate are the free movement of services (Arts. 49 and 56 TFEU) and the Single Market (Art. 114 TFEU) provisions. 14 See Cohen (2017) and Hatzopoulos (2018).

1.1 Introduction

3

the digital single market.15 Since the advent of online platforms, there has been discussion in both public debate and academic research16 as to whether public intervention (and what type) is necessary to govern online platforms (including online marketplaces) in order to ensure a suitable balance of different (and sometimes competing) interests, to facilitate a smooth transition toward digital economies. The European Commission did not officially refer to this issue until 2015, in its Communication for a Digital Single Market Strategy for Europe, where it announced the launch of a comprehensive assessment of the role of all online platforms, in order to build ‘a fit for purpose regulatory environment for the platform economy’.17 This Communication, as well as numerous stakeholders and scholars, drew attention to an essential concern: the imbalance created by the immense market power some online platforms have acquired and the alleged ability of platforms to expedite the spread of illegal content, while benefiting from virtually no surveillance and enforcement obligations, as per the ‘intermediaries’ regime established in the e-Commerce Directive (a regime that frees most platforms from the obligation to engage in proactive monitoring of the content they host, and keeps them shielded from secondary liability for the illegal activities of their users as long as they act ‘expeditiously’ to remove illegal content once they become aware of its existence).18 Such ‘digital threat discourse’19—initially focused on issues such as digital piracy, terrorism and hate speech—has led the European Commission to advocate in favour of requiring all platforms ‘to exercise greater responsibility and due diligence in the way they manage their networks and systems—a duty of care’20 to stop the spread of illegal content, including recurrent product safety and fraud issues in the digital single market. As recently as 2010, the Monti report identified a significant compliance gap21 online: one in three businesses appeared to be operating digitally without complying with EU consumer protection rules, a situation which has not significantly improved since then.22 In fact, one of the underlying reasons to propose moving from secondary liability to responsibility of online platforms has been the ongoing online

15 See EC Staff Working Document Impact Assessment promoting fairness and transparency for business users of online intermediation services COM 2018/0238 final (2018) and EC Communication COM 2018/772 final. 16 See, among many others, Katz (2015), Hatzopoulos (2018), Finck (2018b), Frosio (2017), Sartor (2017), Smorto (2018), Goudin (2016) and Vara et al. (2016). 17 See EC Communication COM 2015/192 final, para 3.3.2. 18 See Chap. 2. 19 See Frosio (2016), p. 9. 20 EC Communication COM 2015/192 final, para 3.3.2. 21 This book distinguishes between the ‘compliance gap’ (referring to the low compliance rates in the digital single market) and the enforcement gap (which refers to the lack of successful application of private and public enforcement mechanisms in the digital environment). 22 See Monti (2010). In fact, only a year later, the European Commission reported that ‘you need only browse the internet for a short while to see that compliance with transparency and consumer information requirements is insufficient in relation to the placing of orders;’ see EC Communication

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

enforcement deficit, partly caused by the ‘retraction’ of public ordering from online enforcement.23 The reasons for such retraction are, at least, twofold. First, the low legal certainty regarding how to properly transpose brick-and-mortar product and business requirements to online transactions; and second, the lack of technical knowledge and resources to face a new, unknown and volatile environment for market surveillance. As a result, control authorities responsible for the enforcement of EU law online have struggled (or even sometimes neglected) to design strategies for bringing online suppliers into compliance.24 This sort of ‘wait and see’ attitude in some jurisdictions has worked in favour of many, who have been allowed a sense of impunity in e-commerce. For the last decade, the European Commission has promoted self-regulation in the fields of e-commerce, consumer protection and sector-specific legislation (such as intellectual property rights or product safety) which engages online marketplaces in the enforcement of EU substantive law. This is a problem-driven approach which has resulted in targeted initiatives designed to entrust platforms with some (varying) degree of responsibilities to fight ‘non-compliance’25 in specific sectors, while leaving the intermediaries regime of the e-Commerce Directive intact.26 But more recently, online marketplaces have even become ‘units’27 expressly subject to European Union horizontal law.28 The race to build a regulatory framework fit for the platform economy has however not included a comprehensive evaluation of whether EU sector-specific law is well-suited to meet its regulatory goals online; at least not when it comes to regulation of ‘physical’ consumer goods.29 Instead, regulatory changes to bring legal requirements into the digital era have generally consisted of the introduction of targeted amendments to pre-existing legal instruments to clarify (first) information rules, and (second) to update public enforcement powers. In this context, it is worth exploring whether such an approach suffices to create a legal framework that facilitates compliance and ensures enforcement in the platform economy. Considering that, ‘regulation amounts to a tool providing certainty for those involved’30 in shaping and benefiting from digital innovation, this book examines the evolution of

A coherent framework for building trust in the Digital Single Market for e-commerce and online services COM/2011/0942 final, p. 8. 23 Frosio (2018), p. 33. 24 See Part 2 of this book. 25 In this book, the concept of ‘non-compliance’ refers to ‘any deviation from what is required by the law as detected during the control activity performed according to the methods and techniques defined by the regulations,’ See Rossi et al. (2020) and Art. 2(10) of the Compliance Regulation. 26 See Ullrich (2017), para 33. 27 Savin (2018), p. 13. 28 See Chap. 2. 29 The concept referring to physical goods that are bought by individuals or households (such as food, clothes, or furniture), as opposed to consumer goods of digital content. 30 Finck (2018a), p. 666.

1.1 Introduction

5

EU law affecting online retail,31 analyses its application to online marketplaces and the transactions they enable, and critically discusses whether EU sector-specific law is fit for purpose. The starting point of this research is that online marketplaces enabling third parties to trade goods are ‘disruptive’32 entities that are transforming not only the Law,33 but also its enforcement; and that regardless of the potential role that such platforms may have in bringing the digital market into compliance, it has become necessary to (1) clarify the implementation of legal requirements for online transactions so that businesses can remain primarily responsible for compliance, and (2) to bring public enforcement mechanisms up to date so that control authorities can regain and reclaim their role in bridging the enforcement gap online. In this context, this book aims to answer three essential questions: • How are online marketplaces regulated, and what is their regulatory capacity? • Does sector-specific legislation provide legal certainty regarding information, product and business requirements applicable to online transactions carried out through online marketplaces? • How are online marketplaces changing the way control authorities work to enforce European Union Law? Given the number and variety of online marketplaces active in the EU digital single market, and given the respective legal questions that arise from the way they function, the scope of this book and its findings has been limited to online marketplaces which enable third-party suppliers and consumers to trade in physical consumer goods. Research into the legal disruption caused by these platforms has been modest when compared to the disruption brought about by online platforms allowing information sharing, and also when compared to marketplaces offering services or goods of digital content. This is partly due to the fact that the online trade of physical goods has long been a relatively marginal phenomenon, and therefore initiatives to address the spread of unsafe and non-compliant physical goods online are relatively recent.34 However, for the last 5 years this market has been growing at an unprecedented rate,35 and it is gaining even more momentum as a result of the lockdowns and social distancing policies adopted by countries around the world due to the COVID-19 pandemic.

The term ‘e-commerce’ encompasses online trade for both services and goods. In this book, the terms ‘online retail’ or ‘online shopping’ are used to refer to the purchase of tangible consumer goods online. 32 Katyal (2014), p. 1685. 33 See Twigg-Flesner (2016). 34 As analysed in Chap. 2, early regulatory policy decisions at European and Member State level focused on creating a safe internet environment to protect citizens from illegal content such as hate speech, child pornography, digital piracy and counterfeit products, while creating an ecosystem favourable to the digitisation of the mainly service economy. 35 In fact, in 2017, physical consumer goods had the biggest part in e-commerce, and eight out of ten people who engaged in cross-border online retail purchased such goods. Eurostat (2020). 31

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

As recently identified by Ullrich (2019), online trade in physical goods ‘poses specific legal challenges emanating from global supply chain transformations and the nature of product regulation in the EU’.36 In this context, this book aims to contribute to the recent body of research on EU law and the platform economy by identifying and critically analysing the challenges that arise when transposing EU legislation governing the trade of physical consumer goods (and its enforcement) to online marketplaces. Off and online, EU sector-specific legislation plays an essential role in determining the legal requirements applying to the marketing of consumer goods, the allocation of responsibilities for compliance, and the governance of enforcement mechanisms available to control authorities. Accordingly, after examining the role that horizontal e-commerce and consumer protection legislation play in online marketplaces, the book’s attention shifts towards sector-specific legislation governing exchanges through online marketplaces. This choice is consistent with the European Commission’s problem-driven approach to regulating the platform economy.37 In particular, this research examines how European Union Food Law and its public enforcement regime have evolved to face the challenges of online food trade, and describing how control authorities in Member States are changing the way they work to bring public enforcement into the digital era. Why food? Food safety has been a priority for the Europe Union since (at least) the Bovine Spongiform Encephalopathy (BSE) crisis of the mid-1990s.38 It has justified building a complex legal framework for food products, which is specially designed to ensure food safety and the protection of other consumer interests, such as healthy eating and environmentally friendly food production.39 In this context, it is no coincidence that European Union Food Law, and the authorities in charge of its enforcement, were quick to respond to the particularities of the online trade of foods marketed via the Internet for human consumption (or ‘e-foods).40 Indeed, as recently as 2011, the Food Information Regulation established rules on information provision in distance sales (such as those concluded online).41 And in 2013 (2 years before the

36

Ullrich (2019), p. 559. See Commission Staff Working Document, COM 2016/320 final (2016). 38 Between 1996 and 2010 more than 220 people were affected by Creutzfeldt-Jakob disease, a variant of BSE that since 1986 had been infecting cattle in the United Kingdom. European authorities determined that these patients had become infected by eating beef from infected cattle. This ‘mad cow crisis’ is still today considered the most significant food safety crisis that the European Union has faced, and the origin of its current food safety policy. 39 See EC Communication A farm to fork strategy for a fair, healthy and environmentally-friendly food system, COM 2020/381 final (2020) (hereinafter, ‘The Farm to Fork Strategy’). 40 See, among others, the EC Recommendation on a coordinated control plan on the official control of certain foods marketed through the Internet, C 2017/4986 final (2017). 41 See Art. 14 Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/ 37

1.2 Online Marketplaces in the ‘Platform Economy’

7

Commission’s Communication for a digital single market strategy), a draft for a new regulation of ‘official controls’42 on food products intended for human consumption granted competent authorities specific powers to monitor the digital market. Moreover, the high degree of regulatory intervention in the food market generates a host of critical control points that require the verification of compliance with European Union Food Law—a situation which illustrates perfectly how the workings of online marketplaces, and the regulatory decisions adopted to govern them, impact on businesses’ and authorities’ ability to ensure compliance in this digital environment. In this context, it is relevant to consider how the increasing ‘platformization’43 of the food sector is affecting EU sector-specific law and its enforcement.

1.2

Online Marketplaces in the ‘Platform Economy’

Online platforms are Complicated mixtures of software, hardware, operations and network. The key aspect is that they provide a set of shared techniques, technologies, and interfaces to a broad set of users who can build what they want on a stable substrate.44

Falling within the scope of this definition, there are numerous types of platforms, including online advertising platforms; search engines, social media and creative content outlets, among many others. They all have in common the fact that they constitute multi-sided markets bringing different types of users together to facilitate various types of transactions between them (be it for information, goods or services), where the value for one group (i.e. suppliers) increases as the number of participants

EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63. 42 ‘Official controls’ are defined in Art. 3 of Regulation (EU) 2017/625 Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products, amending Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and of the Council, Council Regulations (EC) No 1/2005 and (EC) No 1099/2009 and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC, and repealing Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and of the Council, Council Directives 89/608/EEC, 89/662/EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC and Council Decision 92/438/EEC (Official Controls Regulation), O.J. L 95/1 (2017), as the ‘activities performed by the competent authorities, or by the delegated bodies or the natural persons to which certain official control tasks have been delegated in accordance with this Regulation, in order to verify’ compliance with Food Law by the operators. 43 See Van Dijck et al. (2018). 44 Kenney and Zysman (2016), p. 64.

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

from the other group increases (i.e. consumers).45 As described by Hatzopoulos (2018), The core of an online platform (or, indeed, any multisided market) is to bring together the different groups of users it attracts. It plays an intermediary role. It creates value by connecting distinct groups of users and reducing interaction costs among those. Without the aid of the platform, the different type of users (eg suppliers and consumers) would find it (more) difficult and particularly costly to even find each other, let alone conclude transactions. What is more, in digital platforms the pools of users on each side are exponentially greater, thus increasing the possibilities of better matches.46

Online marketplaces (also known as ‘digital’ marketplaces, or simply ‘the marketplaces’) are online platforms: multi-sided markets gathering both suppliers and consumers at the same place, thus facilitating their direct interaction, through network effects.47 The first types of online marketplaces enabling transactions of physical consumer goods date back to the 1990s, when they were used for business-to-business trade as a way of ‘e-Purchasing’. As described by Eurostat in its first pilot survey on e-Commerce in 2001, they consisted of ‘specialised sites that allow[ed] buyers and suppliers to meet each other virtually and to trade’,48 in order to reduce transaction costs. Since the early 2000s however, marketplaces have been evolving to fit all kinds of transactions. Initially, there existed collaborative marketplaces from the ‘sharing’ economy,49 which altered supply chains and economies worldwide by enabling peer-to-peer trade to grow well beyond the limits of local communities, offering prosumers50 the opportunity to trade services and goods ‘while bypassing the traditional economic intermediaries’51 (such as hotels, transportation services, or even companies selling or leasing farming equipment and machinery52). Online marketplaces from the collaborative or ‘sharing’ economy would encompass, stricto sensu, those which facilitate: (a) access, as opposed to transfer of ownership; and (b) the conclusion of a transaction (contract) between two other parties (a tripartite relationship); (c) which parties are mostly but not exclusively- peers, regardless of whether these prosumers or service providers.53

Within that limited framework, a representative example of a collaborative marketplace would be that of a marketplace connecting an individual looking to

45

de Reuver et al. (2018), p. 125; Savin (2018), p. 13. Hatzopoulos (2018), pp. 11–12. 47 Hatzopoulos (2018), pp. 9–10. 48 European Commission (2002), p. 34. 49 See Katz (2015) and Davidson et al. (2018). 50 A word meaning ‘professional consumer’, referring to individuals offering their peers food products but not devoting themselves to it professionally. See Finck (2018b), p. 5. 51 Hatzopoulos (2018), p. 7. 52 See Carolan (2018). 53 Hatzopoulos (2018), p. 7. 46

1.2 Online Marketplaces in the ‘Platform Economy’

9

borrow gardening tools from peers that are not using theirs. The borrower might pay the supplier a fee, via the platform, to gain temporary access to the tools. As many have predicted,54 the collaborative model has evolved ‘from a community practice into a profitable business model’55 which has grown exponentially in the last 5 years. Collaborative initiatives were first coopted by global corporations matching peers for service provision (such as Uber, Lyft, and Airbnb), and now by global ISSPs facilitating the online presence of incumbent retailers from brick-andmortar. Marketplaces matching suppliers and consumers of physical consumer goods are increasingly becoming business-to-consumer environments, where traditional retailers offer their products to consumers as an additional channel for sales, moving away from enabling ‘sharing’ and towards facilitating ‘trading’. Marketplace giants Amazon or AliExpress, among many others, do not have a collaborative intent56 but ‘rather they facilitate commercial transactions between two parties’.57 Even eBay, a marketplace originally launched to promote peer-to-peer trade, has evolved into a hybrid marketplace where retailers and prosumers58 coexist. In this context, this book will focus on marketplaces of the ‘platform economy’, a phenomenon encompassing platforms of collaborative and commercial intent, hence limiting the scope of research based on the type of product being traded (food) and the type of online platform through which transactions are brokered (online marketplaces), instead of on the intent of the users. In a marketplace, suppliers and consumers are both ‘users’ of the marketplace, and their relationship is governed not only by EU and Member States’ law, but also by the platform’s Terms and Conditions Agreement (T&Cs). In fact, this agreement is one of the most important determinants in the workings of a marketplace, as it is in this contract that the rules that users must follow to offer and obtain goods are set.59 As identified by Finck (2018a, b), such private rules frequently impose on suppliers ‘rules beyond those created by the legal framework’ to increase trust in the platform.60 For instance, marketplace rules may prohibit the sale of specific products that are legally sold offline or on other platforms. This is frequent when it comes to the online sale of delicate goods such as foods. Facebook’s online marketplace forbids the sale of alcoholic beverages, live animals (such as lobsters) as well as food supplements and any food or drinks that make health claims; all of which can be marketed online according to European Food Law. eBay’s restrictions for foods sold 54

See, among others, Böckmann (2013), Katz (2015) and Hatzopoulos (2018). Böckmann (2013), p. 2. 56 See Hatzopoulos (2019), p. 400. 57 Davidson et al. (2018), p. 1. 58 An individual that is both a provider and a consumer in the platform economy, as defined by Finck (2018b), p. 5. 59 These private rules normally encompass the conditions required to become a supplier, the quality of the offers, and the platforms’ monitoring and content moderation powers – including the platforms’ prerogatives regarding the use of the data they extract from suppliers’ registration and activity. See Hatzopoulos (2019). 60 See Finck (2018b), p. 11. 55

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

online, which vary from one Member State to another, often include unpasteurised dairy products, unpasteurised fruit or vegetable juices, and most wild mushrooms. Other marketplaces, such as Amazon, choose to restrict the sales of products such as alcoholic beverages to pre-authorised suppliers which can only ship their drinks to a fixed list of territories. The T&Cs of online marketplaces enabling transactions of physical consumer goods often identify that the responsibility for compliance with legal requirements governing the placement on the market of the goods (including those set in sectorspecific legislation) lies with the supplier-user; because (they argue) the marketplace acts as a mere ‘intermediary' facilitating a transaction completed by third parties. As extensively analysed by Hatzopoulos (2018), in this business model, the marketplace concludes two contracts for digital services: one with the consumer (a contract of intermediation, which in the framework of this research would be to have access to the offers of consumer goods) and one with the supplier (a contract of promotion and/or advertisement of the said goods, and of intermediation to connect with potential buyers). In both contracts, the marketplace offers an information society service, making offer and demand meet; while the buyer makes a purchase from the supplier, which is the buyer’s only contracting party regarding that purchase. As a result of such triangular contractual relation61 (between platform-supplier-buyer), the supplier is responsible for ‘any damage accruing from the ill-execution of the underlying service, while the platform is, in principle, only responsible for the electronic services,’62 while benefitting from the ‘intermediaries’ enshrined in the e-Commerce Directive. The fact that platforms claim to be mere intermediaries has become highly controversial when looking at marketplaces for services such as those in the accommodation and transportation sectors,63 but is generally undisputed when considering platforms enabling the online sale of physical consumer goods (such sales consisting of information society services64). It is accepted that these marketplaces do not act as ‘double’65 service providers, where, in addition to its intermediary role in the intermediation scenario, the platform would play a predominant role in the definition and/or delivering of the underlying service (the sale of physical consumer goods).66

61

See Busch et al. (2016), p. 4. Hatzopoulos (2018), p. 22. 63 See, among others, the judgments of the CJEU on the Airbnb and Uber cases: C-434/15, Asociación Profesional Élite Taxi vs Uber Systems Spain SL, 2017 ECLI. 981; and Case-390/18, Airbnb Ireland, 2019 ECLI. 1112. 64 See C108/09, Ker-Optika bt vs ÀNTSZ Dél-dunántúli Regionális Intézete, 2010 ECLI:EU: C:2010:725. 65 See Hatzopoulos (2018). 66 In order to be considered a double service provider, the buyer would have to see the marketplace service provider as its ‘co-contractor,’ purchasing the goods directly from the marketplace (or from the supplier, but ‘at a price and/or by the method determined by the platform) and the supplier would be a mere execution agent in the transaction, turning the online marketplace service provider into the sole party responsible for damages. See Hatzopoulos (2018), p. 22. 62

1.3 E-nforcement in the ‘Platform Economy’

11

This second scenario would require that the marketplace would characteristically offer a catalogue of consumer goods whose specifications and price it defines, but are supplied (manufactured and maybe even delivered) by a third-party supplier. This is not the case for the marketplaces analysed in this book: they do not impose on suppliers detailed product specifications (even if their own rules may require suppliers to ensure a certain level of quality in the products offered), they do not employ suppliers (even if they may require them to meet specific qualifications to operate through their interface) nor do they determine product prices, they ‘do not take title to the goods being sold’.67 They do not intervene in the configuration of the underlying transaction. As a result, European Union e-commerce law does not impose on such marketplaces the responsibility of ensuring that the goods traded via their interface are offered legally. In this context, it is one of the goals of this book to explore the role (if any) that sector-specific legislation (and EU Food Law in particular) assigns to online marketplaces.

1.3

E-nforcement in the ‘Platform Economy’

The concept of ‘enforcement’ refers to the use of preventive and repressive activities to ensure that private parties (be they individuals or economic operators) comply with the law: it is linked to a specific policy area.68 The concept of ‘e-nforcement’ used in this book, on the other hand, refers to the activities carried out (offline or online) to ensure that offers and products traded online comply with applicable legislation. Such activities may include market surveillance and inspections carried out by public authorities, as well as the use by private parties of online dispute resolution systems and private litigation (among others) to enforce legal requirements in the digital market. The EU e-nforcement regime is therefore ‘a regulated market for rendering dispute resolution and justice (. . .where) the monopoly of enforcement by the state has been broken’.69 It has led to competition between several private and public enforcement mechanisms. Although most enforcement mechanisms available can be characterised as ‘omnichannel’ (in the sense that they can be used to enforce legal requirements off and online), since 2010, the European Union has tried to improve its e-nforcement strategy by updating and creating mechanisms that would facilitate an efficient interplay between public and private e-nforcement mechanisms.70 However, in practice, the volatile trade that characterises online marketplaces, together with the inadequate methods of identifying users who enter and leave the marketplace quickly, often unaware of their legal obligations, still challenge the effectiveness

67

Perset (2010), p. 9. See Vervaele (1999), pp. 129–149. 69 Micklitz, and Wechsler (2016), p. 4. 70 See Chap. 2. 68

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

of private enforcement mechanisms.71 This is due to the fact that the success of private enforcement mechanisms, such as individual litigation before a civil court, depends on the plaintiff’s ability to identify clearly the defendant and to provide the evidence supporting his or her claim. In online marketplaces, the ‘pop-up’ nature of many product offers and suppliers means that consumers often do not have complete information about the supplier’s identity and location, and are no longer able to contact the seller after they have taken delivery of the goods, or when problems arise later. As a result, in a scenario where consumers cannot easily identify sellers, and where information society service providers do not have enforcement responsibilities, public enforcement (defined in this book as the use of government agents to detect and sanction violators)72 has become essential to bridge the enforcement gap. Indeed, one can argue that public authorities are in a better position than third parties when it comes to tracking down online suppliers—it is not only a technical challenge and an expensive, time-consuming task, but it may also require certain investigatory powers unavailable to consumers (such as requiring third parties to share information about the supplier). Additionally, when the products traded in the marketplace are subject to highly technical or scientific legislation, as is the case for food products, trained inspectors from public authorities are much better equipped to identify potential infringements of substantial law that may not have been noticed by previous buyers posting product reviews.73 Furthermore, consumers may not be able to assess compliance with aspects such as the formal qualifications required by law to act as a supplier, or compliance with health, safety and security regulations.74 Therefore, as identified by Katz (2015), in the platform economy, private enforcement can supplement government efforts,75 but public enforcement is key to bridging the enforcement gap.

1.3.1

Public Enforcement in the European Union

Direct public enforcement76 is an essential part of the implementation of policy77 of any regulatory regime. ‘Aimed directly at EU citizens and economic actors’78 it

71

Hatzopoulos (2018), p. 177. Polinsky and Shavell (2007), p. 405. 73 See Weber (2018), pp. 245–262. 74 Hatzopoulos (2018), p. 195. 75 Katz (2015), p. 1092. 76 As opposed to indirect enforcement activities carried out by the European Commission to control Member State’s implementation of EU law. 77 Vervaele (1999), p. 131. 78 Scholten (2017), p. 6. 72

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13

encompasses three core actions: monitoring, investigating79 and sanctioning of the violation of substantive norms.80 As pointed out by Vervaele (1999), Such activities require their own enforcement rules regarding the competences of enforcement agencies, the sanctions against and duties of the economic operators, etc. Imposing these enforcement rules, the so-called ‘regulatory enforcement framework’, is a duty of the legislature and consists of defining the normative framework.81

Establishing the regulatory enforcement framework and implementing public enforcement activities have traditionally been the responsibility of Member States, both online and in the brick-and-mortar market. Until the 1990s, Member States performed this task with great institutional autonomy.82 However, public enforcement by competent authorities at the domestic level has been gradually harmonised at the EU level by both case law and legislation. In fact, in the last 5 years, the Europeanisation83 of public enforcement has taken a dramatic step, due to the globalisation and digitalisation of the EU single market, and to compensate for the EU’s enforcement deficit.84 This process has resulted in the creation of a highly regulated EU public enforcement regime, gradually restricting Member States’ choice of enforcement strategy. However, the Europeanisation of enforcement regimes has not led to their horizontal harmonization. Instead, enforcement rules are still fully dependent on the policy area: just as legal requirements to place products on the market depend on both consumer law and sector-specific legislation, a variety of authorities and pieces of legislation intervene when looking to verify whether a product is offered in compliance with European Union and domestic law. This fragmentation of enforcement regimes has a consequence: the procedures and powers of public authorities in charge of e-nforcement vary depending on the product being traded. Accordingly, just as the European Commission has chosen to take a problem-driven approach to regulating the platform economy, this book examines sector-specific legislation (more specifically, Food Law) to analyse how online marketplaces are altering public enforcement in the European Union.

79

As described by Scholten (2017), while monitoring refers to the process of ongoing supervision of a certain policy area, and can target a specific group or involve general market oversight before any suspicion arises regarding potential infringements, investigative activities are those carried out on the basis of administrative or criminal law once such suspicion has arisen to find out whether an infringement has indeed taken place. 80 Widdershoven (2019), p. 318. 81 Vervaele (1999), p. 131. 82 Vervaele (1999), pp. 129–130. 83 Widdershoven (2019), p. 310. 84 See Adriaanse et al. (2008), pp. 86–89.

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1.3.2

1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

The E-nforcement Deficit

Member States have a responsibility to bridge the enforcement gap and to ensure a level playing field by bringing the digital single market under a similar level of control as the traditional store-based market.85 However, control authorities in charge of e-nforcement are facing significant technical and legal challenges to enforce legislation in online marketplaces.86 To begin with, control authorities face the challenge of not having accurate information about suppliers, their products and premises: in online marketplaces, the information about the identity of online suppliers and about the location of their premises is often scarce or even hidden.87 Additionally, a significant number of those suppliers fail to notify their activity to proper authorities, even if legally required.88 This information would normally be used to plan control activities based on the assessment of potential risks associated with a product or with a type of business. Given the absence of this information, Member States must devote abundant resources to carrying out digital investigations to ‘map’ the digital market. Furthermore, the prioritization of control activities (essential to ensure the effectiveness and impartiality of any control system because authorities have limited economic resources and staff) has also proven a challenge. The overlapping scope of Member States’ controls systems, which should be a potential asset to building effective e-nforcement systems because it ensures that a high number of authorities can control violations, has too often created a duplication of control efforts over a limited number of dangerous goods,89 while leaving the rest of the market virtually unguarded. It has been argued that this situation may have, in practice, resulted in the European Union food policy privileging the internet market.90 The challenges to the implementation of official controls in online marketplaces are numerous: the difficulties of applying legislation drafted for brick-and-mortar markets to online environments make it so that it is often unclear to control authorities whether the information available to consumers complies with EU law, which suppliers should be considered responsible for compliance, what their rights and obligations are when there is a dispute, and the degree to which ISSPs should collaborate or even facilitate enforcement.91 There is uncertainty regarding when to consider that consumer information requirements are met in marketplaces, as their interface distributes information between layers and links operated by different parties. Finally, online marketplaces also pose a challenge to public authorities’ 85

See Lachenmeier et al. (2013). See Snijders et al. (2015) and Part 2 of this book. 87 As described in Chap. 5, most marketplaces only require users to provide an e-mail address and an invented username to start trading. 88 See Schreiber et al. (2015), European Commission (2018) and Chap. 6. 89 See Part 2. 90 See Lachenmeier et al. (2013). 91 See OECD (2016), Snijders et al. (2015), Chaps. 3 and 5. 86

1.3 E-nforcement in the ‘Platform Economy’

15

ability to ensure that their administrative decisions are implemented online. In the traditional market, once non-compliance has been determined, control staff can adopt measures to ensure that the business corrects the situation, and to contain or eliminate risks. Measures generally include the initiation of sanctioning proceedings, a requirement to correct specific issues of non-compliance, or the suspension of the activity in a specific food establishment. All those measures, among others, can be applied to establishments and food business operators that engage in online sales. The business may be sanctioned, and the establishment may be closed. However, given that the competent authority cannot always identify the online suppliers nor have information about the location of their premises, control staff may find it necessary to turn to information society service providers to ensure enforcement. These problems have long resulted in a de facto ‘retraction’ of public ordering from online enforcement92—a widening of the enforcement gap due to inactivity. Until recently, the European Commission’s involvement in this issue has mostly been limited to facilitating cooperation between authorities in different jurisdictions:—providing a legal framework suitable for administrative cooperation, promoting formal and informal structures to make information sharing possible, and coordinating sweeps and joint market surveillance activities within the EU and with its closest trade partners.93 Conversely, the Commission has long refrained from providing clearer instructions to Member States’ domestic authorities in how to incorporate systematic e-nforcement activities to their official control systems to ensure that e-foods and internet-based food businesses are under a similar level of control as the those operating in the brick-and-mortar market. As a result, different jurisdictions have faced e-nforcement with different strategies.94 In some Member States, special units for online market surveillance have been established.95 In others, central control authorities have drafted guidance documents and adopted updated guidelines to equip local control authorities with tools to monitor online trade.96 The choice of such domestic strategies (designed to tackle the technical and legal challenges of online enforcement enshrined in the domestic legislation governing the performance of market surveillance, inspection, sampling and sanctioning) reveal many of the causes of the retraction of public ordering from online enforcement, and fully illustrate how the platform economy is altering the way control authorities work to bridge the enforcement gap.

92

Frosio (2018), p. 33. See OECD (2016). 94 See Snijders et al. (2015) and Part 2 of this book. 95 France, Italy and Germany, among other Member States of the European Union, have created central units to monitor compliance with European law in the digital single market. France centralises the monitoring of consumer protection rules, while Italy has created a special unit focusing on fraudulent offers of products labelled as ‘made in Italy’. As analysed in Chap. 6, in 2011, Germany created a central unit monitoring the digital market of foods, which today monitors the digital market of any consumer product. See OECD (2016), p. 22. 96 See, among others, the United Kingdom’s strategy, described in Chap. 7. 93

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1.4

1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

Relevance of the Problem: Unsafe Shopping in the E-Food Market

E-food shopping brings added value to both consumers and businesses.97 Consumers appreciate that buying anything online is easy, fast and can be done 24/7 regardless of the goods purchased. Additionally, it provides access to a wider range of food products of varying origins, quality, and prices, allowing individuals to better customise their groceries and their diet by making foods available that might not be found in traditional stores.98 By entering the digital market, food businesses can reach a new customer segment that provides additional sales both online and offline: a significant number of sales carried out at brick-and-mortar stores are made after the customer has researched the product online. This behaviour, known as Research Online Purchase Offline (ROPO), is becoming mainstream.99 During the first stage of researching this book, prospects for online food retail were unclear,100 due to the hurdles101 for consumers associated with buying goods online which are normally closely examined before purchase, as well as the challenges for operators, which include the difficulty of ensuring proper delivery of multi-temperature, awkwardly sized and shaped products.102 Nevertheless, a gradual consensus has been developing that this practice would increase across Europe in the next decades, leading the European Commission to declare, in 2018, that even if the proportion of food products sold online is low compared to other goods sold on the Internet, fast-growth was anticipated in the coming years.103 This statement was supported by market data showing that, in the 2009–2018 period, the share of e-food shopping almost doubled to the point that in 2018, ‘25% of online orders were made for food and groceries’.104 Today, this is gaining even more momentum as a result of the lockdowns and social distancing policies adopted by countries around the world due to the COVID-19 pandemic, which have led to online grocery sales worldwide growing by 22% in 2019,105 explained by factors including consumers’ fear of

97

See Duch-Brown and Martens (2015). See Nussenbaum (2018). 99 See Heinemann and Gaiser (2014). 100 In 2013, the scoping study commissioned by the European Commission regarding the challenges for delivering on EU food safety and nutrition by 2050 timidly argued that it could not ‘be ruled out’ that new consumer information and communication technologies (ICTs) could ‘have profound indirect effects relevant for the food chain,’ including leading to ‘internet food ordering, specific apps/internet services to meet consumer food choices and preferences.’ See European Commission (2013a), p. 51. 101 See Fradkin (2017). 102 Stern (2020). 103 European Commission (2018), p. 1. 104 Angelovksa (2019). 105 See Melton (2020a). 98

1.4 Relevance of the Problem: Unsafe Shopping in the E-Food Market

17

becoming infected by the virus while grocery shopping, and the phenomenon of panic buying.106 However, the popularity of online grocery shopping varies significantly from one country to another: e-grocery shopping is much less popular in the south than in the north of Europe. Whereas in the Netherlands online groceries constitute 5% of supermarket turnover and two million consumers say they have bought food online,107 in Spain the market share of e-foods has for a long time been less than 1% of total food retail turnover,108 and in 2017 only 12.5% of consumers ordered their groceries online occasionally. The difference between countries seems to be partly explained by the traditional shopping behavior in each region: while Spaniards tend to prefer shopping at small or medium-sized local supermarkets as part of their daily routine, in northern Europe ‘the hypermarket is very common, which entails a more voluminous purchase, for which the Internet stands as a very convenient alternative’.109 The variety of food products that are offered online has significantly evolved over the last decade: while just a few years ago the most commonly bought groceries were beverages and non-perishable or canned foods, today fruit, vegetables, meat and fish are increasingly finding their way into the digital shopping basket.110 Similarly, the type of online suppliers active in the digital single market is extremely varied.

1.4.1

Online Suppliers in the E-Food Market

Traditional retailers from the brick-and-mortar market (which can be referred to as ‘store-based’ operators) coexist in the e-food market with undertakings that do not serve customers from a physical retail store (known as ‘internet-based’ operators). Also, business-to-business operators such as primary producers are increasingly selling their produce online directly to consumers; and home-based entrepreneurs and even prosumers are trading foods on a daily basis using different types of online platforms.111 Online marketplaces match consumers with all these initiatives. As a result, online, disruptive112 food businesses and products thrive.

106

See Melton (2020b). See van der Veer (2017), p. 90. 108 See Comisión Nacional de los Mercados y la Competencia (2015). 109 See Nielsen Company, the (2017). 110 Packaging Europe (2020). 111 See Chap. 5. 112 See Katyal (2014) and Twigg-Flesner (2016). 107

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

Traditional Retail Goes Digital

Store-based food retailers are going digital. In most countries, brick-and-mortar supermarkets are leading the way for smaller businesses despite the narrow profit margins that characterise grocery shopping113 online. Historically, brick-and-mortar supermarkets have led the way when it comes to going digital. Indeed, research shows that by 2015, on a value basis, large supermarkets and hypermarkets accounted for just over half of global e-food sales.114 For these food businesses, not offering an online shopping option is quickly becoming the exception rather than the rule.115 In this context, buying groceries through the supermarket’s webshop has in fact become a technologised version of ordering by phone, where the store’s own staff personally deliver the foods available at the store to the customer’s home.116 But supermarkets are increasingly using online marketplaces to expand their market share and reach new customers.117 Since Amazon’s acquisition of Whole Foods in 2017 (which is considered the milestone which has changed grocery retailing most profoundly in the last decade),118 supermarkets around the globe are following this trend, with some supermarkets, even creating their own marketplace. For instance, Carrefour has launched an online grocery marketplace in France, which should, by the end of 2020, features more than 100,000 products ‘from more than a hundred different retailers’,119 complementing its own traditional product offer. The process of platformization of food retail might be only starting.120 From both a compliance and an enforcement perspective, supermarkets going digital does not present a challenge per se: the same foods that can be found at the local store are offered online, and will be handled and delivered by the supermarket’s trained staff from its retail store, an establishment which is regularly subject to official controls by the competent authority. Still, a close look at traditional retailers’ 113 The costs of the logistics of e-shopping (including labour and equipment to ensure the timely and safe delivery of groceries, and investment in advertising and web-positioning services) are often difficult to cover for retailers—especially given customers’ unwillingness to pay a delivery fee that covers the full cost of this operation. 114 See Nielsen Company, the (2015). 115 By 2018, more than half of the world’s food retailers had begun preparations to sell their goods online. See Nussenbaum (2018). 116 There are some exceptions to the rule, as some supermarket chains have decided to separate online and offline sales by building ad hoc warehouses to process online orders. This is the case of, among others, Mercadona in Spain, which stores, processes and ships the foods bought online in warehouses known as ‘hives’ (in allusion to beehives). The centralisation of companies’ efforts to satisfy online customers aims to minimise the logistical costs entailed in delivery. 117 Nussenbaum (2018). 118 Nussenbaum (2018). 119 Ecommerce News (2020). 120 As analysed by Lehdonvirta et al. (2020), not all markets have suffered platformization to a similar degree. The share of transactions in the e-food market that is mediated by platforms, instead of established channels such as supermarkets, is still low if compared to other sectors such as accommodation, transportation, or even the sale of other physical consumer goods.

1.4 Relevance of the Problem: Unsafe Shopping in the E-Food Market

19

websites shows that these obligations are often not met. Commonly, offers only list the name, size and price of groceries together with a small picture of the packaged item that allows buyers to check all mandatory information online. Some retailers argue that food information rules are difficult to implement online, while others simply embrace the sense of impunity that the Internet provides. Together with supermarkets, smaller store-based businesses such as bakeries, butchers and speciality shops are gradually gaining their share of the digital market. These businesses may occasionally open their own self-hosted webshop, but their products are mostly offered via online marketplaces such as Amazon and eBay, or through specialised marketplaces dealing specifically with some categories of foods. As with other types of goods, selling e-foods in those platforms is convenient for small and medium-sized food businesses, as becoming a supplier there requires less investment than creating a flagship shopping portal.121 Medium or small, most of these retailers are well known to the public authorities. As with supermarkets, their premises, equipment, staff and documents are regularly subject to official controls aimed at verifying compliance with Food Law requirements. But here again, research shows that medium to small retailers going digital poses certain challenges. For instance, those businesses frequently do not comply with the obligation to notify the authority of the fact that the store is now also used for online retail.122

1.4.1.2

Internet-Based Retail

Internet-based businesses that offer food products online can be mainly broken down into two core categories: business-to-business (B2B) players that have decided to participate in online retail, and business-to-consumer (B2C) initiatives that do not have any food-related activity outside the Internet but offer food products online. Even though they are still less popular than store-based retailers, these businesses are gradually gaining consumer trust.

B2B Goes B2C Food business operators normally limiting their offline activities to business-tobusiness operations are increasingly operating as retailers on line. Within this group, one may find large food manufacturers selling their branded products online, but also farmers and producers of artisanal food that do not wish or do not have the capacity to open a physical retail store—but they may be increasingly present online to maximise the benefits of additional income that the Internet brings. Online, they are in direct contact with their customers and they, therefore, avoid the additional costs of intermediaries such as food brokers. This represents not only an economic

121 122

Laitenberger (2018), p. 3. See Art. 15 of Regulation (EU) 2017/625.

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

advantage but also the opportunity to build stronger relationships with both their regular and new customers: by providing enhanced information about their e-foods online, they satisfy consumers’ increasing insistence upon quality and traceability. In this context, B2B players may decide to offer their products online, as well as fulfilling online orders from their pre-existing food establishments used for their B2B operations. These now B2C suppliers frequently choose to offer their e-foods through online marketplaces, because creating a supplier profile is easier, faster and less expensive than creating a self-hosted webshop. The online activity of these well-established food business operators can however pose a challenge to the authorities monitoring the e-food market, as the businesses may fail to notify authorities that they are now acting as retailers. As a result, elements such as the businesses’ ability to safely deliver foods to the final consumer may never be tested. Also, the case of primary producers such as farmers going digital raises additional concerns: offline, the direct sale of their produce to the final consumer visiting their premises benefits from significant exemptions from Food Law rules.123

100% Digital Food Business Operators The second category of internet-based operators concerns those business-to-consumer initiatives that do not have any food-related activity outside the Internet but offer food products online. New internet-based supermarkets and convenience stores fall within this category, where they coexist with new forms of retail such as food box124 companies. These internet-based initiatives do not serve customers face-toface but are professionally operated from a warehouse where e-foods are processed, stored and shipped to their customers. Additionally, 100% digital operators also include small-scale businesses operated by an individual registered as a sole trader selling e-food products. In this category one may find chefs and bakers who have decided to start their own business and prepare their e-foods from their home. A consolidated practice in the United

123

For instance, Art. 28(2) of Council Regulation (EC) No 834/2007 on organic production and labelling of organic products and repealing Regulation (EEC) No 2092/91, O.J. L 189 (2007), pp. 1-23, see Chap. 3. 124 When purchasing food boxes, consumers can choose a box containing all the ingredients (which often include fresh food products) and the written recipe necessary to cook a meal for a certain number of people at home. A whole host of different food box initiatives can be purchased online. While some require a subscription (monthly, yearly, weekly), other initiatives allow consumers to buy boxes one at a time. The food box market even includes popular subscriptions where part of the product’s attractiveness lies in the fact that the customer is purchasing a box or a subscription to several boxes with no information about the content. These surprise boxes raise relevant questions from a Food Law perspective, such as how to apply food information legislation when the value of the product resides in the content of the box remaining unknown until its delivery.

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States,125 online home-based food businesses are increasing their share of the EU e-food market.126 Home-based foods are frequently sold via online marketplaces such as Facebook Marketplace or eBay, as well as via food delivery apps such as Uber Eats, Glovo and Deliveroo. While online supermarkets tend to be operated by a medium to large registered company with the structure to ensure compliance with Food Law requirements, home-based operations normally revolve around a single individual in charge of running all the business. As a result, compliance with Food Law requirements is more likely to be challenging. Home-based operations also raise challenges to control authorities, as there is uncertainty regarding what extent the activity falls within their jurisdiction. Authorities across Europe are providing differing answers to this question. Finally, a review on the landscape of suppliers active in the e-food market would not be complete without a mention to peer-to-peer food trade or digital ‘food sharing,’127 where individuals offer all types of e-foods (from leftovers to their signature dishes prepared at home), aiming to reduce food waste and to partake in the creation of local and sustainable food systems, or simply to make some extra money. As analysed further in this book, e-food transaction between professionals acting outside of their professional capacity has become a sort of pandora’s box for control authorities: ‘a source of great and unexpected troubles’128 for those in charge of deciding what, when, and to enforce EU law in the platform economy.

1.4.2

The Compliance Gap in the E-Food Market

But, as will be described in the next pages, rates of non-compliance with Food Law online are much higher than for the brick-and-mortar market, and consumers do not ‘have to enter the catacombs of the Internet to access food and drugs that are supplied illegally, or which do not comply with the legal safety and quality standards’. These are easily found on the first page of the results of a manual search via a search engine or in online marketplaces, a type of platform that allows for highly volatile trade,

Home-based operations in the US are identified as ‘cottage food operations.’ This practice gained momentum in the framework of the collaborative economy, and has led to the adoption, in most States, of Cottage Food Laws drafting hygiene and labelling requirements applicable to such undertakings. See Rice et al. (2018). 126 Blogs and websites advising entrepreneurs how to start a home-based food business are easy to find, providing new micro-entrepreneurs with everything from cooking to tax and legal advice. The importance of such a phenomenon as a result of the COVID19 pandemic has even led authorities in the UK to create a webpage and publish a guidance document outlining the legal requirements which apply to home-based operations. See Food Standards Agency (2020). 127 See, among other, Zurek (2016). 128 As defined by the Chambers Dictionary in 1998. 125

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

thereby widening the compliance and enforcement gap. Current rates of compliance in the digital food market are low. This problem is not exclusive to the e-food market. As concluded by the OCDE as early as 2016, product safety concerns are frequent online. The most common online product safety concerns, per product category, are the following: (i) Banned products, which are prohibited from sale in countries, both online and offline, as well as products that have been recalled from the market in a voluntary or mandatory manner; (ii) Inadequate product labelling and safety warnings; and (iii) Products that do not meet voluntary or mandatory safety standards.129 When it comes to the e-food market, the landmark case for non-compliance in the e-food market being that of unauthorised products marketed as food supplements. But that is not the only issue: many suppliers fail to comply with EU food information, product and business requirements.

1.4.2.1

The Landmark Case: Unauthorised Food Supplements

Often considered by consumers to have medicinal properties, food supplements are legally classed as food products according to European Union law.130 They therefore come within the scope of Food Law and their trade is monitored by the authorities responsible for food official controls. The composition of legal food supplements ‘most frequently includes vitamins, mineral substances, as well as plant or animalderived ingredients, which are present in food and consumed as its part’,131 and as defined by the law they should have a nutritional or physiological effect but not medicinal properties. European Union Law establishes that every food supplement placed on the market is subject to prior notification132 —but because food supplements are food products and not medicine, there is no need to present or perform a clinical trial to confirm ‘the effectiveness, quality and safety profile as it is in the case of medicinal products’.133 Instead, the advertising and presentational materials must simply adhere to the rules of EU food information laws.134 Member States regulate the organisation of the notification process, which can also decide to allow the use of additional ingredients for food supplements not subject to EU rules. This means that the information that needs to be submitted and the composition of the product, as well as the timeline of the procedure, varies

129

OECD (2016), p. 9. The category is defined in Art. 2 of Directive 2002/46/EC on the approximation of the laws of the Member States relating to food supplements, O.J. L 183 (2002), pp. 51–57. 131 Wróbel-Harmas et al. (2014), p. 2. 132 See Art. 10 of Directive 2002/46/EC. 133 Wróbel-Harmas et al. (2014), p. 2. 134 See Chap. 3. 130

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from one Member State to another. Some, including Belgium, have adopted a long list of authorised ingredients and have designed an easy fast-tracked procedure for notification, while others, such as Spain, require suppliers to present abundant information about the product and only accept the use of ingredients established at EU level. Based on the principle of mutual recognition, however, the supplements legally marketed in Belgium are later legally available in other Member States and, more importantly, online. This lack of harmonisation of supplements’ composition and notification rules has caused confusion among businesses and enforcers assessing if a specific product complies with applicable legislation. As a result, offers of non-compliant supplements are often posted by legitimate food business operators (such as small businesses), offering natural supplements made of protected plant varieties, but unaware that they are not authorised. Food supplements are sold in great volume online and their control has become the most pressing issue for law enforcement authorities. Fact-finding missions carried out by the European Commission in several Member States, notifications in the Rapid Alert System for Food and Feed (RASFF), as well as several EU-funded research projects, demonstrate that food supplements marketed with illegal health claims are increasingly sold online ‘or in some cases, exclusively online, with important social media input’.135 In an attempt to obtain accurate data about the level of compliance with Food Law in food supplements, since 2009 the European Commission has conducted several activities that—although they did not target the digital market specifically— underlined the need to ‘address issues such as assessment of botanicals and the control of Internet sales’.136 This necessity became more urgent after the outbreak of hepatitis caused by consumption of the food supplements OxyElite Pro and VERSA1, which led the Commission to affirm that ‘the problem lies in the availability of the products to consumers on the Internet’137 as these illegal offers are easier to access than safe, compliant food supplements. The results of the EU actions carried out during the last decade suggest that the performance and efficiency of official controls online varies significantly from one country to another, as does the level of specialisation of public officials carrying out the controls, the training available to them and the amount of time they dedicated to the task. They also show that the levels of non-compliance in food supplements are higher when compared to conventional grocery products. Given the significant risks to human health, as well as the fact that criminal organisations play a substantial role in making these e-foods available online, agencies in charge of criminal law enforcement are taking the lead in preventing the sale of these products.

135

European Commission (2018), pp. 2–3. Food and Veterinary Office (2015), p. 4. 137 European Commission (2013b), p. 19. 136

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1.4.2.2

1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

Poor Compliance with Food Information Law: A Visible Problem

The low rate of compliance in the digital market of foods is not only due to the illegal sale of food supplements. Food information rules are also widely infringed online when looking at the marketing of more traditional grocery products. Offenders are regularly legitimate retailers, store- and internet-based alike, who consider food information rules excessively burdensome.138 By exploring the digital market, one can easily see that non-compliance with food information requirements is the rule rather than the exception—however, there is little systematic research on this subject. One of the few recent studies, looking at conformity with general food information laws in Germany in the period between May and June 2019, concluded that more than half of all evaluated products did not comply.139 This data confirmed the results of larger studies carried out in the previous years by the organisation Foodwatch140 and by Stones (2016). Compliance with nutrition and health claims rules is in even worse shape. Back in 2015, the United Kingdom’s Trading Standards North West area conducted a survey on the online regulation of compliance with nutrition and health claims, which concluded that non-compliance was widespread: ‘of 213 online health claims reviewed, 162 did not comply – a failure rate of 76%’.141 Infringements of EU food information law appear to be partly due to a mistaken interpretation of the scope of the EU Food Information Regulation by some suppliers. For instance, empirical research by Van der Veer on the food box market concluded that ‘not a single Dutch website that provides food boxes actually states the information that is obliged based on Article 9 in conjunction with Article 14 Food Information Regulation’142 because operators wrongly believed that their business was exempted from providing information. Educating suppliers about their legally established obligations is thus essential. But there can be no doubt that the current situation is also a result of the shortage of enforcement initiatives in the field of food information. As pointed out by BEUC,143 ‘labelling is one of the most neglected areas of Food Law enforcement’, even if ‘when controls are undertaken on food labels, it often turns out to be an area with a high rate of non-compliance’.144

138

European Commission (2018). See Höller (2019). 140 See Rücker (2018). 141 Food Standards Agency, Food Standards Scotland (2016), p. 5. 142 van der Veer (2017), p. 91. 143 Acronym of the Bureau Européen des Unions de Consommateurs. 144 European Consumer Organisation (2019), p. 16. 139

1.4 Relevance of the Problem: Unsafe Shopping in the E-Food Market

1.4.2.3

25

Food Safety and Hygiene Online: The Larger Problem

Fresh and perishable e-foods are increasing their presence in the digital shopping basket. In 2018, Seven of the 15 largest online grocery stores in Germany delivered fresh products (...;) in England, around two-thirds of the country's largest e-food shops delivered fresh food to their customers.145

Fresh meat is one of the top-selling products in this category. However, the safety of these products is often compromised, as non-compliance with food safety and hygiene rules is frequent among a variety of digital retailers. A control initiative implemented by the German Federal Office of Consumer Protection and Food Safety (BVL) in 2014 found that hardly any of the fresh meat samples purchased by the authority, using mystery shopping146 techniques, complied with food hygiene requirements.147 Most of the offers analysed warned that the delivery was made ‘at the buyer’s expense and risk’, the supplier being unaware of or unconcerned about the fact that Food Law makes them responsible for ensuring that the e-food is delivered to the final consumer (the buyer) safely. The e-food in the control initiative was frequently delivered by mail couriers who were not authorised to transport food, and may not even have been aware they were doing so; the parcel’s contents were not properly declared, consequently there was no guarantee of maintaining the cold chain. Meat products were repeatedly shipped in cardboard boxes containing the meat wrapped in freezer blocks or gel packs, a practice that does not prevent spoilage and can actually harm the product. A similar pattern has been identified in the United Kingdom by the Food Standards Agency in 2016: The online sale of meat by small-scale or unregistered providers is repeatedly observed in available intelligence. This practice effectively removes traders from the scrutiny that comes with registering as a food business operator or having physical business premises.148

The situation is similar for fresh fish and other highly perishable foods. But compliance is not only poor when dealing with fresh foods: compliance inspections for sweets, meat products and food supplements, carried out in the United Kingdom in 2015, resulted in a 90% failure rate across all surveys.149 Online marketplaces have become a problematic environment, because their functioning multiplies and disperses offers: in many of them, offers of e-foods can commonly be posted in less than three clicks and using an invented username.

145

Statista (2018). Mystery shopping (or test purchases) allows competent authorities to purchase a product anonymously, inspecting it and using the evidence gathered for law enforcement purposes. 147 See Federal Office of Consumer Protection and Food Safety (2018). 148 Food Standards Agency, Food Standards Scotland (2016), p. 49. 149 Food Standards Agency, Food Standards Scotland (2016), p. 6. 146

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1 Online Marketplaces: A Disruptive Environment for the Enforcement of EU. . .

This boosts the presence of small retailers and amateur suppliers, which might not be trained when it comes to shipping methods (hence, sending parcels without following procedures to ensure the cold chain or to prevent food spoilage) as well as other legal obligations established in Food Law. It also facilitates the lack of accountability of suppliers, who can easily exit the platform leaving virtually no trace. As the popularity of marketplaces and e-foods grows, competent authorities share the concern over the safety of the e-foods offered, as well as their capacity to monitor and enforce Food Law requirements in those platforms. The transition towards a prevalence of online trade over brick-and-mortar retail is accelerating, and there is an urgent need to evaluate whether the European Union’s regulatory framework and enforcement regimes are ready to tackle the challenges ahead.

1.5

Content of the Book

Legal scholarship has paid little to no attention to the challenges of implementing EU sector-specific law in online marketplaces enabling the trade of physical consumer goods. It has neglected the issue of how to build an effective public enforcement regime, capable of facilitating systematic market surveillance over the activity of legitimate suppliers operating in the digital single market, to ensure that productspecific regulatory goals are met. This book aims to contribute to this novel body of research by gathering empirical data on the socio-economic phenomena of e-food trade, mapping the existing (albeit scarce) scholarship and policy documents on the application of European Food Law requirements in the digital single market, with the ultimate aim of providing a critical evaluation of the current EU legal framework and e-nforcement strategy in the platform economy. Part 1 of the book explores the European Union’s regulatory policy for the e-food market and the ways in which its legal requirements are implemented in online marketplaces. It first describes the evolution of the horizontal legal framework, discussing how online marketplaces have shaped EU law (Chap. 2). Following this, the book analyses how Food Law has adapted to the particularities of online grocery shopping. It then examines the adjustments that have been made to bring product and business requirements online (Chap. 3) before exploring the novel regulatory provisions governing food official controls over the digital market (Chap. 4). Part 2 illustrates how online marketplaces are altering domestic control protocols and practices, and identifies the challenges to e-nforcement which remain ahead. After examining the specific issues challenging public enforcement of EU Food Law in online marketplaces and presenting the policy decisions adopted at the EU level to support Member States’ update their protocols and mechanisms to monitor the e-food market (Chap. 5), the next part of the book discusses the e-nforcement strategies designed by Germany (Chap. 6) and in the United Kingdom (Chap. 7) to bridge the public enforcement gap online, and carries out a comparative analysis to identify good practices as well as the regulatory challenges that remain ahead

References

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(Chap. 8). During the last decade, Germany and the United Kingdom have been the most active members,150 and their activity has translated into concrete and noteworthy policy and regulatory decisions that are influencing their neighbours’ response to e-food trade. Germany, which as early as 2011 put together a specific unit to face the challenges of the e-food market, and is now exploring technology-assisted monitoring systems, is at the vanguard of successful e-food control in Europe. The United Kingdom has opted for a decentralised strategy to deter non-compliance, and for providing standarised guidance on how to apply key concepts and procedures of food law to online environments, as a tool to promote legal certainty and compliance. Based on the findings described in the previous chapters, the concluding chapter of the book discusses whether current EU (Food) Law and its corresponding public enforcement strategy are appropriate to tackle the challenges posed by online marketplaces in the platforms’ economy (Chap. 9).

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Katz V (2015) Regulating the sharing economy. Berkeley Technol Law J 30(4):1067–1126. https:// doi.org/10.15779/Z38HG45 Kenney M, Zysman J (2016) The rise of the platform economy. Iss Sci Technol 32(3):61–69 Lachenmeier DW, Löbell-Behrends S, Böse W et al (2013) Does European Union food policy privilege the internet market? Suggestions for a specialized regulatory framework. Food Control 30(2):705–713. https://doi.org/10.1016/j.foodcont.2012.07.034 Laitenberger J (2018) Vertical restraints, online marketplaces, and enforcement tools. Report presented at ICN Annual Conference, International Competition Network, New Delhi, 21-23 March 2018 Lehdonvirta V, Park S, Krell T, Friederici N (2020) Platformization in Europe: global and local digital intermediaries in the retail, taxi, and food delivery industries. University of Oxford, Oxford. https://www.oii.ox.ac.uk/wpcontent/uploads/2020/08/Platformization-in-Europe_Plat form-Alternatives.pdf https://www.oii.ox.ac.uk/wp-content/uploads/2020/08/Platformizationin-Europe_Platform-Alternatives.pdf. Accessed June 2020 Lodder AR, Murray AD (eds) (2017) EU regulation of E-commerce. Edward Elgar Publishing Limited, Cheltenham Melton J (2020a) The coronavirus pandemic lifts global online gro-cery sales. https://www. digitalcommerce360.com/2020/07/20/the-coronavirus-pandemic-lifts-global-online-grocerysales/. Accessed 16 Oct 2020 Melton (2020b) 2020 changed the face of grocery retailing- likely forever. https://www. digitalcommerce360.com/article/online-food-report/. Accessed 16 Oct 2020 Micklitz H, Wechsler A (eds) (2016) The transformation of enforcement: European economic law in a global perspective. Hart Publishing, Oxford Monti M (2010) A new strategy for the single market at the service of Europe’s economy and society. Report to the President of the European Commission José Manuel Barroso. European Commission and Bureau of European Policy Advisors Nielsen Company, the (2015) The future of grocery e-commerce, digital technology and changing shopping preferences around the world. https://www.nielsen.com/wp-content/uploads/sites/3/ 2019/04/nielsen-global-e-commerce-new-retail-report-april-2015.pdf. Accessed 9 Sept 2019 Nielsen Company, the (2017) What’s in-store for online grocery shopping omnichannel strategies to reach: crossover shoppers. 2017 Connected Commerce Report. https://www.nielsen.com/wpcontent/uploads/sites/3/2019/04/nielsen-global-connected-commerce-report-january-2017.pdf. Accessed 18 Nov 2020 Nussenbaum (2018) The rise of online marketplaces in digital grocery—learning from Amazon. https://www.mirakl.com/the-rise-of-online-marketplaces-in-digital-grocery-learning-from-ama zon/. Accessed 16 Oct 2020 OECD (2016) Online product safety: trends and challenges. OECD Digital Economy Papers 261. https://doi.org/10.1787/5jlnb5q93jlt-en Packaging Europe (2020) New research reveals consumers’ online grocery shopping habits for fresh foods. https://packagingeurope.com/new-research-reveals-consumers-online-groceryshopping-habits/. Accessed 16 Oct 2020 Perset K (2010) The economic and social role of internet intermediaries. OECD Digital Economy Papers 171. OECD Publishing, Paris. https://doi.org/10.1787/5kmh79zzs8vb-en Polinsky M, Shavell S (2007) The theory of public enforcement of law. In: Polinsky M, Shavell S (eds) Handbook of law and economics, vol 1. Elsevier, Amsterdam, pp 403–454 Rice C, Leib EB, Balkus O et al (2018) Cottage food laws in the United States. Food Law and Policy Clinic, Harvard Law School Rossi A, Rossi G, Rosamilia A, Renato M (2020) Official controls on food safety: competent authority measures. Italian J Food Safety 9:8607 Rücker M (2018) Bringt’s das? Lebensmittel-Onlinehändler im Vergleich. Foodwatch e.V., Retrieved on May 7, 2019 from https://www.foodwatch.org/fileadmin/Themen/ Lebensmittelkennzeichnung/Dokumente/201803_Lebensmittel-Onlinehaendler-imVergleich_foodwatch.pdf

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Sartor G (2017) Providers liability: from the eCommerce directive to the future. European Parliament, Brussels Savin A (2017) EU internet law. Edward Elgar Publishing Limited, Cheltenham Savin A (2018) EU regulatory models for platforms on the content and carrier layers: convergence and changing policy patterns. Nordic J Commerc Law 1:7–37 Scholten M (2017) Mind the trend! Enforcement of EU law has been moving to ‘Brussels’. J Eur Public Policy 24(9):1348–1366. https://doi.org/10.1080/13501763.2017.1314538 Schreiber GA, Liebscher B, Kranz P (2015) Der Online-Handel mit Lebensmitteln – Herausforderung für die Überwachung. ZLR 42(290) Schwab K (2015) The fourth industrial revolution: what it means and how to respond. Foreign Affairs. https://www.foreignaffairs.com/articles/2015-12-12/fourth-industrial-revolution. Accessed 12 Dec 2015 Smorto G (2018) The protection of the weaker parties in the platform economy. In: Davidson NM, Finck M, Infranca JJ (eds) The Cambridge handbook of the law of the sharing economy. Cambridge law handbooks. Cambridge University Press, Cambridge, pp 431–446. https://doi. org/10.1017/9781108255882.033 Snijders J, Graaf A, Coyne M (2015) Good practice in market surveillance activities related to non-food consumer products sold online. Annex: good practice cases. Publications Office of the EU, Luxembourg. https://op.europa.eu/s/orcX. Accessed 18 Nov 2020 Statista (2018) Frische-Lieferanten unter den Top 15 E-Food Shops in ausgewählten Ländern in 2018. https://de.statista.com/statistik/daten/studie/892157/umfrage/anzahl-der-frischelieferanten-unter-den-top-15-e-food-shops-in-ausgewaehlten-laendern/. Accessed 16 Sept 2019 Stern (2020) E-commerce and grocery: this time it’s real. Forbes. https://www.forbes.com/sites/ neilstern/2020/04/27/e-commerce-and-grocery-this-time-its-real/. Accessed 25 Nov 2020 Twigg-Flesner C (2016) Disruptive technology - disrupted law? How the digital revolution affects (contract) law. In: De Franceschi A (ed) European contract law and the digital single market. Intersentia, Cambridge, p 19. ISBN 9781780684222 Ullrich C (2017) Standards for duty of care? Debating intermediary liability from a sectoral perspective. JIPITEC 8(111). https://doi.org/10.2139/ssrn.3037744 Ullrich C (2019) New approach meets new economy: enforcing EU product safety in e-commerce. Maastricht J Eur Comp Law 26(4):558–584. https://doi.org/10.1177/1023263X19855073 van der Veer L (2017) Food Online: PhD thesis on food legal and civil law requirements for digital contracts regarding food purchases by consumers in the Netherlands. PhD Thesis, Wageningen University. 10.18174/425634 Van Dijck J, Poell T, de Waal M (2018) The platform society. Oxford University Press, Oxford Vara G, Steible B, De Bondt A (2016) Cost of non-Europe in the sharing economy: legal aspects. EPRS study, January 2016 Vervaele J (1999) Shared governance and enforcement of European Law: from comitology to a multi-level agency structure? In: Joerges G, Vos E (eds) EU Committees: social regulation, law and politics. Hart Publishing, Oxford, pp 129–150 Weber F (2018) Enforcement of European food laws. In: Bremmers H, Purnhagen K (eds) Regulating and managing food safety in the EU. Economic analysis of law in European legal scholarship, vol 6. Springer, Heidelberg, pp 245–262. https://doi.org/10.1007/978-3-31977045-1_12 Widdershoven R (2019) Enforcement of the law in European perspective: trends and challenges. In: Urazbaeva A, Szajkowska A, Wernaart B et al (eds) The functional field of food law: reconciling the market and human rights. Wageningen Academic Publishers, Wageningen, pp 317–329 Wróbel-Harmas M et al (2014) Food supplement-related risks in the light of internet and RASFF data. Przeglad epidemiologiczny 68(4):613–619 Zurek K (2016) Food sharing in Europe: between regulating risks and the risks of regulating. Eur J Risk Regul 7(4):675–687. https://doi.org/10.1017/S1867299X00010114

Part I

EU Law for the E-Food Market

Chapter 2

The Developing History of Online Marketplace Regulation in the EU

2.1

Introduction

With the digital economy ‘growing at seven times the rate of the rest of the economy’,1 online retail is expanding at a dramatic rate. Online platforms enabling third parties to trade physical consumer goods (acting as the digital version of brickand-mortar shopping malls) are at the heart of this socio-economic and political phenomenon. Virtually non-existent in the early 2000s,2 by 2018 more than half of the online sale of goods in the European Union had been completed via online marketplaces.3 Online marketplaces are largely governed by EU law,4 and the transactions they enable must comply with the rules established in consumer and sector-specific legislation (such as those regulating the placing on the market of consumer electronics or food) at the EU (and sometimes Member State) level. Significantly, most e-commerce and consumer law currently regulating marketplaces was adopted at least a decade before the emergence of these platforms. With online platforms increasing their market share, in recent years, the European Commission has

1

European Commission (2016), p. 5. Until the late 1990s, online marketplaces were mostly used for business-to-business e-commerce. European Commission (2002), p. 34. 3 See EC Staff Working Document Impact Assessment promoting fairness and transparency for business users of online intermediation services COM 2018/0238 final (2018) and EC Communication The single market in a changing world: A Unique asset in need of renewed political commitment COM 2018/772 final (2018), p. 21. 4 Based on the Treaty on the Functioning of the European Union (TFEU), the European Union has wide competences to regulate the Internet’s infrastructure and online transactions. As examined by Savin (2017), the most widely used legal basis to regulate are the free movement of services (Arts. 49 and 56 TFEU) and the Single Market (Art. 114 TFEU) provisions. 2

© Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_2

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begun the process of updating the existing legal framework, proposing new pieces of legislation to bring EU law into the ‘platform economy’.5 Using a historical approach, this chapter describes and critically discusses this process, in order to identify how online marketplaces have influenced EU law and highlighting how sector-specific legislation (designed with brick-and-mortar transactions in mind) has largely remained untouched despite its role in ensuring the effective functioning of the digital single market.

2.2

Evolution of the EU’s Regulatory Policy for Online Retail

As analysed by Savin (2017), the history of the EU’s regulation of the Internet is not that of a coherent Internet policy, but rather that of ‘a set of mini-policies’.6 This is particularly true when looking at e-commerce regulation: over a dozen soft-policy and regulatory instruments have been adopted since the Commission’s landmark initiatives in 1997, ‘A European Initiative in Electronic Commerce’,7 and the Green Paper on the Convergence of the Telecommunications. These documents, which are commonly identified as the origin of the EU’s regulation of the Internet, outlined the principles8 that still shape the EU approach to e-commerce today. At that time, the focus was on ensuring the equivalence of electronic transactions (via Directives such as the e-signature Directive9 and the Distance Selling Directive),10 to help bring Europe online. However, as described in the next sections, as e-commerce develops, pushed by the influence of an ever-transforming Internet, the EU’s regulatory objectives have also transformed, bringing about changes to the legal framework governing online marketplaces and the transactions they enable.

5

See Chap. 1 as well as Commission staff working document guidance on the implementation/ application of Directive 2005/29/EC on unfair commercial practices, COM 2016/320 final (2016) and, among other, Kenney and Zysman (2016). 6 Savin (2017), p. 22. 7 EC Communication A European Initiative on Electronic Commerce, COM 97/157 final (1997). 8 The European Initiative outlined four principles that should guide the EU’s regulatory approach to e-commerce: no regulation for regulation’s sake; any regulation should be based on Single Market freedoms; it should also take into account business realities; it should meet general interest objectives effectively and efficiently. See EC Communication, COM 97/157 final (1997). 9 Directive (EC) 1999/93 on a Community framework for electronic signatures, O.J. L 13 (2000), pp. 12–20. 10 Directive 97/7/EC on the protection of consumers in respect of distance contracts, O.J. L 144 (1997), pp. 19–27.

2.2 Evolution of the EU’s Regulatory Policy for Online Retail

2.2.1

35

2000: Regulating ‘Intermediaries’ and Electronic Transactions to ‘Bring Europe Online’

During the special European Council of Lisbon held in March 2000, the European Commission unveiled its political initiative ‘eEurope: An Information Society for All’.11 As reported by the Commission, its goal was to ensure that (in a time of ‘extremely rapid penetration of Internet connections amongst businesses and households’,12 in the words of Eurostat’s first ever large survey of e-commerce in Europe) individuals, industry, and governments maximised the benefits of the information and communication technologies (ICTs) and of the information society in general. The initiative included a proposal to adopt a Directive providing a reliable legal framework for e-commerce, capable of boosting stakeholders’ confidence in electronic transactions. Consequently, Directive 2000/31/EC (the ‘e-Commerce Directive’) was adopted, and quickly became the cornerstone of EU electronic commerce regulation. The Directive still governs the most essential elements of the relationship between platforms and their users, with the industry, and with public authorities. Indeed, not even the recent regulatory initiatives,13 which updated significantly the legal framework governing online retail, have resulted in amendments to the e-Commerce Directive—even though its provisions have been interpreted by the Court of Justice of the European Union more than a dozen times in two decades to fit technological and socioeconomic developments. The goal of the Directive was to allow the digital economy to flourish by ensuring the free movement of ‘information society services’14 in the internal market, and by removing uncertainties about the legal status of electronic transactions. Its provisions guarantee the equivalence of e-contracts (including those for the online sale of consumer goods) and define the legal status of ‘information society service providers’15 (ISSPs) such as web-hosting providers, Internet access providers, or online payment services. The Directive also established the three core principles of the European regulation of ISSPs: the principle of no prior authorisation16 (ISSPs cannot 11

See eEurope: An Information society for all. Progress report. For the Special European Council on Employment, Economic reforms and Social Cohesion – Towards a Europe based on Innovation and Knowledge, COM 2000/130 final (2000). 12 European Commission (2002), p. 7. 13 See Sect. 2.2.3. 14 The concept of ‘information society services’ is defined as ‘any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’ in Directive 98/48/EC amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations, O.J. L 217 (1998), pp. 18–26. 15 See Art. 2 Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. L 178 (2000), pp. 1–16 (hereinafter, ‘eCommerce Directive’). 16 See Art. 4 of the e-Commerce Directive.

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be obliged to request public authorisation to operate, unless they offer a service subject to authorisation when offered offline);17 the internal market clause18 (preventing ‘host’ countries from imposing on ISSPs legal requirements that do not exist in the country where the ISSP is established); ‘safe harbour’ protections for ISSPs exclusively providing intermediation services (shielding these ‘intermediaries’ from the consequences of their users’ illegal activities and releasing them from enforcement obligations).19 The combined application of these three principles has been successful in fostering the proliferation of ISSPs in general, and ‘intermediaries’ providing hosting, caching or ‘mere conduit’ services20 in particular, and has certainly been a necessary element in to get to the platform economy as we know it today. Indeed, online platforms (including most online marketplaces) strongly position themselves as ‘intermediaries’ providing hosting services and therefore benefiting from the Directive’s intermediaries regime.21 Thanks to the principle of no prior authorisation, platforms can start operating in most markets with little or no red tape, and thanks to the internal market clause which acts as ‘the ideal market access opener both in the home and in most of the host Member States,’22 platforms can expand their business across jurisdictions easily. Due to safe harbour protections, they can do their business without being legally required to invest any resources into ensuring that their users do not carry out illegal activities through their interface. As assessed by Reidenberg (2003), this ‘public re-engineering of the network’ evidenced public efforts to redesign critical features of online activity after the internet bubble burst in 2000. While the principle of no prior authorisation and the internal market clause have stood the test of time, the safe harbour protections established in the Directive have not aged well and are highly contested in the platform economy. The reason for this is twofold. First, the secondary liability exemption (shielding intermediary platforms from the consequences of their users’ illegal activities as long as they are unaware of them and act ‘expeditiously’23 to remove or to disable access to content once they

17

I.e., a transportation service. Art. 3(2) of the e-Commerce Directive states that information society service providers are subject to the law of the Member State in which they are established, and not the law of the Member States where the service is accessed. Other Member States cannot raise any obstacles to their activity within that second jurisdiction. 19 See Arts. 12 to 15 of the e-Commerce Directive. 20 Within the meaning of Arts. 12, 13 and 14 of the e-Commerce Directive. 21 It must however be pointed out that, as examined by Hatzopoulos (2018), platforms shall only be considered ‘intermediaries’ benefiting from this regime if three conditions are met: (i) they qualify as ‘service providers’ within the meaning of Art. 57 TFEU; (ii) they provide an information society service within the meaning of Art. 1(2) of Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations, O.J. L 204 (1998), pp. 37–48; and (iii) they do not affect nor participate in the provision of the underlying service. 22 Hatzopoulos and Roma (2017), p. 97. 23 See Art. 14 of the e-Commerce Directive. 18

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become aware of its existence) has long resulted in most platforms avoiding building the necessary infrastructure to screen the offers they host to identify and eliminate illegal postings. And second, the ban on national legislation establishing a general obligation for intermediaries ‘to monitor the information which they transmit or store,’ or to actively seek facts or circumstances indicating illegal activity,24 has prevented public authorities in Member States from imposing on platforms proactive surveillance obligations to help bridge the enforcement gap. The rationale behind safe harbour protections was to avoid excessive interference from intermediaries with their users; to prevent service providers from removing lawful content ‘in fear of sanctions for the illegal activities of their users’.25 In this context, if authorities wanted intermediaries to remove illegal content,26 they would first have to place a formal request to ISSPs, clearly identifying the specific content which should be removed and the reasons why, and the intermediary would have to do so ‘expeditiously’ to remain shielded from potential secondary liability claims. This legal regime favoured the use of contractual-based ‘notice-and-takedown procedures’ (NTDs), allowing third parties to file complaints (‘notices’) requesting the elimination (by removal or blocking) of illegal content such as hate speech, offers of counterfeit products, and digital piracy. In online marketplaces, NTDs are used to require the service provider to eliminate individual offers of products that manifestly do not comply with legal requirements (for instance, because they are counterfeit, or include ingredients or compounds that are prohibited in the applicable legislation). NTDs have proven their usefulness in platform-based e-commerce: they allow trusted flaggers27 and platforms’ users to engage actively in enforcement efforts to remove dangerous goods from the market and protect public and individual health. However, the same instrument is used for other purposes, such as to delete individual posts in a social network when it is considered potential hate speech, to remove digital content when it is flagged as potentially violating intellectual property rights, or to prevent the spread of fake news. With such a wide range of uses, today many judge the current system inadequate in a platform economy context (for being either too soft or too harsh on ISSPs), and urge the European Commission to reconsider safe harbours. Potential reform to online intermediary liability has become one of the most critical Internet governance issues of our time.28 A significant part of the industry are in favour of

24

See Art. 15(1) of the e-Commerce Directive. Sartor (2017), p. 6. 26 There is no harmonized EU legal definition of what constitutes illegal content. However, the concept is described as ‘any information which is not in compliance with Union law or the law of a Member State concerned’ in the Commission’s Recommendation on tackling illegal content online. See Commission Recommendation on measures to effectively tackle illegal content online, C 2018/ 1177 final (2018). 27 Defined as any ‘individual or entity which is considered by a hosting service provider to have particular expertise and responsibilities for the purposes of tackling illegal content online,’ see Commission Recommendation C 2018/1177 final (2018). 28 See Frosio (2018). 25

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imposing some monitoring and enforcement obligations on intermediaries (not only for digital content but also for consumer goods and incumbent service providers),29 and authorities in many Member States argue that building a safe digital single market requires imposing enforcement responsibilities on online platforms (including marketplaces). Those against—ISSPs, many human rights organizations and some scholars—argue that such demands are based on a ‘digital threat’ discourse which is ‘based on shaky grounds,’30 and that enhanced liability would lead to the over-removal of content by internet hosting providers, raising ‘censorship concerns, especially in connection to the emerging idea of internet as a fundamental right.’31 As described later in this chapter, today safe harbour protections stand as designed in 2000. However, recent vertical soft-law and regulatory instruments are slowly moving towards the enhanced responsibilities32 of platforms in specific policy areas such as intellectual property law.33

2.2.2

2010–2014: Designing an Ecosystem Favourable to Online Retail

Ten years after the adoption of the e-Commerce Directive, in an uncertain economic environment, Europe decided to commit the future of its economy to the growth of the digital economy: given that between 2004 and 2010, B2C online purchases for goods and services had risen from 20% to 40%,34 e-commerce could become the driver to stimulate growth and employment. However, ‘the fragmentation of online markets, ill-adapted intellectual property legislation, the lack of trust and interoperability, the lack of high-speed transmission infrastructure and the lack of digital skills’35 had become significant obstacles to the free movement of goods and services online. The simplification of the business environment for cross-border retail transactions became a priority of the EU Commission’s work on e-commerce, as reflected in its 2010 Communication on a Digital

29

See Frosio (2016). Frosio (2016), p. 2. 31 Frosio (2016), p. 5. 32 See EC Communication A Digital Single Market Strategy for Europe, COM 2015/0192 final (2015) and EC Communication Tackling Illegal Content Online Towards an enhanced responsibility of online platforms, COM 2017/555 final (2017). 33 See Frosio (2017). 34 See European Commission (2011), p. 4. 35 Monti (2010), pp. 44–46. 30

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Agenda for Europe,36 one of the seven flagship initiatives of the Europe 2020 Strategy37 to exit the economic crisis. The Digital Agenda included multiple policy and regulatory proposals ‘to deliver sustainable economic and social benefits from a digital single market based on fast and ultra-fast internet and interoperable applications’.38 The list of ‘key actions’ proposed present an ecosystem where cross-border transactions could grow. It included, among many other things, the revision of 1997’s e-signature Directive, the completion of the Single Euro Payment Area (SEPA), and the reform of the rules on implementation of ICT standards at the EU level. The Digital Agenda is also significant because it identified as its fourth ‘key action’ the need to strengthen consumers’ rights and small and medium-sized enterprises (SMEs)’ confidence in e-commerce. In fact, the Digital Agenda made it possible to move forward in the harmonisation of consumer law, as well as in the design of private enforcement mechanisms to let consumers and industry enforce their rights in the digital market.

2.2.2.1

The Harmonisation of Consumer Rights Online

E-commerce has been an important driver when it comes to the construction of European consumer law. In 2010, the Digital Agenda gave a definite push to the legislative process to adopt a Consumer Rights Directive (CRD),39 an essential piece of legislation which ensured the application of longstanding consumer rights to online retail. The CRD identified that ‘distance contracts’40 such as those completed when online shopping, were to be subject to specific rules for pre-contractual information and to specific formal requirements41 that should be comparable across the EU. Based on Member States’ implementation of the Directive, online retailers (then and today)42 must provide consumers with detailed information about the

See EC Communication a Digital Agenda for Europe, COM 2010/0245 final (2010) European Commission (2010). EC Europe 2020: A strategy for smart, sustainable and inclusive growth, COM 2010/2020 final (2010). 38 EC Communication, COM 2010/0245 (2010), p. 1. 39 Directive 2011/83/EU on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, O.J. L 304/64 (2011), pp. 64–88 (hereinafter, ‘Consumer Rights Directive’, or CRD). 40 See Art. 2(7) CRD. 41 See Arts. 6 and 8 CRD. 42 Its original provisions about distance contracts were not modified until the adoption, on 27 November 2019, of the Omnibus Directive for better enforcement of consumer rules. This new piece of legislation upgrades but does not replace the rules of the 2011 Directive. See Directive (EU) 2019/2161 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and 36 37

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characteristics of the goods, the identity of the seller, and about the contractual procedures and remedies available.43 It also harmonises the right of withdrawal and other consumer rights such as the rules for delivery, and it entrusts Member States with the task of ensuring that adequate and effective means exist to ensure compliance with consumer rights. The Digital Agenda also proposed to codify pre-existing consumer rights in its EU Code of Online Rights.44 The Code, instead of granting new rights to consumers, summarised and clarified existing digital user rights in ‘a clear and accessible way,’45 in order to raise awareness among consumers of their rights online and the enforcement tools available to them. The Consumer Rights Directive is among the first regulatory instruments that explicitly refer to ‘online platforms.’ In particular, its Recital 20 indicates that an online platform should be considered ‘an organised distance sales or serviceprovision scheme’ used by the traders46 to participate in e-commerce. It therefore makes a contract between consumers and traders concluded through such platforms that are to be considered ‘distance contracts’, falling under the scope of the Directive. However, the Directive did not originally direct obligations to online platforms, but rather to ‘trading websites’ and traders. In particular, the 2011 wording of the Directive (which applies until 2022), mandates that ‘trading websites’ (a concept which in turn was not defined in the Directive) should ‘indicate clearly and legibly at the latest at the beginning of the ordering process whether any delivery restrictions apply and which means of payment are accepted’.47 By then, most online retail was still carried out through websites created by traditional retailers, the digital equivalent of brick-and-mortar flagship stores. The ‘owner’ of the trading website and trader were therefore likely to be the same entity, which would be responsible for providing consumers with all the information required by law. As described in the next sections of this chapter, in order to adapt to the particularities of the platform economy, the CRD was amended in 2019 to impose additional information requirements specific to online marketplaces. However, until 2022, the almost decade-old legal provisions of the CRD are the first and virtually48 only piece of legislation to entrust marketplaces with any obligation regarding

modernisation of Union consumer protection rules (Omnibus Directive), O.J. L 328/7 (2019), pp. 7–28 (hereinafter, ‘Omnibus Directive’). 43 See Art. 6 CRD. 44 See European Commission (2012b). 45 EC Communication, COM 2010/0245 (2010), p. 13. 46 As defined in Art. 2 CRD, ‘trader’ means ‘any natural person or any legal person, irrespective of whether privately or publicly owned, who is acting, including through any other person acting in his name or on his behalf, for purposes relating to his trade, business, craft or profession in relation to contracts covered by this Directive’. 47 Art. 8(3) CRD. 48 With the only exception of the Regulation (EU) No 524/2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC, O.J. L 165/1 (2013), pp. 1–12, (hereinafter, ‘ODR Regulation’).

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consumer protection. Their application to online marketplaces as a specific type of ‘trading website’ is analysed in Chap. 3 of this book.

2.2.2.2

First (Private) Enforcement Mechanisms

As early as 2010, EU institutions acknowledged that the rate of business non-compliance with EU online consumer rules was suboptimal: based on conservative estimates, 37% of ‘e-commerce websites’ did not respect basic consumer rights.49 After a decade of consecutive sweeps50 on the digital market, non-compliance is still an unresolved issue. The figures speak for themselves: in 2015, the European sweep on compliance with pre-contractual information rules of the Consumer Rights Directive online showed significant irregularities in more than 60% of the websites, which were monitored by competent authorities across the Union.51 More recently, the 2019 sweep on delivery and right of withdrawal, focusing on screening websites offering the top three categories for online retail (clothing and footwear, furniture and household items, and electrical appliances), revealed that ‘67% of screened online shops might be infringing basic EU consumer law’.52 These high rates of non-compliance are explained by several factors, such as sellers’ lack of regulatory knowledge, ability, and sometimes willingness to obey the law. But the lack of a clear and comprehensive public e-nforcement strategy coordinated at EU level has also played its part in letting the enforcement gap grow. The European Union historically began building its current online enforcement strategy for the digital single market with the updating of private enforcement mechanisms where individuals (consumers or copyright-holders, among others) triggered mechanisms to remediate non-compliance. The Digital Agenda planned the adoption of legal instruments establishing private enforcement mechanisms to facilitate enforcement of consumer law and intellectual property (IPR) law. Firstly, with regard to the enforcement of consumer law, the Digital Agenda included the proposal to create ‘an EU-wide online redress tool for eCommerce,’53 which less than three years later would result in the adoption of Regulation (EU) no. 524/2013,54 creating an EU-wide Online Dispute Resolution platform for e-commerce transactions (also known as ‘ODR’). The ODR was the first EU online tool for consumers to access dispute resolution instruments specifically for goods See EC Commission staff working document guidance, COM 2016/320 final (2016). The sweeps carried out on online retail since 2010 include those on guarantees on consumer electronics (2004), on pre-contractual information required by CRD (2005), on price transparency and drip pricing (2018), and on delivery and right of withdrawal (2019). The goal of these actions was first to identify the different types of non-compliance taking place online, and also the gaps in the regulation of public enforcement activities such as inspection and sample taking. 51 European Commission (2020). 52 See European Commission (2020). 53 EC Communication, COM 2010/0245 (2010), para 2.1.3. 54 ODR Regulation (2013). 49 50

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bought online, regardless of the geographical location. It provides a channel for consumers and sellers to attempt to resolve disputes regarding goods purchased online ‘in a non-confrontational way’, either by messaging the seller or by referring the problem to an approved dispute resolution body. The Regulation establishing the ODR was the first to provide a legal definition of ‘online marketplace,’:55 the only requirement was for the marketplace to provide an electronic link to the ODR platform on their interface.56 Secondly, the Digital Agenda proposed to update the Directive on the enforcement of intellectual property rights57 to ensure that ‘measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights’ such as copyright, trademarks, designs or patents, were in operation for the digital environment. However, this proposal, which was the first at the EU level to advocate in favour of the update of sector-specific legislation to facilitate enforcement in online trade, did not result in an amended version of the 2004 Directive. Instead, it led to the signature, in 2011, of the Memorandum of Understanding on the online sale of counterfeit goods (MoU)58 (the first significant and structured initiative actively involving ISSPs in enforcement of EU law), and to the adoption, in 2013, of the Customs Enforcement of Intellectual Property Rights Regulation,59 (creating an ad hoc IPR Enforcement Portal for right-holders and their representative organisation to alert authorities of the trade of alleged counterfeit products online). In a pioneering self-regulatory effort, the MoU achieved in making ISSPs and right holders (its signatories) acknowledge that cooperation between all parties was necessary to ensure smooth business for all. It expressed that although the primary responsibility for the protection and enforcement of intellectual property rights remained with the respective rights owners, ISSPs were ‘responsible for creating a safe online environment for consumers’.60 Accordingly, service providers committed themselves to creating an ad hoc channel for NTDs submission, where rightholders could request the removal of offers of alleged counterfeit goods, and that these notifications would be processed ‘in an efficient and comprehensive manner, without undue delay’ to ensure ‘a swift removal or disabling of the notified offer.’61 Right-holders, on the other hand, committed themselves to submitting notifications

As stated in its Art. 4(1)(f) ‘online marketplace’ means a service provider, as defined in point (b) of Art. 2 of the e-Commerce Directive, ‘which allows consumers and traders to conclude online sales and service contracts on the online marketplace’s website.’ 56 See Art. 14 of Regulation (EU) No 524/2013 (2013). 57 Directive 2004/48/EC on the enforcement of intellectual property rights, O.J. L 157 (2004). 58 First adopted in 2011, the Memorandum was revised in 2013 and replaced in 2016 to widen its scope and adapt its functioning to the particularities of the platforms’ environment. See EC Memorandum of Understanding on the sale of counterfeit goods on the internet, Ares 2016/ 3934515 (2011). 59 Regulation (EU) No 608/2013 concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2003, O.J. L 181/15 (2013), pp. 15–34. 60 EC Memorandum of Understanding, Ares 2016/3934515 (2011), para 7. 61 EC Memorandum of Understanding, Ares 2016/3934515 (2011), para 18. 55

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exercising ‘appropriate care’62 and to paying platforms’ listing or commission fees when overdue. The MoU also included agreements on the signatory’s responsibilities in monitoring rogue sellers, on the establishment of self-regulatory measures to deter repeated infringements, and on the sharing of information between all parties and public authorities. The Memorandum provided a definition for the concept of an ‘internet platform’, which it defined as ‘any information society service provider whose service is used by third parties to initiate online the trading of physical goods, and which is operated by a signatory of the MoU, to the extent so indicated by the service provider.’ This definition has not been picked up by legislation, with EU law yet to provide a legal definition of ‘internet’ or ‘online’ platforms to this day. This historic Memorandum has become an essential tool in facilitating the private enforcement of intellectual property rights. It has also inspired the adoption of similar agreements concerning other violations of EU law (such as the 2018 Product Safety Pledge, a voluntary commitment of online marketplaces with respect to the safety of non-food consumer products sold online, where online platforms make the commitment to screen some of the offers they host to prevent dangerous goods from being placed on the market). But the Digital Agenda, on the other hand, has remained silent regarding the potential update of public enforcement regimes to face the challenges of online trade. Only three references to the role of public authorities in e-nforcement63 were made in the Digital Agenda: first to their role in preventing cybercrime; second to their role in the conduction of market sweeps to obtain compliance data; third to their role in the implementation of EU measures to combat spam. The update and upgrade of public enforcement regimes was, at the time, not a priority key action for the Commission.

2.2.3

2015–2019: Regulating the Platform Economy

Shortly after the adoption of the Consumer Rights Directive and the signature of the MoU, in 2012, the European Commission vouched to double the volume of e-commerce in Europe by 2015.64 But despite EU efforts to boost cross-border transactions, at that point, e-commerce was still mainly a domestic phenomenon. In 2016, 57% of Internet users indicated that they shopped online, but only 7.5% of the retailers based within European Union sold online across borders.65 Data also indicated that SMEs (therefore the vast majority of retailers) experienced major

62

EC Memorandum of Understanding, Ares 2016/3934515 (2011), para 16. The concept of ‘e-nforcement’ used in this book refers to the activities carried out (off or online) to ensure that offers and products traded online comply with applicable legislation. See Chap. 1. 64 See European Commission (2012a). 65 Enterprise Europe Network (2018), p. 6. 63

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difficulties in operating across borders because of the lack of resources and knowledge to comply with a fragmented legal framework. In parallel, corporation-run content websites yielded the monopoly of digital content creation to social networks and digital content platforms where users create and share content, e-commerce channeled through retailers’ flagship webstores was losing momentum in favour of online transaction platforms enabling third-party sellers (including individuals acting outside of their professional capacity). This made online marketplaces the power brokers of online retail. To face this reality, the European Commission unveiled its Communication on the Digital Single Market Strategy,66 a policy instrument which included several legislative proposals, such as stopping unjustified geoblocking,67 the regulation of cross-border parcel delivery services,68 and new digital contracts rules for the supply of digital content69 and the conformity of goods70—all of which were to help create a better ecosystem for online trade by helping retailers to operate seamlessly online. Yet, this Communication is better remembered as a turning point, when Europe finally focused on acknowledging the regulatory dilemmas of the platform economy. Indeed, the Communication launched a comprehensive assessment of the role of platforms in the digital single market, reflecting on issues such as (i) transparency e.g. in search results (involving paid for links and/or advertisement), (ii) platforms’ usage of the information they collect, (iii) relations between platforms and suppliers, (iv) constraints on the ability of individuals and businesses to move from one platform to another and will analyse, (v) how best to tackle illegal content on the Internet.71

The goal of the assessment was to determine whether EU regulation (and what type) was necessary to rebalance and more easily predict the relationship between platforms and their users, and what role should platforms play in bridging the e-nforcement gap. One year later, the Commission’s Communication on Online Platforms and the Digital Single Market enunciated the four principles that should guide EU policy in the platforms’ economy: ensuring a level playing field for comparable digital

66

See EC Communication, COM 2015/0192 (2015). Online discrimination on the basis of nationality or place of residence for example being re-routed back to a country specific website, see Regulation (EU) 2018/302 on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulations (EC) No 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EC, O.J. L 60/1 (2018), pp. 1–15. 68 To guarantee price transparency and competition when sending small parcels cross-border within the European Union, see Regulation (EU) 2018/644 on cross-border parcel delivery services, O.J. L 112 (2018), pp. 19–28. 69 Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services, O.J. L 136/1 (2019), pp. 1–27. 70 Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC, O.J. L 136/28 (2019), pp. 28–50. 71 See EC Communication, COM 2015/0192 (2015), para. 3.3.2. 67

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services; enhancing platforms’ responsibilities; fostering trust, transparency and ensuring fairness; keeping markets open and non-discriminatory to help create a data-driven economy.72 Retaining the spirit of 1997’s European Initiative in e-Commerce, the Commission reaffirmed its inclination towards promoting the adoption of self-regulation to rule platforms, to let the new platform-based economy develop its own dynamism.73 Taking a problem-driven approach, regulation at the EU level (if necessary) was to ‘only address clearly identified problems relating to a specific type or activity of online platforms in line with better regulation principles.’74 The 2016 Communication has been not spared from criticism. As identified by Savin (2018), The 2016 Communication on Platforms is a neither a comprehensive document on platforms nor a proper policy paper but a brief 15-page-long outline of the principles that the Commission declares will guide it in its effort to regulate platforms and an outline of the ways in which these principles will be implemented. To be the former, it lacks a commissioned body of research normally accompanying other proposals and to be the latter it lacks separate objectives and tools (although it does declare some basic principles).75

Regulatory proposals imposing on platforms’ legal obligations towards their users did not emerge until April 2018, with the adoption of the European Commission’s Communications ‘A New Deal for Consumers’.76 By then, it was already established that the generally accepted reasons for justifying regulatory intervention77 are also present in the platform economy78 and that, despite its innovative character, a certain level of EU regulation is indeed necessary to ensure the proper functioning of the digital single market. Indeed, for the last decade, platforms have developed extremely dominant positions, having the characteristics of super-star economics,79 a circumstance that has discouraged many retailers (particularly SMEs) from operating through marketplaces.80

72

See EC Communication Online Platforms and the Digital Single Market Opportunities and Challenges for Europe, COM 2016/288 final (2016). 73 Hatzopoulos (2019), p. 413. 74 EC Communication, COM 2016/288 final (2016), p. 5. 75 Savin (2018), p. 18. 76 EC Communication A New Deal for Consumers, COM 2018/0183 (2018) final (2018). 77 Such as the inability of the market to solve particular structural problems, including ensuring competition, solving information asymmetries and compensating for externalities. See Breyer (1998). 78 See Hatzopoulos (2019). 79 Hatzopoulos (2019), p. 401. 80 The Commission’s Communication ‘A European retail sector fit for the 21st century’ identifies that, by 2018, 80% of store-based retailers (those already operating in the brick-and-mortar market) did not operate online, with most of those absent in the digital market, stating that they did not go digital because of the difficulties in adapting to the particularities of the platforms’ economy (such as operating though online marketplaces available to consumers across jurisdictions, adapting their business to the rules unilaterally imposed and frequently rewritten by ISSPs). Based on those

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In this context, the New Deal’s legislative package included two fresh regulatory proposals which have resulted in two pieces of legislation, opening a new stage in the regulation of the digital market: the Platform-to-business Regulation (or ‘P2B Regulation’)81 and the Omnibus Directive on better enforcement of consumer law rules,82 adopted in 2019. Almost ten years after the adoption of the CRD, and almost two decades after the establishment of the e-Commerce Directive, the EU legislator defines legal obligations specifically for online platforms. For the P2B Regulation, the regulatory unit83 is no longer the ISSP,84 nor the ‘trading website’,85 but the ‘provider of online intermediation services’,86 defined as ‘any natural or legal person which provides, or which offers to provide, online intermediation services to business users’.87 That is to say: online platforms. The Omnibus Directive, moving platforms even closer to the legislator’s lens, directs consumer information obligations towards the online marketplaces themselves.88 As further analysed in the next sections, the rules established in both pieces of legislation complement the intermediaries regime of the e-Commerce Directive.

2.2.3.1

Online Marketplaces as ‘Providers of Online Intermediation Services’ in the Platform-to-Business Regulation

The Platform-to-business Regulation introduces to European Union Law the concept of ‘provider of online intermediation services’ (POIS), a category of information society service providers enabling suppliers to offer and trade goods or services to

findings, the Communication instructed Member States to facilitate the adoption of digital technologies by small retailers, to facilitate retail establishment conditions, and to review their administrative strategy to alleviate the cost of compliance. However, it did not include any legislative proposal at the European level. See EC Communication A European retail sector fit for the 21st century, COM 2018/219 final (2018). 81 Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services, O.J. L 186 /57 (2019), pp. 57–79 (hereinafter, ‘P2B Regulation’). 82 Directive (EU) 2019/2161 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules (Omnibus Directive), O.J. L 328/7 (2019), pp. 7–28. 83 See Savin (2018), p. 13. 84 Regulatory unit in the E-Commerce Directive. 85 Regulatory unit in the Consumer Rights Directive. 86 Based on Art. 2(2) of the P2B Regulation, ‘online intermediation services’ are those information society services allowing business users to offer goods or services to consumers, ‘with a view to facilitating the initiating of direct transactions between those business users and consumers’ on the basis of a contractual agreement between the platform and the business users. 87 Art. 2(3) of the P2B Regulation. 88 Defined in the Directive as ‘a service using software, including a website, part of a website or an application, operated by or on behalf of a trader which allows consumers to conclude distance contracts with other traders or consumers.’

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consumers on the basis of a contractual relationship.89 The definition of POIS is made to suit most online platforms, including online marketplaces, and reflects the triangular contractual relationship that characterises platforms. The adoption of the P2B Regulation proved necessary given the power that platforms such as online marketplaces have developed in recent years. As noted by the Commission in 2019, in the internal market alone, over one million businesses are dependent on online marketplaces to engage in e-Commerce because a significant part of online retail takes place in them, and that ‘nearly half of business users (46%), especially small ones, experience problems with online intermediation services’.90 As a result, they ‘can control access to online markets and can exert significant influence over how various players in the market perform’,91 and smalland medium-sized businesses with no bargaining power.92 This dependency is very clear when it comes to online retail of goods: early estimates signal that in 2019, Amazon may have reached the milestone of accounting for more than half of the local e-commerce in the United States and ‘for 13.7 percent of worldwide retail e-commerce sales’.93 The online retail giant, which does not operate in all Member States, is rapidly growing in some countries such as Germany, where it has steadily increased its online market share for the last decade: from little more than 11%94 in 2008, to as much as 28.7%95 in 2018. The power of mainstream marketplaces is even greater when considering the fact that, in 2018, Amazon and eBay accounted for 66% of German e-commerce and ‘every other online retailer from the top 50 list can’t even pass a market share of 3 percent’.96 The P2B Regulation, which applies across the European Union from July 2020, aims at promoting the proper functioning of the digital single market by laying down rules to ensure that businesses using online platforms ‘are granted appropriate transparency, fairness and effective redress possibilities.’97 Its provisions are intended to discourage online platforms from ‘behave[ing] unilaterally in a way that can be unfair and that can be harmful to the legitimate interests of their businesses-users and, indirectly, also of consumers’98 in order to facilitate smooth functioning of the digital single market. Among the more notable measures in the regulation is that prohibiting the modification of terms and conditions agreements without properly notifying business users of the changes, giving them a period of notice and the option to reject the

89

See Art. 2(2) of the P2B Regulation. European Commission (2019a), p. 4. 91 EC Communication, COM 2015/0192 final (2015), para 3.3.1. 92 European Commission (2019a), p. 4. 93 See Statista report (2020a). 94 See Statista report (2020b). 95 See Ecommerce News (2018). 96 See Ecommerce News (2018). 97 See Art. 1(1) of the P2B Regulation. 98 Recital 2 of the P2B Regulation. 90

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new terms and terminate the contract.99 The measure also obliges platforms to offer the opportunity for the user to inspect and challenge the notification that has led to the decision to delist an offer100 (including via an internal complaint-handling system or via a mediator). Additional transparency measures established in the Regulation to correct the information asymmetry hindering businesses’ positions require, among other measures, that T&Cs include information about the platform’s offer ranking system101 so that retailers can make an informed decision when subscribing to the marketplace’s services. The Regulation also ensures that platforms (prior to or at the time of the restriction or suspension taking effect) must provide their users with a statement of reasons for the removal of online offers and allow them to counter such decisions in the framework of the platform’s internal complaint-handling system.102 This is considered an important step forward to protect suppliers’ interest because the e-Commerce Directive did not regulate noticeand-takedown procedures (NTDs). In absence of regulation, many online marketplaces did not offer their users the option of contesting the decision to remove the allegedly illegal offer, hindering their users’ right to present their case and allowing for the possibility of the abuse or mis-use of NTD procedures.103 Finally, based on the new Regulation, online marketplaces have the obligation to display, visible to all users of the platform, information about the ‘the identity of the business user providing the goods’.104 Although it might resemble a rule for consumer protection, in fact the goal of this provision is, as indicated in Recital 21 of the Regulation, ‘to ensure that business users can fully exploit the commercial opportunities offered by online intermediation services by allowing businesses to feature their trading identity when posting an offer online. Notably, the provision could also have an impact on the public enforcement of EU law in the digital market: until this point, even if consumer protection law identifies the trading name, address and contact details of traders, among the mandatory pre-contractual information to be provided to online shoppers, suppliers in online marketplaces often neglect this obligation, making the supplier’s username on the platform the only information available about its identity.105 The P2B Regulation applies to all online marketplaces enabling business-toconsumer trade, regardless of the product being traded. It excludes from its scope, however, business-to-business and pure peer-to-peer marketplaces. Indeed, the definition of ‘providers of online intermediation services’ in the Regulation only applies to those information society service providers allowing ‘business users’ to offer goods or services to consumers, the concept including only private individuals

99

See Art. 3(2) of the P2B Regulation. Art. 5(4) of the P2B Regulation. 101 See Art. 5 of the P2B Regulation. 102 See Art. 4 of the P2B Regulation. 103 See Wallberg (2017). 104 Art. 5(3) of the P2B Regulation. 105 See Chap. 5. 100

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acting in a commercial or professional capacity who, or any legal person which, through online intermediation services offers goods or services to consumers for purposes relating to its trade, business, craft or profession.106

This was already anticipated in the Commission’s impact assessment, which provided a list of examples of peer-to-peer platforms that were not to be protected by the new rules.107 Therefore, although the European Commission press release enthusiastically stated that ‘the new rules will apply to the entire online platform economy – approximately 7000 online platforms or market places operating in the EU – which include world giants as well as very small start-ups’,108 the Regulation only applies to online retail platforms and to those where retail is the dominant practice. Given the popularity of peer-to-peer (P2P) online marketplaces facilitating the (re)sale of consumer goods, this is not a minor issue. The narrowing of the scope of the platform-to-business Regulation to online business-to-consumer marketplaces has a direct impact on the protection of suppliers operating in P2P platforms: T&Cs can still be drafted and amended at the marketplace’s discretion, and therefore suppliers may not be able to determine why their offers have been delisted. Additionally, it is a missed opportunity to improve the monitoring of exchanges carried out through marketplaces dedicated to P2P transactions because the P2B Regulation does not apply to peer trading.

2.2.3.2

The Omnibus Directive on Better Enforcement and Modernisation of EU Consumer Protection Rules, or How Online Marketplaces Finally Became Responsible for (Some) Consumer Information

Consumer law has an essential role in building confidence in online transactions among consumers and therefore promoting the digital single market. Since the Communication on a Digital Agenda for Europe109 supported the adoption of the Consumer Rights Directive110 in 2011, a set of directives has been adopted to cover online sales contracts between traders and consumers. The legal framework today is essentially constituted by the Consumer Rights Directive (CRD), the ODR

106

Art. 2(1) of the P2B Regulation. EC Staff Working Document, COM 2018/0238 final (2018), p. 7. 108 European Commission (2019b), para 2. 109 See EC Communication, COM 2010/0245 final (2010). 110 Consumer Rights Directive (2011), pp. 64–88. 107

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Regulation, the Directive on Unfair Business-to-consumer commercial practices,111 and the Sales,112 and Injunctions113 Directives.114 One of the fundamental elements of consumer law is that it defines the mandatory pre-contractual information that must be made available to consumers before the purchase is complete. The Consumer Rights Directive of 2011 established specific consumer information rules for ‘distance contracts’115 such as those concluded in online retail. In particular, according to Article 6 of the Directive, consumers must be informed of the trader’s name, address and contact details, the main characteristics of the goods, the price, the cost of using distance communication, contractual rules (such as those regarding delivery and payment, complaint handling, and applicable guarantees), the time-constraints of the contract (both regarding duration and right of withdrawal) and all legal terms (including general conditions, applicable law and jurisdiction, codes of conduct, out-of-courts complaint and redress mechanisms). Additionally, the Directive required that the interface used to conclude the transaction must include a ‘button or similar function’ labelled with the words ‘order with obligation to pay’116 (or similar wording) to be clicked on by the consumer when placing the order (to register the consumers’ explicit acknowledgement that the order implies an obligation to pay). Traditionally, consumer law makes the marketplaces’ suppliers-users responsible for the provision of the above-mentioned, as it states that

111

Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’), O.J. L 149/22 (2005), pp. 22–39 (hereinafter, ‘Unfair Commercial Practices Directive’ or simply ‘UCPD’). 112 Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees, OJ L 171 (1999), pp. 12–16 (hereinafter, ‘Sales Directive’). 113 Directive 2009/22/EC on injunctions for the protection of consumers’ interests, O.J. L 110/30 (2009), pp. 30–36 (hereinafter, ‘Injunctions Directive’). 114 It should be noted that the Sales Directive is due to be repealed (and the Injunctions Directive amended) on 1 January 2022, with the application of Directive 771/2019, of the European Parliament and of the Council, of 20 May 2019, on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC, O.J. L 136/28 (2019), pp. 28–50, whose main purpose was to ensure that all market participants enjoy smooth access to cross-border sales of goods, including online sales. See Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004, O.J. L 345 (2017), pp. 1–26. 115 As stated in Art. 2(17) of the CRD, ‘distance contract’ means ‘any contract concluded between the trader and the consumer under an organised distance sales or service-provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded.’ As acknowledged in Recital 20 of the Directive, ‘service-provision schemes’ include ‘those schemes offered by a third party other than the trader but used by the trader, such as an online platform;’ in this case, the online marketplace. 116 Art. 8(2) of the Consumer Rights Directive.

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the information required by Article 6 of the CRD should be made available to consumers shopping online ‘by the trader.’ Marketplaces (as ‘trading websites’ in the 2011 version of the CRD), on the other hand, have only been considered responsible for providing consumers with two specific information elements: (i) the link to the website of the ODR,117 and (ii) the information about applicable delivery restrictions and accepted means of payment (which it must provide consumers ‘at the beginning of the ordering process’).118 One of the goals of the Omnibus Directive has been to update online information requirements. First, it requires traders to inform consumers whether and how ‘the published reviews originate from consumers who have actually used or purchased the product’119 or not, making such information ‘material’.120 Traders must also inform consumers whether the price of the goods purchased was personalised on the basis of automated decision-making.121 Additionally, the Omnibus Directive introduces in the CRD a new article, 6(a), for ‘additional specific information requirements for contracts concluded on online marketplaces,’122 which for the first time imposes on online marketplaces explicit consumer information obligations. In particular, it mandates that marketplaces should inform consumers of the following elements: (i) the main parameters determining ranking123 of the ‘offers presented to the consumer as a result of the search query and the relative importance of those parameters as opposed to other parameters’;124 (ii) the nature of the supplier (trader or prosumer) and, accordingly, the extent to which consumer rights would apply;125 and (iii) how the obligations resulting from the transaction are shared between the supplier offering the goods and the provider of the online marketplace. Regardless of this last provision, the allocation of responsibilities for consumer information is still is at odds with the fact that, when shopping in an online marketplace, both the supplier and the platform intervene in the configuration of

117

See Art. 14(1) of ODR Regulation. Art. 8(3) of the Consumer Rights Directive. 119 See Art. 7(6) of the Unfair Commercial Practices Directive, as amended by the Omnibus Directive. 120 The Omnibus Directive also amends the UCPD to mirror the updated rules in Article 6 of the CRD (by declaring that those pieces of information are to be considered ‘material’ therefore their omission being considered a misleading commercial practice). 121 See Art. 4(4) of the Omnibus Directive. 122 See Art. 4(5) of the Omnibus Directive. 123 As defined in point (m) of Art. 2(1) of the Unfair Commercial Practices Directive. 124 See new Art. 6(a) of the CRD, as amended by the Omnibus Directive. 125 This is a long-awaited requirement, since in most marketplaces it is currently not feasible for consumers to identify whether the offer is placed by a business or by a peer, hence they are unable to assess whether or not the purchase is protected by consumer protection rules. It is however still too soon to determine the impact that the changes introduced to consumer rules by the Omnibus Directive will actually have on the information displayed in digital marketplaces, as Member States have until 28 November 2021 to transpose the changes, and these measures will apply from 28 May 2022. 118

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legally required pre-contractual information.126 First, because the design of the platform’s interface frequently determines the way in which this information is presented. Second, because it is the online marketplace that creates and controls the ‘order button’ that the Directive requires traders to create. Third, because it is normally the platform that controls consumer reviews (and even automated pricing features). Finally, because a confirmation e-mail (providing a standarised summary of the purchase and of the consumer’s rights in relation to that transaction) comes from the marketplace itself (instead of or in addition to an e-mail generated by the supplier). As a result, suppliers tend to relinquish any de facto control regarding the accuracy of consumer information, while still being held responsible in case of non-compliance.

2.2.3.3

Nudging Marketplaces Towards Enhanced (Enforcement) Responsibilities

The increasing market power of marketplaces has led many127 (including legislators) to consider whether the current intermediaries regime should be modified to promote consumer protection and bridge the current enforcement gap in the digital market.128 As analysed by Ullrich (2017), this is not a new debate: Even those early days [of internet regulation] were not free from considerations of a more hands-on regulatory approach towards the information transmitted and hosted by online intermediaries. The reasons for this were principally based on a logic, which looked to retrospective responsibility in the absence of other suitable actors. It was based on the central role online intermediaries played as gatekeepers and infrastructure providers for various forms of content.129

However, the platform economy seems to have made the discussion more complex, partly because current filtering technology can make the monitoring of online content much more feasible and reasonable in terms of cost. Those in favour of revising the e-Commerce Directive to narrow the liability shield for marketplaces and other online platforms, or to create hybrid categories for some information society services, hope for ‘a more balanced legal regime than that currently used’130 to improve the effective functioning of the digital single market. This sentiment seems to have been picked up on by the head of the Commission, Ursula von der Leyen, who announced during the presentation of her political guidelines for the 2019–2024 period a proposal for a new Digital Services Act to ‘upgrade our liability and safety rules for digital platforms, services and products, and complete

126

See Cohen (2017) and Hatzopoulos (2018). See, among many other Finck (2018), Frosio (2017), Smorto (2018), Goudin (2016) and Vara et al. (2016). 128 See Chap. 1. 129 Ullrich (2017), p. 2. 130 Goudin (2016), p. 28. 127

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our Digital Single Market’.131 Where this proposal will take EU e-Commerce law is still uncertain, as on either side of the debate academia and stakeholders are firmly entrenched in their opposing views. In the meantime, online marketplaces are slowly moving towards a more proactive role in the enforcement of EU Law, based on self-regulatory decisions instead of a change to their legal obligations. Indeed, their T&Cs increasingly include provisions widening marketplaces’ power to eliminate offers they suspect are not compliant with EU law. With such ‘private re-engineering’ of the platform, marketplaces hard-wire regulatory compliance requirements in their infrastructure to preclude violations,132 making these platforms potential allies in the battle to bridge the enforcement gap in the digital single market. As identified by Reidenberg almost twenty years ago, this ‘policy-enforcing design’ also ensures the enforcement of EU Law while allowing public authorities to focus their limited enforcement resources on specific cases.133 As in other areas of the law, this collaboration between public and private actors is important for bridging the enforcement gap. Aware of this reality, the European Commission is taking action and creating forums to engage platforms systematically with a more proactive role in law enforcement. In its 2017 Communication on illegal content,134 and building on the judgement in the Loréal v eBay case,135 it made clear that taking ‘voluntary, proactive measures does not automatically lead to the online platform losing the benefit of the liability exemption provided for in Article 14 of the E-Commerce Directive’136—an argument that had been invoked by online marketplaces to refuse engaging in any kind of proactive monitoring of the activity of their users. The goal of the Communication, like its corresponding 2018 Recommendation ‘on measures to effectively tackle illegal content online’,137 was to involve platforms in bridging the enforcement gap by providing all stakeholders with guidance on how to build effective NTDs mechanisms, in order to handle legal content removal requests issued by national courts or competent authorities, as well as any notice-and-takedown procedures issued by third parties. The Communication and the Recommendation explicitly indicated that their concept of ‘illegal content’ included products with safety issues.138 But, other than that, the problem of lack of compliance with online retail legislation by online suppliers was not discussed in either of those instruments.

131

See Von der Leyen (2019). See Reidenberg (2003), p. 218. 133 Reidenberg (2003), p. 219. 134 EC Communication COM 2017/555 final (2017). 135 C-324/09, L’Oréal SA and Others v eBay International AG and Others, 2011 ECLI 474. 136 EC Communication, COM 2017/555 final (2017), p. 10. 137 EC Recommendation on measures to effectively tackle illegal content online, C 2018/1177 final (2018). 138 However, it must be noted that both policy instruments prioritised the take down of very specific types of illegal content: hate speech, terrorist or child abuse material, or counterfeit products. 132

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In parallel, the European Commission worked on facilitating the signing, in 2018, by several large online marketplaces (such as eBay, Amazon and Alibaba) of the ‘voluntary commitment of online marketplaces with respect to the safety of non-food consumer products sold online by third party sellers’139 (also known as ‘Product Safety Pledge’). Replicating the success of the 2011 MoU on counterfeit goods, the goal of this agreement was to engage marketplace service providers in proactive market surveillance activities in order to improve the detection of unsafe products marketed through their interface. The 2018 Safety Pledge includes marketplaces’ commitment to educating their supplier-users on their legal responsibilities regarding product safety, and to create internal mechanisms to fight non-compliance. For instance, they commit to providing competent authorities and trusted flaggers with an ad hoc channel to submit NTDs on products which they suspect to be dangerous.140 But it must be noted that the scope of the Product Safety Pledge is limited to compliance matters related to physical consumer goods (with the noteworthy exception of foods) which may pose serious risks to the health and safety of consumers. Accordingly, compliance issues associated with products which do not threaten consumer safety fall outside of the scope of the pledge.141 Therefore, the Product Safety Pledge is not a tool transposing offline market surveillance activities to the digital arena: it is an emergency mechanism designed to tackle severe cases of non-compliance with non-food consumer goods legislation, while general market surveillance remains an exclusive responsibility of public authorities. Still, these experiences seem to have fostered the voluntary and unilateral design, by online marketplaces, of mechanisms to enforce privately sector-specific legislation different from that covered by the MoU and the Product Safety Pledge. For instance, some marketplaces, such as Amazon, explicitly include among their policies the prerogative to remove any offer of food products which have been recalled or subjected to Rapid Alert System for Food and Feed (RASFF) notifications. Thereby the platform is de facto applying to some food products the rules it has already agreed to for non-food products as a signatory of the 2018 Product Safety Pledge.142

139

See Alibaba Group et al. (2018). The Pledge demands that those notifications submitted by competent authorities must be handled in less than two working days. 141 That being said, given the current secondary liability regime, platforms might still be inclined to delist products which do not pose threat to consumer safety but are allegedly non-compliant with legal requirements. 142 See Alibaba Group et al. (2018). 140

2.2 Evolution of the EU’s Regulatory Policy for Online Retail

2.2.4

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Regulating Enforcement for the Platform Economy

As analysed in the previous sections, the Digital Agenda was key to the regulation of private enforcement mechanisms for the digital market. Not only did it smooth the enforcement of IPR rights by facilitating the 2011 MoU on counterfeit goods sold online, it also led to the adoption, in 2013, of the Online Dispute Resolution mechanism (ODR), to facilitate consumers’ enforcement of the Consumer Rights harmonised in the 2010 CRD. But after almost two decades of regulation, only the forthcoming adoption of a Directive on representative actions for the protection of the collective interests of consumers (which would apply to both off- and online transactions) will facilitate advancement in the field of private e-nforcement (by providing consumers with appropriate mechanisms to enforce their rights deriving from online retail transactions).143 Both the ODR and the forthcoming Directive on representative actions provide consumers with tools to seek redress regardless of where the product was bought: they create private enforcement mechanisms that can be activated whether the consumer bought goods in an online marketplace or in a retailers’ webstore. The consumer claim is then channeled through a specific online site created by the legislator, and are resolved with no intervention of the marketplace (whose only obligation is to provide on their websites an electronic link to the ODR platform.)144 Therefore, the mechanisms available to consumers today have not evolved to serve the particularities of the platform economy: they are tools that seek redress in e-commerce, but they do not require the intervention of online platforms. Similarly, while ensuring the public enforcement of existing sector-specific legislation is considered a priority at the EU level,145 the European Commission’s strategy for e-commerce has not resulted in ground-breaking reform to public enforcement regimes sufficient to face the challenges of retail through online marketplaces. Only the regulatory framework for the enforcement of consumer law was referred to in the last decades’ Commission’s Communications dealing with e-commerce. First, in 2015, the Communication on a digital single market strategy for Europe proposed to review the Regulation on Consumer Protection Cooperation, resulting in the adoption of similar new provisions and upgrading cross-border administrative cooperation mechanisms two years later.146 More recently, in 2018, the Communication for a New Deal for Consumers proposed that the Omnibus Directive included legal provisions to improve control authorities’

143

See EC Proposal for a Directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/ EC, COM 2018/0184 final (2018). The proposal aims to provide appropriate tools for collective redress in ‘mass harm situations’ such as widespread infringements of consumer protection legislation, which are particularly recurring online. 144 See Art. 14 of the ODR Regulation. 145 See, among others, EC Communication, COM 2018/219 (2018) and European Council (2018). 146 See Regulation (EU) 2017/2394, O.J. L 345 (2017), pp. 1–26.

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ability to impose effective, proportionate and dissuasive penalties in relation to ‘widespread infringements and to widespread infringements with a Union dimension,’147 and to set minimum standards for the fines that should be introduced domestically to sanction and deter infringements of consumer law. Neither of these pieces of legislation entrust platforms with any specific responsibility to facilitate public monitoring of the transactions they enable. On the other hand, the evolution of the regulatory framework governing the public enforcement of EU sector-specific legislation has mostly taken place separately from the EU strategy for e-commerce. In 2013 (two years before the European Commission’s strategy for the digital single market was unveiled), the Commission’s Communication ‘Healthier Animals and Plants and a Safer Agri-Food Chain: A modernised legal framework for a more competitive EU’148 proposed a new food Official Controls Regulation.149 It resulted in the first EU legislative proposal providing control authorities with specific powers to ensure that market surveillance is possible in the digital market (such as the power to use mystery-shopping techniques to control products at the distribution stage, to order the removal of sites or social media accounts, and to request from intermediaries detailed information about the identity of rogue online traders). It was not until six years later that Regulation (EU) 2019/1020, on market surveillance and the compliance of products covered by some Union harmonisation legislation,150 provided control authorities across the EU with a common regulatory framework for public enforcement of those Union rules, and included some e-nforcement provisions similar to those established for the control of the digital market of foods. The proposal was part of the 2017 ‘Goods Package’ (which also included a proposal for regulating the mutual recognition of goods, and a communication on reinforcing trust in the single market). This reality illustrates a wider phenomenon: the regulatory policy for the digital market has mostly151 focused on the update and upgrade of EU e-commerce and consumer law, but has not included among its key actions a comprehensive revision of EU sector-specific legislation. In fact, only some pieces of legislation governing product and business requirements have been amended to clarify their application

147

Recital 10 of the Omnibus Directive. EC Communication Healthier Animals and Plants and a Safer Agri-Food Chain: A modernised legal framework for a more competitive EU, COM 2013/0264 final (2013). 149 EC Proposal for a Regulation to ensure the application of food and feed law, rules on animal health and welfare, plant health, plant reproductive material, plant protection products and amending Regulations (EC) No 999/2001, 1829/2003, 1831/2003, 1/2005, 396/2005, 834/2007, 1099/2009, 1069/2009, 1107/2009, Regulations (EU) No 1151/2012, [. . . .]/2013, and Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC, 2008/120/EC and 2009/128/EC (Official controls Regulation), COM 2013/265 final (2013). 150 Regulation (EU) 2019/1020 on market surveillance and compliance of products and amending Directive 2004/42/EC and Regulations (EC) No 765/2008 and (EU) No 305/2011, O.J. L 169/1 (2019), pp. 1–44. 151 With the noteworthy exception of IPR law, which has even become a driver of regulatory change in this strategy. 148

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online, all of them covering information requirements. First, in 2011, the Food Information Regulation152 introduced specific rules for the provision of mandatory food information in online sales, clarifying what information mandatory to an offline label should appear in an online offer of foods.153 Second, in July 2015, the legal framework applying to medicinal154 products for human use has required those selling medicines at a distance to display the common logo identifying a legal seller of medicinal products.155 More recently, in 2017, EU legislators156 established specific rules for displaying the energy label on consumer electronics when they are sold online. Based on the above, it is clear that the EU has not carried out a comprehensive reform of EU sector-specific legislation to assess whether its regulatory goals are still met online. This should be explored, as it may well be that legal definitions and rules for the allocation of responsibilities, among other elements of sector-specific legislation, may not yet be sufficient to be transposed to online trading environments.

2.3

Conclusions

Taking a historic approach, this chapter described the evolution of the European Union’s regulatory policy for the digital single market, and the impact of online marketplaces on that policy. Initially focused on providing legal certainty in digital transactions to let e-commerce flourish, during the last decade the European Commission shifted its attention towards online platforms, to face the challenges of the platform economy. Accordingly, EU legislation has gradually shifted the regulatory focus from intermediaries, networks and services, to platforms157 in general and online marketplaces in particular. EU e-commerce Law, as well as consumer law, has been clearly influenced by the development of online retail in the platform economy. While early legislative 152

Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63. 153 See Art. 14 of Regulation (EU) No 1169/2011. 154 Although technically not consumer goods, medicines are frequently found online with other tangible goods. 155 See Commission Implementing Regulation (EU) No 699/2014 on the design of the common logo to identify persons offering medicinal products for sale at a distance to the public and the technical, electronic and cryptographic requirements for verification of its authenticity, O.J. L 184/5 (2014), pp. 5–7. 156 See Regulation (EU) 2017/1369 setting a framework for energy labelling and repealing Directive 2010/30/EU, O.J. L 198/1 (2017), pp. 1–23. 157 See Savin (2018).

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instruments such as the e-Commerce Directive avoided meddling with the functioning of ISSPs to foster innovation (by imposing on them virtually no obligations towards their users), recent legislation regulates some elements of platforms’ relationships with their business users, to increase the bargaining power of online retailers such as small and medium-sized enterprises in the platform economy. Similarly, while in 2000 consumer law placed virtually all information responsibilities with traders, the recent Omnibus Directive broadens significantly marketplaces’ responsibilities regarding consumer information. However, these recent pieces of legislation have not amended platforms’ role in enforcement: they must still act to facilitate third-party enforcement, but have no general monitoring obligations. On the other hand, online marketplaces (and the development of e-commerce at large) have had little or no impact on EU sector-specific law. There has not been a comprehensive strategy to assess whether legislation governing the production and placing on the market of consumer goods is fit for the digital single market, and much less for the platform economy. EU rules have undergone only minor modifications to address e-commerce issues during the last decade, mostly focusing on information provision and market surveillance powers. Other than that, sectorspecific law applies mutatis mutandis online. In this context, urgent evaluation is needed as to whether the European Union’s sector-specific legislation (including its enforcement regimes) is ready to tackle the challenges of online retail in the platform economy. The next chapters of this book examines how EU Food Law is evolving to adapt to the digital single market, and discusses the implementation challenges that arise when operating in a unique trading environment such as online marketplaces.

References Alibaba Group, Amazon, eBay et al (2018) Product Safety Pledge: voluntary commitment of online marketplaces with respect to the safety of non-food consumer products sold online by third party sellers. Brussels. https://ec.europa.eu/info/sites/info/files/voluntary_commitment_document_ 4signatures3-web.pdf. Accessed 18 Nov 2020 Breyer S (1998) Typical justifications for regulation. In: Baldwin R, Scott C, Hood C (eds) A reader on regulation. Oxford University Press, Oxford, pp 59–92 Cohen JE (2017) Law for the platform economy. UC Davis Law Rev 51(1):133–204 Ecommerce News (2018) Amazon and eBay account for 66% of German ecommerce. https:// ecommercenews.eu/amazon-and-ebay-account-for-66-of-german-ecommerce/. Accessed 16 Sep 2019 Enterprise Europe Network (2018) A guide to e-commerce in Europe. https://een.ec.europa.eu/sites/ default/files/een_guide_ecommerce_2018.pdf. Accessed 18 Nov 2020 European Commission (2002) E-Commerce in Europe: results of the pilot surveys carried out in 2001. Office for Official Publications of the European Communities, Luxembourg European Commission (2010) EC Europe 2020: a strategy for smart, sustainable and inclusive growth, COM 2010/2020 final (2010) European Commission (2011) Commission Staff Working Paper: bringing e-commerce benefits to consumers. Accompanying the document: communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the

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Committee of the Regions. A coherent framework to boost confidence in the digital single market of e-commerce and other online services. Brussels European Commission (2012a) Stimulating growth and employment: an action plan for doubling the volume of e-commerce in Europe by 2015. Brussels European Commission (2012b) Code of EU online rights. Publications Office of the European Union, Luxembourg European Commission (2016) Flash Eurobarometer 439. The use of online marketplaces and search engines by SMEs. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2759/67063 European Commission (2019a) A digital single market for the benefit of all Europeans. Publications Office of the European Union, Luxembourg. https://doi.org/10.2775/591676 European Commission (2019b) Digital single market: EU negotiators agree to set up new European rules to improve fairness of online platforms’ trading practices. EU Newsroom. https://ec. europa.eu/commission/presscorner/detail/en/IP_19_1168. Accessed 24 Nov 2020 European Commission (2020) Sweeps. https://ec.europa.eu/info/live-work-travel-eu/consumers/ enforcement-consumer-protection/sweeps_en. Accessed 16 Sep 2019 European Council (2018) European Council conclusions on jobs, growth and competitiveness, as well as some of the other items (Paris Agreement and Digital Europe). https://www.consilium. europa.eu/media/33430/22-euco-intermediary-conclusions-en.pdf. Accessed 24 Nov 2020 Finck M (2018) Digital co-regulation: designing a supranational legal framework for the Platform Economy. LSE Working paper, EL Rev 1. https://doi.org/10.2139/ssrn.2990043 Frosio GF (2016) Digital piracy debunked: a short note on digital threats and intermediary liability. Internet Pol Rev 5(1). https://doi.org/10.14763/2016.1.400 Frosio GF (2017) From horizontal to vertical: an intermediary liability earthquake in Europe. J Intellect Prop Law Pract 12(7):565–575. https://doi.org/10.31235/osf.io/jx2rb Frosio GF (2018) Why keep a dog and bark yourself? From intermediary liability to responsibility. Int J Law Inf Technol 26(1):1–33. https://doi.org/10.1093/ijlit/eax021 Goudin P (2016) The cost of non-Europe in the sharing economy. European Parliamentary Research Service, Brussels. https://doi.org/10.2861/26238 Hatzopoulos V (2018) The collaborative economy and EU law. Bloomsbury Publishing, London Hatzopoulos V (2019) Vers un cadre de la régulation des plateformes? Rev Int Droit Économique 33(3):399–416. https://doi.org/10.3917/ride.333.0399 Hatzopoulos V, Roma S (2017) Caring for sharing? The collaborative economy under EU law. Common Mark Law Rev 54(1):81–127 Kenney M, Zysman J (2016) The rise of the platform economy. Issues Sci Technol 32(3):61–69 Monti M (2010) A new strategy for the single market at the service of Europe’s economy and society. Report to the President of the European Commission José Manuel Barroso. European Commission and Bureau of European Policy Advisors Reidenberg JR (2003) States and Internet enforcement. Univ Ottawa Law Technol J 213 Sartor G (2017) Providers liability: from the eCommerce Directive to the future. European Parliament, Brussels Savin A (2017) Internet regulation in the European Union. In: Savin A (ed) EU Internet law. Edward Elgar Publishing Limited, Cheltenham, pp 1–37 Savin A (2018) EU regulatory models for platforms on the content and carrier layers: convergence and changing policy patterns. Nordic J Comm Law 1:7–37 Smorto G (2018) The protection of the weaker parties in the platform economy. In: Davidson NM, Finck M, Infranca JJ (eds) The Cambridge handbook of the law of the sharing economy. Cambridge law handbooks. Cambridge University Press, Cambridge, pp 431–446. https://doi. org/10.1017/9781108255882.033 Statista (2020a) Global retail e-commerce market share of Amazon from 2016 to 2019. https:// www.statista.com/statistics/955796/global-amazon-e-commerce-market-share/. Accessed 16 Sep 2019

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Statista (2020b) Amazon’s online retail market share in Germany from 2008 to 2015. https://www. statista.com/statistics/669458/online-retail-market-share-of-amazon-germany/. Accessed 16 Sep 2019 Ullrich C (2017) Standards for duty of care? Debating intermediary liability from a sectoral perspective. JIPITEC 8(111). https://doi.org/10.2139/ssrn.3037744 Vara G, Steible B, De Bondt A (2016) Cost of non-Europe in the sharing economy: legal aspects. EPRS study, January 2016 Von der Leyen U (2019) A Union that strives for more. My agenda for Europe: political guidelines for the next European Commission 2019-2024. Directorate-General for Communication (European Commission). Publications Office of the European Union, Luxembourg. https:// doi.org/10.2775/018127 Wallberg K (2017) Notice and takedown of counterfeit goods in the digital single market: a balancing of fundamental rights. J Intellect Prop Law Pract 12(11):922–936

Chapter 3

EU Food Law in the Platform Economy

3.1

Introduction

Although food e-commerce is still a marginal practice in the European Union,1 the market share of online grocery shopping has been growing steadily for the last decade and is said to be ‘poised for growth’2 in the platform economy; with online grocery sales worldwide growing 22% in 2019 alone (a growth that is expected to be even greater for 2020, due to the municipal lockdowns during the COVID19 pandemic).3 As food supply goes digital, the question remains as to whether it is necessary to update EU Food Law establishing requirements for ‘e-food’4 products and businesses, in order to promote compliance with online legal requirements. The cornerstone of European Union Food Law is the Regulation (EC) No 178/20025 also known as the General Food Law (GFL). Adopted on the 28th January 2002, it articulates the EU’s food safety policy, which aims at ensuring the safety of food through a comprehensive, integrated approach.6 The General Food Law provides the general principles and the legal definitions of key concepts of EU Food Law such as ‘food business’ or ‘unsafe food,’ determines the responsibilities of 1

In the northern Member States of the European Union, online groceries’ market share is about 5% of total supermarket turnover (which is the case, for example, in the Netherlands), dropping to around 1% in Member States in the south of the EU (such is the case of Spain). See Nielsen Company (2017) and Melton (2020). 2 See Nielsen Company (2017). 3 See Melton (2020). 4 See the EC Recommendation on a coordinated control plan on the official control of certain foods marketed through the Internet, C 017/4986 final (2017) and Chap. 1. 5 Regulation (EC) No 178/2002, laying down the general principles and requirements of Food Law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002), pp. 1–24 (hereinafter, ‘General Food Law’ or ‘GFL’). 6 See EC White Paper on food safety, COM 1999/719 final (1999). © Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_3

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food businesses and public authorities,7 and provides procedures to ensure food safety.8 It also provides a legal definition of what is considered ‘food’ (most substances or products intended for human consumption)9 and even of ‘food law’ which means The laws, regulations and administrative provisions governing food in general, and food safety in particular, whether at Community or national level; it covers any stage of production, processing and distribution of food, and also of feed produced for, or fed to, foodproducing animals.10

Given this definition, the scope of EU food law is notably wide: it not only refers to technical regulations defining the characteristics of a specific food product (such as olive oil or dairy products), but also includes all legislation enacted to ensure food safety and the protection of other consumer interests such as healthy eating and environmentally friendly food production.11 The number of pieces of legislation that constitute this functional field of EU law is also incredibly vast, to the point that EU food law has been described as ‘a great baroque cathedral whose entry is hidden’12 and the food sector has been said to be ‘one of the most heavily regulated sectors in the EU’.13 However, with further consideration, food law could be structured more straightforwardly so that it covers legislation governing public powers and responsibilities on the one hand, and legislation addressing food businesses on the other.14 Food laws establishing the legal requirements with which businesses must comply can be classified essentially into one of the three following types: (i) product-related laws, defining product standards (which regulate the characteristics that a certain food product must meet in order to be marketed in the EU with a specific legal name),15 approval requirements (such as those for GMOs in food or novel foods), and food

7

See Art. 17 of GFL. See Art. 14 to 20 of GFL. 9 Art. 2 of GFL defines food as any “substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans.” This includes any ‘drink, chewing gum and any substance, including water, intentionally incorporated into the food during its manufacture, preparation or treatment.’ 10 Art. 3(1) of GFL. 11 As stated in Art. 8 of GFL. 12 Lex Studio Legale Alimentaria (2010). 13 Van der Meulen (2013), p. 71. 14 Van der Meulen (2010). 15 A product standard establishes a legal definition for a food, indicates which ingredients should or should not be present in the product and in what quantity, as well as other aspects that may be relevant (such as acidity, in the case of olive oil). A paradigmatic example of food whose commercialization is subject to a community product standard is olive oil, for which the EU establishes the legal definitions of different olive oil categories, and other elements such as the positive adjectives that can be included on the label to sell the oil without misleading the consumer. The decision to regulate this product is not accidental, since it is a foodstuff frequently traded internationally with a history of misleading practices. 8

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safety targets (for instance, governing the presence of contaminants in food); (ii) process-related legislation, such as that regulating the hygiene during manufacturing, traceability, or premises; (iii) laws governing the presentation of foods (such as labelling to consumers and protection designations). Until today (and in absence of a formal roadmap that could point towards further modifications of this sector-specific field of EU Law), the EU legislator has only carried out a single targeted modification of the current legislation: the inclusion in the Food Information Regulation16 of specific requirements for the provision of mandatory information in distance sales—such as those completed online. However, the reinterpretation of what constitutes ‘direct sales’ in online environments resulting from the ruling of the Court of Justice of the European Union (CJEU) in the Kamin case17 suggest that longstanding legal concepts of EU Food Law might also need to be revised to ensure that food law meets its regulatory goals in the digital single market. In this context, this Chapter critically discusses whether EU food legislation governing food production and trade is fit for purpose in the platform economy.18

3.2

Food Information Law Online

The main piece of legislation governing food information for consumers is Regulation (EU) No 1169/2011, also known as the Food Information Regulation (FIC). The purpose of this piece of legislation is twofold: ‘to provide a basis for consumers to make informed choices in relation to food they consume and to prevent any practices that may mislead the consumer.’19 As identified by Purnhagen and Schebesta (2019), the Regulation ‘follows the structure of a horizontal regulation by providing general rules and principles for all food information law in the EU.’ In a nutshell, it establishes the general rules for the provision of mandatory information (frequently identified as ‘mandatory particulars’), and it sets rules to prevent misleading actions and omissions of information by, among other measures, regulating voluntary information provision.

‘Food Information Regulation’ stands for Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63 (hereinafter, ‘Food information Regulation’ or ‘FIC’). 17 C-289/16, Kamin und Grill Shop GmbH vs Zentrale zur Bekämpfung unlauteren Wettbewerbs eV., 2017 ECLI. 758. See Sect. 3.3. 18 Regarding the evolution of EU food legislation governing public powers and responsibilities (in particular, food official controls), see Chap. 4. 19 See Recital 4 of Regulation (EU) No 1169/2011. 16

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It first requires that the label of pre-packed foods must include a list of twelve mandatory particulars20 (such as the name of the food, the ingredients list, the nutrition information and the date of minimum durability or ‘use by’ date). Additionally, it establishes specific rules regarding foods packed on the sales premises at the consumer’s request and for prepacked food for direct sale by the primary producer. It also establishes21 the general principles for the inclusion of voluntary food information and the rules regarding the presentation of all the information in food labels. However, by using a wide definition of what constitutes ‘food information’22 (which goes beyond the information on labels to include also the information provided by, among other ‘means of modern technology tools’) its provisions are relevant to both brick-and-mortar and digital trade. In fact, the Regulation includes specific rules for the provision of food information when offering ‘prepacked foods offered for sale by means of distance communication,’ a practice including (but not limited to) online retail.

3.2.1

Rules for Food Information in ‘Distance Sales’

Article 14 of FIC regulates food information requirements for sales concluded through ‘means of distance communication.’23 The goal of the distance selling provisions is to make sure that when consumers purchase food products through distance selling ‘in such cases the relevant mandatory food information should also be available before the purchase is concluded.’24 As opposed to the rules governing

20 As stated in Art. 9 of Regulation 1169/2011, mandatory particulars include the name of the food; the list of ingredients; any ingredient or processing aid listed in Annex II or derived from a substance or product listed in Annex II causing allergies or intolerances used in the manufacture or preparation of a food and still present in the finished product, even if in an altered form; the quantity of certain ingredients or categories of ingredients; the net quantity of the food; the date of minimum durability or the ‘use by’ date; any special storage conditions and/or conditions of use; the name or business name and address of the food business operator; the country of origin or place of provenance where provided for in Art. 26, instructions for use where it would be difficult to make appropriate use of the food in the absence of such instructions; with respect to beverages containing more than 1.2% by volume of alcohol, the actual alcoholic strength by volume; a nutrition declaration. Some foods, such as frozen products, have additional mandatory information rules, which also apply online. 21 For those products, only the name of the food and the allergen information are mandatory, a rule which can be modified at national level. 22 Term defined in Art. 2(2)a of FIC as any ‘information concerning a food and made available to the final consumer by means of a label, other accompanying material, or any other means including modern technology tools or verbal communication.’ 23 Defined in Art. 2 of Regulation 1169/2011 as ‘any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the conclusion of a contract between those parties.’ 24 Recital 27 of Regulation 1169/2011.

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pre-contractual consumer information online,25 this provision of the Food Information Regulation does not create a comprehensive legal framework governing food information in distance sales. Instead, Article 14 of the FIC only includes two rules that prevail over standard food information requirements when supplier and consumer are not simultaneously physically present to complete the purchase. First, it dictates that all mandatory particulars except for the information on date marking must be available to consumers before the purchase is made.26 The second rule in Article 14 indicates that mandatory food information must be made available to consumers before the purchase is concluded, either (Option 1) ‘on the material supporting the distance selling’ (such as written down in a product catalogue) or (Option 2) ‘through other appropriate means’ (which are not identified in the Regulation) but which have no associated supplementary costs for consumers. Even when article 14 was being drafted, part of the industry critised the regulatory choices made in this legal provision, considering it excessively burdensome.27 Regarding the first rule (all mandatory particulars identified in article 9 are still mandatory online, except for date marking), retailers indicated that compliance was going to be difficult (especially for small- or medium-sized businesses), because of the inconvenience of keeping the mandatory information up-to-date on their websites.28 Taking that into account, the Commission’s services have offered an alternative solution for online sales: indicating that in a spirit of a pragmatic approach, a general indication should be given on the website that would accordingly inform the consumer of the different possibilities.29

However, this interpretation being not legally binding, it has only led to confusion among retailers (and control authorities) regarding whether statements conveying such different possibilities would comply with the FIC. The second rule in article 14, regarding the presentation of mandatory particulars, is also controversial (particularly from a consumer protection perspective). Based on

25

See Art. 6 of Directive 2011/83/EU on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, O.J. L 304/64, (2011), pp. 64–88 (hereinafter, ‘Consumer Rights Directive’ or CDR); and Chap. 2. 26 The reason for this exception may well be that different batches of foods have different dates of minimum durability (or ‘use by’ dates), while the information available either online or in food products’ catalogues used in other distance selling scenarios (such as phone sales) must refer to a type of food product instead of individual batches. Interestingly enough, when this legal provision was discussed, the European Commission rejected the industry’s request to allow operators to omit the information about the specific variety or origin of some ingredients as well, based on the same argument that justifies the omission of date marking. Indeed, just as every batch has a different date marking, some ingredients and their origin changing change from one batch to another. The reason for this rejection was that ingredient lists are at the core of food labelling rules, not only because of the need to protect consumers from allergies or intolerances, but also for citizens’ choices. 27 European Commission (2018), p. 6. 28 European Commission (2018), p. 6. 29 European Commission (2015), p. 1.

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that legal provision, in online sales, mandatory information should either be visible in the webpage in which the offer is embedded (such webpage being considered the ‘material supporting the distance selling’ in Option 1), or made available to consumers by using ‘an internet link/address, which would provide all necessary information for each specific product, without any supplementary costs for the consumer’30 (based on the European Commission services’ interpretation of Option 2). As analysed by Liuzzo et al. (2019), in practice, this second option has led to a situation where ‘after the identification of a product,’ consumers must perform 3.8 clicks in average to get to mandatory food information, and can in fact even ‘make the purchase even before having visualized and read the mandatory information.’31 Such flexible approach is quite surprising, when taking into account the vulnerability of consumers in online sales: (i) online, they cannot physically access the product to properly inspect its characteristics (nor can easily communicate with the supplier), therefore relying only in the information available online to decide whether to make a purchase; and (ii) the rates of non-compliance with food information law online are much higher than offline.32 But even when taking flexibility issues out of the equation, the Food Information Regulation falls short when it comes to providing legal certainty to online transactions. Be it in the webpage enabling the transaction or in the external link, how should online suppliers structure the mandatory information so that it meets the general presentation requirements of FIC?33 For instance, when are typographic requirements met? How close should the name of the product and the net content statement be so that they are in the same field of vision? As concluded by Rolandi (2017), the Food Information Regulation does not ‘give enough clear and strong legal framework capable of reinforcing the basis of the weak trust on the development of food e-commerce.’34

3.2.2

Responsibility for Food Information in Online Marketplaces

Regulation 1169/2011 provides low legal certainty when it comes to regulating food information in online marketplaces. But, as described in the next section, it has also failed to provide legal certainty regarding responsibilities for compliance with such information rules: in particular, regarding the role that online marketplace service providers have in ensuring compliance with information rules.

30

European Commission (2015), p. 3. Liuzzo et al. (2019), pp. 150–151. 32 See Chap. 1, and Stones (2016), Rücker (2018) and Höller (2019). 33 See Art. 13 of FIC. 34 Rolandi (2017), p. 243. 31

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Article 8 of the Regulation itemizes up to eight different rules to determine which party is responsible for compliance with consumer information rules (supplier? manufacturer? importer? retailer?). In all of those eight options, the party responsible is unequivocally identified as a ‘food business operator’ (FBO). For instance, the first rule is that ‘the food business operator responsible for the food information shall be the operator under whose name or business name the food is marketed;’35 and the last rule is that ‘food business operators that supply to other food business operators food not intended for the final consumer’ must ensure that those other FBOs are provided with sufficient information to enable them to meet their own information obligations.36 Therefore, in contrast to recent developments in EU consumer law, EU food legislation does not explicitly entrust marketplaces (or any other information society service provider for that matter) with responsibilities regarding information to consumers.37 They are not ‘regulatory units’38 when it comes to food information to consumers. Taking that into account, the only way to consider that online marketplaces have responsibilities regarding food information to consumers enshrined in this sectorspecific field of EU law (food law) would be to conclude that online marketplaces are, in fact, food business operators engaging (in some way) in the distribution of e-foods by the mere fact of acting as intermediaries in the transaction.39

35

See Art. 8(1) of FIC. See Art. 8(8) of FIC. 37 EU Consumer law requires online marketplaces to (i) display a link to the website of the Online Dispute Resolution mechanism (See Art. 14(1) of Regulation (EU) No 524/2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC, O.J. L 165/1 (2013), pp. 1–12 (hereinafter, ‘ODR Regulation’)); (ii) provide consumers, at the beginning of the ordering, with information about applicable delivery restrictions and accepted means of payment process (See Art. 8(3) of the Consumer Rights Directive); and from 2022, online marketplaces will be required to inform consumers about the main parameters determining ranking of the ‘offers presented to the consumer as a result of the search query and the relative importance of those parameters as opposed to other parameters’; about the nature of the supplier (trader or prosumer) and the extent to which consumer rights would apply accordingly; and of whether the obligations resulting from the transaction are shared between the supplier offering the goods and the provider of the online marketplace (See Directive (EU) 2019/2161 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules, O.J. L 328/7 (2019), pp. 7–28, (hereinafter, ‘Omnibus Directive’). See Chap. 2. 38 See Savin (2018). 39 It is not discussed that, when online marketplaces act as fulfilment centres for their supplier-users (storing and shipping e-foods from their own food establishments), or even use their own interface to offer e-foods themselves, they are undoubtedly food business operators carrying out activities relating the production, processing or distribution of food. As such, they must comply not only with food information rules but also with those legal requirements enshrined in other pieces of legislation governing food (such as: ensuring the safety of the e-foods; ensuring traceability and cooperating with control authorities in the event of incidents; registering their establishments; and notifying their activity to the competent authority). 36

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The definition of an FBO is enshrined in the General Food Law, and refers neither to suppliers, nor to traders within the meaning of the Consumer Rights Directive.40 GFL considers a ‘food business’ any undertaking, ‘whether for profit or not and whether public or private, carrying out any of the activities related to any stage of production, processing and distribution of food’.41 Are online marketplaces that do not engage in e-food production or processing, nor store and ship their suppliers’ products, but only connect the supply and demand of e-foods, partaking in e-food distribution activities within the meaning of GFL? There is no case law from the Court of Justice of the European Union on the concept of ‘food business’, FBO, nor on article 8 of the FIC. But there are two documents by the Commission’s services that point in the direction that online marketplaces may be considered FBOs with (some) responsibilities for compliance with food information rules. First, in 2013, a Q&A working document on the application of Regulation (EU) N 1169/2011 to distance selling, affirmed the following: Where foods are offered for sale by means of distance selling, the responsibility for providing mandatory food information before the purchase is concluded lies with the owner of the website.42

Still, one may argue that, in 2013 (therefore, at least two years before online platforms really caught the attention of the European Commission)43 this document was in fact referring to self-hosted websites set up by retailers to offer their own products. In this context, the retailer would be both the owner of the website and the food business operator in charge of providing mandatory food information before the purchase is concluded. But again, in 2015, a similar document seems to impose some responsibilities for food information on online marketplaces: the 2015 document argues that when ‘an internet site hosting a commercial web page that allows small caterers to sell their foods via the internet’, Article 8(3) of the Food Information Regulation makes ‘the owner of the website’ (the marketplace service provider?) a ‘food business operator’ responsible for ensuring that suppliers (in this case the caterers) are aware that the regulation applies to their activity.44 It also argues that, if ‘the owner of the website’ is not just hosting the offers but the consumer makes the payment ‘to’ the platform 40 The concept of ‘trader’ in consumer law corresponds to ‘any natural person or any legal person, irrespective of whether privately or publicly owned, who is acting, including through any other person acting in his name or on his behalf, for purposes relating to his trade, business, craft or profession,’ as defined in Art. 1(2) of Consumer Rights Directive. 41 Art. 3(2) of the General Food Law. 42 European Commission (2013), p. 7. 43 See EC Communication A digital single market strategy for Europe COM 2015/192 final (2015) and See EC Communication A Digital Single Market Strategy for Europe, COM 2015/0192 final (2015) and EC Communication Tackling Illegal Content Online Towards an enhanced responsibility of online platforms, COM 2017/555 final (2017). 44 Ar. 8(3) of Regulation 1169/2011 states that ‘food business operators which do not affect food information shall not supply food which they know or presume, on the basis of the information in

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while the supplier delivers the food to the consumer ‘for which an agreed amount is paid to the caterer by the owner of the website,’ then the owner of the website is in fact responsible for compliance with food information rules.45 Are the Commission’s services interpreting Article 8(3) of the Food Information Regulation in the light of the professional diligence rules enshrined in the Unfair Commercial Practices Directive,46 or is the document plainly considering that online marketplaces are, in fact, FOBs in any case?

their possession as professionals, to be non-compliant with the applicable food information law and requirements of relevant national provisions.’ 45 The document states the following: A business runs an internet site hosting a commercial web page that allows small caterer businesses to sell their foods via the internet. What responsibilities does the owner of the website have in ensuring the correct information is present on the individual pages of the small businesses? Given Article 8(3) of the FIC Regulation, the owner of the website must ensure that the catering businesses are aware that the FIC Regulation applies to the caterers and in particular: •

as far as prepacked foods are concerned: – that all mandatory food information, except the marking dates, must be available before the purchase is concluded (i.e. before the consumer decides to go ahead with the purchase) and must appear on the material supporting the distance selling or be provided through other appropriate means clearly identified by the food business operator, without any supplementary costs for the consumer; – that all mandatory particulars are available at the moment of delivery.

•

as far as non-prepacked foods are concerned: – at the very least, they need to provide the consumers with allergen/intolerance information before a purchase is concluded (i.e. before the consumer decides to go ahead with the purchase); – there may be additional mandatory information required by national authorities.

If the owner of the website is not just hosting those catering businesses but the consumers pay the owner of the website and the caterer delivers the food to the consumer for which an agreed amount is paid to the caterer by the owner of the website, then the owner must ensure that the caterer complies with the FIC Regulation and national rules. See European Commission (2015), p. 3. As a general rule, the Unfair Commercial Practices Directive makes the supplier, qualifying as a trader, responsible for compliance with pre-contractual information requirements established in consumer law. However, under the UCPD marketplaces must still act with a degree of professional diligence and therefore ensure that suppliers fulfil their information obligations. In that context, marketplaces must take steps to prevent suppliers from misleading consumers by taking appropriate measures to enable relevant third party traders to comply with EU consumer and marketing law requirements, and to help users clearly understand with whom they are potentially concluding contracts. See Article 5(2) of Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’), O.J. L 149/22 (2005), pp. 22–39 (hereinafter, ‘Unfair Commercial 46

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The implications of this question are not minor: classifying online marketplaces as food business operators responsible (to any degree) for food information would require platforms to overhaul the way they currently function, as today, most online marketplaces do not provide suppliers with any information regarding applicable legal requirements, nor do they screen the offers posted by third-party suppliers to ensure that food information rules are complied with. In fact, marketplaces rarely build mechanisms to prevent suppliers to publish offers without providing consumers with the food information required in Regulation 1169/2011 or in consumer protection legislation. Added to the fact that many small undertakings operate unaware of (at least some of) their obligations enshrined in Food Law, this circumstance results in many e-food offers lacking most mandatory particulars such as ingredients lists, as well as nutrition or allergens information. The issue of whether marketplaces may be considered FBOs with responsibilities for compliance with EU Food Law is far from being settled: in 2018, the European Commission’s overview report on official controls on internet sales of food in EU member states clearly rejected this possibility, indicating the following: Online platforms that act solely as third party service providers are not considered FBOs operating online, since they never own or/and physically handle the product. These are considered as information society service providers under the EU’s Directive 2000/31/EC hereafter the “EU e-Commerce Directive”. These service providers are not obliged to take action until they are informed of any non-compliant offers made available by third parties via their platforms.47

Does this 2018 document ‘overrule’ the position expressed in the previous reports? Were those simply out of context? Certainly, recent case law of the Court of Justice of the European Union (CJEU) justifies the position expressed in 2018. For instance, the Court’s ruling in case C-390/18 interpreted that the online marketplace should be classified, as a general rule, as an ‘information society service’ provider regulated under the e-Commerce Directive,48 because it is ‘in no way indispensable to the provision of’ the underlying service (in this book, e-food trade).49 Additionally, online marketplaces enabling e-food sales do not set caps on the price of e-foods, nor own elements necessary for the food supply, nor ‘exercise a decisive influence over the conditions under which

Practices Directive’), and EC Commission Staff Working Document Guidance on the implementation/application of directive 2005/29/ec on unfair commercial practices accompanying the document communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, a comprehensive approach to stimulating cross-border e-commerce for europe’s citizens and businesses, SWD 2016/0163 final (2016), p. 114. 47 European Commission (2018), p. 12. 48 ‘E-Commerce Directive’ stands for Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. L 178 (2000), pp. 1–16 (hereinafter, ‘e-Commerce Directive’). 49 Case-390/18, Airbnb Ireland, 2019 ECLI. 1112, paras. 50–55.

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the’ foods are supplied (to quote the Uber case).50 They should, accordingly, be considered ‘intermediaries’ offering a hosting51 service instead of food business operators, and as such, benefit from safe harbour protections enshrined in the E-Commerce Directive.52 Consequently, they should not be considered responsible for compliance with Food Law requirements. Still, the low legal certainty surrounding this legal question has resulted in a lack of consensus among control authorities in Member States regarding the role and responsibilities of online marketplaces when it comes to ensuring compliance with EU Food Law.53

3.3

Short Supply Chains in the E-Food Market

Although recent decades have seen overwhelming development of global food chains, short supply chains54 have developed alongside them and shown the potential of improving the fairness and sustainability of food systems.55 However, there are still regulatory barriers that hinder the growth of these chains: strict hygiene legislation, mandatory certification systems, and food information rules being among them. Stakeholders have called for legal requirements to be adapted to the particularities of these alternative food networks to let them thrive. For instance, EIP-AGRI Focus Group Innovative Short Food Supply Chain management declared in 2015 that ‘it is possible to implement EU rules with sensitivity, by making use of all the exemptions, flexibility and possible derogations on offer’.56 One of the methods of achieving that sensitive flexibility has been to exempt ‘direct sales’ of some food products from several Food Law requirements, and to allow Member States to adopt legislation that simplifies manufacturing, processing and even information rules for certain food business operators partaking in short 50

C-434/15, Asociación Profesional Élite Taxi vs Uber Systems Spain SL, 2017 ECLI. 981, para. 39. See Finck (2018) and Hacker (2018). 51 See Art. 14 of the e-Commerce Directive. 52 As analysed in Chap. 2, ‘safe harbour’ protections entail that platforms are exempt from secondary liability for the illegal activities of their users as long as they remove illegal content ‘expeditiously’ once informed of its existence by a third party, and that Member States cannot impose on intermediaries a general obligation to monitor the offers they host. See Art. 14 and 15 of the e-Commerce Directive. 53 See Chap. 8. 54 Defined as a ‘supply chain involving a limited number of economic operators, committed to co-operation, local economic development, and close geographical and social relations between producers, processors and consumers’ in Art. 2(m) of Regulation (EU) No 1305/2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) - OJ L 347, 20.12.2013, pp. 487–548. 55 See, among many other Renting et al. (2003), Kneafsey et al. (2013), Darolt et al. (2016) and Jarzebowski and Pietrzyck (2018). 56 EIP-AGRI Focus Groups (2015), p. 8.

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supply chains. The ultimate goal of these exemptions is to find the necessary balance between the adaptation of bureaucratic requirements to the size of the undertaking and maintaining food safety standards.57 Among the pieces of legislation that exempt direct sales of foods from compliance with legal requirements are the Food Information Regulation, the Food Hygiene Regulations58 and legislation governing organic foods in the EU. First, article 44 of the FIC exempts pre-packed foods for direct sale from general labelling rules on mandatory food information. As a result, labelling requirements for direct sales are mostly regulated by Member State law, the only EU requirement being that the label should include the name of the product and the allergen information. Second, article 1 of Regulation 852/2004, declares that ‘direct sales of small quantities of primary products’ do not fall within the scope of EU food hygiene rules, and explicitly allows Member States to adopt legislation in this area. Legislation governing organic foods opens the door to exempting primary producers selling their produce directly to the final consumer from being subject to the control system for organic products. None of these pieces of legislation provide a definition of what constitutes a ‘direct sale.’ In 2009, the European Commission partially filled that gap, in its guidance document on hygiene rules: the document identified that farmers selling vegetables or raw milk, or individuals selling foods at local markets, are examples that constitute direct sales of small quantities of primary products.59 But the document did not address the issue of online sales, a phenomenon virtually non-existent at the time. Are those same individuals selling the same products online engaging in a direct sale of their produce? Or does the fact that there is no simultaneous physical presence of supplier and buyer entail that direct sales do not exist in an online environment? As in other areas of European Union Law, such as copyright, the CJEU’s interpretative role is becoming key to clarify the application of EU Law in a digital space. This is exactly what happened in 2016, when the Court was called to analyse whether the exemptions established in organic production legislation for direct sales of organic primary produce also applied to online sales. Bound only by legal considerations, the ruling has resulted in a restrictive legal interpretation of what constitutes ‘direct sales.’

57

See Ministerio de Agricultura, Alimentación y Medio Ambiente (2013), p. 10. In particular the ‘Food Hygiene Package’, consisting of Regulation (EC) No 852/2004 on the hygiene of foodstuffs, O.J. 139/1 (2004), pp. 1–54; and Regulation (EC) No 853/2004 laying down specific hygiene rules for food of animal origin, O.J. L 139 (2004), pp. 55–205. 59 See EC Guidance document on the implementation of certain provisions of Regulation (EC) No 852/2004 On the hygiene of foodstuffs (2009), p. 4. 58

3.3 Short Supply Chains in the E-Food Market

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Case 289/16: Can Organic Products Be Sold ‘Directly’ to Consumers Online?

The judgment of the Court on case C289/16, in proceedings between Kamin und Grill Shop GmbH v Zentrale zur Bekämpfung unlauteren Wettbewerbs eV,60 answers the request for a preliminary ruling concerning the interpretation of Art. 28(2) of Council Regulation (EC) No 834/2007 of 28 June 2007, on organic production and labelling of organic products.61 This legal provision allows Member States to adopt rules exempting primary producers selling their produce directly to the final consumer from being subject to the control system specifically designed to verify compliance with organic product rules.62 This exemption applies ‘provided they do not produce, prepare, store other than in connection with the point of sale or import such products from a third country or have not contracted out such activities to a third party’.63 The narrow scope of the exemption aims to shorten the food chain so that traceability is quick and assured, minimising the possibility of food fraud. In the dispute, a food business based in Germany (Kamin) sells organic spices online. When selling its products directly to consumers in the brick-and-mortar market, Kamin does not need to adhere to the control system for organic products established in article 27 of Regulation 834/2007, in accordance with German laws implementing the exemption in Art. 28(2) of that EU piece of legislation, because those operations are considered ‘direct sales’. Now that Kamin is also selling its products online, the German authority considers that the exemption no longer applies. The authority’s argument is simple: when shopping digitally, consumers access products through an intermediation service provider such as a web host or internet service provider, hence no direct sale can exist. Not convinced by the authority’s position, the German Federal Court of Justice submitted a request for a preliminary ruling from the CJEU considering that the wording of Art. 28(2) could be interpreted in two ways: On the one hand, it would be possible to take the view that that sale must take place where the products are stored, and when both the operator or his sales personnel and the consumer are present at the same time. According to that interpretation, neither online retail trade nor any other type of mail order retail trade would fall within the exemption in Article 28(2) of

60

C-289/16, Kamin und Grill Shop GmbH vs Zentrale zur Bekämpfung unlauteren Wettbewerbs eV., 2017 ECLI. 758. 61 Council Regulation (EC) No 834/2007 on organic production and labelling of organic products and repealing Regulation (EEC) No 2092/91, O.J. L 189 (2007), p. 1. 62 Art. 27 of Regulation 834/2007 mandated Member States to set up a control system fit for verifying regulatory compliance by taking into consideration the particularities of organic production rules and—as said in Recital 39 of that piece of legislation—the ‘certain highly sensitive issues linked to the organic production method,’ such as food fraud. 63 In particular, Art. 28(2) of Regulation 834/2007 indicates that ‘Member States may exempt from the application of this Article operators who sell products directly to the final consumer or user provided they do not produce, prepare, store other than in connection with the point of sale or import such products from a third country or have not contracted out such activities to a third party’.

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Regulation No 834/2007. On the other hand, that provision could also be interpreted to mean that the requirement that the sale must take place directly excludes sales in which a third party has intervened.64

In other words: does the concept of direct sales refer to any sale performed between the primary producer and the consumer, with no intervention of a third food business operator? Or are direct sales only those transactions completed between primary producer and consumer, both simultaneously physically present when completing the transaction? The Court’s ruling answers this last question negatively: direct sales are only possible in brick-and-mortar markets. In particular, the judgement indicates that for products to be regarded as being sold ‘directly’, it is imperative for the sale to occur in the presence of both the operator or their sales personnel and the final consumer. Hence, because the producer (or its representative) and the final consumer meeting physically face-to-face is an essential element of direct sales, this is not possible in the digital market. Curiously enough, the Court reaches that conclusion because it appreciates that e-foods would normally be stored ‘in very large quantities,’ and that their delivery would typically be carried out by a third party (such as delivery and transportation services).65 In fact, differentiated storage systems and the involvement of this third party in the transaction seem to be the reasons for considering that e-foods cannot be sold ‘directly’ online. Inexplicably, the Court is rejecting the possibility the producer could organize and carry out the delivery itself. Further clarification and guidance from public authorities on this issue is therefore urgent and necessary. But for now, the ruling entails that those selling their organic produce online must adhere to the control system because the exemption in Art 28 (2) of Regulation 834/2007 does not apply to their online activity.

3.3.2

Are Exemptions for Direct Sales Applicable Online?

Questions remain as to whether the ruling means in fact that all the exemptions and scope limitations for direct sales established in other pieces of EU Law are also not applicable when selling online. Indeed, it does not seem far-fetched to anticipate that the Court’s reasoning will be applied by competent authorities when verifying compliance with other EU rules, thus the potential impact of this ruling on other areas of Food Law is not a minor issue. In areas such as food hygiene, the impact may be more severe because direct sales offline fall outside the scope of Regulation 852/2004 altogether, which entails compliance with fewer or more flexible food-handling rules and not having to apply for registration or approval of the establishments used. So, if the Court’s

64 65

See para.15 of Case C-289/16. See paras. 32 and 33 of Case C-289/16.

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interpretation of what constitutes a direct sale in organic production is applied to compliance with food hygiene law, the same producer that can legally sell raw milk directly to its neighbours in brick-and-mortar markets without complying with Food Hygiene Regulations should apparently adhere to its rules when selling online (and therefore even change its processes accordingly). Today, primary producers such as farmers are increasingly going digital, and are frequently present in online marketplaces—the CJEU’s judgment in case C-289/16 is a blow to their expectations in a platform economy context. The ruling, however, falls into line with the observations of several EU commissioned reports on short food supply chains: while the Joint Research Centre regretted that ‘internet shopping does not allow for interaction with staff or products which is often a key part of’66 direct sales, the same EIP-AGRI report which advocated for the need to adjust Food Law requirements to the needs of short supply chains concluded that ‘a challenge in internet sales is how to preserve consumer confidence in the authenticity of the produce and how to preserve the close relationship between producers and consumers’.67 This is particularly true when dealing with online marketplaces, given that buying decisions are greatly influenced by the workings of the platform itself. Indeed, as with website searches, consumers do not necessarily use the marketplace search engine ‘and filtering tools to fully and only consider [offers] that appear among the top search results’,68 while the raking of results (based on matching vendors and consumers with the platform’s algorithm)69 can be based on a variety of criteria that the buyer does not know or control.70 In the online marketplace, the algorithm always acts as the middleman.

3.4

Facing the ‘Collaborative’ Economy: Are Peer Traders and ‘Sharers’ Food Business Operators?

Peer-to-peer (P2P) food trade and digital ‘food sharing’ are also increasingly popular. In such initiatives, individuals offer all types of e-foods (from leftovers to their signature dishes prepared at home), aiming to reduce food waste and to partake in the creation of local and sustainable food systems, or simply to make some extra money. Peer-to-peer food trade frequently takes place via mainstream marketplaces, such as eBay and Facebook Marketplace. Additionally, e-foods are ‘shared’ via marketplaces of ‘collaborative’71 intent. Food sharing is not a new phenomenon,72 but 66

Kneafsey et al. (2013), p. 28. EIP-AGRI Focus Groups (2015), p. 18. 68 European Parliament (2011), p. 69. 69 See, among other, Hatzopoulos (2019). 70 See Fradkin (2017), pp. 5–6. 71 In reference to the ‘collaborative’ economy, see Chap. 1. 72 See Zurek (2016). 67

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platforms have changed the scale and the way in which it is carried out, expanding traditional “sharing” within the community ‘beyond an individuals’ social network or even region’.73 Online, individuals do not only not know each other, and often do not even meet or share their personal details, with this lack of prior relationships of trust generating obvious problems.74 Within the borders of the European Union, in 2012 the Dutch not-for-profit Shareyourmeal became one of the forerunners of e-food sharing. This marketplace was initially created to match neighbours offering foods with their most vulnerable peers to build a stronger sense of community and improve diet, a programme that was reported to have matched ‘over 360 people, generated over 14,800 meetings and shared 19,200 meals’.75 Similar initiatives quickly followed, mostly aiming to build on the initial success of US platforms like Josephine, where those who sign up make meals in their home and then post them online. After placing the order, the buyer picks up the food at a prearranged time. The chef gets 90 per-cent of the revenue, Josephine gets the rest.76

However, the experience of the US shows that this trade raises concerns about the legal status and safety of the foods shared, at least among those authorities in charge of the enforcement of legal requirements. Josephine, like many similar platforms on both sides of the Atlantic, was shut down in 2018 after several home cooks received cease and desist orders from health department officials, who considered that cooks and their establishments (their home kitchen) should comply with hygiene rules, including having a food safety management system based on Hazard Analysis and Critical Control Points (HACCP).77 Although US and European Union Food Law rules are not comparable, the uncertainty around these initiatives is similar in Europe, with authorities in Member States having different views on the applicability of food law to e-food transactions completed between peers. As reported by Vaughan and Daverio (2016): The second regulatory issue for Shareyourmeal [after taxation] is the absence of a distinction between food safety & hygiene standards for restaurants and commercial enterprises, and those for home cook food sharing models. For example, in Belgium, the food hygiene authority conducted visits to some home cooks to verify that they were applying food hygiene standards. This news spread rapidly to other home cooks, deterring them from joining the platform and curtailing their presence in Belgium.78

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See Hatzopoulos (2018), p. 1. Plana et al. (2019), pp. 60–61. 75 Vaughan and Daverio (2016), p. 19. 76 Carolan (2018), p. 50. 77 See Carolan (2018), pp. 39–54. 78 Vaughan and Daverio (2016), p. 9. 74

3.4 Facing the ‘Collaborative’ Economy: Are Peer Traders and ‘Sharers’ Food. . .

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The uncertainties regarding the legal framework governing peer transactions online are common to most activities in a collaborative economy setting.79 As reported by Katz (2015), Many providers and platforms cannot comply with local regulations. Others face uncertainty as a result of gaps or ambiguities in the law. To address these problems, sharing platforms have advocated strongly for new rules tailored specifically for P2P service providers.80

The popularity of e-food sharing has not been an expected turn. In 2018, Hatzopoulos forecasted that food was an “up-and-coming market sector81” for the collaborative economy. However, his statement referred to food services provided by either professionals or amateur chefs, such as BonAppetour, ‘a platform connecting locals with travelers who wish to dine at locals’ homes,’82 and to food delivery apps instead of food sale (for profit or not) platforms. In this context, individuals place products on the market and engage in a definitive transfer of ownership of the goods, a circumstance which is inevitably linked to the nature of foods (which cease to exist after use), but which does not fit well in a traditional, collaborative economy context, characterised by facilitating peer-to-peer traders to ‘share’ (instead of buying) goods temporarily, circumventing traditional economic intermediaries.83 From a legal perspective, it is unclear whether those suppliers have any obligations under EU Food Law, because there is no consensus regarding whether they should be considered FBOs. Let’s see. While the scope of European Union consumer law is mostly limited to businessto-consumer transactions (therefore transactions concluded between peers do not benefit from the protections enshrined in the consumer acquis),84 EU Food Law does not limit its scope to business-to-consumer transactions. Indeed, even if the concepts of ‘food business’ and ‘placing on the market’ might seem to refer exclusively to commercial operations by natural or legal persons acting in their professional capacity, the definitions of both concepts in the General Food Law do in fact have a much wider scope. Regulation 178/2002 indicates that ‘any undertaking, whether for profit or not and whether public or private’,85 may be considered a food business. Correspondingly, the regulation considers that ‘placing on the market’ refers to the holding of food ‘for the purpose of sale, including offering for sale or any other form of transfer, whether free of charge or not’.86 As a result, as a general rule, the nature of the 79

See, among many other, Katz (2015), Hatzopoulos (2018) and Davidson et al. (2018). Katz (2015), p. 1076. 81 Hatzopoulos (2018), p. 20. 82 Hatzopoulos (2018), p. 20. 83 See Hatzopoulos (2018), p. 7. 84 Peer exchanges are not covered by consumer law, as long as the individual prosumer placing the offer does not qualify as a ‘trader’ within the meaning of the Consumer Rights Directive. 85 See Art. 3(2) of the General Food Law. 86 See Art. 3(8) of the General Food Law. 80

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transaction or the supplier do not determine whether or not transactions fall within the scope of Food Law. In fact, Regulation 178/2002 only explicitly excludes from its scope the ‘primary production for private domestic use or to the domestic preparation, handling or storage of food for private domestic consumption’.87 Based on that provision, the food grown and/or prepared at home, and eaten in a private and domestic setting by friends and family, falls outside the scope of GFL. E-foods traded in the framework of peer-to-peer exchanges do not fall within that category: they might be grown in someone’s back garden and prepared, handled and stored in a domestic kitchen, but once offered online the food exits the sphere of ‘private and domestic consumption’ referred to in Regulation 178/2002. The result is that—technically at least—P2P transactions (including food sharing initiatives) should fall within the scope of the General Food Law. Offline, authorities have taken a practical approach to this phenomenon and normally do not consider that individuals acting outside their professional capacity are food business operators, and do not include P2P trade in their market surveillance activities unless an incident occurs, or a complaint is filed.88 A European Commission’s guidance published in 2009 validates this strategy, at least partially: it specifies that a private individual ‘who handles, prepares, stores or serves food occasionally and on a small scale’ should not be considered as an ‘undertaking’ subject to the requirements of EU food hygiene legislation.89 The rationale is simple: exchanges take place either between individuals who know each other, or at a specific location such as community markets, and therefore their steps can be retraced if an incident occurs. They also take into account that, because exchanges are conducted within a community (i.e. a neighbourhood or a town), the potential risks derived from the movement of foods are very limited. Traceability90 is relatively ensured, and risks are contained. But, online, food products ‘move from the scale of local community of neighbours, to the online community of strangers,’91 because in such online platforms (at least for now), the general practice is that anyone can open a profile to become an e-food supplier by simply providing an invented username and a valid e-mail address. As a result, the only information about the identity of the supplier (who rarely delivers the e-food in person) available to its peer buyers is frequently the supplier’s invented username. Consequently, online, traceability fades, as do the lines between sharing and trading.92 87

Art. 1(3) of the General Food Law. See Part 2 of this book. 89 EC Guidance document on the implementation of certain provisions of Regulation (EC) No 852/2004 On the hygiene of foodstuffs (2009), p. 1. 90 Traceability refers to the possibility to quickly identify who supplied a food product (‘one step back’) and whom it was transferred to (‘one step forward’). Art. 18 of the General Food Law requires that all food business operators ensure traceability, which is considered key to food safety. 91 See Zurek (2016). 92 See Hatzopoulos (2018), and EC Commission Staff Working Document Guidance SWD 2016/ 0163 final (2016), p. 120. 88

3.4 Facing the ‘Collaborative’ Economy: Are Peer Traders and ‘Sharers’ Food. . .

79

Can the EU Commission’s interpretation of what ‘undertaking’ means (which is no more than a decade old) stand in this context? This is first and foremost a question for debate in the framework of EU food policy discussions, but it is also a legal issue to which European Union institutions and authorities in Member States are failing to clearly respond. The lack of consensus is apparent, particularly among control authorities in Member States. As reported by Vaughan and Daverio (2016), in Belgium, the food hygiene authority conducted visits to some home cooks [using the online marketplace Shareyourmeal] to verify that they were applying food hygiene standards’.93

The uncertainty regarding the status of such initiatives has to do with the fact that, interestingly, the Commission’s argument to exclude individuals acting ‘occasionally and on a small scale’ from the scope of hygiene rules is based on a recital of Regulation 852/2004, instead of on an article. Recital 9 states that Union hygiene rules ‘should apply only to undertakings, the concept of which implies a certain continuity of activities and a certain degree of organisation.’ However, Article 1 of Regulation 852/2004, which defines the scope of that piece of legislation and identifies some activities (such as the direct sale of small quantities of primary products or the domestic preparation, handling or storage of food for private domestic consumption) that fall outside its scope, does not indicate that the size of the undertaking or the frequency of transactions is a relevant factor to determine whether undertakings are subject to its rules. The situation is similarly confusing when it comes to food information. Again, one of its Recitals indicates that Union rules should apply only to undertakings, the concept of which implies a certain continuity of activities and a certain degree of organisation. Operations such as the occasional handling and delivery of food, the serving of meals and the selling of food by private persons, for example at charity events, or at local community fairs and meetings, should not fall within the scope of this Regulation.94

It is reasonable to argue that those Recitals are creating a de facto legal threshold to separate food businesses from other undertakings, but the current lack of clarity has resulted in legal uncertainty for prosumers and the marketplaces enabling peer trading, to the point that many food sharing initiatives recommend their users to ensure compliance with regulatory requirements. Countries such as the United States of America (US) and Australia, with a long tradition of peer trading and homebased food businesses, are building frameworks to regulate these initiatives and separate prosumers from microentrepreneurs.95 The Food Standards Agency, in the United Kingdom, has published its recommendations

93

Vaughan and Daverio (2016), p. 19. Recital 15 of Regulation 1169/2011. 95 For instance, many US states have developed rules for ‘cottage food operations,’ flexibilising Food Law requirements and separating retailers, home-based operators, and prosumers. See Rice et al. (2018). 94

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on how to assess if individuals offering their products at community brick-andmortar markets or charity events have reached a level of continuity and organisation which is relevant to EU hygiene law.96 But, at least for now, there is no EU position on that matter. Given the popularity of food sharing initiatives, this is not a small issue. Are peer-to-peer e-food exchanges be bound by European Union Food Law, and to what extent?

3.5

Conclusions

There has been no formal roadmap to revise whether EU Food Law was appropriate for the digital era. In 2011, in an effort to shed some light on how to provide digital consumers with the mandatory information which traditionally appears on food labels, the Food Information Regulation established its first rules on mandatory food information for distance sales. Sadly, the resulting provisions do not provide much legal certainty when applied to e-food trade. Additionally, they are considered by many excessively burdensome, and for others they have missed the opportunity to clarify the role that online marketplaces have (if any) in food information for consumers. Moreover, in 2016, CJEU’s ruling in the Kamin case, interpreting that direct sales do not exist online (therefore casting a shadow over the applicability of many Food Law exemptions to online sales), revealed that some key concepts of EU Food Law do not translate well to the digital environment, a problem that may have a severe impact on the EU’s regulatory goals such as the promotion of short supply chains. In fact, the analysis carried out in this chapter shows that even the GFL might not stand the test of time. Bringing legal certainty to the e-food market is a matter of utmost importance, not only to let online grocery shopping thrive while holding possible food safety issues in check, but also to ensure consumers benefit from the same levels of protection, regardless of where they get their food. With no EU guidance on sight, it is worth exploring how Member States are facing the challenge of bringing EU Food Law into the platform economy.97

References Carolan M (2018) The food sharing revolution: how start-ups, pop-ups, and co-ops are changing the way we eat. Island Press, Washington, DC

96 97

See Chap. 7. See Part 2 of this book.

References

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Darolt M, Lamine C, Brandenburg A et al (2016) Alternative food networks and new producerconsumer relations in France and in Brazil. Ambiente & Sociedade 19(2):1–22. https://doi.org/ 10.1590/1809-4422ASOC121132V19226 Davidson NM, Finck M, Infranca JJ (eds) (2018) Cambridge handbook of the law of the sharing economy. Cambridge University Press, Cambridge EIP-AGRI Focus Group (2015) Innovative Short Food Supply Chain management. https://ec. europa.eu/eip/agriculture/sites/agri-eip/files/eip-agri_fg_innovative_food_supply_chain_man agement_final_report_2015_en.pdf. Accessed 13 Sep 2019 European Commission (2013) Questions and answers on the application of the regulation (EU) N 1169/2011 on the provision of food information to consumers. https://ec.europa.eu/food/ sites/food/files/safety/docs/labelling_legislation_qanda_application_reg1169-2011_en.pdf. Accessed 10 Sep 2019 European Commission (2015) Issues relating to distance selling in the context of Regulation (EU) N 1169/2011 on the provision of food information to consumers. http://www.aecosan. msssi.gob.es/AECOSAN/docs/documentos/seguridad_alimentaria/gestion_riesgos/Distance_ Selling.pdf. Accessed 10 Sep 2019 European Commission (2018) Overview report official controls on internet sales of food in EU Member States. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2772/57153 European Parliament (2011) Consumer behaviour in a digital environment. IP/A/IMCO/ST/201008. Brussels. https://doi.org/10.2861/32817 Finck M (2018) Distinguishing internet platforms from transport services: Elite Taxi v. Uber Spain. Common Mark Law Rev 55(5):1619–1639 Fradkin A (2017) Digital marketplaces. In: Vernengo M, Caldentey EP, Rosser BJ Jr (eds) The New Palgrave dictionary of economics. Palgrave Macmillan, London Hacker P (2018) UberPop, UberBlack, and the regulation of digital platforms after the Asociación Profesional Elite Taxi Judgment of the CJEU. Eur Rev Contract Law 14(1):80–96. https://doi. org/10.1515/ercl-2018-1005 Hatzopoulos V (2018) The collaborative economy and EU law. Bloomsbury Publishing, London Hatzopoulos V (2019) Vers un cadre de la régulation des plateformes? Rev Int Droit Économique 33(3):399–416. https://doi.org/10.3917/ride.333.0399 Höller A (2019) An analysis of the European Legal Framework for e-commerce in relation to the information obligation applicable to pre-packed food: how consistent are German Webshops in their compliance with the mandatory food labelling rules applicable to pre-packed food?. Thesis, Wageningen University Jarzebowski S, Pietrzyck K (2018) The concept of short supply chains in the food economy. In: Wigier M, Kowalski A (eds) The Common Agricultural Policy of the European Union – the present and the future EU Member States point of view. Institute of Agricultural and Food Economics - National Research Institute, Warsaw. https://doi.org/10.30858/pw/ 9788376587431.15 Katz V (2015) Regulating the sharing economy. Berkeley Technol Law J 30(4):1067–1126. https:// doi.org/10.15779/Z38HG45 Kneafsey M et al (2013) Short food supply chains and local food systems in the EU. A state of play of their socio-economic characteristics. Publications Office of the European Union, Luxembourg. https://doi.org/10.2791/88784 Lex Studio Legale Alimentaria (2010) Shortcomings in enforcing EU food law. What does EU food law stand for? p 32. http://regulation.upf.edu/dublin-10-papers/2F4.pdf. Accessed 9 Apr 2021 Liuzzo G, Rolandi S, Serraino A, Piva S, Giacometti F (2019) Pre-packaged food products Business to Consumer (B2C) distance selling and information obligations in Italian mass market retailers. Ital J Food Saf 8(3):7713. https://doi.org/10.4081/ijfs.2019.7713 Melton J (2020) The coronavirus pandemic lifts global online grocery sales. https://www. digitalcommerce360.com/2020/07/20/the-coronavirus-pandemic-lifts-global-online-grocerysales/. Accessed 16 Oct 2020

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Ministerio de Agricultura, Alimentación y Medio Ambiente (2013) Canales cortos de comercialización en el sector agroalimentario. https://www.mapa.gob.es/es/alimentacion/ temas/desperdicio/Estudio_CCC%20con%20observaciones_tcm30-78860.pdf. Accessed 1 Dec 2010 Nielsen Company, the (2017) What’s in-store for online grocery shopping omnichannel strategies to reach: crossover shoppers. 2017 Connected Commerce Report. https://www.nielsen.com/wpcontent/uploads/sites/3/2019/04/nielsen-global-connected-commerce-report-january-2017.pdf. Accessed 18 Nov 2020 Plana MJ, Baroni MJL, Cabré L (2019) Buying medicines and foods online: bioethical issues. Edicions de la Universitat de Barcelona, Barcelona Purnhagen K, Schebesta H (2019) Food labelling for consumers: EU law, regulation and policy options. http://www.europarl.europa.eu/RegData/etudes/STUD/2019/608871/IPOL_STU (2019)608871_EN.pdf Renting H, Mardsen T, Banks J (2003) Understanding alternative food networks: exploring the role of short food supply chains in rural development. Environ Plan A 35(3):393–411. https://doi. org/10.1068/a3510 Rice C, Leib EB, Balkus O et al (2018) Cottage food laws in the United States. Food Law and Policy Clinic, Harvard Law School Rolandi S (2017) Food E-Commerce as a new tool for the growth of the economy. European Legal Framework for Information of Prepacked Food Sold Online. https://doi.org/10.1007/978-3-31964756-2_11 Rücker M (2018) Bringt’s das? Lebensmittel-Onlinehändler im Ver-gleich. Foodwatch e.V., Retrieved on May 7, 2019 from https://www.foodwatch.org/fileadmin/Themen/ Lebensmittelkennzeichnung/Dokumente/2018-03_Lebensmittel-Onlinehaendler-imVergleich_foodwatch.pdf Savin A (2018) EU regulatory models for platforms on the content and carrier layers: convergence and changing policy patterns. Nord J Comm Law 1:7–37 Stones C (2016) Online food nutrition labelling in the UK: how consistent are supermarkets in their presentation of nutrition labels online? Public Health Nutr 19(12):2175–2184 Van der Meulen B (2010) The function of food law: on the objectives of food law, legitimate factors and interests taken into account. Eur Food Feed Law Rev 5(2):86. Retrieved from http://www. jstor.org/stable/24325791 Van der Meulen B (2013) Structure of European food law. Laws 2:69–98. https://doi.org/10.3390/ laws2020069 Vaughan R, Daverio R (2016) Assessing the size and presence of the collaborative economy in Europe. Publications Office of the European Union, Luxembourg. https://doi.org/10.2873/ 971404 Zurek K (2016) Food sharing in Europe: between regulating risks and the risks of regulating. Eur J Risk Regul 7(4):675–687. https://doi.org/10.1017/S1867299X00010114

Chapter 4

Regulating Food Official Controls in the Digital Single Market

4.1

Introduction

As stated in the preamble of Council Directive 89/397/EEC,1 the ‘trade in foodstuffs is one of the most important aspects of the common market.’ To protect this trade, the European Union has built a complex regulatory framework governing ‘food and feed in general, and food and feed safety in particular.’2 It imposes on ‘food business operators’3 (FBO) the primary responsibility for ensuring compliance with EU Food Law requirements. Complementary to FBO’s actions, public enforcement activities to verify compliance is the responsibility of ‘competent authorities’4 in Member States.5 The ‘measures (aimed at restoring food safety) and sanctions (aimed at punishing infringements),’6 carried out by domestic authorities are known as ‘official

1

Council Directive 89/397/EEC of 14 June 1989 on the official control of foodstuffs, O.J. L 186 (1989). 2 Art. 1(2) of Regulation (EC) No 178/2002 laying down the general principles and requirements of Food Law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002). 3 Defined as ‘the natural or legal persons responsible for ensuring that the requirements of Food Law are met within the food business under their control,’ in Art.3(3) of the General Food Law. 4 The concept of competent authority refers to those authorities of a Member State responsible for the organisation of official controls (and of other official activities) on food and feed. The use of the term 'competent authorities' (plural) ‘designates a subordinate concept which includes all those authority/authorities which is/are competent in the ten areas’ of Union agri-food chain law that fall within the scope of the Regulation. See Menditto et al. (2017). 5 See Art. 17 of Regulation (EC) No 178/2002. 6 Scholten (2017), p. 198. © Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_4

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controls.’7 Since late December 2019, official controls in the EU are carried out in accordance with Regulation 2017/625,8 known as the ‘Official Controls Regulation’ (OCR). The OCR was among the first pieces of legislation to include specific provisions regulating public enforcement of EU Law governing consumer goods in the digital market. This chapter describes its new provisions govern public enforcement of EU Food Law online (or e-nforcement).9

4.2

Food Official Controls: Increasingly a EU Matter

While ‘most of substantive Food Law in the EU consists of uniform rules and regulations enacted at EU level’,10 both European Union and Member States’ legislators have a role to play in regulating official controls.11 First, the general principles and mechanisms that govern domestic official control systems are harmonised at the EU level, to promote consistency of control activities throughout the Union. Then, it is the Member States’ responsibility to build their control structures, plan and implement controls, according to detailed procedures defined in Member State law. This distribution of regulatory responsibilities results in some differences arising when looking at the organisation and implementation of enforcement across the European Union (i.e., regarding how to carry out an inspection, taking a ‘fair sample,’12 or the type of measure or sanction to be adopted in the event of non-compliance). To prevent those differences from becoming barriers to the free 7 ‘Official controls’ are defined in Art. 3 of Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products. It amends Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and the Council; Council Regulations (EC) No 1/2005 and (EC) No 1099/2009, and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC; and it repeals Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and the Council, Council Directives 89/608/EEC, 89/662/EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC, and Council Decision 92/438/EEC, O.J. L 95/1, as the ‘activities performed by the competent authorities, or by the delegated bodies or the natural persons to which certain official control tasks have been delegated in accordance with this Regulation, in order to verify’ compliance with Food Law by the operators. 8 Regulation (EU) 2017/625. 9 The term ‘e-nforcement’ is used to identify the control activities and authorities’ powers which shall only be used regarding online retail (for instance, the order of cessation of online activities). See Chap. 1. 10 Nieto Martín et al. (2016), p. 71. 11 See Art. 17 of Regulation (EC) No 178/2002 (2002). 12 Term referring to those samples that have been taken, handled and labelled ‘in such a way as to guarantee both their legal and analytical validity,’ as described in 16(3) of Regulation 882/2004, and now Art. 34(5) of the Official Control Regulation.

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movement of foods,13 as well as to compensate for the EU’s enforcement deficit,14 the European Union has gradually harmonised official controls. The Official Controls Regulation is the most recent step in this harmonisation path. It repealed Regulation 882/200415 (also known as the ‘Compliance Regulation’), which was itself a turning point for EU public enforcement regimes: a rare piece of legislation which defined the general approach of regulating, designing and implementing official controls at national level in a comprehensive manner.16 Regulation 882/2004 provided guidelines to ensure consistency of controls across the European Union. Until its adoption, a set of Directives17 adopted in the 1980s and 1990s regulated specific aspects of public enforcement, but still gave Member States a wider margin of discretion when establishing their national control systems. But, as was acknowledged by the European Commission in its White Paper on Food Safety in 2002, those rules had proven insufficient to ensure food safety after the mad cow crisis: the new EU legal framework for official controls was designed to ensure that authorities gained the ability to trace products through the whole food chain (instead of focusing on foods already placed on the market), and to take rapid, effective, safeguard measures in response to health emergencies throughout the food chain.18 Compared to its predecessor, the OCR provides an even greater degree of harmonisation of official controls across the EU food chain, and expands the scope of the official controls ‘from only Food Law to now covering almost the entire agrifood sector.’19 As examined in the next sections, part of the harmonisation efforts have been put into dealing, for the first time at the EU level, with the challenge of public enforcement of ‘Union Agri-food Chain Legislation’20 (including Food Law as defined in the General Food Law) in the digital single market.

13

See Preamble of Council Directive 89/397/EEC. See Adriaanse et al. (2008), pp. 86–89. 15 Regulation (EC) No 882/2004 on official controls performed to ensure the verification of compliance with food and feed law, animal health and animal welfare rules, O.J. L 164 (2004) (hereinafter, ‘Compliance Regulation’). 16 Before the adoption of the Compliance Regulation, Council Directive 89/397/EEC only laid down the general principles for the performance of official control, ignoring organisation issues, and avoiding any indication regarding the measures and sanctions available to competent authorities in the event of non-compliance. 17 In particular, they governed particular issues relating to the inspection of live animals (i.e. Council Directive 95/53/EC fixing the principles governing the organization of official inspections in the field of animal nutrition, O.J. L 265 (1995) and Council Directive 85/73/EEC on the financing of health inspections and controls of fresh meat and poultry meat, O.J. L 32 (1985)) and the methods of sampling and analysis for the official control (i.e. Council Directive 85/591/EEC concerning the introduction of Community methods of sampling and analysis for the monitoring of foodstuffs intended for human consumption, O.J. L 372 (1985)). 18 See EC White Paper on food safety, COM 1999/719 final (2000), p. 3. 19 van der Meulen (2019), p. 625. 20 As analysed by Menditto et al. (2017), the term 'Union agri-food chain legislation' (UAFC legislation), is quoted in the third recital of the Regulation, is ‘neither defined nor mentioned in 14

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Understandably, neither the Compliance Regulation nor Member States’ rules governing official controls (frequently adopted in the early 2000s) included rules for e-nforcement: they were exclusively designed for the traditional brick-and-mortar market. Nothing was said about monitoring ‘distance selling’,21 ‘distance contracts’22 or ‘activities undertaken by means of distance communication’,23 all concepts which are frequently used in EU legislation to refer to internet sales as well as to any other transactions carried out without the buyer and the supplier being present in the same place (for instance, those conducted on the phone). In fact, as will be discussed in this chapter, domestic legislation adopted in accordance with the Compliance Regulation presented unforeseen and undesired obstacles to the control of food sold online. For instance, in most Member States, not only was there no specific legal basis for using mystery-shopping techniques (which entail a competent authority purchasing a food product anonymously, without the operator being aware of its real identity), but in fact the drafting of domestic inspection rules (dictating that inspectors were to identify themselves to the FBO before initiating any control activity) actually prevented control authorities from using such techniques.24 The new Official Controls Regulation aims to overcome most (if not all) of these obstacles by the means of greater harmonisation of control powers and procedures, so that competent authorities can bridge the enforcement gap in the digital single market.

the substantive provisions, but found 41 more times within the 99 recitals of the act, [and] identifies a comprehensive legal paradigm that will contribute, according to the EU legislator, “to a better functioning of the internal EU market”.’ It is expected to allow authorities to monitor compliance of not only Food Law stricto sensu, but of other legal provisions affecting the workings of the agrifood chain (identified in Art.1(2) of the Official Controls Regulation. In fact, The Regulation builds to some extent a bridge between these two paths, food safety and the CAP, in the direction of a systemic framework, enhancing the responsibility of the subject which in any way operates within the biological cycle or the environment, regardless of the final goal of such activity, food or otherwise. See Albissinni (2019), p. 125. Art. 14 of Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/ EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304(2011), pp. 18–63. 22 Art.2(17) of Directive 2011/83/EU on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, O.J. L 304/64, (2011), pp. 64–88 (hereinafter, ‘Consumer Rights Directive’ or CRD). 23 Art. 2(2)u of Regulation (EU) No 1169/2011. 24 See European Commission (2018), p. 19. 21

4.3 EU E-nforcement Rules Under Regulation 6017/625

4.3

87

EU E-nforcement Rules Under Regulation 6017/625

For the digital market of foods to reach an acceptable level of Food Law compliance, competent authorities in Member States must monitor and enforce Food Law online. Official controls must be carried out at the production and distribution stage.25 Accordingly, the Regulation includes specific e-nforcement provisions applicable to the verification of compliance with Food Law requirements in the digital market, which are explored in the following sections.

4.3.1

FBOs Obligation to Notify Online Activities

Controlling production is considered to be the most effective way of minimising risks for consumers, because it allows ‘non-compliance’26 that may be systemic or affect several batches of production to be assessed in a single inspection. The object of this type of control can be to check not only that the premises comply with legal requirements, but also the food handling procedures, documentary records, or selfsurveillance systems put into place by the operator to minimise non-compliance. In order to control production, competent authorities must have detailed information on the identity of active food business operators—on the location of their ‘food establishments’27 and on the activities that take place there. With that in mind, Regulation 882/200428 mandated that Member State law should define a procedure for food businesses to apply for the registration of the establishments from which they operate.29 Registration would allow for the proper keeping and updating of a public list of active food business operators, which could be used to plan official controls and verify compliance. It was then Member States’ duty to adopt legislation that clearly identified which competent authority (local,

Indeed, Article 1(2) of the Official Controls Regulation states that its rules apply to all ‘controls performed for the verification of compliance with the rules, whether established at Union level or by the Member States,’ regardless of the means of sale. No exception is made for the food products in the digital single market. 26 It must be noted that ‘non-compliance’ only requires a ‘deviation from what is required by the law, (...) regardless of whether the detected non-compliance represents is illicit (administrative offense);’ see Rossi et al. (2020), pp. 126–127. 27 The concept of ‘establishment’ is still defined as ‘any unit of a food business,’ based on Art. 2 of Regulation (EC) No 852/2004 on official controls performed to ensure the verification of compliance with food and feed law, animal health and animal welfare rules, O.J. L 164 (2004). 28 In particular, Art. 31 of the Compliance Regulation dictated that competent authorities were to establish procedures for feed and food business operators to follow when applying for the registration of their establishments and for keeping an up-to-date public list of active business operators. 29 The procedure was to be defined in accordance with Regulation (EC) No 852/2004. Art. 6 of that piece of legislation, which simply states that operators shall notify the authority of each establishments under its control, ‘in the manner the latter requires’ in national law. 25

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regional, central) was responsible for registration, to outline a procedure for operators to apply for registration and to create a list of establishments and operators active within their territory. The information in that list was to be used to map active food businesses (and their premises) in a particular territory and to plan controls accordingly. The EU Compliance Regulation did not detail the information that was to be requested from operators during the registration process. Instead, it was each Member State (and in some cases, each regional or local authority) that decided what information was mandatory. In practice, this resulted in domestic legislation and administrative registration forms requesting very scarce information, and certainly not enough to identify the establishments used in e-food trade.30 For instance, in Spain, legislation governing the registration of food establishments for the purpose of official controls required FBOs to indicate the legal name of the business and its representative, its Tax ID number, the location of the food establishment, and ‘the object of all its activities’ carried out there.31 In practice, this mandate did not oblige FBOs to submit detailed information regarding their activities: they would only register using a specific key that identified the type of foods handled in the premises (for instance, key 10 referring to establishments dealing meat and meat products and key 15 to those dealing with milk and milky products), and a second key identifying one of the following six categories: manufacturing/ processing/transformation, packaging, distribution, storage, import or ‘other specific phases of the production chain.’32 Even worse, when an establishment was used for more than one activity, it was only obliged to register the activity that was more likely to entail higher risks. For example, a food operator which both produces and sells its products to the final consumer in the same food establishment should register its establishment in category 1 (manufacturing/processing/transformation). Similarly, registration forms in Germany33 and the United Kingdom34 contained very little information about the activities carried out in an establishment. In order to fill this information gap, Regulation 2017/625 imposes on food business operators the obligation to provide competent authorities with 30

See European Commission (2018), p. 13. See Art. 6 of Real Decreto 191/2011, sobre Registro General Sanitario de Empresas Alimentarias y Alimentos, BOE 57 (2011). 32 See Agencia Española de Consumo, Seguridad Alimentaria y Nutrición (2017), pp. 3–4. 33 As in Spain, forms require the identification of the business itself (the name and identification number of the business, its address, the name of a representative responsible for the application procedure), the location of the establishment, and nature of the activities it carries out. The German guidance paper for a nationwide framework recommends that application forms require FBOs to tick a box identifying the type of products handled in the establishment (for example, beverages), and the general activity carried out (for example, processing or packing, among others). See Büchter et al. (2011) and Federal Ministry of Food and Agriculture (2012). 34 The Food Standards Agency in the UK produced a model application which requires FBOs to provide its full name and address as well as the name and address of the food business, the location establishment and, like in Germany, ticking a box selecting a type of activity such as retailing, distribution or warehousing, among many others. See Food Standards Agency (2008). 31

4.3 EU E-nforcement Rules Under Regulation 6017/625

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at least the following updated details: (a) their name and legal form, and b) the specific activities they carry out, including activities undertaken by means of distance communication, and the places under their control.35

This provision has the significant potential to facilitate the appropriate planning of official controls by providing competent authorities with much needed information on the type of operators and the activities which are carried out within their jurisdiction.36 Not only can it facilitate the identification of food establishments actively engaged in online food trading, it also provides a legal basis for actively requesting businesses to provide detailed information about activities carried out online. In fact, with the current wording, competent authorities may be able to obtain information about the websites and even the online marketplaces which are being used, the username under which the products are offered, or a list and number of products traded. However, in the absence of further EU guidelines, it is now the responsibility of Member States to determine which information should be submitted to the proper authorities without it constituting a ‘disproportionate administrative burden’37 for businesses.

4.3.2

EU Regulation of Mystery Shopping

Controlling distribution (that is: performing checks on food products that are made available to the final consumer) is key to verifying compliance with Food Law requirements. In the brick-and-mortar market, controls on distribution are mostly carried out by control staff visiting a retail store, choosing which item to control, and taking a sample of the product in the presence of the store manager (or its representative), to verify whether its ingredients, raw materials, packaging and labelling comply with applicable legal requirements. Transposing this practice to the digital market, in order to control e-foods’ distribution properly, authorities search for online offers, review the information about the food and the FBO posted in the offer, and finally take a sample to verify compliance. In order to ensure that online suppliers do not know that an e-food has been ordered in the framework of official controls, authorities use mystery shopping techniques to purchase the product.38

35

See Art. 15 of the Official Control Regulation. In this book, the term ‘jurisdiction’ is used to refer to the area (both substantive and territorial) over which a competent authority has the responsibility to perform official controls. 37 As stated in the last paragraph of Art. 15 of the Official Control Regulation. 38 Mystery shopping (or test purchases) allows competent authorities to purchase a product anonymously, inspecting it and using the evidence gathered for law enforcement purposes. Anonymity in the purchase is required to ensure that the product that is actually delivered has not been purposely chosen by the food business operator. In order to perform mystery shopping, authorities require specific equipment that does not reveal their identity or location. This does not only include special software to ensure anonymity, but also payment methods that are suited to this task. 36

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Member States’ laws define the administrative procedure that control staff must follow when controlling distribution. The Compliance Regulation of 2004 gave Member States a wide margin of discretion to regulate, resulting in a broad spectrum of regulatory options. Many Member States defined a step-by-step process for carrying out an inspection leading to taking a sample for analysis, frequently beginning with the rule that control officials are legally obliged to identify themselves upon arrival at the retail store, prior to beginning the control activity. The rationale behind giving the FBO the right to witness sampling had traditionally been to ensure that he could cross-examine the procedure, and protect the FBOs right of appeal. In this context, authorities in many Member States considered that, because domestic laws required officials to identify themselves before controlling, and required a representative of the business to be present before or even during sample taking, samples obtained through mystery shopping were not suitable for enforcement.39 Article 36 of the OCR, regulating the sampling of animals and goods offered by means of distance communication, was written with such test purchases in mind.40 The first paragraph of this legal provision clarifies that mystery shopping is a legal technique in the EU, by stating that ‘samples ordered from operators by the competent authorities without identifying themselves may be used for the purposes of an official control.’ However, while the first paragraph of Article 36 clearly procuring e-foods for sampling using mystery shopping, authorities in Member States were still uncertain of whether they had to summon the FBO before carrying out any control activity on the sample. It took two drafts (4 years apart) to obtain a wording that clearly allowed authorities to sample for analysis without the FBO’s presence.41 In June 2016, Article 36’s second draft clarified that FBOs could be informed that an e-food was purchased for enforcement once the sampling process has been completed.42

39

See, for Germany, Schreiber et al. (2015), p. 291. Recital 49 of the Official Controls Regulation openly declared that ‘for the purposes of performing official controls on trade which take place through the internet or other remote means, competent authorities should be able to obtain samples through anonymously placed orders (also known as mystery shopping) which can then be analysed, tested or subject to a verification of compliance.’ 41 The 2013 draft indicated that, when samples were taken from products obtained using mystery shopping techniques, authorities were to ‘take all steps to ensure that the operators (...) are informed that such samples are being taken in the context of an official control and, where appropriate, analysed or tested for the purposes of such official control.’ See EC Proposal for a Regulation to ensure the application of food and feed law, rules on animal health and welfare, plant health, plant reproductive material, plant protection products and amending Regulations (EC) No 999/2001, 1829/2003, 1831/2003, 1/2005, 396/2005, 834/2007, 1099/2009, 1069/2009, 1107/2009, Regulations (EU) No 1151/2012, [....]/2013, and Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/ 119/EC, 2008/120/EC and 2009/128/EC (Official controls Regulation), COM 2013/265 final (2013). 42 In particular, Art. 36(2) of the second draft indicates that FBOs shall be informed ‘once [the competent authorities] are in possession of the samples’ and that such samples ‘have been taken’. 40

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Reaching such a consensus has been an important step forward in e-nforcement. However, there has been virtually no discussion of how to limit the impact that this control technique may have in businesses’ right to cross-examination and appeal (and therefore, to an effective remedy). Indeed, when domestic legislation granted operators the right to be present during the sampling process (from picking the item to specimen storage), it did so to ensure that businesses could witness that the legal procedure was being followed and to ensure cross-examination was possible. Now that Regulation 2017/625 authorizes taking samples in absence of the operator, Member States should revise their sampling procedures so that cross-examination is still possible. Issues such as how to record and store documentary evidence must be addressed to ensure that, after sampling, businesses can still challenge enforcement decisions.

4.3.3

Official Controls on Parcels from Third Countries

With the digitalisation of retail, it has become commonplace to buy consumer goods, including foods, that are shipped from third countries. Regardless of their origin, once the parcel reaches the EU, it falls within the scope of official controls.43 But authorities’ capabilities to verify compliance with EU Law are once again very limited in this area. As identified by Europol, ‘products sold on the Internet are usually distributed in small parcels via postal and express freight services’44 instead of entering EU territory with an approved supplier and an organised and recognised importer, thus avoiding inspection at border control posts or at an approved warehouse, ‘which makes it difficult to identify and control their entry and circulation within a certain territory’.45 This is not only a severe enforcement problem, but also a food safety issue, as there is no guarantee that undeclared foods are shipped safely (for instance, maintaining the cold chain). With the aim of improving controls on foods shipped from third countries, the Official Controls Regulation stipulates that the European Commission shall adopt delegated acts establishing supplementary rules for the performance of control activities (including sampling) on food products ordered online and delivered from a third country.46 As indicated in Article 53 of the Regulation, these supplementary rules should ensure that Food Law compliance checks can be carried out by customs authorities or other public authorities that have access to the parcel. Whichever authority identifies that there is food in the parcel should legally be able to control its

43

See Art. 54 of the Official Controls Regulation. See Europol (2017). 45 Plana et al. (2019), p. 53. 46 See Art. 77 of the Official Controls Regulation. 44

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compliance with EU Food Law requirements. However, as yet, these rules have not been adopted.

4.3.4

Regulating the Order of Cessation of Online Sales

Once authorities determine that a food (or its manufacturing, packaging, storing or distribution process) does not comply with Food Law, swift measures must be adopted to remediate the situation. The Compliance Regulation included a non-exhaustive list of measures that could be taken (i.e., the ordering of the alteration of labels; the removal or destruction of goods; the closure, for an appropriate period of time, of all or part of a business, food establishments, holdings or other premises used in food production or distribution). It also included, as does Regulation 2017/ 625, a final statement stating that Member States could establish ‘any other measure the competent authority deems appropriate’ in order to fight non-compliance.47 Many Member States opted to implement the EU mandate by adopting a closed list of measures to remediate non-compliance. But again, these lists were designed only with the brick-and-mortar market in mind. They did not include measures such as ordering businesses to stop their online sales, nor ordering platforms and other ‘information society services providers’48 to remove non-compliant content. As a result, even when authorities had successfully completed control activities following due process, with non-compliance being officially established, the only measures that could be adopted to achieve remediation were those affecting brickand-mortar. With this in mind, Regulation 2017/625 provides Member States with an explicit legal basis for regulating the order of cessation of online activities: enshrined in the second paragraph of Article 138, it specifies that competent authorities can ‘order the cessation, for an appropriate period of time,’ of the activities carried out through the Internet. The order of cessation of online activities means that competent authorities can order FBOs to stop offering products in the digital market, regardless of the channel they use to place their offers (whether their own website or other platforms such as online marketplaces). Indeed, Article 138 states that the order of cessation can focus on activities carried out through any websites that the operator ‘operates or employs’. Therefore, if a food business operator employs online marketplaces to offer its products, an order of cessation of online activities should also stop sales through this channel. As with any similar measure, there is a process that must be followed when ordering the cessation of activities to ensure due process: the competent authority

47

See Art. 54 of the Compliance Regulation and Art. 138 of the Official Controls Regulation. Within the meaning of Art. 2 Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. L 178 (2000), pp. 1–16 (hereinafter, ‘e-Commerce Directive’). 48

4.4 Conclusions

93

must notify the operator in question of the decision and specify its reasons. The notification of the order should state the period to which it applies and its scope, which could affect ‘all or part of the activities.’49 The order of cessation of online activities is not to be confused with competent authorities’ use of platforms’ notice-and-takedown (NTD) procedures, addressed to information society service providers instead of the FBO.50 While NTDs are commonly triggered by control staff to obtain the speedy removal of non-compliant products from the e-food market, the Official Controls Regulation does not include sector-specific rules regarding their use. Their use is possible, given that the second paragraph or Article 138 clearly indicates that ‘competent authorities shall take any measure they deem appropriate to ensure compliance,’ but there are no rules in the OCR as to when and how to use them. This reality raises an important question: under which circumstances is it (and should it be) permissible to initiate a notice-and-take down procedure to eliminate an offer of an e-food? In the absence of specific provisions in the Regulation, the answer may be found in the e-Commerce Directive, EU soft-policy instruments, or even Member States law.

4.4

Conclusions

The Official Controls Regulation has upgraded significantly competent authorities’ ability to plan and implement official controls—at least, on paper. Competent authorities should be better prepared to plan control activities to bridge the enforcement gap because Regulation 2017/625 provides a legal base to obtain detailed information about those suppliers active in the digital market of foods. Moreover, by explicitly making mystery shopping a legal control technique regardless of where the business is based, Regulation 2017/625 has the potential to remove significant obstacles to the performance of official controls on the distribution of food sold online. Finally, by explicitly including the order of cessation of online activities among the measures available to remediate non-compliance, it guarantees that authorities are able to order retailers to stop their online sales even if the location of the food establishments remains unknown. Interestingly, most of the contributions made by Regulation 2017/625 to e-nforcement are not creating an innovative legal framework for the enforcement of Food Law in the digital market: on closer inspection, the success of the regulation comes from clarifying competent

49

See Art. 138 of Regulation (EU) 2017/625. NTDs allow third parties to file complaints (‘notices’) requesting the elimination (by removal or blocking) of illegal content, including non-compliant e-food offers. In online marketplaces, NTDs are frequently used to require the service provider to eliminate individual offers of products that manifestly do not comply with legal requirements (for instance, because they are counterfeit, or include ingredients or compounds that are prohibited in applicable legislation). See Chap. 2. 50

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authorities’ powers in the digital single market to remove the obstacles enshrined in domestic legislation. Regardless of that, the Official Controls Regulation constitutes an essential step forward towards better e-nforcement. However, it has neglected to assign online marketplaces (along with other information society service providers for that matter) a clear role in Food Law enforcement. Indeed, the Regulation assigns obligations to control authorities, and to those ‘operators’ responsible for ensuring compliance with food and feed law requirements. In this context, marketplaces would only have any responsibility regarding enforcement, if they qualify as operators (an issue that, as analysed in the previous chapter of this book, remains unresolved).

References Adriaanse P, Barkhuysen T, Boswijk P et al (2008) Implementation of EU enforcement provisions: between European control and national practice. Rev Eur Admin Law 1(2):83–97. https://doi. org/10.7590/REAL_2008_02_04 Agencia Española de Consumo, Seguridad Alimentaria y Nutrición (2017) Guía para la clasificación e identificación de las empresas y establecimientos alimentarios. http://www. aecosan.msssi.gob.es/AECOSAN/docs/documentos/seguridad_alimentaria/registro/guia_ operadores.pdf. Accessed 1 Nov 2019 Albissinni F (2019) Regulation (EU) 2017/625: official controls, life, responsibilities, and globalization. Eur Food Feed Law Rev 14(2):118–131 Büchter B, Kuhr C, Schreiber GA (2011) Pilotprojekt zur amtlichen Kontrolle des Handels mit Lebensmitteln im Internet. J Consumer Protect Food Safety 3(6):375. https://doi.org/10.1007/ s00003-011-0700-9 European Commission (2018) Overview report official controls on internet sales of food in EU member states. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2772/57153 Europol (2017) Situation report on counterfeiting and piracy in the European Union. https://www. europol.europa.eu/sites/default/files/documents/counterfeiting_and_piracy_in_the_european_ union.pdf. Accessed 16 Sept 2019 Federal Ministry of Food and Agriculture (2012) Leitfaden zur Registrierung von Betrieben nach der Verordnung (EG) Nr. 852/2004 über Lebensmittelhygiene. https://www.landkreiscuxhaven.de/media/custom/578_4384_1.PDF?1259943398. Accessed 19 Sept 2020 Food Standards Agency (2008) Regulation (EC) No 882/2004 on official controls: guidance in Q&A format for enforcement authorities on the feed and food elements, p. 22. Retrieved from https://www.food.gov.uk/sites/default/files/multimedia/pdfs/offcqaguidancenotes.pdf Menditto A, Anniballi F, Auricchio B, De Medici D, Stacchini P (2017) Regulation (EU) 2017/625 and the union agri-food chain legislation. Eur Food Feed Law Rev 12(5):406–412 Nieto Martín A, Quackelbeen L, Simonato M (eds) (2016) Food regulation and criminal justice. Maklu-Publishers, Antwerpen Plana MJ, Baroni MJL, Cabré L (2019) Buying medicines and foods online: bioethical issues. Edicions de la Universitat de Barcelona, Barcelona Rossi A, Rossi G, Rosamilia A, Renato M (2020) Official controls on food safety: competent authority measures. Italian J Food Safety 9:8607 Scholten M (2017) Mind the trend! Enforcement of EU law has been moving to ‘Brussels’. J Eur Public Policy 24(9):1348–1366. https://doi.org/10.1080/13501763.2017.1314538 Schreiber GA, Liebscher B, Kranz P (2015) Der Online-Handel mit Lebensmitteln – Herausforderung für die Überwachung. Z L R 42:290 van der Meulen B (2019) Enforcement of EU agri-food law. ERA Forum 19:623–641. https://doi. org/10.1007/s12027-018-0532-5

Part II

Bridging the Enforcement Gap in Online Marketplaces

Chapter 5

Facing the Public E-nforcement Challenge in the E-Food Market

5.1

Introduction

Rates of compliance with European Union Food Law in the digital single market are low.1 There is a huge degree of non-compliance with food information rules, by both consolidated retailers and new businesses: not all mandatory information is included in offer posting, and misleading claims are frequently being used.2 Additionally, a large number of active suppliers are not properly identified, and the traceability of goods being sold is not guaranteed.3 This reality is tangible when it comes to e-foods, to the point that some Member States have openly declared that e-food trade is ‘a high risk to food safety’.4 Although Regulation (EU) No 178/2002 (also known as the General Food Law, or GFL) makes ‘food business operators’ primarily responsible for compliance with legal requirements, control authorities in Member States still have to monitor compliance with Food Law, a mandate which is also applicable online.5 However, public e-nforcement6 remains a challenge. This is not a problem exclusive to the e-food market: in fact, regardless of the functionality of the regulatory regime, online trade of physical consumer goods poses significant challenges to control authorities.7

1

See BVL (2014), Food Standards Agency (2016), and European Commission (2018). See Rücker (2018), Höller (2019), and Stones (2016), and Chap. 1. 3 See Schreiber et al. (2015), Food Standards Agency (2016), and European Commission (2018). 4 Food Standards Agency (2016), p. 7. 5 See Art. 17 of Regulation (EC) No 178/2002 laying down the general principles and requirements of Food Law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002), pp. 1–24. 6 Term used in this book to refer to the activities carried out off or online to ensure that offers and products offered in the digital market comply with applicable legislation. See Chap. 1. 7 OECD (2016). 2

© Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_5

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As acknowledged by Snijders et al. (2015) (in what was one of the first studies examining the challenges to public e-nforcement worldwide), The internet has led to cross-border production and supply chains, and the removal or addition of actors in the classic supply chains. The internet has helped change the way products are made and delivered to consumers. Actors can now be very widely dispersed and difficult to find, which proves a substantial challenge for tracing a supply chain. Tracing supply chains in e-commerce can thus be quite an elusive and difficult endeavour. A further challenge is that the internet allows operators to trade in different ways. Economic operators can easily set up new web shops and web shops can easily operate from individuals’ homes for instance. This means that typical enforcement activities by market surveillance authorities (such as inspections or product recalls) are not always possible.8

This chapter first describes the structural challenges to official controls faced by control authorities in Member States, and the support strategy formulated by the European Commission.

5.2

Structural Challenges to Official Controls

Online marketplaces foster a centralised and highly volatile style of trade; they bring together traditional retailers, disruptive businesses, and peer traders. They are transforming online retail, and have become essential players in the ‘Platform Economy.’9 As described in the next sections, they also represent one of the most challenging environments for public enforcement of EU Food Law.

5.2.1

The Identification Gap in Online Marketplaces:

One of the most pressing challenges when controlling digital environments such as online marketplaces is to identify the suppliers who place e-foods on the market, and the premises they operate from, because, as pointed out by Büchter et al. (2011), If you are known to the competent control authority, you are just as controlled as any conventional food business in the framework of the national control plan.10

The process leading to the identification of all ‘food business operators’11 (FBOs) active within a Member States’ jurisdiction (also known as ‘mapping’) is indeed vital to proper enforcement.12 It provides information that is necessary for organising and

8

Snijders et al. (2015), p. 5. See Kenney and Zysman (2016) and Chap. 1. 10 Büchter et al. (2011), p. 2. 11 Defined as ‘the natural or legal persons responsible for ensuring that the requirements of Food Law are met within the food business under their control,’ in Art.3(3) of the General Food Law. 12 See European Commission (2018). 9

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performing official controls: it tells authorities who to control, and where to find them. With the absence of information about the identity and activities of online suppliers, control activities can rarely be planned ahead, in a systematised manner.13 As a result, strategic planning to control online distribution has been the exception, not the norm. Indeed, controls on the digital market of foods are virtually absent from multi-annual plans: only a few Member States, such as Germany, have ad hoc plans to monitor the digital market, including online marketplaces.14 In fact, most controls on online marketplaces are implemented unplanned, in response to consumer complaints, or to a reasoned request for administrative assistance issued by a competent authority in another Member State.15 One of the reasons for the identification gap has been that, for a long period, authorities have failed to compel FBOs to communicate their activities online, because across the EU, administrative registration forms required such scarce information about the FBO’s activities that, in practice, authorities were unable to identify the establishments used in e-food trade.16 As acknowledged by the European Commission (2018): The system for registration of establishments does not favour the correct identification of all FBOs operating online, which in turn impacts the ability of the CAs to organise official controls. It is challenging for CAs to identify and keep track of the activities of such operators and consequently subject them to official controls because of the volatile nature of the online sales business.17

In order to overcome that challenge, Regulation 2017/625 included a key provision requiring FBOs and other businesses to notify the activities they carried out, off and online.18 This new provision has the significant potential to facilitate the appropriate planning of official controls, by providing competent authorities with much needed information about the type of suppliers and the activities carried out within their jurisdiction. In fact, with the current wording, not only does the provision facilitate the identification of food establishments actively engaged in online food trading, but authorities may be able to obtain information about the websites and the online marketplaces which are being used by a business, the

13

Given the complexity of the food chain and the scant resources available to competent authorities, an adequate organisation of official control tasks is necessary to contain potential risks and maintain a suitable compliance rate. With that goal in mind, Member States establish single integrated multiannual national control plans reflecting the country’s arrangements for the organisation of control activities during a limited period of time. This plan is considered to be essential for Member States’ enforcement strategy. In addition to controls based on the plan, ad hoc control activities are often performed to tackle specific issues arising during that same period, for instance, due to food scares. 14 See Federal Office of Consumer Protection and Food Safety (2018), and Chap. 6. 15 See European Commission (2018). 16 See Chap. 5. 17 European Commission (2018), p. 13. 18 See Art. 15(5) of the Official Controls Regulation.

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username under which they offer products, and the list and number of products being traded. That being said, even if the new legislation upgrades authorities’ ability to map the e-food market, the identification gap is far from resolved: there are still dramatically low compliance rates with legal requirements regarding registration and notification of online activities. In 2014, an ad hoc German plan to control the digital market of foods19 revealed that 13% of store-based retailers had not registered their food establishments, a number that increases to more than 40% when looking at Internet-based suppliers. To bridge the identification gap, control staff in most EU Member States, and around the globe, have resorted to performing digital investigations via manual searches to identify online suppliers and their establishments. As described in the next Chapters of this book, these investigations are extremely complex and time- and resource-consuming—a situation made even more complex with online marketplaces where, frequently, the only available information about a trader’s identity is an invented username. This is despite the fact that the EU Food Information Regulation requires that ‘the name or business name and address of the food business operator’20 are visible to potential consumers prior to placing an order.21 Furthermore, the Consumer Rights Directive includes among its mandatory pre-contractual information for distance contracts details of the identity of traders, including its name and address.22 Research shows that the reason for such failure to disclose the information regarding the identity of suppliers is, at least, threefold. First, similar to the brickand-mortar market, small and medium-sized businesses running new retail undertakings are commonly unaware of at least some of their obligations under EU Law.23 Second, the identification gap is also linked to the architecture and functioning of online marketplaces: in these platforms, frequently, anyone can open a profile to become an e-food supplier by simply providing an invented username and a valid e-mail. Third, because some online suppliers actively try to avoid official controls by changing their digital identity recurrently.24

19

Schreiber et al. (2015), p. 298. Art.9 of Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/ EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63. 21 See Art.14 of Regulation (EU) No 1169/2011 and Chap. 3. 22 See Art. 6 of Directive 2011/83/EU on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, O.J. L 304/64, (2011), pp. 64–88 (hereinafter, ‘Consumer Rights Directive’ or CRD). 23 See Fairman and Yapp (2005) and Yapp and Fairman (2006). 24 See European Commission (2018), p. I. 20

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In 2019, the EU Platform-to-business Regulation25 introduced into EU Law an obligation for online marketplaces to display, visible to all users of the platform, information about the ‘the identity of the business user providing the goods’.26 This provision, which applies from 12 July 2020, should improve authorities’ ability to map online suppliers significantly, because while many suppliers fail to comply with food information rules requiring them to provide consumers with their name and address, online marketplaces are more likely to comply with the Platform-to-business Regulation and identify their supplier-users, rendering public enforcement more logistically-feasible and less resource-consuming.27 Still, the impact that this provision may have on enforcement in online marketplaces is difficult to assess because the Regulation does not provide insight as to when and how this mandate should be considered fulfilled. It does not indicate what information should be included as ‘the identity of the business user.’ Instead, the responsibility of deciding what information about the identity of online suppliers is available to consumers is assigned to online marketplaces’ self-regulation.

5.2.2

Planning Risk-Based Controls

Because resources are limited, one of the main goals of multi-annual control plans is to define a prioritisation of the controls that need to be implemented to ensure a proper allocation of resources.28 Which products, operators and establishments should be controlled? The general rule is risk-based programming. The goal of risk analysis is not only to ensure appropriate allocation of resources: it should also guarantee that decisions about controlling a specific food product or establishment are impartial, and also that the objectives of the control system are achieved.29

25 Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services, O.J. L 186 /57 (2019), pp. 57–79. 26 Art. 3(5) of Regulation (EU) 2019/1150. 27 See Katz (2015). 28 See Art. 109 to 111 of Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products. It amends Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and the Council; Council Regulations (EC) No 1/2005 and (EC) No 1099/2009, and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC; and it repeals Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and the Council, Council Directives 89/608/EEC, 89/662/ EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC, and Council Decision 92/438/ EEC, O.J. L 95/1 (2017). 29 In order to do so, each Member State builds its own risk model to prioritise controls on some products or business operators. This model considers relevant factors such as inherent product risk, businesses’ compliance record, the difficulty of containing certain risks with businesses’ selfsurveillance mechanisms, and any other relevant information—such as Rapid Alert System for

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With countless suppliers and offers available in any number of online marketplaces and other e-commerce websites, where to start? Should controls on some online marketplaces be carried out more regularly than in others? On which offers should authorities focus? And, given the limited resources available to control authorities, should they plan to control e-foods placed on the market by prosumers in ‘food sharing’30 marketplaces? In absence of official guidance by the European Commission, the ball is in Member States’ court.

5.2.3

The Jurisdiction Puzzle31

Official controls on production32 can only be performed on establishments that are located within a Member States’ jurisdiction, or during food transportation when the cargo is within the authority’s territory. Controls on food products at the distribution stage, on the other hand, should be performed on any food product placed on the market and available to the final consumer at any retail store, regardless of its origin. When transferring these responsibilities to the digital market and to online marketplaces in particular, it follows that authorities must monitor any e-food offer ‘directed to’ consumers in that Member State. The particulars of how to ascertain whether an offer is ‘directed to the Member State’ were identified by the Court of Justice of the European Union in its Judgment of 7 December 2010, on Joined Cases C-585/08 and C-144/09.33 In this judgment, the Court ruled that suppliers’ activity is directed to the Member State of the consumer’s domicile if there is evidence that the supplier was minded to conclude a contract with the consumer domiciled in that Member State.34 Taking that into account, with regard to the digital market of foods, any e-food that can be purchased Food and Feed (RASFF) notifications, media reports or consumer complaints. In principle, these same criteria should be used to organise and prioritise control over foods and businesses in the digital market. 30 See Zurek (2016). 31 Heading inspired by Jerker and Svantesson (2017). 32 Controls carried out on food businesses, including those at a food business operators’ establishment, are identified as ‘controls on production’. When authorities verify the compliance with food information rules online, or that of e-foods procured using mystery-shopping techniques, controls are made on the ‘distribution’ stage. 33 See Court of Justice of the European Union. Joined Cases C-585/08, Pammer vs GMBH & Co. and C-144/09, Hotel Alpenhof vs Heller, 2010, ECLI 740. 34 In particular, the Court indicates the following: In order to determine whether a trader whose activity is presented on its website or on that of an intermediary can be considered to be ‘directing’ its activity to the Member State of the consumer’s domicile, within the meaning of Article 15(1)(c) of Regulation No 44/2001, it should be ascertained whether, before the conclusion of any contract with the consumer, it is apparent from those websites and the trader’s overall activity that the trader was envisaging doing business with consumers domiciled in one or more Member States, including the

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103

and shipped to domestic consumers should fall within the scope of that Member State’s control system. As a result, offers placed online fall within the scope of more than one (if not all) Member States. Because of this jurisdictional overlap, more than one authority may carry out extensive and resource-consuming digital investigations to identify the operator and perform control tasks on the same offer. As described by the Directorate-General of the European Commission, This places a burden on the competent authorities who strive to prioritise their controls with the existing resources while at the same time trying to provide a fair playing field for food businesses.35

The jurisdiction puzzle has not been solved with the adoption of a reinforced Administrative Assistance and Cooperation (AAC) mechanism in the new Official Controls Regulation. Enshrined in Title IV of the Regulation, the upgraded AAC improves the transmission of information about possible non-compliance between enforcement authorities in different Member States and creates channels for authorities to request assistance from their peers abroad. These measures of ‘pan-European enforcement’36 aim to foster cooperation between authorities once control activities have been initiated and non-compliance is suspected. But they do not prevent different authorities from initially monitoring the same offers. Resolving the issue

Member State of that consumer’s domicile, in the sense that it was minded to conclude a contract with them. The following matters, the list of which is not exhaustive, are capable of constituting evidence from which it may be concluded that the trader’s activity is directed to the Member State of the consumer’s domicile, namely the international nature of the activity, mention of itineraries from other Member States for going to the place where the trader is established, use of a language or a currency other than the language or currency generally used in the Member State in which the trader is established with the possibility of making and confirming the reservation in that other language, mention of telephone numbers with an international code, outlay of expenditure on an internet referencing service in order to facilitate access to the trader’s site or that of its intermediary by consumers domiciled in other Member States, use of a top-level domain name other than that of the Member State in which the trader is established, and mention of an international clientele composed of customers domiciled in various Member States. It is for the national courts to ascertain whether such evidence exists. On the other hand, the mere accessibility of the trader’s or the intermediary’s website in the Member State in which the consumer is domiciled is insufficient. The same is true of mention of an email address and of other contact details, or of use of a language or a currency which are the language and/or currency generally used in the Member State in which the trader is established. See C-585/08, Pammer vs GMBH & Co. and C-144/09, Hotel Alpenhof vs Heller, 2010, ECLI 740, paras. 92–94. 35 36

European Commission (2018), p. 21. See, among other, European Commission (2011), para. 112.

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of the duplication of enforcement efforts requires policy (or even regulatory) decisions at EU level.

5.2.4

Execution of Enforcement Decisions

Once the authorities have established non-compliance in the case of offline enforcement, they adopt measures to ensure that the operator rectifies the situation, and to contain or eliminate risks: the business may be sanctioned, and food establishments (including retail stores) may occasionally be ordered to close. Enforcement decisions may also prevent businesses from placing specific products on the market until non-compliance is remediated. If retailers do not implement the decision, authorities have tools to ensure their execution. For instance, they can close stores themselves or with the help of the police, and they can seize merchandise. But in the digital marketplace, ensuring the execution of enforcement decisions can become extremely problematic, in particular regarding orders of cessation.37 Indeed, if suppliers do not conform to the decision and continue offering their products online, competent authorities lack physical powers to force execution. To put a stop to suppliers’ activity, they must turn to information society service providers38 (including online marketplaces) to ensure enforcement. In this scenario, competent authorities may request the removal of non-compliant offers using noticeand-takedown (NTD) procedures. As analysed in the previous Chapter, the Official Controls Regulation does not explicitly refer to this possibility, but authorities can still resort to their use based on the e-Commerce Directive.39 NTDs procedures have proven to be useful in food e-commerce, as far too often competent authorities cannot implement the administrative procedure that would result in non-compliance being legally established—either because of lack of information about the supplier, lack of legal grounds for mystery shopping, lack of accessibility to food establishments located abroad or merely because the time needed to complete it would render the action pointless.

37 Based on Art. 138(2) of Regulation (EU) 2017/625 competent authorities can order the cessation, for an appropriate period of time, of the activities carried out through the Internet sites that the operator ‘operates or employs’, such as online marketplaces. See Chap. 4. 38 Within the meaning of Art. 1(2) of Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. L 178, (2000), pp. 1–16. 39 ‘Notice-and-takedown procedures’ (NTDs) are a contractual-based tool established by information society service providers to meet their obligation to remove illegal content ‘expeditiously’ once alerted of its existence, an obligation enshrined in Art. 14 of Directive 2000/13/EC. Using an NTD, a third party (in this case, the control authority) files a ‘notice’ to the marketplace requesting the operator to take down an offer which does not comply with legal requirements. See Wallberg (2017).

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However, the question arises of whether authorities should be using this mechanism either routinely, or only after proper administrative measures have failed, or if prompt action is required to contain or eliminate risk. The European Commission has not officially spoken about the use of regulating the use of NTDs in Food Law e-nforcement.40 In fact, it has negotiated additional contact points for control authorities to submit content removal requests concerning e-foods.41 In the absence of an EU position on the use of NTDs as a mediated official control tool, Member States are taking different approaches to this issue.42

5.3

The EU Commission’s Strategy to Bridge the E-nforcement Gap

Since Member States began disclosing their concerns about the challenges of including e-foods in official controls, the European Commission’s priority has been updating the regulatory framework governing official controls, and ensuring that control authorities in Member States have the necessary resources and training to bring official control systems online. As early as 2013, the Commission’s draft for a new Official Controls Regulation included novel provisions harmonising authorities’ powers and procedures to enforce Food Law online.43 The proposal became a reality in 2017, with the

40 The European Commission’s Recommendation on tackling illegal content online indicated that platforms should not wait to hear suppliers’ allegations before removing offers ‘where it is manifest that the content concerned is illegal content and relates to serious criminal offences involving a threat to the life, or safety of persons’ [see EC Recommendation on measures to effectively tackle illegal content online, C 2018/1177 final (2018), p.11]. On the other hand, when the notification deals with illegal content which does not entail a serious criminal offence, the supplier should be granted the possibility of contesting the decision via a counter-notice. This clarification of the steps that need to be followed to complete NTD procedures does not however clarify whether notifications can request the removal of offers which merely do not comply with legal requirements. It also does not contain information whether or how competent authorities can make use of NTDs. 41 By the end of 2019, the Commission had arranged procedures with eBay, Amazon, Alibaba group and Facebook. Major online marketplaces have created specific email addresses, to be used by control staff only. Smaller platforms, on the other hand, normally have not created such specific channels, thus authorities must contact the online marketplace using the contact details available online. 42 See Chap. 8. 43 See EC Proposal for a Regulation to ensure the application of food and feed law, rules on animal health and welfare, plant health, plant reproductive material, plant protection products and amending Regulations (EC) No 999/2001, 1829/2003, 1831/2003, 1/2005, 396/2005, 834/2007, 1099/2009, 1069/2009, 1107/2009, Regulations (EU) No 1151/2012, [....]/2013, and Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC, 2008/120/EC and 2009/128/EC (Official controls Regulation), COM 2013/265 final (2013).

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adoption of the Official Controls Regulation, which has significantly upgraded e-nforcement.44 In parallel to its efforts on legislation, the European Commission developed a capacity-building strategy to improve e-nforcement capabilities in Member States. It has created spaces for knowledge transfer and activities for data gathering, including a coordinated control plan that in 2017 tested the competence of official controls over the digital single market, across the EU, for the first time. These capacitybuilding initiatives are discussed in the next sections.

5.3.1

Training and Knowledge-Transfer

Efficient and effective official controls call not only for a functional public enforcement regulatory regime, but also for adequate resources and training to be available to the staff responsible for their execution.45 To that end, competent authorities must have an adequate laboratory capacity for testing and a sufficient number of suitably qualified and experienced staff so that official controls and control duties can be carried out efficiently and effectively.46

Not only is equipment key, but it is also necessary to ensure continuous staff training. With that in mind, the training initiative Better Training for Safer Food (also known as BTSF) was created in 2006 to update legal and technical training to control staff in both Member States and third countries importing food products into the European Union. The training curriculum includes, since 2014, e-nforcement. Indeed, under the title ‘New investigation techniques for official controls – E-Commerce of food’, course content provides participants with technical skills to better understand and navigate the Internet. Sessions cover relevant topics, such as how to deal with hypertext mark-up language, saving complete websites, creating videos of the surveillance tasks carried out, and storing evidence for enforcement purposes. One of the most significant contributions of this course has been to train control staff on how to undertake digital investigations to identify operators and their establishments. BTSF has become an extremely useful tool for training control staff following the ‘train the trainers’ principle, but also for identifying challenges arising from legislation in specific Member States. For instance, through this training, it was made

44

See Chap. 4. Vapnek and Spreij (2005). 46 See Art. 4(2)(c) of Regulation (EC) No 882/2004 on official controls performed to ensure the verification of compliance with feed and Food Law, animal health and animal welfare rules, O.J. L 165/1 (2004), pp. 1–141. That same obligation, with different wording, is enshrined in Art. 4 and 5 of Regulation (EU) 2017/625. 45

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clear that in some cases domestic laws did not allow the anonymous purchasing of e-foods for enforcement purposes, which had a direct impact on the drafting of the new official controls’ regulation. Additionally, it has become a forum that fosters cooperation between Member States and at international level, as it has recently included participants from third countries in order to maximise knowledge-transfer. Knowledge-transfer has additionally been carried out through working groups. The Expert Group on Official Controls, running since 2010, was quickly identified as the appropriate forum to channel the discussion. At a later stage, in 2016, the Working Group on the Strengthening of the Enforcement of EU Agri-Food Legislation on Internet Sales of Food was created to deal specifically with food e-commerce. Based on the discussions of this working group, the European Commission conducted its first data gathering initiatives between 2015 and 2017, to assess the situation of e-food control in each Member State. This would eventually lead to the coordinated control plan discussed in the next section.

5.3.2

Coordinated Control Online

Capacity-building should not be limited to training and good practice identification. It must also include data gathering and multidisciplinary activities to improve cooperation with other authorities and understanding of new issues that may affect official controls. To that end, the European Commission has carried out several initiatives to assess the Food Law compliance gap online as well as control systems’ capacities to monitor effectively the digital market: starting with low-key factfinding missions in 2015, by 2017 it had launched the first coordinated control plan on e-foods to fast-track the impact of its capacity-building efforts.

5.3.2.1

Data Gathering

Concerned by the growing number of RASFF notifications dealing with non-compliant food supplements, from January 2013 to June 2014 the Food and Veterinary Office of the European Commission carried out fact-finding missions on food supplements controls in five Member States. Although this initiative did not target the digital market specifically, its individual objectives referred to the need to ‘address issues such as assessment of botanicals and the control of Internet sales’.47 One of the most significant conclusions was that ‘an increasing share of the trade in food supplements is developing on Internet. This trade is less transparent and more difficult to control’.48 After an outbreak in 2013 of hepatitis caused by consumption

47 48

Food and Veterinary Office (2015), p. 4. Food and Veterinary Office (2015), p. 10.

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of the food supplements OxyElite Pro and VERSA-1, the Commission became fully aware of the important challenges that food e-commerce at large was going to create: The problem lies in the availability of the products to consumers on the Internet. Even though these products may be harmful to consumers’ health, they remain purchasable through the Internet. The challenge is for authorities to have better control of the Internet sales of food products in order to ensure that the products consumers buy are safe.49

The fact-finding missions suggested that the performance and efficiency of official controls on the digital market varied significantly from one country to another, as did the level of specialisation of public officials undertaking controls and the training available to them. Also, even in those States where samples were taken frequently, only a very limited proportion were analysed in a laboratory, creating a significant difference ‘between Member States with regard to the effectiveness of the control system on food supplements’.50 Criminal law enforcement agencies were (and still are today) leading the way in the control of these products. With those results in mind, the European Commission submitted to the Working Group on the Strengthening of the Enforcement of EU Agri-Food Legislation on Internet Sales of Food a survey to assess the condition of e-food control across the European Union. Member States submitted their answers to the survey in late 2016, but they have not been disclosed. The only information that has been publicly reported was that some Member States monitored offers online while others had been ignoring that market, that some of them had centralised investigatory tasks, and that some Member States had made test purchases to verify compliance with Food Law. In order to get a more accurate picture of the situation across the EU, in 2017 the European Commission conducted additional fact-finding missions in several Member States, coinciding with its first coordinated control action in this field.

5.3.2.2

A Coordinated Control Plan on the Official Controls of Certain Foodstuffs Marketed via the Internet

Convinced of the need to address the distribution of non-compliant food supplements online while training authorities to better bridge the enforcement gap in the digital single market, in July 2017 the European Commission decided to fast-track its capacity-building strategy by implementing its first coordinated control plan on e-foods. Its Recommendation on a coordinated control plan on the official controls of certain foodstuffs marketed via the Internet51 (‘CCP_efood’) was adopted by the Standing Committee for Plants, Animals, Food and Feed (PAFF). This coordinated control plan52 on foods offered online was the first action on the digital market to be 49

European Commission (2013), p. 19. Food and Veterinary Office (2015), p. 7. 51 See EC Recommendation, C 2017/4986 final (2017). 52 Coordinated controls plans’ legal basis is enshrined in Art. 53 of Regulation 882/2004, which allows the European Commission to ‘recommend coordinated plans (. . .) where considered 50

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carried out across Europe53 under the supervision and coordination of the European Commission. The goal was to strengthen coordination and administrative cooperation between Member States, and to obtain additional information on misleading54 and unauthorised practices in the sale of food supplements and novel foods sold online.55 Additionally, it would provide information necessary to define further policy initiatives in the (still unfamiliar) field of official controls on digital food marketing. The control plan targeted four unauthorised novel foods and any food supplement offered online using prohibited medicinal claims,56 a decision which put organisations in that sector on the alert: only 2 days after the adoption of the Recommendation, a petitioner contacted commissioner Vytenis Andriujaitis (at that time in charge of DG SANTE) voicing concerns about the control plan. Although the identity of the author of the petition has not yet been published, the Commission’s answer at that time indicated that the petitioner expressed the same concerns which were raised on the website of the alliance for natural health International: essentially, that the control plan should focus not on the targeted foods but on products which pose a genuine risk to public health and have been subject to RASFF notifications. The Commission’s reply to that argument was straightforward: the four unauthorised novel foods and food supplements with medicinal claims should not be marketed

necessary, organised on an ad-hoc basis, in particular with a view to establishing the prevalence of hazards in feed, food or animals’. To date, the EU Commission has adopted four other coordinated control plans, each of them focusing on honey, fish substitution, horse meat, and on online offers and advertising of food related to COVID-19. 53 Twenty-seven countries participated in this action: all the EU, with the notable exception of the United Kingdom. 54 See Art. 7.1 of Regulation (EU) No 1169/2011, the Food Information Regulation, identifies unfair commercial practices when it comes to food information and gives a description (but not a definition) of what may constitute misleading information. Labelling may be considered misleading (by action or omission) on the characteristics of the food (for instance, its origin), on food effects or properties, or if it attributes medicinal properties to foods. 55 European Commission (2018), Annex 1, p. 2. 56 The selected unauthorised novel foods are Agmatine (4-aminobutyl) guanidine sulphate, Acacia rigidula, Epimedium grandiflorum and Hoodia gordonii. Furthermore, Hoodia gordonii, often sold online in food supplements that claim to facilitate weight loss, is a cactus protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) of 1973. Listed in annex II of the Convention, which refers to ‘species not necessarily threatened with extinction, but in which trade must be controlled in order to avoid utilization incompatible with their survival’, its trade requires an export or re-export permit issued by the CITES’ management authority in the country of origin and can only be imported into the EU if certain requirements are fulfilled. Nevertheless, the Recommendation underlines that ‘the presence of this plant in food and health supplements is one of the most commonly seized commodities that is infringing the CITES/EU wildlife trade rules’.

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due to health concerns. Nevertheless, their digital distribution is repeatedly notified in Rapid Alert System for Food and Feed (hereinafter, ‘RASFF’).57 During the control plan, participants had to carry out three tasks: searching for offers of the targeted e-foods online, identifying responsible food business operators (not just the online supplier but the manufacturer and the importer when relevant) and finally submitting notifications of non-compliance either via the RASFF portal or the Administrative Assistance and Cooperation mechanism.58 Sampling was not required59 as part of CCP_efood. Regarding the organisation of surveillance, the Recommendation instructed competent authorities in Member States to focus on offers directed to consumers in that Member State, regardless of the origin of the product or the location of the suppliers. Although this approach was coherent, especially considering that the objectives of the control plan included identifying bugs in cooperation mechanisms, it also could potentially result in competent authorities in several jurisdictions devoting resources to investigating the same offer. With that in mind, according to the completion report published by the European Commission in 2018, participants decided to focus their controls mainly on offers which appeared to be the responsibility of food business operators located within their borders.60 Focusing on operators that have establishments in the territory is a great advantage from a control perspective: competent authorities can plan visits to the premises and perform controls on the food establishments which are partaking in the online food trade. As put by the Commission, this: Is an appropriate approach as only traders in the authorities’ jurisdiction can be physically inspected, registered and put under the risk-based official control schemes like any other stationary food retail business. In the long run, this approach should be successful in establishing a similar level of food safety in EU-based online food businesses to that which EU consumers experience today in stationary retail.61

Additionally, because a significant number of Internet-based operators are not registered with the authorities and thus are not properly identified, the Recommendation suggested using the information on the contact page in order to identify the

57

Indeed, according to the last RASFF annual report, in 2016 notifications about Agmatine guanidine sulphate rose to 32, more than quadrupling notifications for the same substance in the previous year. Therefore, no changes to CCP_efood were made. 58 The ACC was first established in the Compliance Regulation to improve the effectiveness of control activities when a non-compliant product was being sold across more than one country, and when non-compliance of a food product has been established in the retail market of one Member State but production has taken place in another. Assistance is carried out mainly through ‘liaison bodies’ responsible for ensuring proper transmission and reception of requests for assistance. Articles 104 to 106 of the Official Controls Regulation clarify and enhance national authorities’ powers in the framework of the ACC mechanism. 59 Sampling remained voluntary. However, if test purchases of samples were made, the results on sampling were to be included in the final report to the Commission. 60 European Commission (2018), Annex 1, p. 3. 61 European Commission (2018), p. 4.

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operators and their food establishments and, for those situations where the contact page on the website did not include complete information on the identity of the supplier, using the information on www.whois.net.62 It must be noted, however, that this advice was useless when dealing with offers in online marketplaces, as the goods are made available by suppliers mostly identified by their invented username, and not by the host platform. In order to perform an effective search, the Recommendation included basic advice: control staff should use computers which were ‘not part of the authorities’ office network’ so that their identity was hidden, and they should use keywords such as ‘food supplement’, ‘food’ or ‘dietary supplement’ linked with ‘the expressions related to certain diseases in the area of bone and joint health’ such as rheumatism or osteoporosis, and shopping terms such as ‘purchase’, ‘cart’ or ‘basket’. No recommendations were made as to what technology to use or how to handle the prioritised monitoring, which remained at the discretion of the Member State. During CCP_efoood, nearly 1100 websites were checked, and 779 offers were found to be non-compliant with food law requirements. In 440 cases, ‘measures were taken with the aim of shutting down the respective offer, including inspection of the traders’ premises, warnings and fines in some cases’. Unfortunately, no further details are provided about these measures. Only 680 operators were identified responsible for the non-compliant products, which may imply that some suppliers were repeated offenders. This interpretation is consistent with RASFF data, which indicates that a single illegal shipment includes all four unauthorised food products. Finally, the report also points out that 20% (142) of the non-compliant offers were posted by operators from a Member State different to the one undertaking the investigation, while 15% (110) originated in third countries.63 From this experience, the Commission concluded that, although training and knowledge-transfer initiatives carried out since 2014 had helped prepare competent authorities to tackle the digital market,

As indicated in its terms and conditions, ‘the WHOIS system provides information gathered from publicly available information provided by the domain name owner to their individual registrars’. The system can provide owners’ contact information because, when registering a domain name, the Internet Corporation for Assigned Names and Numbers (ICANN) requires the user’s domain name registrar to submit personal contact information to the WHOIS database. Because registrars must pay an additional fee to keep their contact information private, by introducing a domain name in whois.net, the system will give detailed information about the identity of its owner, including their name, telephone numbers and addresses. However, paying the extra fee to keep their data private or using a proxy registrar for the same purpose is easily available to food operators and to any individual. This option is not only chosen by those carrying out illegal activity but also by anyone who is aware of the risks entailed by having publicly available contact data. 63 154 notifications for non-compliant cross-border offers with no health concerns were placed via the Administrative Assistance and Cooperation IT system, and 139 notifications for non-compliant cross-border offers that entailed health concerns were reported via the Rapid Alert System for Food and Feed. A significant portion of the latter notifications (51) concerned products shipped from the United States and China. 62

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further increases in control capacities and training of additional staff in Internet investigations are required, in particular as more and more food is sold online.64

Accordingly, it recommended carrying out a second coordinated control plan on e-commerce, which has not yet been announced. By and large, the coordinated control plan succeeded in involving almost all Member States (with the notable exception of the United Kingdom, then still an EU member) in e-food control. It provided competent authorities with a valuable example of how to bring the control system into the digital era in order to monitor the market effectively. It also provided valuable information to help assess the impact that controls within a jurisdiction can have on the overall safety and quality of the digital foods market. However, the plan ignored the impact and role of online marketplaces in an emerging platform economy: no advice was offered about how to track down online suppliers operating in marketplaces, nor about the possibility of engaging such service providers in enforcement using notice-and-takedown procedures to successfully remove illegal and dangerous e-foods from the market.

5.4

Conclusions

The digital market of foods is no stranger to the e-nforcement gap. The Official Controls Regulation has provided authorities with new powers to increase their ability to monitor the e-food market, and the initiatives in this field carried out under the coordination of the European Commission have proven useful in helping Member States adapt their control structures and protocols to online sales. However, there are still challenges ahead, particularly in online marketplaces. Additional guidance or regulatory decisions are necessary to ensure legal certainty and due process in e-nforcement. In the absence of an EU roadmap, the next Chapters explore how Germany and the United Kingdom have led the way when it comes to building an e-nforcement strategy for the platform economy, and identifies good practices as well as the challenges that remain ahead.

References Büchter B, Kuhr C, Schreiber G (2011) Pilotprojekt zur amtlichen Kontrolle des Handels mit Lebensmitteln im Internet. J Verbr Lebensm 6(375). https://doi.org/10.1007/s00003-011-07009 Bundesamt für Verbrauchschutz und Lebensmittelicherheit, BVL (2014) Onlinehandel mit frischem Fleisch und frischem Fisch. https://www.bvl.bund.de/SharedDocs/Downloads/01_

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European Commission (2018), p. 3.

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Lebensmittel/Internethandel/Jahresbericht_2014_Fleisch_Fisch_Kuehlung.pdf?__ blob¼publicationFile&v¼3. Accessed 25 Nov 2020 European Commission (2011) Commission Staff Working Paper: Bringing e-commerce benefits to consumers. Accompanying the document: communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. A coherent framework to boost confidence in the digital single market of e-commerce and other online services. Brussels European Commission (2013) RASF. The Rapid Alert system for food and feed. Publications Office of the European Union, Luxembourg. https://doi.org/10.2772/33031 European Commission (2018) Overview report Official Controls on Internet Sales of Food in EU Member States. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2772/57153 Fairman R, Yapp C (2005) Enforced self-regulation, prescription, and conceptions of compliance within small businesses: the impact of enforcement. Law Policy 27(4):491–519 Federal Office of Consumer Protection and Food Safety (2018) G@ZIELT: Safe Shopping on the Internet. https://www.bvl.bund.de/EN/Remit/gezielt_safe_shopping/gezielt_node.html. Accessed 16 Sept 2019 Food and Veterinary Office (2015) Controls on food supplements in Member States. Publications Office of the European Union, Luxembourg. https://doi.org/10.2772/5906 Food Standards Agency (2016) Food Sold Online. Guidance for local authorities. https://www. food.gov.uk/sites/default/files/media/document/foodsoldonline-guidance-for-local-authorities_ 1.pdf. Accessed 16 Sept 2019 Höller A (2019) Food E-Commerce: an analysis of the European legal framework for E-Commerce in relation to the information obligation applicable to prepacked food. Thesis, Wageningen University Jerker D, Svantesson B (2017) Solving the internet Jurisdiction Puzzle. Oxford University Press, Oxford Katz V (2015) Regulating the sharing economy. Berkeley Technol Law J 30(4):1067–1126. https:// doi.org/10.15779/Z38HG45 Kenney M, Zysman J (2016) The rise of the platform economy. Issues Sci Technol 32(3):61–69 OECD (2016) Online Product Safety: Trends and Challenges. OECD Digital Economy Papers 261. https://doi.org/10.1787/5jlnb5q93jlt-en Rücker M (2018) Bringt’s das? Lebensmittel-Onlinehändler im Vergleich. Foodwatch. https:// www.foodwatch.org/uploads/media/2018-03_Lebensmittel-Onlinehaendler-im-Vergleich_ foodwatch_01.pdf. Accessed 7 May 2019 Schreiber GA, Liebscher B, Kranz P (2015) Der Online-Handel mit Lebensmitteln – Herausforderung für die Überwachung. ZLR 42(290) Snijders J, Graaf A, Coyne M (2015) Good practice in market surveillance activities related to non-food consumer products sold online. Annex: good practice cases. Publications Office of the EU. https://op.europa.eu/s/orcX. Accessed 18 Nov 2020 Stones C (2016) Online food nutrition labelling in the UK: how consistent are supermarkets in their presentation of nutrition labels online? Pub Health Nutr 19(12):2175–2184 Vapnek J, Spreij M (2005) Perspectives and guidelines on food legislation: with a new model food law. Food and Agricultural Organisation, Rome Wallberg K (2017) Notice and takedown of counterfeit goods in the digital single market: a balancing of fundamental rights. J Intellect Property Law Pract 12(11):922–936 Yapp C, Fairman R (2006) Factors affecting food safety compliance within small and medium-sized enterprises: implications for regulatory and enforcement strategies. Food Control 17:42–51. https://doi.org/10.1016/j.foodcont.2004.08.007 Zurek K (2016) Food sharing in Europe: between regulating risks and the risks of regulating. Eur J Risk Reg 7(4):675–687. https://doi.org/10.1017/S1867299X00010114

Chapter 6

Germany’s Take on E-food Control

6.1

Introduction

Uncertainties over the legal framework, coupled with structural challenges linked to the design of official control systems and with the limited human, training and equipment resources available to competent authorities, have been hindering authorities’ capacity to monitor the digital market of foods and to enforce Food Law online appropriately.1 In the absence of an early EU strategy for the digital market of foods, and while most Member States have avoided this issue until recently, some countries did take the lead, designing a number of initiatives aimed at improving food safety and Food Law enforcement. A pilot project launched by Germany in 2011 attempted to improve the safety of the digital market of foods by centralising market surveillance in a single body. This has become the landmark case when it comes to e-food control, developing a ground-breaking approach to e-nforcement. Given that consumers in Germany are increasingly buying food on the Internet, and that the number of harmful or deceptive offers of e-foods is increasing,2 the central unit for food e-commerce monitoring has become one of the first3 and most ambitious Food Law compliance initiatives in the European Union. Since the German government defined its concept in 2009, its legal status, responsibilities and tasks have evolved. The German central unit has now been established permanently and leads national efforts to bridge the enforcement gap online, creating communication channels with online marketplaces among other efforts.

1

See Chaps. 3, 4 and 5. Büchter et al. (2011), p. 1. 3 Other Member States have built special units centralising part of the market surveillance activities in different areas such as consumer protection and consumer goods (France), food fraud (Denmark), and protected origin indications (Italy). 2

© Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_6

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6.2

6 Germany’s Take on E-food Control

Construction of the German Central Unit for e-Food Control

G@zielt, short for Zentralstelle Kontrolle der im Internet gehandelten Erzeugnisse des Lebensmittel und Futtermittelgesetzbuch und Tabakerzeugnisse (Control of e-commerce of food, feed, cosmetics, commodities and tobacco), is the leading German body monitoring the digital market of foods. What began life as a temporary unit, undertaking a pilot project focusing exclusively on e-food control, is now a permanent body with a larger objective: to improve the overall safety of the digital market of consumer products.4 The reasons for the creation of this unit were twofold: to avoid the duplication of control efforts and the use of personal and technical resources caused by the decentralisation of control responsibilities in the German state, and to identify and minimise regulatory problems hindering public enforcement5 of Food Law online. Germany, a federal parliamentary republic composed of 16 federal states called Bundesländer (hereinafter, Länder), has a highly decentralised public administration. Different levels of government participate in the design and implementation of food-related policies.6 The Länder have competence over the organisation of the official control system within their territory,7 and no supervision from the national administration is required in this field. Coordination of activities and procedures among Länder is ensured through working groups, which unite competent authorities in all federal states, with the presence of the national government represented by the Federal Office of Consumer Protection and Food Safety (BVL). This domestic distribution of responsibilities means that a large number of authorities have jurisdiction over products offered in the digital market of foods, a dispersion that Germany considers could prevent effective public enforcement in the digital market, where control staff requires specific skills and equipment to verify compliance. The German approach considered that putting together a special team dealing exclusively with e-food would help identify which pieces of legislation (EU and domestic) were creating unnecessary obstacles to competent authorities when enforcing Food Law online. Indeed, as in many other Member States, by 2011 the German legal framework for official controls was not suitable for enforcement: for instance, domestic legislation prevented control authorities from performing mystery shopping. Centralising oversight of the digital market therefore also meant centralising the legislative review in a single body.

4

See Kranz et al. (2015). Public enforcement of the law is defined in this book as ‘the use of governmental agents (regulators, inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules’. See Polinsky and Shavell (2007), p. 405. 6 See Herges et al. (2017). 7 Herges et al. (2017), p. 42. 5

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In order to test the benefits of centralisation, G@zielt was first created as a temporary unit via a pilot project, which ran from 2011 to June 2013.8 Based at the BVL headquarters in Berlin, its work gradually incorporated the collaboration of other administrative bodies such as the Federal Criminal Police Office, the Länder Police Forces, the Customs Authority and the Central Authority for Medical Devices. The pilot aimed to identify active food businesses that had not notified the proper authorities of their activity by registering their establishments, and therefore remained outside the radar of competent authorities. At a time when empirical data about the e-food market was virtually non-existent, it also investigated what kinds of e-foods were being offered online and which of those might be harmful for the final consumer. To that end, the team was tasked to perform online investigations that could support competent authorities enforcing Food Law, and to coordinate any activity related to monitoring e-foods in the country. By the end of the project, ‘more than 3,000 online food establishments and 1,200 online offers of 450 suppliers were reported to the competent authorities’.9 The success of the pilot led to the decision to create a permanent unit, which since 2013 has operated under the ‘Administrative agreement10 between the German Federal Republic and the Länder, to control the operation of a central unit controlling Internet-traded LFGB products and tobacco products’.11 The need for such a national unit was clear to the German authorities: Conducted on behalf of the German Federal States as a central body, the Common Central Unit is in a better position to face the Internet trade, which transgresses Länder and national borders. Duplicate search work is avoided, resources are preserved, and work processes can be organised efficiently. With G@ZIELT, the German food control authorities take the lead in the enforcement of consumer protection in the e-commerce of food.12

The central unit is financed by the Länder, and each lander’s contribution is calculated based on its fiscal income and its population. To ensure that the unit is accountable to the Länder, the agreement requires an annual activity report by G@zielt. Any fundamental changes in the unit’s functioning or its budget need to be agreed to by all the Länder and the BVL.13 The agreement also tasks the BVL with ensuring that there is coordination and cooperation between Länder, who in turn are required to identify a point of contact within its regional administration that will channel all communication with G@zielt.

8

See Kranz et al. (2015). See Federal Office of Consumer Protection and Food Safety (2018). 10 See Bundesministerium für Ernährung, Landwirtschaft und Verbraucherschutz (2013). 11 See Remmel (2013). 12 See Federal Office of Consumer Protection and Food Safety (2018). 13 See Ministerium für Klimaschutz, Umwelt, Landwirtschaft, Natur- und Verbraucherschutz Zu einem Entwurf einer Verwaltungsvereinbarung zur Regelung des Betriebes einer gemeinsamen Projektzentralstelle “Kontrolle der im Internet gehandelten Erzeugnisse des LFGB und Tabakerzeugnisse”, Vorlage 16/934 (2013), para. 3, Art. 3. 9

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G@zielt executes its tasks each year according to a specific annual plan of activities that must be agreed upon with the Länder and the BVL by 30 November of the previous year at the latest. The 2014 annual plan, for instance, focused on perishable refrigerated food products that might entail risks for consumers because of potential breaks in the cold chain during delivery. During the execution of that year’s programme, G@zielt identified 173 online retailers offering perishable refrigerated e-foods and conducted 15 test purchases. Seven of them showed that the temperature of the food product delivered was higher than required by food legislation, and that the packaging did not meet legal requirements.14 Additionally, the investigation found that some of these retailers had not registered their food establishments with the proper authorities. Based on the data gathered during these market surveillance activities, those establishments were subjected to an inspection by control authorities for the first time.

6.3

Responsibilities of the Central Unit

The central unit’s responsibilities are to carry out surveillance tasks to support the competent authorities in charge of the implementation of official controls in each Länder. It also designs nationally coordinated policy strategies to improve suppliers’ understanding of their legal obligations and responsibilities since, as is frequently the case with small and micro-retailers in the brick-and-mortar market, some online operators are not aware of their responsibilities and legal obligations under EU Food Law.15 In order to improve suppliers’ awareness, the unit has published information and resources to educate suppliers about their responsibilities under the law, particularly in relation to food information and to the safe handling and shipping of their e-foods. These resources are made available during workshops addressed to e-food retailers, and through direct digital contact between G@zielt’s team and suppliers posting offers online. Apparently, these actions have contributed to the current increase in compliance rates. Similar activities are organised to raise awareness among consumers of the risks of buying their groceries online. For example, in 2017 the unit incorporated an original educational proposal in its website called the ‘BVL-Mustershop’,16 a web shop that tests consumer knowledge of the risks associated with e-food grocery shopping. Additionally, the central unit worked with organisations awarding trust marks which identify suppliers who comply with specific quality standards, including the fulfilment of their food establishment registration obligations. These trust marks, explained and disseminated in several information campaigns coordinated by the central unit, help consumers to identify safer shopping options. The collaboration

14

See Bundesamt für Verbraucherschutz und Lebensmittelsicherheit (2014). See Fairman and Yapp (2005) and Yapp and Fairman (2006). 16 See Bundesamt für Verbraucherschutz und Lebensmittelsicherheit (n.d.). 15

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with trust marks has apparently been fruitful: it has led to Germany’s major e-commerce trust mark certifiers denying online suppliers their certification if they fail to register their food establishments before competent authorities.17 However, one of the most important tasks that the central unit performs in terms of staff dedication is the digital surveillance of online retail of food products. The unit’s team surfs the Internet looking for e-foods and inspects the information in individual offers to assess its compliance with Food Law requirements. As stated in its creation agreement, G@zielt carries out this ‘preparatory task’ to help the competent authorities in each Land to perform the corresponding official controls. Surveillance activities are aimed at identifying suppliers operating in the digital market that may not be known to the competent authorities and thus not controlled in the framework of traditional official controls. They also aim to identify non-compliant e-foods available to the final German consumer. As described in the next sections, in both cases the results of the searches are passed on to the competent authorities in the Länder or even in other EU Member States or third countries, so that those authorities can take the necessary steps within their field of competence—to order the cessation of online sales or to enforce registration.18

6.4

G@zielt’s Surveillance of the Digital Market of Foods

In order to help the competent authorities to bring the digital market of foods under official control, the central unit is responsible for identifying online suppliers which are operating in the digital market but have not notified the competent authorities of their activity, and identifying e-foods that may not comply with Food Law requirements. Additionally, when commissioned by competent authorities or in accordance with its annual plan, the unit may verify compliance by conducting purchases using mystery-shopping techniques. In 2014 alone the German central unit conducted surveillance activities on 220 different e-food products. The surveillance of those products led to the identification of 1100 offers addressed to German consumers.19 The next sections of this chapter describe how the central unit carries out these tasks to promote Food Law compliance online.

6.4.1

Mapping the German Market of E-foods

As pointed out by Büchter et al. (2011),

17

See Kranz et al. (2015). See Federal Office of Consumer Protection and Food Safety (2018). 19 Yearly reports on the central unit’s activities are available online, at the BVL’s website. 18

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If you are known to the competent control authority, you are just as controlled as any conventional food business in the framework of the national control plan.20

However, in a country where national legislation does not include an applicable sanction for the lack of registration,21 surveillance work discovered in 2014 that 13% of store-based retailers had not registered their food establishments—a number that increases to more than 40% when looking at Internet-based suppliers.22 Based on the unit’s data,23 those numbers stay relatively constant every year since the first control plan, a fact which illustrates the volatility of this market, where a significant number of suppliers and offers tend to have a ‘pop-up’ nature, many of which remain unknown to control authorities. To make matters worse, even when retailers have fulfilled this legal obligation, the authorities still do not know whether they were operating online or not, since German legislation does not list online sales among the mandatory information that must be submitted upon registration, and no Länder registration forms require that information. In this scenario, one of the most pressing tasks for bridging the enforcement gap in order to proactively map the German digital market of food has been gathering information on suppliers and their premises.

6.4.1.1

Legislation and Mapping

As a member of the EU, Germany’s Food Law is based on EU harmonised legislation. But as is the case with all Member States, the incorporation of EU public enforcement regime into the German legal system has required the adoption of domestic pieces of legislation that reflect the particularities of the internal organisation of the Member State. The Lebensmittel- und Futtermittelgesetzbuch (LFGB)24 is the fundamental piece of legislation in Germany that transposes EU Food Law requirements, including the definition of a harmonised framework for the organisation and implementation of the official controls system. Its provisions are further detailed in several other national regulations, such as the General Administrative Provision on Food Hygiene,25 setting out the general principles for the registration of

20

Büchter et al. (2011), p. 2. Schreiber et al. (2015), p. 297. 22 Schreiber et al. (2015), p. 298. 23 See Bundesamt für Verbrauchersschutz und Lebensmittelsicherheit (2017). 24 German Lebensmittel un Futtermittelgesetzbuch (“Food and Feed Code” in English, hereinafter “LFGB”), which is the basic rule on food law in Germany. See Bundesministerium für Ernährung und Landwirtschaft Lebensmittel-, Bedarfsgegenstände- und Futtermittelgesetzbuch (2005) (hereinafter, ‘LFGB’). 25 Transalated from: Allgemeine Verwaltungsvorschrift über die Durchführung der amtlichen Überwachung der Einhaltung von Hygienevorschriften für Lebensmittel und zum Verfahren zur Prüfung von Leitlinien für eine gute Verfahrenspraxis.AVV-LmH (hereinafter, ‘AVV-LmH’). 21

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food business operators.26 Decentralisation also entails each Land adopting executive legislation on that matter, so in order to ensure consistency, in 2012 the German administration adopted a guidance paper for a nationwide framework for the registration of businesses.27 This guidance paper stated that application forms should include the type of products handled in the establishment (for example, beverages) and the general activity carried out (for example, processing, or packing). The document even provided authorities with an example form. Among the activities that can be notified is retail, which additionally requires the identification of the establishments used as retail stores. But the guidance paper did not consider requesting additional information on online retail. Accordingly, no Länder took the opportunity to use the registration form to request information about online activities, making this source of information useless when trying to map the digital market of foods. This situation is similar in most Member States: the relevant forms do not include information about online sales, therefore they are of no use to those mapping e-food suppliers. In the absence of useful information in the registry, the German strategy is to surf the Internet, proactively looking for e-food suppliers that may be operating from food establishments located inside Germany. Digital investigations focussed on suppliers whose food establishments were located in German territory, so that the competent authorities could visit premises based within their jurisdiction, perform controls on production, and compel the food business operator to fulfil its registration obligations. Thanks to these investigations, by 2015 G@zielt had sent the Länder over 2500 references of food business operators to be properly identified. However, mapping has proven to be a time-consuming task, as many suppliers fail to provide consumers (in this case, control staff) with the information necessary to identify them fully. As described in previous chapters, this is particularly true when dealing with online marketplaces, as most of these platforms make it technically possible for suppliers to post e-food offers without displaying the supplier’s legal name or address, or by simply displaying the details of the food’s manufacturer and not the supplier itself. Proper mapping requires both, as the supplier may be responsible for storing the pre-packed product it has purchased from the manufacturer, and thus its premises should also be controlled. When working to identify suppliers in an online marketplace, G@zielt tries to obtain the missing data either by contacting the supplier directly, using the platform’s messaging system, or, if that fails, by sending information requests to the site administrator, the information service provider, Paypal, or other relevant stakeholders. Once a supplier is properly identified, the central unit proceeds to transfer the information to the relevant competent authority based on its geographical ‘Food business operator’ means the natural or legal persons responsible for ensuring that the requirements of food law are met within the food business under their control. See Art. 3(3) of Regulation 178/2002 laying down the general principles and requirements of food law, establishing the EU Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002), pp. 1–24 (hereinafter, ‘General Food Law’). 27 See Federal Ministry of Food and Agriculture (2012). 26

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location (via the Land’s contact point) to check if that supplier has registered its activity. This task is onerous, as there is no centralised database of registered food businesses and establishments in Germany28 that the central unit can use to check against. The lack of information about online activities in registration forms, together with the lack of centralised29 access to the register of food establishments, makes it impossible for German authorities to use the information submitted by food business operators to map suppliers and their active food establishments, a situation that is repeated across the EU. This was one of the first conclusions reached, not only in Germany, but also during EU training and working group meetings looking at Food Law enforcement online.30 In response, the Official Controls Regulation of 2017 included a specific provision to ensure that competent authorities can legally request, in their administrative forms, information about the online activity of food business operators. As analysed previously in this book, Regulation 2017/625 mandates that Member States’ laws must ensure that competent authorities can ‘draft and keep up-to-date a list of operators’ (including online suppliers) based on the information obligatorily submitted by food business operators, which must at least include their name and legal form, the specific activities they carry out, ‘including activities undertaken by means of distance communication [for instance, e-food sales], and the places under their control’.31 It now remains for German lawmakers to update domestic regulations and forms to facilitate the identification of food establishments actively engaged in online food trading. But with the current wording EU Law provides an appropriate legal framework for creating a tool for gathering information about online suppliers, their premises, or even the websites (including online marketplaces) which are being used to trade e-foods, the username under which they offer products, and the list and number of products traded online.

28

Only a few Member States, such as Spain, have created this database, which allows competent authorities and even citizens to browse the full list of registered food business operators and establishments. 29 Although Art. 2(7) of the AVV-LmH establishes that competent authorities must notify the BVL of any new approval of establishment, this legal framework does not create a central registration system or a register of establishments at federal level. 30 Referring to the BTSF training on ‘New investigation techniques for official controls – E-Commerce of food.’ See Chap. 5. 31 See Art. 15 Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products, amending Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and of the Council, Council Regulations (EC) No 1/2005 and (EC) No 1099/2009 and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/ 119/EC and 2008/120/EC, and repealing Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and of the Council, Council Directives 89/608/EEC, 89/662/EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC and Council Decision 92/438/ EEC, O.J. L 95/1 (2017), pp. 1–142 (hereinafter, ‘Official Controls Regulation’).

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6.4.1.2

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Towards Technology-Assisted Mapping?

The German central unit initiated its project in 2011, conducting manual investigations to uncover the identity of e-food suppliers. This is a time-consuming task, which requires tracking down enough scattered pieces of information to complete the puzzle revealing the identity of suppliers, frequently in collaboration with information society service providers and other branches of the public administration at home and abroad. In order to speed up this process, G@zielt’s team opted to try to expedite mapping of the digital market of foods, incorporating the use of an Internet bot. The software used actually belongs to the German Federal Tax Office, which, like many others across the EU, uses Internet bots to track down information available online to identify undeclared income from individuals and businesses who are not declaring their activity for tax purposes.32 The Internet bot combines a web crawler and content analysis software, which tracks down relevant information without staff having to begin time-consuming and repetitive online searches from scratch: it helps to find e-food offers and pieces of information about suppliers automatically, and can be programmed to focus on offers matching a specific description. Using the results of the tax office’s web crawler for Food Law enforcement purposes required modifying the German food code33 to explicitly allow the transmission of data on Internet trading between both entities. This legislative change did not however allow the central unit to commission searches itself: instead, it is the Land’s authority’s prerogative to place those requests. When a Land wants information on a specific operator or e-food offer (frequently by recommendation of G@zielt), the request is placed with the Federal Tax Office via the central unit at the BVL. Later, the data report is returned to the central unit, and the information is forwarded to the Land’s authorities. Because G@zielt cannot access the data, the files received by the central unit must be filtered by Länder, and each Land receives the files with results relevant to its jurisdiction via the Länder contact point. However, the automated system has a significant weakness that needs to be addressed in order to ensure its efficiency: the software produces a very large amount of data, and because neither the tax authority nor G@zielt have the authority to open the files to review and screen them, a significant part of the generated data sets forwarded to the competent authorities have already been forwarded at least once before. The competent authorities thus receive the same unfiltered information repeatedly, which discourages the proper use of this resource.

32 33

See Federal Office of Consumer Protection and Food Safety (2018). See Art. 38(a)(1)(3rd) of LFGB, as amended.

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6.4.1.3

6 Germany’s Take on E-food Control

Small Undertakings, Food Sharing and Mapping

The German mapping strategy is to track down suppliers that are suspected of operating from establishments based inside the Member State’s borders, in order to ensure that competent authorities can bring unknown food establishments under official control and increase current registration rates. But it cannot escape the question of whether all e-food suppliers should be identified and compelled to notify their activity and register their food establishments if necessary. Should home-based micro-entrepreneurs or individuals partaking in food sharing initiatives be mapped? Does EU Food Law apply to their online activity? This legal controversy has not been settled at the EU level.34 Germany has no official position or policy regarding food sharing. However, as examined in the next section, it might include homemade e-foods in its monitoring activities if exchanges take place in popular marketplaces, to prevent consumers from unsafe foods.

6.4.2

G@zielt’s Monitoring of the Digital Market

The central unit’s responsibilities, when it comes to supporting a competent authority’s enforcement efforts, also include monitoring the digital market of foods by searching the Internet for specific e-foods and occasionally conducting test purchases for the verification of compliance with Food Law requirements. Searches are carried out according to its annual plan, but also in response to requests from the Länder, usually triggered by consumer or business complaints. This surveillance is the most time- and resource-consuming task that G@zielt has developed since its creation in 2011. Since there are a huge number of offers online, the central unit adopts an annual surveillance plan and prioritises controls, focusing on several factors such as the type of food product, the type of supplier, and even the type of platform. When it comes to the type of food product, the central unit prioritises identifying the e-foods that may entail a health risk for the consumer and those which have been the subject of a notification in the framework of a food safety alert system. Among the e-foods controlled by the central unit that are potentially hazardous to consumer health are those whose offer states that they have been formulated with ingredients that are forbidden by EU Food Law, which, as described in previous chapters of this book, are frequently found online. It may be that an unauthorised substance is present in the food (i.e., food supplements with extract of the plant Epimedium grandiflorum), or that the product lists an ingredient not authorised in that particular food product (i.e., an olive oil whose list of ingredients includes food additives other than those authorised). In these situations, through the mere examination of the information

34

See Chap. 3.

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posted with the offer, the investigator can ascertain that the product does not comply with Food Law. These products are commonly offered via a webshop where most of the products manifestly fail to comply with Food Law requirements. In some, the website may even include a banner at the top of the page stating that the shop is not commercially active and is only a ‘demo shop’, but test purchases prove otherwise. In other cases, the operator is not identified in the offer and relevant data such as an offshore mailbox, an anonymous domain, or packages being sent without a return address are intuitive indications that the operator may not be legal.35 In both situations the information and evidence gathered by the team should be passed on to criminal investigation authorities, as it exceeds the scope of administrative control of Food Law requirements. The central unit can then assist if required. Surveillance is also carried out on products that, according to the information available in rapid alert systems databases, do not comply with legal requirements. For example, investigators can review the Rapid Alert System for Food and Feed (RASFF) notifications database in order to identify non-compliant products and use the Internet to locate offers of those products. Together with the RASFF portal, the central unit’s team also uses the information received via the International Food Safety Authorities Network (INFOSAN), which includes warnings from third countries, including those from the US Food and Drug Administration. Additionally, the central unit closely monitors e-food offers posted on popular online marketplaces. Market leaders such as eBay, Amazon, Facebook Marketplace, Alibaba and Aliexpress are frequently checked for compliance. The rationale behind this methodology is that the offers which are more likely to be accessed by consumers should be closely monitored to ensure that accessible e-foods are safe. Because some of these platforms, such as eBay and Facebook, allow for peer-topeer food trading, it is likely that G@zielt’s team may occasionally review the compliance of offers posted by non-professional suppliers, then making contact to request any necessary changes. Based on consumer protection concerns, it may even ask the marketplace to remove offers if necessary, in order to remediate non-compliance. G@zielt’s surveillance therefore focuses on containing or even eliminating potential risks to consumers, regardless of the nature of the supplier making the product in question available. Once this risk-based analysis has led to the decision to control specific categories of offers, G@zielt applies an additional filter: it only monitors those that are directed to the German consumer. The criteria used by the central unit to determine this is one first adopted by the German Federal Court of Justice in its Judgment I ZR 24/2003 of 30 March 2006, which ruled that a product is addressed to German consumers if the post is written in German and ‘contains no clear and well-defined disclaimer’. The criteria chosen by the German Federal Court of Justice concurs with the Court of Justice of the EU, which rules that mere access to the website or platform where the

35 When this happens, officials may contact the official body responsible for domain registration in Germany (‘DENIC’), who will request the missing information directly from the domain owner.

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offer is posted is not enough to consider that the offer is directed to the national consumer.36 Instead, it must be possible for the purchase to be completed, and for the product to be actually shipped to Germany. But given that online shopping is a transnational phenomenon, e-foods addressed to the German consumer may come from operators based outside the country and even outside the European Union. When this happens, the central unit transmits the information to the relevant authority so that it can take action to remediate non-compliance by performing official controls on production. However, notably, data collected by G@zielt suggests that when searching for offers using the same search engines and keywords as an average consumer, the results that appear are mostly offers placed by operators located within the Member State. For instance, surveillance carried out in 2014 shows that 570 out of 1100 e-food offers subject to monitoring were issued by a food business operator based in Germany, 350 by suppliers based in other Member States, and finally 180 by operators in a third country.37 Hence, only about 15% of the remaining offers are placed from third countries and about 25% from another Member State. These figures could suggest that, although there is a pressing concern over the role that food business operators in third countries (and even in other Member States) are playing when it comes to putting unsafe foods on the online market, by focusing on operators at home, competent authorities could take legal action against the majority of non-compliant offers of e-foods. This has to do with the very nature of grocery shopping: in most EU countries, brick-and-mortar supermarkets are leading the market, to the point that in some countries, such as Spain, the predominance of online supermarkets is such that three out of four purchases of e-foods are made through supermarket websites.38 This situation is partly explained by the fact that supermarkets can easily be made accountable when unacceptable food products are delivered. Thus, if competent authorities ensured that operators at home complied with Food Law requirements, the overall compliance rate of the offers that are relevant to the consumer would be dramatically improved.

6.4.2.1

Performing Searches for Non-compliant Foods

The G@zielt’s team’s online surveillance for offers addressed to the German consumer that may be considered non-compliant with Food Law, must be carried out while going unnoticed by suppliers to protect the outcome of control activities. To that end, the central unit’s hardware and software has been selected and programmed so that it does not reveal that a public authority is investigating. Regarding the hardware, the computer that is used to carry out surveillance does not share the competent authority’s usual Internet connection. As for the software,

36

See Chap. 5. Federal Office of Consumer Protection and Food Safety (2018). 38 See Comisión Nacional de los Mercados y la Competencia (2015). 37

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the central unit employs specialised software tools that prevent tracking while making it possible to store the information gathered while surfing the Internet. The search for e-food offers is performed manually, following a well-defined methodology to navigate and store the information gathered. This search starts with the entering of keywords in popular search engines such as Google or Yahoo, so that the first search results the investigator gets are the same as a German consumer. In order to obtain relevant results, the manual search needs to be tailored and must take into account the different workings of the engines and platforms.39 This methodology is also carried out in popular online marketplaces. Considering that there are hundreds or even thousands of results from a single search, it has become the position of the German administration that an efficient search can only be achieved using automated software systems,40 similar to the method of mapping the German digital market of foods. In the absence of an appropriate tool available to control authorities that would ensure the automated analysis, the German administration decided to develop computer software that would perform searches automatically.41 To this end, a partnership was established between EDV Gesellschaft für Projektmanagement & Informationssysteme (computer association for project management and information systems) and the BVL, which resulted in the creation of the Arbeitsgruppe der Hochschule für Angewandte Wissenschaften Hamburg to work on software that would make online searches easier. The specific aim of this collaboration, which was to end by 2018, was to develop software that can carry out an automated search and analysis of online food offers while also automatically identifying non-registered food operators, so that mapping and surveillance efforts are aligned. The software should also ‘be able to collect evidence automatically (screen prints) and compare the results of the queries with the data available in other official databases.’42 Using automated searches for both mapping and product monitoring shows how ‘technological advances taking place in the field of artificial intelligence and robotics can also have many positive effects on law enforcement,’43 in this case facilitating the identification of unknown food business operators and of non-compliant food products. The data processing capabilities of web crawlers not only bring speed but also help control staff to make the administrative decision (for example, by carrying out part of the analysis of information and leaving out report results that are considered by the tool to be false ‘hits’). The use of these tools for law enforcement is expected to increase dramatically in the years to come, and automated

39

The good practices identified during the performance of such searches has been shared with authorities from other Member States in the framework of Better Training for Safer Food training and in other knowledge-transfer discussion forums. 40 Büchter et al. (2011), pp. 1–6. 41 Krewinkel et al. (2011), p. 1. 42 See European Commission (2018). 43 INTERPOL & UNICRI (2019), p. 1.

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enforcement systems for e-food control (as with traffic speed cameras, where even enforcement decisions are automated) may be just around the corner.

6.4.2.2

Product Analysis and Test-Purchases

Once a manual search has identified e-foods that appear to be unsafe, G@zielt’s team may occasionally decide to carry out checks to determine non-compliance. The central unit’s surveillance includes both formal and material monitoring. It first performs a formal analysis by analysing the product information on the website. The team not only checks the rigour of the food information,44 but also looks for mandatory information established under EU consumer law,45 such as the identification of the food business operator and its address, a link on their websites to the EU Online Dispute Resolution platform, or the provision of a contact e-mail address, among others. If by examining the information on the website it is suspected that the e-food may not comply with Food Law, screenshots are then taken and safely stored for further analysis. G@zielt may then decide to perform an analysis of the food products that are suspected of being non-compliant. In these cases, the central unit purchases the product using mystery shopping techniques, thus keeping its identity hidden. This anonymity is required to ensure that the product delivered has not been chosen purposely by the supplier, and that it is therefore a good example of the food offered to German consumers. This process is required by the no-prior-warning principle of the EU Official Controls Regulation. Once the product is in the hands of the central unit, the team proceeds to check the parcel, the individual packaging of the items purchased, any documents that may have been delivered, and any other aspects relevant to Food Law (such as the temperature of the food when dealing with fresh, perishable or refrigerated food products). During this examination, photographs are taken, and videos made in order to keep appropriate records for further inspection. Samples for analysis may also be taken and forwarded to a laboratory to check product identity, adulteration, or the

44 Within the meaning of Art 2(2) of Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63. 45 See, in particular, Art. 6 of the Consumer Rights Directive [Directive 2011/83/EU on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council Text with EEA relevance O.J. L 304 (2011), pp. 64–88], and Arts. 6 and 7 of the Unfair Commercial Practices Directive [Directive 2005/29/ EC concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council O.J. L 149 (2005), pp. 22–39].

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presence of microbiological or chemical hazards. Test purchases completed by the central unit are used as indications of whether or not compliance is met, and to gather information about the supplier that may have been impossible to obtain any other way. For example, the parcel may include trademarks, or information about the sender, which may help identify the supplier. However, the material checks carried out on those samples are not suitable for enforcement in Germany—not only because enforcement competence lies with competent authorities in the Länder, but also because German legislation has long prevented any authority from using samples procured by mystery shopping for enforcement purposes. Rather than being a conscious choice, this is the result of laws not being designed for the digital market. First, in order to perform mystery shopping, it is necessary to have specific equipment that does not reveal the buyer’s identity or location. This includes not only special software to ensure anonymity, but also payment methods that are suited to this task. This is where the problems start, as German legislation prevents competent authorities from paying for samples. According to the wording of paragraph 4 of article 43 of LFGB, competent authorities should not pay the selling price for a sample that is going to be used for enforcement purposes. This means that, in order to perform mystery shopping lawfully, a system of reimbursement for the authority should be put in place in order to comply with LFGB. Until then, neither G@zielt nor competent authorities in the Länder can control e-foods at the distribution stage using mystery shopping techniques. Second, it is the interpretation of German authorities that the same legal provision does not provide a suitable legal basis for taking samples anonymously: Article 43 of the food and animal feed regulations (LFGB) does not contemplate electronic commerce and only allows conventional sampling in the establishments of online stores if they store the products there. For official online sampling, there is a lack of a legal basis to purchase without the need to indicate the identity of the buyer (the authority).46

It should be noted that although this second obstacle may be overcome thanks to the Official Controls Regulation, which mandates that domestic legislation allows competent authorities to use mystery shopping, the EU regulation does not per se eliminate the obstacle referring to payment for samples. In this scenario, the importance of controls at the production stage (i.e. mainly at the suppliers’ food establishments) is paramount.

6.4.3

Measures in the Event of Non-compliance: The Role of Online Marketplaces

Once formal and material checks have been completed, results are forwarded to the relevant Land and from there to the competent authority, so that it can perform 46 Schreiber et al. (2015), p. 291. (Citation translated from the original version in German) It must be noted that the authors of the paper were at the time part of the German central unit.

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official control activities on production. If, on the other hand, G@zielt’s controls suggest that a non-compliant e-food has been shipped from outside Germany, the central unit may forward the information that has been collected to the country where the parcel came from, via available international cooperation mechanisms such as the EU administrative assistance and cooperation (ACC) mechanism enshrined in the Official Controls Regulation. But the unit may also follow two other different courses of action, if authorised by the competent authority: contacting the supplier to request a modification or elimination of the offer in order to remediate non-compliance, or initiating a notice-andtakedown (NTD) procedure to have an online intermediation service provider (such as the online marketplace) remove the offer ‘expeditiously’.47 Based on the experience of the central unit, these two courses of action have been identified as very successful activities for improving the safety of the German digital market of foods. Internet-based food business operators are lagging behind their store-based counterparts when it comes to compliance with Food Law (keeping in mind that German data suggests that almost 40% of Internet-based retailers have not registered with the proper authorities as opposed to less than 13% of store-based suppliers), but it appears in most cases not to be deliberate. As in the brick-and-mortar food market, the size of the business affects compliance. It has repeatedly been reported that small and medium-sized enterprises tend to have a reactive approach to dealing with food safety requirements.48 In the digital market, where small and micro-undertakings thrive, the impact of this reality is magnified. In order to foster compliance, the central unit regularly contacts online suppliers directly, in an informal manner, to inform them of the responsibilities and legal obligations they have as food business operators and to work with them to remediate non-compliance. In online marketplaces, where e-food offers rarely display more than the username of the supplier,49 staff are normally forced to contact suppliers via the messaging system created by the platform, so the unit’s first contact generally includes a request to the supplier to properly identify itself and provide an alternative communication channel such as an e-mail address, a postal address or a phone number. But platforms’ messaging systems rarely allow users to know if the recipient of the message has read the message. Therefore, in the absence of a reply, there is no way of knowing if the supplier is deliberately ignoring the message or has just not seen it.

47

See Art. 14 of Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. L 178 (2000), pp. 1–16; and Chap. 2. 48 Yapp and Fairman (2006), p. 50. 49 Such an identification gap is also linked to the architecture and functioning of online marketplaces. In these platforms, anyone can create a profile to become an e-food supplier by simply providing an invented username and a valid e-mail. Some social networks even allow their users to sell e-foods without creating a separate supplier profile. By simply signing into the platform’s account and clicking on a ‘sell something’ button, any user (prosumer or business) can publish e-food offers under their username (while their real identity remains hidden). See Chap. 5.

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131

A significant proportion of suppliers do however cooperate with G@zielt during these informal contacts. Offers are voluntarily corrected when possible and eliminated when necessary. Systematic constructive monitoring and educational initiatives can therefore have a great impact on compliance rates. This is an important finding when looking at improving the safety of peer-to-peer trade, as it means that even if these exchanges were to be considered outside the scope of most EU Food Law, food and consumer protection authorities can raise awareness about food safety concerns and improve the safety of exchanges by educating those engaging in food sharing. However, when suppliers refuse or ignore this request, the central unit decides whether to contact the platform hosting the offer directly to request the removal of an e-food offer. Inspired by the legal obligation to take prompt action to eliminate or contain risks enshrined in article 35 of the Official Controls Regulation, this option may also be triggered when, given the degree of non-compliance or the potential harm to human health, there is an urgent need to stop the distribution of the e-food. During the first years of the pilot project, it was the central unit’s team that had to investigate who to contact in each online marketplace that would be open to agreeing to G@zielt’s demands. Now however, notice-and-take down requests are channeled through ad hoc channels specially created by major platforms to manage law enforcement requests.50 This communication channel does not preclude additional contacts when considered appropriate. The use of notice-and-takedown procedures by the central unit, however, raises the question of whether this tool should only be used in those situations requiring prompt action, or in all cases where e-foods are suspected not to comply with requirements. To date, there is no official German position on the matter. Not even the controversial German Act to Improve Enforcement of the Law in Social Networks, adopted in 2017 to force large platforms to remove manifestly illegal content in 24 h and other unlawful products within 7 days, addresses this issue.51

6.5

Conclusions

The German experience illustrates how EU and Member States’ laws and public enforcement regimes have been affected by online trade in the platforms’ economy. Its domestic implementation legislation, which was adopted with the brick-andmortar market in mind, has created obstacles for control activities in the digital 50 In fact, the Product Safety Pledge signed by major marketplaces in 2018 was in part possible thanks to the communication and collaboration channels opened years earlier by G@zielt. 51 The German law indicates that while manifestly illegal content shall be removed within 24 h, content which is merely unlawful shall be taken down in 7 days. It does not indicate whether authorities can skip administrative sanctioning procedures and go straight to submitting an NTD. See German Bundestag (2017) Act to Improve Enforcement of the Law in Social Networks (Network Enforcement Act), Section 3.

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market. As a result, it has been necessary to amend legislation and find an innovative approach to improve authorities’ ability to monitor compliance and enforce Food Law online. G@zielt has proved that preliminary investigations not suitable for directly enforcing Food Law, together with supplier awareness initiatives, can have a significant impact on bridging the enforcement gap. Data obtained during its surveillance activities confirm that higher non-compliance rates among Internet-based operators are not generally based on intentional infringements of the law, but on the fact that they are frequently small scale, and have a lower level of awareness of their legal obligations than traditional operators. Such a situation is exacerbated in online marketplaces, given the ‘pop-up’ nature of many offers in this type of platform. Additionally, the data generated by its investigations suggest that, even if the digital market is a transnational phenomenon, when dealing with food, online sales are most likely to be concluded between a supplier and a consumer located in the same jurisdiction. This is partly explained by the fact that brick-and-mortar supermarkets and local grocery stores still dominate the e-food market, and also by the fact that popular items such as fresh produce or homebased meals are generally shipped only within the country’s borders. To tackle the identification gap online, the German central unit performs digital investigations to increase current notification and registration rates among internetbased food business operators. These investigations are increasingly technologyassisted. German legislation was updated to ensure that the national tax authority’s web crawler, which performs automated searches and formats the information in a way that is manageable by a public official, could be used to identify unregistered food businesses. Additionally, the unit is working to develop its own software to automate e-food searches, aiming at building a system where part of the analysis work is completed by the technology instead of by control staff. As forecasted by Reidenberg (2003), these ‘disruptive technologies have important police powers,’ and will increasingly ‘be used by states to support law enforcement.’52 To face the prioritization challenge, the German central unit focusses on monitoring dangerous e-foods in popular e-commerce websites and marketplaces, focusing especially on those offers which are highest ranked. The goal is to increase the chances that those e-foods which are more visible to consumers are safe. As a result, less popular marketplaces or trading websites are hardly controlled. This strategy also entails that peer-to-peer platforms and exchanges, although considered within the scope of the General Food Law, are rarely monitored. G@zielt does not consider online marketplaces to be food business operators. Instead, the German approach is to embrace recurrent collaboration with online marketplaces as online intermediation service providers. As early as the initial pilot project, the central unit built channels of communication and collaboration with service providers to make sure that, in application of the e-Commerce Directive, illegal content (in this case, non-compliant e-foods) was removed or blocked

52

Reidenberg (2003), p. 227.

References

133

expeditiously. In fact, measures to remediate non-compliance detected during centralized digital inspections consist essentially of the submission of notice-and-takedown procedures. Traditional public enforcement measures are only adopted by competent authorities in the Länder when non-compliance is established as a result of traditional inspections on a businesses’ food establishment. The German experience also provides valuable insight regarding the jurisdiction question.53 In a highly decentralised country, centralisation of mapping and digital market surveillance has proven a success. However, formally, centralisation has not resulted in competent authorities relinquishing all their competences. It is still the responsibility of authorities in each Länder to review the data generated from automated investigations, and to carry out controls on food establishments used for online sales; the central unit is accountable to the Länder (which fund and supervise its activity). According to the German administration, the creation of a central unit has dramatically increased the efficiency of official controls in the digital market, so much so that the scope of its activities has been extended to the control of cosmetic products, consumer products, animal feed and tobacco. Targeted centralisation of online monitoring has facilitated building a team with specific investigative skills, limiting the use of resources associated with decentralised surveillance. Its work has facilitated the design of investigation and inspection procedures that remove or reduce legal obstacles to the monitoring of the e-food market. The success of the German experience raises the question of whether the centralisation of all or some control activities is desirable for other Member States, or even at EU level. As analysed by Scholten (2017), when challenges to the enforcement EU Law and policies arise, ‘the EU seems to have employed three promoting strategies in promoting the implementation of its policies’:54 regulating domestic enforcement, building networks of competent national authorities, and creating a EU Enforcement Authority that has complete or partial enforcement responsibility. The team leading the central unit argues that the European Union may have reached stage three, and therefore the time may have come to centralise some enforcement tasks at EU level.55

References Büchter B, Kuhr C, Schreiber G (2011) Pilotprojekt zur amtlichen Kontrolle des Handels mit Lebensmitteln im Internet. J Verbr Lebensm 6(375). https://doi.org/10.1007/s00003-011-07009 Bundesamt für Verbraucherschutz und Lebensmittelsicherheit (2014) FAQ zur Registrierung und zu Pflichten von Lebensmittelunternehmern sowie den wichtigsten Gesetzesregelungen. https://

53

Inspired by Jerker and Svantesson (2017). Scholten (2017), p. 3. 55 Schreiber et al. (2015), p. 297. 54

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www.bvl.bund.de/SharedDocs/Downloads/01_Lebensmittel/Internethandel/FAQ_ Registrierung_Lebensmittelunternehmen.pdf?__blob¼publicationFile&v¼10%0A. Accessed 16 Sep 2019 Bundesamt für Verbraucherschutz und Lebensmittelsicherheit (BVL) (n.d.) Korrigieren Sie die Fehler in unserem Online-Shop! http://download.gsb.bund.de/BVL/bvl-demoshop/index.html. Accessed 16 Sep 2019 Bundesamt für Verbrauchersschutz und Lebensmittelsicherheit (BVL) (2017) Gemeinsame Zentralstelle “Kontrolle der im Internet gehan- delten Erzeugnisse des LFGB und Tabakerzeugnisse”. G@ZIELT-Jahresbericht 2017 Bundesministerium für Ernährung, Landwirtschaft und Verbraucherschutz (2013) Verwaltungsvereinbarung zwischen der Bundesrepublik Deutschland zur Regelung des Betriebes einer gemeinsamen Projektzentralstelle ‘Kontrolle der im Internet gehandelten Erzeugnisse des LFGB und Tabakerzeugnisse’. Berlin Comisión Nacional de los Mercados y la Competencia (2015) El comercio electrónico supera en España los 4.100 millones de euros en el tercer trimestre de 2014, un 25% más que el año anterior. https://www.cnmc.es/2015-05-18-el-comercio-electronico-supera-en-espana-los4100-millones-de-euros-en-el-tercer. Accessed 18 May 2015 European Commission (2018) Overview report official controls on internet sales of food in EU Member States. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2772/57153 Fairman R, Yapp C (2005) Enforced self-regulation, prescription, and conceptions of compliance within small businesses: the impact of enforcement. Law Policy 27(4):491–519 Federal Ministry of Food and Agriculture (2012) Leitfaden zur Registrierung von Betrieben nach der Verordnung (EG) Nr. 852/2004 über Lebensmittelhygiene. https://www.landkreiscuxhaven.de/media/custom/578_4384_1.PDF?1259943398. Accessed 19 Sep 2020 Federal Office of Consumer Protection and Food Safety (2018) G@ZIELT: Safe Shopping on the Internet. https://www.bvl.bund.de/EN/Remit/gezielt_safe_shopping/gezielt_node.html. Accessed 16 Sep 2019 Herges L, Kaus S, Böl GF et al (2017) EU Food Safety Almanac. German Federal Institute for Risk Assessment (BfR), Berlin INTERPOL & UNICRI (2019) Artificial intelligence and robotics for law enforcement. 2nd INTERPOL-UNICRI Global Meeting on Artificial Intelligence for Law Enforcement, Singapore, 2–4 July 2019 Jerker D, Svantesson B (2017) Solving the internet jurisdiction puzzle. Oxford University Press, Oxford Kranz P, Harms H, Kuhr C (2015) Kontrolle der im Internet gehandelten Erzeugnisse des LFGB und Tabakerzeugnisse (G@ZIELT). J Verbraucherschutz und Lebensmittelsicherheit 10(1). https://doi.org/10.1007/s00003-015-0993-1 Krewinkel A, Tolg B, Fritsche J (2011) Online-Lebensmittelhandel und Strategien zur Kontrolle des virtuellen Lebensmittelmarktes. Verbraucherschutz und Leb. J Verbr Lebensm 6:395–400. https://doi.org/10.1007/s00003-011-0701-8 Polinsky M, Shavell S (2007) The theory of public enforcement of law. In: Polinsky M, Shavell S (eds) Handbook of law and economics, vol 1. Elsevier, Amsterdam, pp 403–454 Reidenberg JR (2003) States and internet enforcement. Univ Ottawa Law Technol J 213 (2003–2004)

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Remmel J (2013) Bericht des MKULNV zu einem Entwurf einer Verwaltungsverein- barung zur Regelung des Betriebes einer gemeinsamen Projekt- zentralsteIle ‘Kontrolle der im Internet gehandelten Erzeugnisse des LFGB und Tabakerzeugnisse’. Ministerium für Klimaschutz, Umwelt, Landwirtschaft Natur- und Verbaucherschutz des Landes Nordrhein-Westfalen, Düsseldorf Scholten M (2017) Mind the trend! Enforcement of EU law has been moving to ‘Brussels’. J Eur Pub Policy 24(9):1348–1366. https://doi.org/10.1080/13501763.2017.1314538 Schreiber GA, Liebscher B, Kranz P (2015) Der Online-Handel mit Lebensmitteln – Herausforderung für die Überwachung. Z L R 42(290) Yapp C, Fairman R (2006) Factors affecting food safety compliance within small and medium-sized enterprises: implications for regulatory and enforcement strategies. Food Control 17:42–51. https://doi.org/10.1016/j.foodcont.2004.08.007

Chapter 7

The United Kingdom’s Strategy for Bridging the Enforcement Gap

7.1

Introduction

Before leaving the European Union, the United Kingdom’s Food Standards Agency (FSA) designed a comprehensive strategy to bridge the enforcement gap and to raise consumer awareness of the risks associated with e-food trade. One of the highlights of this work was the publication, in 2016, of the first open access guide for competent authorities on how to overcome the challenges associated with enforcement of Food Law in the digital market. Entitled ‘Food Sold Online - Guidance for Local Authorities’,1 the publication provides control staff with detailed recommendations for the implementation of control activities over the digital market of foods, in compliance with the EU public enforcement regime. It identifies control tactics and techniques which can be implemented by any local authority, even those that may not be equipped to perform digital investigations or test purchases. The goal is to engage as many local authorities as possible in the task of bridging the enforcement gap, to deter online suppliers from placing non-compliant e-foods on the market. The UK’s enforcement rules were drafted to comply with EU harmonisation legislation, and accordingly, the FSA’s recommendations are also valuable for enforcement staff throughout the European Union. With that in mind, the first part of this chapter describes the Food Standards Agency’s strategy, focusing on its recommendations on how to increase the efficiency of control efforts by reconnecting the digital market with brick-and-mortar food establishments. The second part of this chapter analyses the Food Standards Agency’s interpretation on what constitutes a ‘food business’ subject to EU Food Hygiene legislation. In the absence of EU guidelines, the FSA’s interpretation can help decide whether online food sharing initiatives and homebased businesses are bound by EU Food Law. 1

Food Standards Agency (2016a), p. 18.

© Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_7

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7.2

7 The United Kingdom’s Strategy for Bridging the Enforcement Gap

A Note About the Administrative Structure of the United Kingdom and the Scope of the FSA’s Strategy

In 1997, the UK began devolving powers to Scotland, Wales and Northern Ireland. Based on the separate devolution settlements, these countries have undertaken a process of decentralisation: the parliament in each country has reclaimed power to legislate on a wide range of issues, known as ‘devolved matters’. The issues that remain the exclusive responsibility of the UK Parliament consist mainly of areas such as international relations and defence, national security, nationality and immigration, nuclear energy, and broadcasting. In this process of decentralisation, the devolved administrations have regained competences for food legislation, animal health and welfare, and plant health law.2 Official food controls are, therefore, devolved matters in the United Kingdom, and as such the responsibility of each country. Responsibilities for official controls are assigned to several branches of each administration, ‘but, in practice, day to day responsibility for enforcement functions is divided between central and local government’.3 There are over 400 local authorities carrying out official controls in the United Kingdom, and each one of them acts according to a service plan that is defined under the recommendations of a Framework Agreement on official feed and Food Law controls. These numerous local authorities are in charge of performing official controls in the digital single market. Local authorities implement their responsibilities under the coordination and guidance of the Food Standards Agency, a non-ministerial independent government department in the United Kingdom that plays a decisive role in the implementation of the official controls system. Under article 12 of the Food Standards Act,4 the Agency has a duty to monitor the performance of control authorities when enforcing relevant legislation. This duty includes providing guidelines for public enforcement strategy and setting performance standards in relation to the enforcement of any relevant legislation. The FSA has used this prerogative to build a strategy for the enforcement of Food Law in the digital market of foods, which is the focus of this chapter. Since the creation of Food Standards Scotland (FSS) in 2015, the FSA no longer has responsibilities in Scotland. The FSS took over the responsibilities previously entrusted to the FSA, including those related to official controls. Yet, the FSA is still in charge of leading UK policy in relevant issues such as the coordination and definition of the multi-annual control plan required by EU Food Law. In the absence of an FSS strategy for Scotland, it also has a leading role in areas such as food sold online.

2

Food Standards Agency (2019), p. 9. Food and Veterinary Office (2015), p. 4. 4 See UK Parliament Food Standards Act 1999 (c. 28), vol 345 cc379-98 (2000). 3

7.3 The Food Standards Agency’s Strategy for the Digital Market of Foods

7.3

139

The Food Standards Agency’s Strategy for the Digital Market of Foods

The Food Standards Agency considers that e-food trade is ‘a high risk to food safety’.5 This dramatic statement is based on data obtained from several surveys carried out by the National Trading Standards Regional Investigations Teams in 2015, which identified that, in some areas of Food Law compliance, online suppliers had a failure rate of 90%. The first survey, regarding compliance with EU nutrition and health claims regulation,6 concluded that non-compliance with rules on health claims was widespread: ‘of 213 online health claims reviewed, 162 did not comply – a failure rate of 76%’.7 It was also established that at least one of the products that were tested during the survey had been subject to adulteration. Other surveys that followed shortly afterward showed no improvement in compliance rates: surveys on compliance with labelling legislation for feed and sweets found that most products were non-compliant, and one feed product was also found to be adulterated. A survey on meat and meat products online (such as sausages and pies offered via online marketplaces and other e-commerce websites) showed that, of the seven samples purchased, all but one was unsatisfactory due to meat content deficiency, the presence of an undeclared species, and inadequate labelling. The activities carried out to complete the survey also helped to identify meat producers that were unknown to the authorities because they had failed to comply with the obligation to request approval of their establishments, as required by EU hygiene rules. In order to improve compliance rates and bridge the enforcement gap in the digital food market, in 2016 the FSA started work on a strategy for the digital market of foods. This entailed providing systematized advice and training for control staff, while creating a communication and capacity-building policy to improve food businesses’ understanding of their legal obligations selling food online, as well as consumer awareness of the risks that online grocery shopping can pose.

7.3.1

Raising Business and Consumer Awareness

Raising awareness among businesses and consumers is key to improving the functioning and safety of the digital market of foods. With regard to businesses, the FSA argues that the incredibly low compliance rates in the online market are in part explained by operators’ poor knowledge of the legal requirements established in European Union Food Law. This belief is based on the results of the follow-up activities carried out during the 2015 surveys. After the surveys were completed, 5

Food Standards Agency (2016a), p. 7. Regulation (EC) No 1924/2006 on nutrition and health claims made on foods, O.J. L 404/9 (2006), pp. 9–25. 7 Food Standards Agency (2016a), p. 6. 6

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control staff contacted online suppliers that were posting non-compliant food offers online, and, once significant sustained follow-up work had been carried out, many situations of non-compliance were addressed without the need to begin sanctioning procedures. In fact, the second round of digital market surveillance showed that the non-compliance rate had fallen from 90% to 72%. This substantial drop of 18% shows that intervention (which mostly consisted of advice)—though resource intensive—can be effective. Such results align with literature and empirical data gathered by authorities in other EU Member States.8 Since the first surveys were completed, the FSA has carried out many activities to improve suppliers’ understanding of legal requirements. For instance, in 2016, it published Distance Selling Guidance for Food Businesses,9 which includes information on how to ensure compliance. For instance, it covers EU pre-contractual information rules online based on the Consumer Rights Directive,10 and other consumers’ rights such as the right to cancel a contract. The guidance document also highlights the fact that food businesses must inform authorities of their activity, as prescribed in European Union Law. When it comes to consumers, the agency focuses on giving practical guidance on purchasing food online safely and on helping consumers to identify online suppliers operating legally. To that end, a specific guidance document11 includes recommendations such as checking that offers include the operator’s address, avoiding buying from outside the EU, or from websites with many spelling mistakes (an indication that it may not be professionally run). Furthermore, when purchasing e-foods sold in an online marketplace, the FSA recommends consumers to review the available feedback from previous consumers is good. Additionally, the FSA decided to include online businesses in its ‘Food Hygiene Rating’. The Food Hygiene Rating is a rating scheme put in place by the FSA in partnership with local authorities.12 Its goal is to give consumers information about a food business’s performance in relation to food hygiene legislation. It grades businesses from 0 (poorest performance) to 5 (best performance), based on the results of an official inspection on a given date when the business’s premises were visited by the local authority. Offline, retailers and restaurants must display the scheme at the entrance of their establishments. Businesses operating online can digitally display the rating scheme, but it is not mandatory.13 To close that gap, the FSA’s website has made a database publicly

8

See Chaps. 1. See Food Standards Agency (2017). 10 Directive 2011/83/EU on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, O.J. L 304/64 (2011), pp. 64–88. 11 See Food Standards Agency (2016b). 12 There is a similar rating in Scotland, the ‘Food Hygiene Information Scheme’. 13 As identified by Brice (2018), some online marketplaces connecting chefs and other food entrepreneurs offering food-related services (such as a supper club) require suppliers to produce evidence that they have received a rating. This is due to the fact suppliers in those platforms (which do not fall within the scope of online marketplaces identified in this book because they do not enable 9

7.3 The Food Standards Agency’s Strategy for the Digital Market of Foods

141

available, indicating the rating received by all food businesses that are registered and have been inspected by local authorities. Consumers can use the database to check an online supplier’s rating before making a purchase. However, given the scant information about suppliers on platforms such as online marketplaces (which often consists of only an invented username other than the business’s registered trading name), consumers may not always be able to identify an online supplier’s hygiene rating. It is hoped that this situation will improve once online marketplaces, as part of their application for the Platform-to-business Regulation,14 provide consumers with the identification of the supplier responsible for each e-food offer.15

7.3.2

Capacity-Building to Ensure Enforcement

The FSA has devoted resources to capacity-building initiatives to improve local authorities’ ability to monitor the online market of foods. It has established partnerships among different institutions to provide control staff with ad hoc training to develop their duties effectively. For instance, public officials can access a course by the National Trading Standards e-Crime Unit, which covers issues such as the functioning of the Internet and e-commerce platforms, and the capture of digital information that may be used as evidence for enforcement purposes.16 Additionally, in 2016, the FSA has published the first open-access guide for public officials on how to prioritise and perform control tasks in the digital market of foods. Food Sold Online – Guidance for Local Authorities,17 updated between September and December of that year, was drafted by control officials whose responsibilities are to organise and/or perform official control, and who had experience in digital investigations. Instead of building a specific team centralising market surveillance, the UK’s approach is to ensure that as many of their 400 local control authorities as possible are engaged in the task of bridging the enforcement gap. Decentralised action should, according to the FSA, deter suppliers from placing on the market non-compliant e-foods:

the trade of foods but of food-related services) is almost exclusively made up entirely of food businesses with a brick-and-mortar presence. The report also identified that online marketplaces enabling e-food trade, on the other hand, did not require suppliers either to be registered with their local authorities or to possess a hygiene rating. See Brice (2018), p. 25. 14 Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services, O.J. L 186/57 (2019), pp. 57–79. 15 See Chap. 2. 16 Also, until 2019, enforcement officials from the United Kingdom also participated in relevant BTSF training initiatives. Better Training for Safer Food (BTSF) is a Commission training initiative covering food and feed law, animal health and welfare, and plant health rules (including, since 2014, e-nforcement. See Chap. 5. 17 Food Standards Agency (2016a), p. 18.

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The more local authorities that carry out both reactive and proactive activities in relation to internet food sales, the easier it will be to protect consumers. This will also help businesses who want to comply, but which find themselves up against unfair competition from those businesses that do not comply.18

Most of the recommendations issued by the FSA are still applicable throughout the European Union in 2020 because, at the time of publication and still today, the United Kingdom’s legislation governing the organisation and implementation of food official controls was bound by EU regulations. Therefore, given that some Member States are failing to provide their own authorities with training and guidance on how to tackle the challenges of online food trade, the FSA’s initiative has great value.

7.3.2.1

Facing the Identification Gap

As in many other Member States, in 2016, competent authorities lacked systematised information about who was operating in the digital market of foods. At the time the guidance was published, the Compliance Regulation19 required businesses to register their establishments before proper authorities, an obligation which was developed in UK countries’ legislation. Today, the Official Controls Regulation mandates that food business operators must notify authorities of their online activity.20 However, most internet-based businesses fail to do so, and those who do provide such scarce information that the implementation of planning controls over the digital market of foods is a herculean task. In the United Kingdom, when online suppliers apply for registration, they must specify if their establishments are retail stores or premises used for ‘distribution/ warehousing’ activities, among other options. But model registration forms do not include a specific option for online sales, therefore authorities are not made aware of this information. To make matters worse, the authorities’ premises management information system is not normally programmed to generate lists of all (or even most) of those food businesses that engage in selling e-food.

18

Food Standards Agency (2016a), p. 6. See Art. 31 of Regulation (EC) No 882/2004 official controls performed to ensure the verification of compliance with feed and Food Law, animal health and animal welfare rules, O.J. L 165/1 (2004), pp. 1–141. 20 See Art. 15 of the Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products. It amends Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and the Council; Council Regulations (EC) No 1/2005 and (EC) No 1099/2009, and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC; and it repeals Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and the Council, Council Directives 89/608/EEC, 89/662/ EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC, and Council Decision 92/438/ EEC, O.J. L 95/1 (2017); hereinafter ‘Official Controls Regulation’. 19

7.3 The Food Standards Agency’s Strategy for the Digital Market of Foods

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Taking this problem into account, the FSA directs local authorities to prioritise carrying out digital investigations to identify operators active in the digital market. These investigations are carried out manually: the FSA makes specific recommendations to identify operators by tracking the information available on their webshop or with their offers in marketplaces. For instance, it suggests looking at the ‘contact us’ page or at the terms and conditions on the website if the business is operating from its own flagship webshop, as this is where the business’s legal address is usually found. If the identity of the business is available there, control staff should carry out a search of the UK’s Companies House database21 to ascertain whether the business operates within the local authority’s territory. If the search is unsuccessful, it may mean that the trader has not registered its activity and is operating unlawfully. In that case, the guidance recommends using other investigation techniques involving tracing the supplier by using the domain name information and the IP address to pinpoint the operator’s location. However, as acknowledged by the FSA, these techniques have significant limitations, as in some cases a domain is registered by an individual who is under no obligation to include an address. In other cases, the information provided is false. Most of these recommendations are useless in digital marketplaces, where there is no domain or IP information to trace. Additionally, it recommends updating the local authority’s premises management information system so that they help reveal which establishments are used for food online sales: Local authorities’ should ensure information is captured about businesses in the area that have an online sales platform and include this as a key part of their inspection protocol. This could be achieved with a premises/property use code for internet businesses on each local authority’s premises management information system. This may be used as a primary usage if business sales are only online or as a subsidiary usage, for example if the business also has physical retail premises.22

By assigning a specific code to those establishments engaging in the distribution or production of foods sold online, authorities would be able to draft a specific control plan for the digital market far more efficiently and therefore increase the efficiency of future controls over the digital market. Sadly, no further details of this proposal have transpired.

7.3.2.2

Prioritizing Control Activities

The FSA recommends that control authorities prioritise digital investigations to identify online suppliers that might be based within their jurisdiction (or ‘local 21

The UK’s Companies House database uses a search engine that generates company information, such as the identity of the company’s owner, its registered address and date of incorporation, previous company names, or insolvency information. With this information, a public official can use the database of the register of food establishments to check their location and plan controls on production. 22 Food Standards Agency (2016a), para 13.

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authority area’) so that, once the identity of a supplier has been discovered, the authority can inspect the supplier’s food establishments and verify that the business complies with Food Law requirements. Inspections are then to be conducted in two phases: first, a digital inspection to review the website to gain an understanding of the nature of the business, including the type of e-foods it handles. This digital inspection is useful, because it helps control staff anticipate the issues which may arise when inspecting the supplier’s premises. The information that appears online constitutes preliminary evidence to help competent authorities assess non-compliance. For instance, inaccurate information and the advertising of products with unauthorised substances may suggest possible risks to human health. Also, suppliers claiming their products are organic, but whose brand is not certified as such, may suggest potential fraud. Only after this digital inspection is completed should authorities then visit the food establishment they have successfully located and perform official controls on production. This way, authorities bridge the enforcement gap by reconnecting digital offers with brick-and-mortar establishments. Online test purchases are not an essential part of the FSA’s strategy, even if domestic legislation provides control authorities with a legal base to use this control technique.23 Test purchases are only recommended for targeting ‘high-risk products that consumers in their area can purchase over the internet’24 but which are placed on the market by an online supplier based outside the authority’s jurisdiction. These controls on distribution are conceived as a complementary activity to reduce serious risks associated with specific e-foods. But if these controls are carried out, the FSA insists on the need to ensure that online investigations comply with enforcement regulations, which includes an obligation that digital surveillance activities are recorded following FSA’s instructions in Annex D of the guidance document. This record is used to ensure the operator’s right to appeal, and as evidence supporting the imposition of sanctions in case non-compliance is established. If controls include the purchase of an e-food using mystery shopping techniques, authorities must inform the supplier and send a part ‘of the sample as soon as reasonably practicable’,25 to comply with national sampling legislation.26

23 In 2016, national legislation established that authorities could purchase or take a sample of any food, or any substance capable of being used in the preparation of food which appears to be intended for human consumption. 24 Food Standards Agency (2016a), p. 11. 25 Food Standards Agency (2016a), p. 13. 26 At the time of the publication of the guidance, the Food Safety (Sampling and Qualifications) Regulations of 2013 required that samples sent for analysis were to be divided in three homogenous specimens, one of which was to be delivered to the responsible food business operator to ensure its right to supplementary expert opinion.

7.3 The Food Standards Agency’s Strategy for the Digital Market of Foods

7.3.2.3

145

Measures to Be Taken in Case of Non-compliance

Reconnecting digital offers with brick-and-mortar establishments allows authorities to perform official controls on production following existing inspection protocols. This approach aims at increasing the effectiveness of control activities: by inspecting the supplier’s premises, a larger number of products are controlled and potential systematic deficiencies in operators’ food safety management systems are addressed. After controlling production, authorities can impose sanctions (or adopt any other measure established in the public enforcement regime) on online suppliers, just as they would do on store-based food business operators placing non-compliant products on the brick-and-mortar market. They can decide simply to inform food business operators of their obligations and suggest changes to the businesses’ food safety management system, to directly detain and seize non-compliant food batches, or to order the cessation of all sales (off and online). The FSA also includes guidance on how to act to remediate non-compliance when e-foods are controlled at the distribution stage. Authorities must contact the online supplier responsible for the offer, and if he or she does not respond to the authority’s directives, the FSA recommends making referrals and sharing intelligence with other branches of government such as the National Food Crime Unit or the e-Commerce Directive compliance authority,27 who may take action to delete or hide non-compliant offers in specific situations, based on their own enforcement procedures. Once again, the goal is to ensure that the resources devoted to the digital market result in actual enforcement decisions to bridge the enforcement gap. Notice-and-takedown (NTDs) procedures to request that online marketplaces and other information society service providers (ISSPs) remove non-compliant offers of e-foods are also identified as an option when closing down a business’s online sales presence is deemed necessary. The guidance does not identify limits to the use of this technique. In fact, it is quite emphatic when it comes to holding service providers accountable if they do not remove content expeditiously: You can contact the webhost or sales platform and outline the criminal offences and that they may be liable for if they continue to host the site/supplier via applicable act or default provisions of the legislation, which is being breached. The protection provided to webhosts by of European e-Commerce Directive 2000/31/EC article 14 would not be effective once they have actual knowledge of the illegal activity and fail to act expeditiously to remove or to disable access to the information.28

In this guidance, the FSA expressly identifies that online marketplaces (including as eBay and Amazon) are information society service providers responsible for closing down illegal offers identified by third parties. It does not, on the other hand, consider platforms food business operators bound by EU Food Law: they are not responsible for compliance with food safety and hygiene legislation, nor with

27 Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (Framework Directive), O.J. L 108 (2002). 28 Food Standards Agency (2016a), pp. 15–16.

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the Food Information Regulation.29 Interestingly, in 2018, this official position was questioned in a report resulting from the collaboration of the FSA and the Centre for Analysis of Risk and Regulation at the London School of Economics and Political Science. The report, which does not represent the official views of the FSA as a public agency, states the following: Internal communications suggest that a consensus is emerging within the FSA that platform operators should be classified as food businesses because they participate in both an organised and a continuous fashion in the distribution of food to consumers, and therefore that they have a responsibility to register with and to undergo inspection by their local authorities. However, this research has produced evidence that at least some firms which operate digital marketplaces for food remain uncertain about the terms in which their enterprises should be classified, and about their position and responsibilities within the UK’s current regime of food regulation. While six of the platform operators which contributed to this project have registered with their local authorities as food businesses, and two had established PA relationships, other interviewees appeared to be uncertain about whether or not the platforms which they represented should be considered food businesses.30

The report encouraged the FSA to publish a formal guidance document clarifying whether operators of digital marketplace platforms should be categorised as food businesses, and outlining what food safety and authenticity controls they would need to implement in order to comply with Food Law. However, at least for now, the FSA has neglected this task.

7.4

Peer-to-Peer Trade Online

Peer-to-peer food trade, or ‘food sharing,’ are not a new phenomenon, but when carried out through online marketplaces, the online dimension changes the scale of the transaction31 and blurs traceability and accountability.32 From a legal perspective, it is unclear whether suppliers have any obligations under Food Law, as in this functional field of EU Law transactions do not fall within or outside the scope of the law based on the nature of the transaction or the supplier.33 The challenge is to

29

Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63. 30 Brice (2018), p. 45. 31 See Zurek (2016). 32 See Hatzopoulos (2018), and EC Commission Staff Working Document Guidance SWD 2016/ 0163 final (2016), p. 120. 33 Transactions do not fall within or outside the scope of Food Law based on the nature of the transaction or the supplier. Only preparation, handling and storage of foods not bound by EU Food Law is that which is not put into circulation: the food grown and/or prepared at home, and eaten in a

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reconcile the fact that the General Food Law establishes that (on and offline) any food placed on the market is bound by its rules, but Recital 9 of the EU Food Hygiene Regulation34 indicates that only those ‘undertakings’ with ‘a certain level of continuity and organization fall within its scope.’ No authority, at the EU level, has officially spoken on the issue of how to treat P2P initiatives online, but it could be argued that this recital in the Food Hygiene Regulation is in fact creating a legal threshold which takes into account ‘the regularity with which the service is provided’35 to separate food businesses from other undertakings, and that accordingly those individuals who handle, prepare, store or serve food occasionally and on a small scale to offer it online are not subject to the requirements of European hygiene legislation.36 Such an interpretation suggests that P2P and online food sharing initiatives are not bound by EU hygiene regulations. But there is no consensus on the existence of such legal threshold, and control authorities in Member States such as Belgium have conducted visits to home cooks to verify that they were applying food hygiene standards.37 In 2016, the FSA published a guidance document analysing the implications of Recital 9 of Regulation 852/2004, which proposes several criteria to determine if an undertaking has reached the designated degree of organisation and continuity. It is the only document published by a public authority providing recommendations on how to make this determination. The guidance, however, was not issued with online sales in mind (a subject which was also neglected in its guidance on food sold online): it focusses on brick-and-mortar charity sales and community markets, its goal being to help local authorities ‘make pragmatic assessments about the registration of activities such as charity food sales’.38 But, even though the FSA limits the scope of its guidance to such specific activities, the Guidance on the Application of EU Food Hygiene Law to Community and Charity Food Provision39 does address the question of the impact of Recital 9 on food sharing online. In fact, its recommendations have been used to discuss the role and responsibilities of some online

private and domestic setting by friends and family. See Art. 1(3) of the Regulation 178/2002 laying down the general principles and requirements of Food Law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002), pp. 1–24 (hereinafter, ‘General Food Law’). 34 Regulation (EC) No 852/2004 on the hygiene of foodstuffs, O.J. L 139/1 (2004), pp. 1–54. 35 EC Commission Staff working document: Accompanying the document. A European agenda for the collaborative economy. European agenda for the collaborative economy - supporting analysis, COM 2016/0356 final (2016), p. 5. 36 EC Guidance document on the implementation of certain provisions of Regulation (EC) No 852/2004 On the hygiene of foodstuffs (2018), p. 1. 37 See Vaughan and Daverio (2016), p. 19, and Chap. 3. 38 Food Standards Agency (2016c), p. 7. 39 See Food Standards Agency (2016c).

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platforms and food entrepreneurs in two reports commissioned by the FSA in 2018.40 The 2016 guidance is clear on the fact that EU Food Law prescribes that any ‘food supplied, sold or provided outside of the family/domestic setting is subject to EU Food Law and must be safe to eat’.41 If authorities were to apply this criterion peer-to-peer trade online, e-foods available in online marketplaces would be legally required to be safe. However, the FSA does not indicate whether this means that prosumers are, in fact, food business operators responsible for ensuring their safety. Nor does it clarify whether local authorities should be including those initiatives in their official controls. Regarding the applicability of food hygiene requirements (such as the registration of food establishments) to private individuals engaging in activities such as charity sales, the agency considers that local authorities must make a pragmatic assessment of each case, focusing on determining whether the activity has ‘a certain continuity’ and ‘a certain degree of organisation’. With that task in mind, it provides different complementary criteria and a set of examples of what an undertaking with ‘a certain continuity of activities and a certain degree of organisation’ might look like offline. The starting point should be that activities consisting of the ‘provision of food on at least one occasion on an average monthly basis’42 are considered as having some degree of continuity, even if foods are given away for free. Therefore, generally, those individuals placing foods on the market less than once a month should not register their establishment, and they would not be bound by hygiene rules. Hence, the same would apply to those individuals using online food sharing platforms less than once a month. But monthly recurrence might not be enough to turn a peer into a food business: the activity should also require ‘a certain degree of organisation’. In order to assess whether that second requirement is met, the FSA’s guidance suggests that authorities consider ‘the risk presented by the food itself, the needs of consumers, the nature of the event and the consequent controls needed for safe food provision’.43 The list of almost twenty examples included in the guidance clarifies that risks are considered low when dealing with canned or packaged foods and soft drinks, whereas dealing with ‘hot food’ (such as soup) and ‘hot meals’, as well as with sandwiches and similar items, is considered to pose a higher risk to the consumer. Applying this criterion to online food sharing initiatives, it may well be that those sharing unused pre-packed groceries which are not perishable might still fall outside the scope of hygiene rules, as long as their operation does not require significant economic, equipment, or human resources. However, those offering homemade dishes or perishable foods such as meat products on a regular basis via food sharing platforms would fall within the scope of Regulation 852/2004.

40

See Brice (2018), p. 51; Prost (2018), p. 9. Food Standards Agency (2016c), p. 10. 42 Food Standards Agency (2016c), p. 11. 43 Food Standards Agency (2016c), p. 10. 41

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Given the particularities of food sharing platforms (where prosumers often coexist with microentrepreneurs), the issue is far from settled: Home cooks who sell food only on a part time basis, and prepare meals and organise events at irregular or varying intervals, may satisfy these criteria only intermittently. Moreover, Prost’s (2018) findings suggest that those ‘home cooking’ enterprises which trade more frequently are likely to move between various rented commercial spaces. This appears to create further confusion among these vendors, some of whom currently believe that if the establishment in which they cook has undergone food hygiene inspections as part of its normal operations (e.g. as a café during the day) then their supper clubs does not require registration as a separate food business.44

Further guidance on this issue, preferably at the EU level, is therefore necessary.

7.5

Conclusions

The Food Standards Agency has defined a strategy for official controls on e-foods, which focuses on bridging the enforcement gap by engaging as many control authorities as possible in official controls over e-foods to deter online suppliers from placing non-compliant food products on the digital single market. Decentralisation is considered key to improving current compliance rates, therefore UK countries have not created a specific unit dealing with monitoring the e-foods market. The strategy identifies that ‘mapping’ the market is a priority: resources should be allocated to track down the identity of online suppliers, and to locate the food establishments used to handle, store and ship e-foods. Digital investigations to identify suppliers are carried out manually. Additionally, local authorities’ premises management information system should be updated to reveal which establishments are used for food online sales. This database should assign a specific code to those establishments engaging in the distribution or production of foods sold online, so that authorities are able to draft ad hoc control plans for the digital market. The FSA prioritises identifying and monitoring online suppliers based within the local authorities’ jurisdiction, so that food establishments can be inspected, and compliance with Food Law can be verified and enforced, using traditional administrative measures established in public enforcement regimes. With this approach, competent authorities can reconnect digital offers with brick-and-mortar production and increase the efficiency of resource-consuming digital investigations. In this context, initiatives to close down the internet presence of online suppliers is only a secondary activity. Local authorities are instructed to seek collaboration from other branches of the administration to eliminate non-compliant offers, and may also require online marketplaces to remove or block illegal content based on the e-commerce Directive. Consequently, online marketplaces are officially considered by the FSA information

44

Brice (2018), pp. 51–52.

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society service providers with no obligations regarding compliance with EU Food Law. However, as reported by Brice (2018), there seems to be a consensus emerging within the FSA that marketplaces should be classified as food businesses, and that, accordingly, they must register their activity and agree to undergo inspection by their local authorities. Still, this alleged consensus has not translated into an official shift in the policy. The FSA has identified criteria to determine whether the activities carried out by private individuals are bound by European Union Food Law, and by EU hygiene legislation in particular. It considers that any food (including that placed on the market by prosumers) should be safe based on the General Food Law. It also provides local authorities with advice and examples to apply the legal threshold established in Recital 9 of the Food Hygiene Regulation, to differentiate food businesses from other undertakings falling outside the scope of hygiene legislation. Although the FSA issued its recommendations in the framework of community and charity foods and underlines that its reasoning is not extensible to other situations, in the absence of any other guideline in the EU, the FSA’s interpretation can help determine whether online food sharing initiatives and homebased businesses should be bound by European Union Food Law.

References Brice J (2018) Food in the platform economy: understanding and governing emerging digital marketplaces. Food Standards Agency. https://www.food.gov.uk/sites/default/files/media/ document/food-in-the-platform-economy-emerging-online-marketplaces-for-food.pdf. Accessed 16 Sep 2019 Food and Veterinary Office (2015) Country Profile. Organisation of Official Controls Ref. Ares (2015)5523463. http://ec.europa.eu/food/audits-analysis/act_getProfile.cfm?pdf_id¼384%0A. Accessed 16 Sep 2019 Food Standards Agency (2016a) Food Sold Online. Guidance for local authorities. https://www. food.gov.uk/sites/default/files/media/document/foodsoldonline-guidance-for-local-authorities_ 1.pdf. Accessed 16 Sep 2019 Food Standards Agency (2016b) Selling and buying food online – Q&A. https://www.food.gov.uk/ sites/default/files/media/document/selling-food-online-qa.pdf. Accessed 16 Sep 2019 Food Standards Agency (2016c) Guidance on the application of EU food hygiene law to community and charity food provision. https://www.food.gov.uk/sites/default/files/media/document/ hall-provision-guidance%20(2).pdf. Accessed 16 Sep 2019 Food Standards Agency (2017) Distance selling, mail order and delivery. https://www.food.gov.uk/ print/pdf/node/287. Accessed 16 Sep 2019 Food Standards Agency (2019) Multi-Annual National Control Plan for the United Kingdom. April 2019 to March 2023. https://www.food.gov.uk/sites/default/files/media/document/uk-mancp2019-2023-final.pdf. Accessed 16 Sep 2019

References

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Hatzopoulos V (2018) The collaborative economy and EU law. Bloomsbury Publishing, London Prost S (2018) Food in the platform economy: digital food marketplaces for unconventional food entrepreneurs. Food Standards Agency. https://www.food.gov.uk/sites/default/files/media/ document/food-in-the-platform-economy-digital-food-marketplaces.pdf. Accessed 16 Sep 2019 Vaughan R, Daverio R (2016) Assessing the size and presence of the collaborative economy in Europe. Publications Office of the European Union, Luxembourg. https://doi.org/10.2873/ 971404 Zurek K (2016) Food sharing in Europe: between regulating risks and the risks of regulating. Eur J Risk Regul 7(4):675–687. https://doi.org/10.1017/S1867299X00010114

Chapter 8

Bringing EU Food Law and Its Enforcement into the Platform Economy

8.1

Introduction

As analysed in this book, the General Food Law imposes the primary responsibility for ensuring that foods satisfy the requirements of Food Law on ‘food business operators’ (such as online suppliers operating in online marketplaces).1 The operators should determine which requirements are relevant to their activities and verify that these requirements are met. Additionally, it imposes on Member States the duty to enforce Food Law, and to monitor and verify that food business operators (FBOs) meet the relevant requirements at all stages of production, processing and distribution.2 To meet their responsibilities, Member States must maintain a system of official controls covering activities throughout the food chain, including retail sales off and online.3 However, competent authorities face significant obstacles when trying to monitor compliance and enforce their decisions in the digital market, something that has led to the emergence of an enforcement gap online.4 With the rise 1 See Art. 17(1) of Regulation (EC) No 178/2002, laying down the general principles and requirements of Food Law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002), pp. 1–24 (hereinafter, ‘General Food Law’ or ‘GFL’). 2 See Art. 17(2) of the General Food Law. 3 See Art. 9(1) of Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products. It amends Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and the Council; Council Regulations (EC) No 1/2005 and (EC) No 1099/2009, and Council Directives 98/58/EC, 1999/ 74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC; and it repeals Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and the Council, Council Directives 89/608/ EEC, 89/662/EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC, and Council Decision 92/438/EEC, O.J. L 95/1. 4 See, OECD (2016), Vaughan and Daverio (2016), and Chaps. 1 and 5.

© Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_8

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of the ‘Platform Economy’,5 which has allowed e-commerce to thrive, this gap is growing wider. The reasons for that are (at least) twofold. First, online marketplaces, by providing a (normally) inexpensive, ready-to-go interface for virtually anonymized retail, are enabling volatile trade, increasing the number of suppliers and e-foods placed on the market, while blurring the traceability and accountability of suppliers, who often operate unaware of their legal responsibilities. Second, the lack of technical knowledge and resources to cope with this new, unknown and volatile environment, and the legal challenges to transpose brick-and-mortar requirements and procedures to the digital single market, have led to the ‘retraction’ of public ordering from online enforcement.6 In order to adapt to the platform economy and ensure the proper functioning of the digital single market, control authorities are changing the way they plan, organise and conduct official controls. The initiatives developed in Germany and the United Kingdom (UK) during the last decade provide valuable insight into how competent authorities are trying to bridge the enforcement gap in the platform economy.7 First, Germany, a highly decentralised country, has created a central unit that carries out monitoring and preliminary control activities on e-food offers available to the German consumer.8 Based on an agreement adopted by all the länder and the German Federal Office of Consumer Protection and Food Safety (BVL), G@zielt is in charge of conducting ‘preparatory tasks’, which help the competent authorities in each Land perform the corresponding official controls at the production stage.9 The United Kingdom has chosen a different approach: engaging as many authorities as possible in the control of e-foods to deter suppliers from offering products which do not comply with EU Food Law, and reconnecting online sales with brick-andmortar food establishments which can be inspected in compliance with a 20-year-old public enforcement regime.10 The next sections compare and contrast how the public enforcement strategies of Germany and the United Kingdom attempt to tackle these challenges, and discusses how to move e-nforcement forward.

5

See Kenney and Zysman (2016). Frosio (2018), p. 33, and Chaps. 1 and 5. 7 See Chaps. 6 and 7. 8 See Kranz et al. (2015). 9 See Bundesministerium für Ernährung, Landwirtschaft und Verbraucherschutz (2013). 10 See Food Standards Agency (2016b). 6

8.2 Unmasking Online Retail

8.2

155

Unmasking Online Retail

The organisation of effective and impartial official controls requires an accurate understanding of the composition of the food chain and the market in any given territory. In order to facilitate the task of ‘mapping’11 the market, food business operators are required to register their food establishments and to provide competent authorities with information about the specific activities they carry out off and online, so that the resulting information can be used to organise and implement official controls.12 Ensuring that all establishments are registered and that the information they provide is accurate and up to date is essential for official controls, because registration information is used by competent authorities to plan control activities in the brick-and-mortar food market.13 It provides information about the locations of active food establishments, about the identity of the food business responsible for those premises, and about the type of activities and products carried out on them. Competent authorities can filter information based on criteria such as a food category (i.e. fish products) or a specific stage of the food chain (i.e. packing). They will then obtain a list of the establishments (and therefore operators) that are relevant to that category and should be controlled. However, since the Official Controls Regulation now mandates that businesses provide authorities with information about their e-commerce activities,14 Member States’ registration systems must be updated to ensure that registration data provides control staff with accurate information. In most Member States, competent authorities’ registration forms still do not require businesses to include information about online sales.15 Germany and the United Kingdom are no exception to that: their forms contain very little information about the activities carried out in an establishment.16 Categories of food and 11 The concept of ‘mapping’ refers to the process leading to the identification of food business operators, their activities and establishments within a jurisdiction. 12 See Art. 15(5) of Regulation (EU) 2017/625, and Art. 6 of Regulation (EC) No 852/2004 on the hygiene of foodstuffs, O.J. L 139/1 (2004), pp. 1–54. 13 See Recital 19 of Regulation (EC) No 852/2004. 14 See Art. 10 of Regulation (EU) 2017/625 and Chap. 4. 15 European Commission (2018), p. 12, and Chap. 5. 16 Their registration forms require information for the identification the business itself (the name and identification number of the business, its address, the name of a representative responsible for the application procedure), the location of the establishment, and nature of the activities it carries out. The German guidance paper for a nationwide framework for the registration of businesses recommends that application forms require FBOs to tick a box identifying the type of products handled in the establishment (for example, beverages), and the general activity carried out (for example, processing or packing, among other). Similarly, the Food Standards Agency in the UK produced a model application which requires FBOs to provide its full name and address as well as name and address of the food business, the location establishment and, like in Germany, ticking a box selecting a type of activity such as retailing, distribution or warehousing among many other. See Food Standards Agency (2008), Büchter et al. (2011) and Federal Ministry of Food and Agriculture (2012).

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activities are very broad (such as ‘wholesaler’, ‘distributor’, ‘warehouse’), and mostly do not require the applicant to indicate if the premises are used for e-commerce. Thus, even when an establishment is properly registered, the information available to competent authorities cannot be used to plan controls of the digital market. There is therefore still work to be done to ensure that the registration process reveals online activities. It is also uncertain whether authorities would require online suppliers to detail which websites and online marketplaces they use to place their goods in the digital single market, or whether (given the volatile nature of online trade in the platform economy) this would constitute a disproportionate administrative burden for food business operators.17 The United Kingdom’s Food Standards Agency has moved forward in that direction and has also proposed that local authorities’ premises management information systems should assign a code for businesses partaking in e-commerce so that the authorities would be in a better position to draft specific control plans for the digital market.18 This information could be obtained, for example, during a visit to the establishment in the framework of regular control tasks. This mechanism would allow competent authorities to filter operators and establishments that have been assigned this code, and to plan controls accordingly. The code proposed by the Food Standards Agency (FSA) could be most useful in facilitating the mapping of the digital market, as it takes advantage of inspection activities that are already being carried out, and of the information that officials could retrieve from other sources. However, these initiatives alone cannot bridge the identification gap, because many online suppliers fail to report their activities or to register their food establishments.19 This is frequent regarding small suppliers active in online marketplaces, which are often unaware not only of the registration requirement. This lack of regulatory knowledge results in a significant number of online suppliers placing e-foods on the digital market under an invented username while their identity remains hidden, because many of them are also unaware of the information requirements enshrined in EU food information legislation.20 The lack of regulatory knowledge in small and newer food business operators is not a problem exclusive to the e-food market: research on compliance with Food Law requirements in the brick-and-mortar market repeatedly reports that small and medium-sized enterprises tend to have a reactive approach to dealing with food safety requirements, hence making their products non-compliant more frequently than those offered by larger operators.21 In an attempt to reduce the number of non-registered operators, the competent authorities in Germany and the United Kingdom have designed initiatives to educate

17

European Commission (2018), p. 6. Food Standards Agency (2016b), para 13. 19 See, among other, Schreiber et al. (2015) and European Commission (2018). 20 See Höller (2019). 21 See Fairman and Yapp (2005) and Yapp and Fairman (2006). 18

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food businesses (and online suppliers in particular) about their obligations when it comes to Food Law. The authorities in both Member States have published guidelines for operators (which are available free of charge on their website) and carry out training activities that stress the fact that registration is their duty.22 Germany has worked with relevant trust marks, ensuring that their seal is awarded only to suppliers complying with specific quality standards and that have fulfilled the obligation to register their food establishment.23 Germany and the United Kingdom have taken a proactive approach in identifying food business operators carrying out their activities online and the establishments for which they are responsible. They have both entrusted control units with the task of conducting digital investigations to uncover the identities of online suppliers who have not complied with registration requirements, contacting them, and compelling them to comply with the legal requirement to register food establishments.24 Their approach to conducting these investigations is nevertheless different: while local authorities in the UK conduct manual searches and use any available data to discover suppliers’ identities, the German central unit normally uses an automated system powered by big data technology to obtain information about food business operators. Indeed, the identification of operators is facilitated by the information obtained from automated searches carried out by the Federal Tax Authority’s Internet bots, which track down relevant information without staff having to perform time-consuming and repetitive online searches.25 To build on the success of this automated initiative, the German administration decided to develop their own computer software for automated analysis that would perform searches automatically, and provide control staff with relevant information to assess e-food offers’ compliance with relevant legal requirements.26 The options of manual or automated searches for information gathering are not mutually exclusive, but could complement each other to improve the efficiency of online surveillance. However, it should be noted that obtaining information from automated searches (even when using software already operated by another branch of the administration) may entail the adoption of specific agreements or legal amendments to ensure that this transmission of information does not infringe data protection regulations. This has been the case in Germany, where the use of the tax authority’s software to track down unidentified food businesses has required modifying the German food code to explicitly allow the transmission of data on Internet trading between both entities.27

22

See in Germany, BVL (n.d.), and in the UK, Food Standards Agency (2016a). See Federal Office of Consumer Protection and Food Safety (2018) 24 See Kranz et al. (2015) and Food Standards Agency (2016b), p. 18. 25 See Federal Office of Consumer Protection and Food Safety (2018). 26 Krewinkel et al. (2011), p. 1. 27 See Art. 38(a)(1)(3) of the Bundesministerium für Ernährung und Landwirtschaft Lebensmittel-, Bedarfsgegenstände- und Futtermittelgesetzbuch (2005) (hereinafter, ‘LFGB’). 23

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Regardless of the upgrade to mapping that software for automated analysis may bring to mapping, recent EU legislation on e-commerce can also have a significant impact in bridging the identification gap in online marketplaces. From July 2020, based on the provisions of the Platform-to-business Regulation,28 online marketplaces are required to display, visible to all users of the platform, information about the ‘the identity of the business user providing the goods’.29 In order to comply with this novel provision, marketplace service providers should require suppliers to provide them with such information. This decision is a significant step forward in the effort to bridge the enforcement gap (even if enforcement was not the main motivation to include such a provision in this e-commerce regulation),30 because it is likely that platforms will not allow suppliers to use their service if they do not provide this information. However, it is difficult to assess the impact this provision may have on mapping: the wording of the regulation is vague and does not specify the details about the identity of suppliers that should be provided. But this regulatory choice opens the door to considering the use of a similar strategy to improve the effectiveness of food official controls. For instance, EU legislators could consider amending current food information and official controls legislation, to require online marketplaces to display the information regarding the registration status of food business operators, without modifying their current liability regime.

8.3

Planning Risk-Based Controls

Regulation 2017/625 mandates that official controls of the digital market of foods be planned and carried out taking a risk-based approach, the frequency of which takes into account the particularities of the foods and the suppliers placing products on the market.31 Both the UK and Germany have interpreted that this requires control plans to prioritise monitoring and verification of compliance in the food products that are more likely to be accessed by consumers based within their borders. Accordingly, in both Germany and the UK, control personnel are instructed to prioritise controls on e-foods that appear on the first page of a search engine’s results or an online marketplace ranking. The goal is to obtain similar search results so that operators and offers that are more likely to be accessed by consumers are controlled. With this approach in mind, ‘Page 1’ of popular search engines and marketplaces have become

28 See Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services, O.J. L 186/57 (2019), pp. 57–79 (hereinafter, ‘P2B Regulation’). 29 Art. 3(5) of the P2B Regulation. 30 In fact, as indicated in Recital 21 of the Regulation, the goal of this useful provision is ‘to ensure that business users can fully exploit the commercial opportunities offered by online intermediation services’ by allowing businesses to feature their trading identity when posting an offer online. 31 See Art. 9(1) of Regulation (EU) 2017/625.

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the ‘Holy Grail’ for online market surveillance: on Google, 90% of traffic comes from placements on page one, while page two drives about 5% and page three less than 1%.32 Only a small part of internet users’ views come from the following pages of results; thus, using a risk-based approach, the first results that appear in the search engine should be prioritised. Consequently, monitoring offers that appear on the first page of results could significantly improve the overall safety and quality of the digital market. Seeking to optimise market surveillance, the German administration developed an automated software system capable of tracking non-compliant food products.33 The system also stores and processes the relevant obtained data in order to facilitate the control staff’s compliance assessment. The ultimate goal is to bring greater automation to the enforcement of EU Food Law in a digital single market, by creating a software tool ‘able to collect evidence automatically (screen prints) and compare the results of the queries with the data available in other official databases’.34 However, it must be taken into account that the success of such web crawlers depends on the availability of the information they are designed to ‘crawl.’ In this context, improving current compliance rates with food information legislation online is a necessary step to optimise the efficiency of automated tools.35 A possible solution might be found, again, in amending current EU food legislation to impose on marketplaces the obligation to display the food information submitted by the supplier, while not being held responsible for its accuracy. This would require such online platforms to modify their functionality and architecture significantly, as today many marketplaces allow for publishing offers that fail to provide consumers with most (if not all) mandatory information. The use of automated software analysis for market surveillance is expected to grow significantly during this decade.36 However, the rules regarding the conditions for using such tools, and the impact that the use of such technology-assisted enforcement may have on suppliers’ procedural rights have not been properly debated and should urgently be examined to ensure that authorities do not privilege instrumental requirements and effectiveness of e-nforcement over compliance with procedural guarantees and fundamental rights of those subject to controls.37

32

See Sharp (2014). Büchter et al. (2011), pp. 1–6. 34 See European Commission (2018), p. 19. 35 By accessing the digital market, one can easily see that non-compliance is the rule rather than the exception. See Stones (2016), Rücker (2018) and Höller (2019). 36 See, among others, Reidenberg (2003), Miller (2016) and Koops (2013). 37 Widdershoven (2019), p. 326. 33

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Solving the Jurisdiction Puzzle38

Official controls are not only performed on food products manufactured in a food establishment within the Member State’s territory, but on any which are distributed within its borders, regardless of origin.39 When transferring this obligation to the digital market, competent authorities accept the assumption that any offer ‘directed to’40 the Member State falls within the scope of the domestic control system. In fact, it falls within the jurisdiction41 of any control authority in the country. Moreover, the overlapping of official control systems means that more than one authority may carry out digital investigations to identify the operator and may perform control tasks on the same product, duplicating control efforts in an era of scarce control resources.

8.4.1

Domestic Organisation of Official Controls

In order to avoid the duplication of control efforts, local authorities in the United Kingdom are instructed to privilege the monitoring of suppliers and e-foods that are placed on the digital market by food establishments based inside the authority’s territory.42 Control staff can then visit the premises where e-foods are produced, processed and/or distributed to assess compliance. The local authorities ascertain the identity and location of online suppliers from their website, reviewing the information that may be relevant to preparing offline inspections. Only occasionally would they perform controls at the distribution stage (using mystery-shopping techniques to purchase e-foods which are later subjected to material checks), when a specific product potentially posing a high risk to human health is popular among the consumers within their jurisdiction, but the suppliers’ premises are outside the authority’s territory.43 By prioritising controls on production, the FSA aims to reconnect digital offers with brick-and-mortar production and distribution. However, the identification gap means that, in the initial stages of the digital investigation, local authorities may not know the identity or location of the supplier, resulting in 38

Heading inspired by Jerker and Svantesson (2017). Art. 9(6) of Regulation (EU) 2017/625 instructs competent authorities to perform official controls for the verification of food law requirements ‘irrespective of whether the animals and goods concerned are: (a) available on the Union market, whether originating in the Member State where the official controls are performed or in another Member State; (b) to be exported from the Union; or (c) entering the Union’. 40 The particulars about how to ascertain whether an offer is ‘directed to the Member State’ were identified by the Court of Justice of the European Union in its, on Joined Cases C-585/08, Pammer vs GMBH & Co. and C-144/09, Hotel Alpenhof vs Heller, 2010, ECLI 740. 41 The term ‘jurisdiction’ is used to refer to the area (both substantive and territorial) over which a competent authority has the responsibility to perform official controls. 42 See Food Standards Agency (2016b), para 12. 43 See Food Standards Agency (2016b), para 20. 39

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more than one authority working on the same post. With that problem in mind, the German strategy has been to centralise digital investigations. The German central unit searches online platforms to identify non-compliant food products, and compel suppliers to remediate non-compliance and remove offers if necessary. It may also use mystery-shopping techniques, and forward the resulting assessment to the competent authorities in the länder.44 Additionally, it may contact information society service providers and request the removal of non-compliant offers. With no formal enforcement powers, this digital monitoring is considered a preliminary activity to facilitate regional authorities’ enforcement efforts and to increase compliance rates. It is these other authorities, based on the information provided by the central unit, that are responsible for reconnecting digital with brick-and-mortar. The priority of this centralised strategy is not only to identify online suppliers and connect them to brick-and-mortar establishments where official controls can be carried out: in the main, the central unit aims to bridge the compliance gap to make online sales safer for German consumers.45 The strategies of Germany and the United Kingdom are not entirely different. In both cases, the authorities traditionally in charge of official controls are using public enforcement mechanisms established in the Official Controls Regulation and in domestic implementation legislation with the aim of bringing the digital market under control. It is the competent authorities that perform official controls on food establishments used to placing e-foods on the market or to producing them. The essential difference between the two initiatives is that while in Germany online monitoring and digital investigations have been centralised to avoid the duplication of control efforts and are carried out by a relatively small group of trained professionals, in the United Kingdom the FSA’s strategy is to engage as many competent authorities as possible in these activities to act as a deterrent. Avoiding the duplication of control efforts is a challenge that could indeed be tackled by centralisation, both within a Member State and at EU level. The decision as to whether a Member State should create a centralised unit ought not to be based exclusively on economically or efficiency-driven considerations: as the German experience shows, even if powers of enforcement can still be held by the regions, centralising surveillance means that the regional or local authorities who had the responsibility assigned in the first place have to give up resources and some degree of autonomy. Consequently, centralising some aspects of official controls demands a sensitive, in-depth discussion and the evaluation of the political implications of centralising (some) control. While placing all the responsibility on individual competent authorities may entail some duplication of control activities, and hence reduce control efficiency, opting for centralisation could trigger significant reluctance from Member States and affect the proper functioning of a central unit.

44 45

See Büchter et al. (2011), Kranz et al. (2015), Schreiber et al. (2015), and Chap. 6. See Kranz et al. (2015).

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A German-Inspired EU Unit Monitoring the Digital Single Market of Foods?

In 2015, several members of the German central unit G@zielt published an article arguing that, given the success of centralisation in such a decentralised state as Germany, it was worth considering creating a similar body, which at EU level would assist authorities in Member States with the monitoring of the digital market of foods: The German model of central Internet control by the responsible agencies in the 16 federal states could likewise be transferred to the EU, with its 28 member states. Many stores have their offers in several languages and could be controlled by one agency, instead of by parallel controls by several affected member states. A central unit covering all the EU languages and having extensive experience in relation to Food Law and online controls would be, as in the case of Germany, the most effective, efficient and economic solution to face the challenge of control at the European level. In combination with quality seals, the result would be a European market in the EU, ‘Safer Shopping’ for more than 500 million consumers. At the same time, traders operating in this market would have an important competitive advantage, as their offer would not only be attractive for EU consumers, but also for consumers around the world, especially those from states that lack proper food security.46

In this context, the EU central investigation unit would be financed by all Member States. It would track down online suppliers and their food establishments, and forward the results of these investigations to the competent authorities in the Member State where the suppliers’ premises were located. It would also coordinate administrative assistance and requests for cooperation, and contact individual suppliers and information society service providers (such as online marketplaces) in order to get offers of high-risk food products removed from the digital single market. Member States would not relinquish their powers of control; they would either delegate investigatory tasks to the EU body or use the results of the investigations to complement their domestic strategy. The reason for such a proposal at that moment in time was not only the apparent success of the German strategy. As analysed by Scholten (2017), when challenges in enforcing EU Law and policies arise, ‘the EU seems to have employed three promoting strategies in promoting the implementation of its policies’:47 regulating domestic enforcement, building networks of competent national authorities, and creating a EU enforcement authority that has complete or partial enforcement responsibility. Such an argument stands when it comes to Food Law enforcement in the digital single market. The European Union may now have reached stage three, and therefore the time might have come to centralise the online monitoring of the EU digital single market of foods. But, is centralisation necessary? There are arguments against any degree of centralisation, and not only political ones. As described in previous chapters of

46 47

(Translated from original language of publication, in German). See Schreiber et al. (2015). See Scholten (2017), p. 3.

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this book, despite the fact that e-commerce is a transnational phenomenon, data gathered by control authorities suggests that the e-food offers which are most accessible to national consumers are most likely posted by online suppliers based within that Member State’s jurisdiction.48 This circumstance is largely due to the fact that (unlike with other consumer goods) consumers tend to prefer to purchase food products from local operators, or from those retailers they are familiar with (i.e. the local supermarket, butcher’s shop or bakery).49 Taking that into account, local response from competent authorities, together with mechanisms for current and future cooperation, may be enough.

8.5

Private Execution of Public Enforcement Decisions: Are There No Limits?

In order to bridge the enforcement gap, once official control activities establish that an e-food, or an e-food offer, does not comply with legal requirements, competent authorities must ensure that the food business operator readdresses the situation. Non-compliance will result in the introduction of any administrative measure deemed appropriate to ensure that the operator concerned remedies the non-compliance and avoids further occurrences of it.50 There is a full range of options: ‘educating food business operators, giving advice, informal action, sampling, detaining and seizing food’,51 or even—in cases of serious infringements of Food Law—ordering ‘cessation for an appropriate period of time of all or part of the activities of the operator concerned and, where relevant, of the internet sites it operates or employs’.52 Such a decision is taken based on the administrative procedure regulated in domestic legislation, designed taking into consideration the need to protect, among other things, due process and the operators’ right to an effective remedy. When the operator does not execute the enforcement measure, or when the competent authority is not able to identify and therefore communicate with the supplier, it might be necessary to find alternative ways of achieving the desired goal: the elimination of non-compliant e-food products. One of the most popular 48

See Federal Office of Consumer Protection and Food Safety (2018) and European Commission (2018), p. 3. 49 Traditional brick-and-mortar food business operators are leading online sales of foods: research shows that on a value basis, large supermarkets and hypermarkets account for half of the global sales of e-foods, and in some countries, such as Spain, the predominance of online supermarkets is such that three out of four purchases of e-foods are made through supermarket websites. Those are closely followed by smaller retailers such as bakers, butchers or other local grocery stores which have decided to ‘go digital’. See Nielsen Company (2015) and Chap. 1. 50 Art. 138(1)(b) of Regulation (EU) 2017/625. 51 Food Standards Agency (2016b), p. 14. 52 Art. 138(2)(i) of Regulation (EU) 2017/625.

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way of achieving this goal has become contacting the relevant intermediary (for example, the online marketplace hosting the offer) to request the removal of a non-compliant e-food offer, which in this context is considered ‘illegal content.’ This behaviour illustrates that, although research commissioned by the FSA suggests that at least some authorities in the United Kingdom internally argue that online marketplaces should be considered food businesses,53 to date, the official position in the UK and Germany is that online marketplaces are merely information society service providers (or ‘online intermediation service providers’ in the wording of the Platform-to-business Regulation)54 and not food business operators. Accordingly, they are not required to monitor or enforce Food Law requirements, but must remove illegal content ‘expeditiously’55 once a third party such as a competent authority informs them of its existence, in order to avoid secondary liability for the illegal activity of the supplier. Both the UK and German authorities report using notice-and-takedown (NTD) procedures established by online marketplaces to have non-compliant food products delisted. This is an option that has been encouraged by the European Commission, which negotiated single contact points to facilitate communication between control authorities and mainstream online marketplaces such as Amazon, Alibaba and eBay. The widespread use of NTDs poses an important question: in what situations should authorities be able to initiate such procedures? Are there (or should there be) any limits to use of NTDs by control authorities? The Official Controls Regulation does not refer to the use of NTDs to remove illegal e-food offers from the digital market, nor does the implementation of Member States’ legislation governing the public enforcement of Food Law requirements. However, such practice seems to be in line with Article 138 of the Official Controls Regulation, which indicates that authorities shall use any measure they deem appropriate to remediate non-compliance. Interestingly, Regulation 2017/2394,56 governing the public enforcement of consumer protection legislation, adopted only nine months after the adoption of the Official Controls Regulation, did address the issue of content removal by information society service providers. Article 14 of that piece of legislation, listing the measures to be adopted in case of non-compliance, states that competent authorities shall have, among others, the power to order service providers (online marketplaces are implicitly included) to remove content ‘in order to avoid the risk of serious harm to the collective interests of consumers’.57 Similarly, the recently 53

See Brice (2018), p. 45. See Art. 2(2) of the P2B Regulation. 55 See Art. 14 of the Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’), O.J. L 178 (2000), pp. 1–16. 56 Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004, O.J. L 345/1 (2017), pp. 1–26. 57 Art. 9(4)(g) of Regulation (EU) 2017/2394. 54

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adopted Regulation 2019/1020 indicates that competent authorities should be able to request such removal by service providers ‘where no other effective means are available to eliminate a serious risk’.58 It is not clear whether these pieces of legislation limit the use of NTDs in urgent situations, or simply emphasize that they can be used to protect consumers. This leaves control authorities in charge of the enforcement of consumer protection and product safety legislation with a similar lack of clarity as those responsible for Food Law enforcement. With the absence of EU rules for food official controls, possible limits to the use of such procedures might need to be found in Member States’ legislation and case law implementing the e-Commerce Directive and determining what shall be considered ‘illegal content’ (a concept defined in the Commission’s 2018 Recommendation as ‘any information which is not in compliance with Union law or the law of a Member State concerned’).59 Potential limitations to the use of NTDs by administrative control authorities is not a minor issue. Administrative procedural rules are designed to ensure that authorities make lawful, fair and transparent decisions, in order to safeguard Human Rights such as the right to conduct a business, and the right to an effective remedy.60 In application of those rights, the EU Charter of Fundamental Rights requires that EU and Member States authorities do not privilege instrumental requirements and effectiveness of e-nforcement over compliance with procedural guarantees and fundamental rights of those subject to controls61 (including legal entities such as corporations acting as FBOs62). In this context, one might argue that having ISSPs delete offers of non-compliant foods because they do not comply with legal requirements is highly effective to bridge the compliance gap, but it is also the factual equivalent of imposing an order of cessation of activities or having a food withdrawn from the brick-and-mortar market. Offline, such actions are limited to severe cases of non-compliance, and are taken on the basis of a formal procedure regulated in Member States’ law and resulting in the adoption of an administrative decision that can be appealed by operators and repealed by courts. In absence of such a due process, are NTDs de facto privileging effectiveness over procedural guarantees? Given that due process is key to ensuring the right to an effective remedy, further research should explore the impact that this 20-year-old private enforcement

58 See Art. 14(4)(k) of Regulation (EU) 2019/1020 on market surveillance and compliance of products and amending Directive 2004/42/EC and Regulations (EC) No 765/2008 and (EU) No 305/2011, O.J. L 169/1 (2019), pp. 1–44. 59 EC Recommendation on measures to effectively tackle illegal content online, C 2018/1177 final (2018), p. 10. 60 See Art. 6 and 47 of the Charter of the Fundamental Rights of the European Union, O.J. 2000/C 364/01 (2000). 61 See Widdershoven (2019). 62 Regarding the personal scope of the Charter, and the ability of legal entities to invoke its provisions. See Julicher et al. (2019).

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mechanism is having on traditional administrative procedures (and, by extension, on the rights and interests of all the parties involved).

8.6

Addressing Peer-to-Peer and Food Sharing Initiatives in the Platform Economy

The platform economy has enabled e-commerce to thrive, connecting large and small food businesses with consumers doing their groceries or looking for exotic foods and fresh produce from local farms. It is also enabling the second golden age of ‘food sharing’ initiatives, and letting prosumers engage in e-food trade with their peers through the (digital) community facilitated by online marketplaces.63 As in other areas of the platform economy, such initiatives make traditional dividing lines between businesses and consumers disappear.64 From the perspective of these platforms, the greatest challenge they face is ‘the absence of a distinction between food safety & hygiene standards for restaurants and commercial enterprises and those for home cook food sharing models’.65 Indeed, there is an unresolved debate about whether peer-to-peer exchanges (including foodsharing initiatives) are bound by EU Food Law, and if they are, to what extent.66 The legal uncertainty arising from current legislation has left control authorities, sharing platforms and prosumers in legal limbo, and in the absence of EU guidance on this issue it has fallen to control staff to decide whether to control peer-to-peer trade or not, and whether to compel individuals to comply with (all or some) food law requirements. In Germany, the central unit for the digital market does monitor e-food offers posted by prosumers to some degree, because the unit’s ultimate goal is to contain food-related risks regardless of who places the food product in the market. Staff examine mainstream online marketplaces enabling peer-to-peer trade, and analyse product descriptions, pictures and the comments posted by dissatisfied consumers, in order to identify unsafe e-foods. For instance, the unit monitors offers of perishable foods (such as meat stews or other meat products) which are shipped to peer buyers by regular mail, without following procedures to ensure the cold chain. Some even indicate that the delivery of the e-food is made ‘at the consumer’s own risk’, thereby denying responsibility for its safety. When monitoring such offers, the German team 63

See Zurek (2016) and Brice (2018). See, among other, Katz (2015), Busch et al. (2016), Brownsword (2018), Davidson et al. (2018) and Hatzopoulos (2018). 65 Vaughan and Daverio (2016), p. 9. 66 In a nutshell, the controversy arises from the fact that the General Food Law indicates that anyone placing foods on the market must ensure that food placed on the market is safe, but on the other hand, the EU Hygiene Regulation and the Food Information Regulation specify in their Recitals (9 and 15, respectively) that only those ‘undertakings’ that have a certain degree of continuity and organisation must comply with the regulations. See Chap. 3. 64

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does not carry out an assessment of the continuity and degree of organisation of the non-professional supplier’s activity. Instead, it assesses the risks that an offer might entail and acts accordingly: it may contact the online supplier through the marketplace’s messaging system, or use NTD procedures to require the marketplace service provider to remove the offer expeditiously.67 In the United Kingdom, the FSA holds no official position on the status of digital food sharing initiatives. Its 2016 guidance for competent authorities on how to monitor food sold online does not address this issue. However, it does indicate that ‘high-risk’ offers available online should be monitored when directed to domestic consumers. It can therefore be interpreted that the nature of the operator or the transaction should not be relevant when deciding whether to control e-foods, because EU Food Law requires that all foods placed on the market should be safe.68 The question remains as to whether the FSA considers that EU food hygiene rules are applicable to prosumers operating online. The FSA does not answer this specific question, at least not in any of its guidance documents. However, based on its 2016 Guidance on the Application of EU Food Hygiene Law to Community and Charity Food Provision,69 it may be inferred that local authorities should assess this on a case-by-case basis. This guidance, whose scope is supposedly limited to determining when to require brick-and-mortar charity sales and community markets to comply with hygiene requirements, but which has been repeatedly used in FSA commission reports in other scenarios,70 proposes several criteria to determine whether an undertaking has reached a degree of organisation and continuity, making it relevant to EU Food Hygiene Law. By and large, it interprets that initiatives taking place less than once a month should, as a general rule, not be considered food businesses bound by EU hygiene rules, and that those which are more frequent should only be subject to those rules if the risk presented by the food itself, the needs of consumers, the nature of the event and the consequent controls needed for safe food provision recommend it.71 Applying this criterion to online sharing initiatives, it may well be that those sharing unused pre-packed groceries which are not perishable might still fall outside the scope of hygiene rules, as long as their operation does not require significant economic, material or human resources. Conversely, those offering homemade dishes or perishable foods such as meat products on a regular basis via food sharing platforms would fall within the scope of Regulation 852/2004. But, in the absence of

67

See Food Standards Agency (2016b). See Art. 14 of Regulation (EC) No 178/2002. 69 See Food Standards Agency (2016c). 70 In particular, by both Brice (2018) and Prost (2018). 71 The list of almost twenty examples included in the guidance explains that risks are considered low when dealing with canned or packaged foods and soft drinks, whereas ‘hot food’ (such as soup) and ‘hot meals’, as well as with sandwiches and similar items, are considered to entail a higher risk to the consumer. See Food Standards Agency (2016c), p. 10. 68

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an official position by the FSA or any other relevant authority, the issue is far from being settled. In this context, the EU legislator has two options: either to provide authorities with further clarification (via policy72 or regulatory decisions)73 on how to measure the degree of organisation that would turn an amateur undertaking into a food business falling within the scope of the Food Hygiene and Food Information Regulations (a measure which is undoubtedly necessary in any case to shed some light on how to deal with micro-entrepreneurs and home-based operations ‘going digital’), or simply to exclude non-professionals from official control activities altogether. Policy options include the possibility of adopting a Commission notice on food official controls carried out over the digital market, to clarify how to deal with peerto-peer trading and food sharing. Such instrument has already been used to clarify other issues regarding enforcement of EU legislation, i.e. regarding e-nforcement on the safety and compliance of non-food products.74 The second option (regulation) could be delivered by including prosumers in the list of operators that would be exempt from official control activities on the basis of article 10.3 of the Official Controls Regulation. This provision empowers the European Commission to draw up a list of food business operators for whom subjection to official controls would ‘constitute a disproportionate administrative burden for them compared to the risk related to their activities’.75 In this scenario, the safety of e-foods offered in food sharing marketplaces could still be monitored by authorities, but would limit peers’ responsibilities for compliance with most Food Law requirements, such as notifying control authorities of their activity, registering their home as a food establishment, or complying with handling and storage hygiene requirements. The European Commission should move quickly on this issue. If it fails to do so, it is only a matter of time before the Court of Justice of the European Union is asked to resolve this legal conundrum, and it will base its decisions solely on legal considerations, ignoring the potential implications of its decision for policy.

72 Policy options including the possibility of adopting a Commission notice on official controls carried out over the digital market, which has already been done regarding enforcement of EU legislation on the safety and compliance of non-food products. See EC Commission Notice on the market surveillance of products sold online O.J. C 2017/5200 (2017). 73 Potentially, amending the Regulation (EC) No 852/2004, Regulation 1169/2011 or Regulation (EU) 2017/625. 74 See EC Commission Notice on the market surveillance of products sold online O.J. C 2017/5200 (2017). 75 Art. 10 of Regulation (EU) 2017/625.

References

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Conclusions

The Official Controls Regulation was an important step forward in equipping control authorities with adequate tools to e-nforce Food Law online, but authorities are still struggling to design comprehensive policies to bridge the enforcement gap. The decentralised and volatile nature of e-food trade in online marketplaces still challenges the effectiveness of enforcement efforts, as many third-party suppliers operating through online marketplaces are small or newer undertakings which are often unaware of their legal responsibilities. Therefore, as analysed by Katz in 2015, policing online marketplaces has proven more difficult than enacting legislation.76 However, even if the conclusive solutions to bridging the compliance and enforcement gaps in the platform economy might lie in the policy decisions rather than law (preferably, coordinated at the EU level), this Chapter has identified several areas in which EU legislation can improve the policing of online marketplaces by targeting online marketplace service providers. But will the EU consider amending EU Food Law rules to impose this obligation on marketplaces, and still ensure that their liability regime remains untouched? The Chapter has also identified that, as in other areas of the Law, technologyassisted decision making (and even enforcement), is likely to take over during this decade. Further research should explore whether regulation should specify the conditions and limits for the use of such technology as a public enforcement tool in the Digital Single Market.77

References Brice J (2018) Food in the platform economy: understanding and governing emerging digital marketplaces. Food Standards Agency. https://www.food.gov.uk/sites/default/files/media/ document/food-in-the-platform-economy-emerging-online-marketplaces-for-food.pdf. Accessed 16 Sep 2019 Brownsword R (2018) The E-Commerce Directive, consumer transactions, and the digital single market: questions of regulatory fitness, regulatory disconnection and rule redirection. In: Grundmann S (ed) European contract law in the digital age, vol 3, 1st edn. Intersentia, Cambridge, pp 165–204 Büchter B, Kuhr C, Schreiber G (2011) Pilotprojekt zur amtlichen Kontrolle des Handels mit Lebensmitteln im Internet. J Verbr Lebensm 6(375). https://doi.org/10.1007/s00003-011-07009

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Katz (2015), p. 1089. While research focusing on the regulatory and policy implications of the use of technologyassisted decision-making by States is prolific, it has largely focused on algorithmic discrimination and on the right to privacy and other Human Rights of individuals. Research on the regulatory challenges posed by the use of such technologies for enforcement of EU Law requirements is virtually non-existent. Filling that gap is urgent. 77

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Bundesamt für Verbraucherschutz und Lebensmittelsicherheit, BVL (n.d.) FAQ Lebensmittel. https://www.bvl.bund.de/DE/Service/04_FAQ/02_FAQ-Unternehmer/01_Lebensmittel/ lebensmittel_faq_node.html;jsessionid¼04730E1BA25601D904516EC0F819A324.1_cid360. Accessed 13 Sep 2020 Busch C et al (2016) The rise of the platform economy: a new challenge for EU consumer law? J Eur Consum Market Law 5:3–10 Davidson NM, Finck M, Infranca JJ (eds) (2018) Cambridge handbook of the law of the sharing economy. Cambridge University Press, Cambridge European Commission (2018) Overview report official controls on internet sales of food in EU Member States. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2772/57153 Fairman R, Yapp C (2005) Enforced self-regulation, prescription, and conceptions of compliance within small businesses: the impact of enforcement. Law Policy 27(4):491–519 Federal Ministry of Food and Agriculture (2012) Leitfaden zur Registrierung von Betrieben nach der Verordnung (EG) Nr. 852/2004 über Lebensmittelhygiene. https://www.landkreiscuxhaven. de/media/custom/578_4384_1.PDF?1259943398. Accessed 19 Sep 2020 Federal Office of Consumer Protection and Food Safety (2018) G@ZIELT: Safe Shopping on the Internet. https://www.bvl.bund.de/EN/Tasks/01_Food/01_tasks/06_E-Commerce/lm_E-Com merce_node.html. Accessed 16 Sep 2019 Food Standards Agency (2008) Regulation (EC) No 882/2004 on official controls: guidance in Q&A format for enforcement authorities on the feed and food elements, p. 22. Retrieved from https://www.food.gov.uk/sites/default/files/multimedia/pdfs/offcqaguidancenotes.pdf Food Standards Agency (2016a) Advice to businesses selling food online. https://www.food.gov. uk/sites/default/files/media/document/advice-to-businesses-selling-food-online_0.pdf. Accessed 30 Nov 2020 Food Standards Agency (2016b) Food sold online. Guidance for local authorities. https://www. food.gov.uk/sites/default/files/media/document/foodsoldonline-guidance-for-local-authorities_ 1.pdf. Accessed 16 Sep 2019 Food Standards Agency (2016c) Guidance on the application of EU food hygiene law to community and charity food provision. https://www.food.gov.uk/sites/default/files/media/document/ hall-provision-guidance%20(2).pdf. Accessed 16 Sep 2019 Frosio GF (2018) Why keep a dog and bark yourself? From intermediary liability to responsibility. Int J Law Inf Technol 26(1):1–33. https://doi.org/10.1093/ijlit/eax021 Hatzopoulos V (2018) The collaborative economy and EU law. Bloomsbury Publishing, London Höller A (2019) An analysis of the European Legal Framework for e-commerce in relation to the information obligation applicable to pre-packed food: how consistent are German Webshops in their compliance with the mandatory food labelling rules applicable to pre-packed food?. Thesis, Wageningen University. https://edepot.wur.nl/498751 Jerker D, Svantesson B (2017) Solving the internet jurisdiction puzzle. Oxford University Press, Oxford Julicher M, Henriques M, Amat Blai A, Policastro P (2019) Protection of the EU Charter for private legal entities and public authorities? The personal scope of fundamental rights within Europe compared. Utrecht Law Rev 15(1):1–25. https://doi.org/10.18352/ulr.490 Katz V (2015) Regulating the sharing economy. Berkeley Technol Law J 30(4):1067–1126. https:// doi.org/10.15779/Z38HG45 Kenney M, Zysman J (2016) The rise of the platform economy. Issues Sci Technol 32(3):61–69 Koops B (2013) Police investigations in Internet open sources: procedural-law issues. Comput Law Secur Rev 29(6):654–665. https://doi.org/10.1016/j.clsr.2013.09.004 Kranz P, Harms H, Kuhr C (2015) Kontrolle der im Internet gehandelten Erzeugnisse des LFGB und Tabakerzeugnisse (G@ZIELT). J Verbraucherschutz und Lebensmittelsicherheit 10(1). https://doi.org/10.1007/s00003-015-0993-1

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Krewinkel A, Tolg B, Fritsche J (2011) Online-Lebensmittelhandel und Strategien zur Kontrolle des virtuellen Lebensmittelmarktes. Verbraucherschutz und Leb. J Verbr Lebensm 6:395–400. https://doi.org/10.1007/s00003-011-0701-8 Miller K (2016) The application of administrative law principles to technology-assisted decisionmaking. AIAL Forum 86:20–34 Nielsen Company, the (2015) The future of grocery e-commerce, digital technology and changing shopping preferences around the world. https://www.nielsen.com/wp-content/uploads/sites/3/ 2019/04/nielsen-global-e-commerce-new-retail-report-april-2015.pdf. Accessed 9 Sep 2019 OECD (2016) Online product safety: trends and challenges. OECD Digital Economy Papers 261. https://doi.org/10.1787/5jlnb5q93jlt-en Prost S (2018) Food in the platform economy: digital food marketplaces for unconventional food entrepreneurs. Food Standards Agency. https://www.food.gov.uk/sites/default/files/media/ document/food-in-the-platform-economy-digital-food-marketplaces.pdf. Accessed 16 Sep 2019 Reidenberg JR (2003) States and internet enforcement. Univ Ottawa Law Technol J 213 (2003–2004) Rücker M (2018) Bringt’s das? Lebensmittel-Onlinehändler im Vergleich. Foodwatch. https:// www.foodwatch.org/uploads/media/2018-03_Lebensmittel-Onlinehaendler-im-Vergleich_ foodwatch_01.pdf. Accessed 7 May 2019 Scholten M (2017) Mind the trend! Enforcement of EU law has been moving to ‘Brussels’. J Eur Publ Policy 24(9):1348–1366. https://doi.org/10.1080/13501763.2017.1314538 Schreiber GA, Liebscher B, Kranz P (2015) Der Online-Handel mit Lebensmitteln – Herausforderung für die Überwachung. Z L R 42(290) Sharp E (2014) The first page of Google’s search results is the Holy Grail for marketers. Protofuse. https://www.protofuse.com/blog/details/first-page-of-google-by-the-numbers/. Accessed 16 Sep 2019 Stones C (2016) Online food nutrition labelling in the UK: how consistent are supermarkets in their presentation of nutrition labels online? Public Health Nutr 19(12):2175–2184 Vaughan R, Daverio R (2016) Assessing the size and presence of the collaborative economy in Europe. Publications Office of the European Union, Luxembourg. https://doi.org/10.2873/ 971404 Widdershoven R (2019) Enforcement of the law in European perspective: trends and challenges. In: Urazbaeva A, Szajkowska A, Wernaart B et al (eds) The functional field of food law: reconciling the market and human rights. Wageningen Academic Publishers, Wageningen, pp 317–329 Yapp C, Fairman R (2006) Factors affective food safety compliance within small and medium-sized enterprises: implications for regulatory and enforcement strategies. Food Control 17:42–51. https://doi.org/10.1016/j.foodcont.2004.08.00 Zurek K (2016) Food sharing in Europe: between regulating risks and the risks of regulating. Eur J Risk Regul 7(4):675–687. https://doi.org/10.1017/S1867299X00010114

Chapter 9

Conclusions: EU (Food) Law Is Not Fit for Purpose in the Platform Economy

Over the last decade, the popularity of online marketplaces enabling the trade of consumer goods has grown rapidly, and they are now a key player in the Digital Single Market.1 The European Commission has taken a problem-driven approach to the regulation of these (and other types of) online platforms, their role in fostering compliance with European Union Law, and in bridging the e-nforcement gap in the digital single market. Based on its 2016 Communication on Online Platforms and the Digital Single Market, in order to protect the ‘innovation-promoting role of platforms,’ EU legislation (if necessary) would ‘only address clearly identified problems relating to a specific type or activity of online platforms’ after the ‘evaluation of whether the existing framework is still appropriate.’2 In particular, instead of modifying the ‘intermediaries’ regime established in the e-Commerce Directive3 (in order to impose enforcement responsibilities on marketplaces and other service providers), it would adapt vertical legislation to impose specific obligations on platforms and to clarify and update the legal requirements applying to e-commerce when necessary. Half a decade after the adoption of the Online Platforms Communication, an evaluation of whether EU Food Law (as a paradigmatic field of sector-specific

1

See EC Communication The single market in a changing world: A Unique asset in need of renewed political commitment COM 2018/772 final (2018). 2 EC Communication Online Platforms and the Digital Single Market Opportunities and Challenges for Europe, COM 2016/288 final (2016), p. 5. 3 As analysed in Chap. 2, ‘safe harbour’ protections for information society service providers exclusively providing intermediation services shield these ‘intermediaries’ from the consequences of their users’ illegal activities and release them from enforcement obligations (they are only required to remove illegal content ‘expeditiously’ after a third-party notifies its existence). See Arts. 12–15 of Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. L 178 (2000), pp. 1–16 (hereinafter, ‘eCommerce Directive’). © Springer Nature Switzerland AG 2021 M. J. Plana Casado, E-FOOD: Closing the Online Enforcement Gap in the EU Platform Economy, Studies in European Economic Law and Regulation 21, https://doi.org/10.1007/978-3-030-79504-7_9

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legislation) is fit for purpose in the ‘platform economy’4 has not been carried out. It was the goal of this book to fill that gap, by analysing the challenges to the proper implementation and public enforcement of EU Food Law rules and principles in online marketplaces. The first part of this book has examined the changes that online marketplaces have brought about in the Law. EU Food Law was first updated to the particularities of online trading in 2011, when the Food Information Regulation5 clarified (some) of the rules for the provision of mandatory food information to consumers in distance sales (a concept including, but not limited to, online sales). Based on the distance sales rules established in Article 14 of the Regulation, e-food offers are not required to include date marking information, and while the rest of the mandatory information should be available to consumers before the purchase is concluded, mandatory particulars do not necessarily have to be displayed on the same page used to complete the transaction.6 This is the only provision in the Food Information Regulation that allows departing from the general rules applying to sales of foods, when selling online. This research has shown that, with such a targeted modification of legal requirements, the EU legislator fails to provide legal certainty to food businesses operating online, as well as to protect consumer interests such as health and informed food choices.7 First, there is low legal certainty regarding how to comply with the rest of the presentation rules of the Food Information Regulation when operating digitally:8 What is the appropriate (or better, required!) font size?9 When is information too cluttered? How close should the name of the food and the net content statement be, so that they appear in the ‘same field of vision’ as required by Article 13(5) of the Regulation? In a nutshell: how can FBOs ensure legibility online? This is not a minor issue, but one the legislator ignored, even when Recital 26 of FIC concedes that

4

See, among other, Kenney and Zysman (2016) and Chap. 1. Regulation (EU) No 1169/2011 on the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 87/250/EEC, Council Directive 90/496/EEC, Commission Directive 1999/10/EC, Directive 2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 2008/5/EC and Commission Regulation (EC) No 608/2004, O.J. L 304/18 (2011), pp. 18–63 (hereinafter, ‘FIC’ or ‘Food Information Regulation’). 6 Art. 14(1)(a) of Regulation 1169/2011 ensures that compliance with food information rules only requires that consumers can access mandatory food information (free of charge and before placing their order) ‘through other appropriate means clearly identified by the food business operator’ such a link to another website. 7 As stated in Art. 3(1) of Regulation 1169/2011, one of the main goals of the Regulation is to make sure that consumers are enabled to make informed choices, not only in relation to food safety, but also explicitly in relation to health, economic, environmental, social and ethical considerations. 8 See Rolandi (2017) and Chap. 3. 9 It must be noted that Art. 13(2) of Regulation 1169/2011 requires mandatory information to be ‘printed on the package or on the label in such a way as to ensure clear legibility, in characters using a font size where the x-height, as defined in Annex IV, is equal to or greater than 1,2 mm.’ 5

9 Conclusions: EU (Food) Law Is Not Fit for Purpose in the Platform Economy

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Studies show that easy legibility is an important element in maximising the possibility for labelled information to influence its audience and that illegible product information is one of the main causes of consumer dissatisfaction with food labels. Therefore, a comprehensive approach should be developed in order to take into account all aspects related to legibility, including font, colour and contrast.10

As analysed by Rolandi (2017), the Food Information Regulation opened the door for the Commission to adopt delegated acts to establish additional legibility rules to achieve the goals of the Regulation, and although this regulatory tool could be used to bring clarity to online information provision, (at least for now) there is nothing in the EU Commission’s agenda in this regard. Second, the fact is that the Food Information Regulation plainly flexibilises food information rules to facilitate compliance, but does not introduce any specific mechanism to protect informed choice online: in compliance with Article 14 of the Regulation, online suppliers can close a sale without clearly displaying any of the mandatory particulars, including the name of the food (which alerts consumers of the differences in the formulation of apparently similar products), or the net content (which provides information about the amount of product bought). The legislator does not seem to be taking into account the fact that, in online sales, the lack of physical access to products (as well as the lack of access to the retailers’ premises and the impracticalities surrounding B2C communication before, during and after the purchase) leaves the buyer dependent on (often unreliable)11 food information when making a food choice. In this context, the Regulatory choices made in Article 14 of FIC are, to say the least, debatable. More progress has been made regarding legislation governing the public enforcement regime. Six years after the adoption of the Food Information Regulation, in 2017, the Official Controls Regulation12 was adopted. Research shows that this piece of legislation provides control authorities with adequate powers for online market surveillance. In particular, current public enforcement rules ensure that operators are legally required to inform authorities of the activities they carry out online,13 and competent authorities can use mystery-shopping techniques to verify whether products comply with the relevant legal requirements,14 and, if necessary, 10

Recital 26 of Regulation 1169/2011. See Stones (2016), Rücker (2018) and Höller (2019) and Chap. 1. 12 Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products, amending Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/ 2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/ 2031 of the European Parliament and of the Council, Council Regulations (EC) No 1/2005 and (EC) No 1099/2009 and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC, and repealing Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and of the Council, Council Directives 89/608/EEC, 89/662/EEC, 90/425/ EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC and Council Decision 92/438/EEC, O.J. L 95/1 (2017). 13 See Art. 15 of Regulation 2017/625. 14 See Art. 35 of Regulation 2017/625. 11

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order the cessation of online sales.15 That being said, the Regulation falls short to address several core issues challenging proper enforcement in the e-food market. First, it does not clarify whether anyone placing foods on the market (including prosumers) should be considered an ‘operator’16 in the framework of official controls (thus blurring the boundaries of the control system). Second, it does not provide authorities with mechanisms to minimise the duplication of control efforts caused by the jurisdiction puzzle.17 Finally, the Regulation avoids dealing with the role of online marketplaces in public enforcement altogether. In fact, the law does not even make explicit that authorities have the power to order service providers (online marketplaces are implicitly included) to remove content when non-compliance is spotted or ‘in order to avoid the risk of serious harm to the collective interests of consumers’18 (a provision which has been included in more recent EU law). Against this background, it is clear that further regulatory or policy decisions are necessary to build an effective official control system for the Digital Single Market. Moreover, this book has illustrated how ensuring that EU sector-specific law meets its regulatory goals online may require reconsidering our understanding of key concepts and legal rules. Essential pieces of legislation such as the General Food Law19 and the Food Hygiene Regulations20 have not been amended to refer to online trade, and therefore are applied mutatis mutandis online. As a result (and quite problematically), there is no consensus as to whether online marketplaces fall within the scope of the legal definition of a ‘food business operator’ (responsible for compliance with food safety, hygiene, and information rules), or about the responsibilities of food ‘sharers’, prosumers and home-based initiatives partaking in e-food trading. Additionally, it is unclear whether food business operators benefit from the exemptions granted for direct sales to consumers, enshrined in EU food hygiene and food labelling rules, when selling through an online marketplace. The European

15

See Art. 138(2)(i) of Regulation 2017/625. See Art. 3(29) of Regulation 2017/625. 17 Online offers fall within the scope of that Member State’ control system as long as they are directed to consumers domiciled within their territory (the payment is completed, and the product is delivered to the consumer). [See Case-390/18, Airbnb Ireland, 2019 ECLI. 1112] Because online marketplaces normally allow for the same offer to be purchased and shipped to any Member State, those offers automatically fall within the scope of more than one (when not all) Member States. Because of this jurisdictional overlap, more than one authority may end up controlling the same offer. See Chap. 5. 18 Art. 9(4)(g) of Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/ 2004, O.J. L 345/1 (2017), pp. 1–26. 19 Regulation (EC) No 178/2002 laying down the general principles and requirements of Food Law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, O.J. L 31 (2002), pp. 1–24. 20 Regulation (EC) No 852/2004 on the hygiene of foodstuffs, O.J. 139/1 (2004), pp. 1–54 and Regulation (EC) No 853/2004 laying down specific hygiene rules for food of animal origin, O.J. L 139 (2004), pp. 55–205. 16

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Commission should consider providing guidance or even proposing regulatory changes to bring legal certainty to online marketplaces and all their users, and to control authorities that are struggling to bridge the enforcement gap, before the Court of Justice of the European Union is asked to step in to solve the issue. Recent regulatory choices articulated in the Platform-to-business21 and Omnibus Directive22—choices designed to bring about better enforcement of consumer law— open the door to the possibility of amending EU Food legislation to enlist marketplace service providers as facilitators of e-nforcement, while keeping their liability regime untouched. Indeed, just as those pieces of legislation require marketplaces to display information about the identity23 and nature24 of suppliers, EU Food Law could require marketplaces to display information regarding the suppliers’ registration status, and to prevent users from posting offers unless they include all mandatory particulars established in EU food information rules (thus, turning these platforms into ‘regulatory units’25 in EU Food Law). Marketplaces would not be made responsible for ensuring that the information submitted by suppliers is accurate and lawful, but for displaying the information submitted, which is key to proper official controls online. Therefore, bringing EU Food Law into the Platform Economy requires the adoption of novel E-Food Law provisions. However, it does not seem likely that European Union Food Law will follow that path any time soon, as the content of the recently adopted Farm to Fork strategy26 (includes a detailed action plan narrating the Commission’s regulatory and policy initiatives for this decade) avoids any mention to the digital market of foods altogether. The European Union Commission should reconsider this position. The second part of this book has examined how problematic issues such as the ‘mapping’27 of the digital market, the prioritisation of control activities, or the possibility of centralising market surveillance in order to avoid the duplication of control efforts caused by overlapping control systems, remain mostly unexamined

21 Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services, O.J. L 186 /57 (2019), pp. 57–79 (hereinafter, ‘P2B Regulation’). 22 Directive (EU) 2019/2161 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules, O.J. L 328/7 (2019), pp. 7–28 (hereinafter, ‘Omnibus Directive’). 23 See Art. 5(3) of the P2B Regulation, which requires providers of online intermediation services to display, visible to all users of the platform, information about the ‘the identity of the business user providing the goods.’ 24 See Art. 3(4) of the Omnibus Directive, which requires marketplace service providers to indicate whether the supplier is a professional retailer or a peer consumer (identified as ‘non-trader’ in the Directive’s recitals). 25 Using the words of Savin (2018). 26 See EC Communication A farm to fork strategy for a fair, healthy and environmentally-friendly food system, COM 2020/381 final (2020) (hereinafter, ‘The Farm to Fork Strategy’). 27 See Chap. 5.

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by EU institutions. Good practice in e-nforcement build on the experience acquired by domestic control authorities throughout the continent. Those experiences show that proper public enforcement for the digital single market requires the creation of a new control paradigm, where the role of third parties and information and communication technologies (ICTs) are key. First, it is only reasonable to expect that there will be (if there is not already) a growing trend towards the use of computer and information technologies in digital investigations and to facilitate public enforcement of European Union Law. For instance, German authorities have developed software which is ‘able to collect evidence automatically (screen prints) and compare the results of the queries with the data available in other official databases’,28 to speed up investigations and facilitate enforcement decisions. Competent authorities in Europe and abroad are increasingly investing in technology capable of automatically mapping and monitoring the digital market, demonstrating how ‘technological advances taking place in the field of artificial intelligence and robotics can also have many positive effects on law enforcement’.29 The use of such tools for law enforcement is expected to increase dramatically in the years to come,30 thanks to the developments being made in the fields of artificial intelligence and machine learning: automated enforcement systems capable of proposing (or even notifying and imposing) sanctions may be just around the corner. But while authorities are moving swiftly towards technology-assisted forms of enforcement to improve the efficiency of control efforts, it is necessary to assess its impact on suppliers’ rights and on the principles of administrative law to technology-assisted enforcement.31 Furthermore, Member States’ legal process and the conditions leading to the lawful use of technology in public enforcement are often ill-defined.32 There is an urgent need to examine these issues, because, as already identified by Reidenberg in 2003, For democratic societies, the use of any technological enforcement instrument necessitates carefully prescribed authorization criteria. Like other police powers of the state, legal authority is a pre-requisite for the exercise of coercive powers. Each mechanism implicates important civil, political and sovereign rights.33

Moreover, this research has indicated that even if public enforcement is the primary player34 in the platform economy, the new control paradigm does not escape mediated enforcement by online platforms. Authorities recurrently request online marketplaces to remove illegal content (such as e-food offers) to ensure the execution of such administrative sanctions, or in situations where prompt action is required to reduce or avoid serious risks to consumer health (encouraged by the European 28

See European Commission (2018). INTERPOL & UNICRI (2019), p. 1. 30 See, among other many other, Reidenberg (2003), Miller (2016) and Koops (2013). 31 See Miller (2016). 32 See Koops (2013). 33 See Reidenberg (2003). 34 See Chap. 1. 29

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Commission and Member States). However, there are no clear rules identifying the possible constraints on the use of notice-and-takedown (NTDs) procedures by control authorities. In fact, in EU Food Law, there are no rules at all. At least on paper, NTDs can be used to remove any offer that does not comply with legal requirements (the limits of what constitutes ‘illegal content’ only exist in domestic interpretations35). There is no equivalent prerogative in brick-and-mortar enforcement, where operators are only stopped from placing a product on the market in certain situations established in Member States’ law.36 In 2012, Dirk W. Lachenmeier, Sigrid Löbell-Behrends, Wolfgang Böse and Gerhard Marx wondered whether a lack of possibilities for governmental control of the digital market of foods had de facto resulted in European Union food policy privileging the internet market.37 Almost one decade later, the liberal use of NTDs and the routine use of technology-assisted digital investigations software by control authorities, coupled with the low legal certainty regarding the implementation of EU Food Law requirements only, could lead to a similarly unfair scenario: that brickand-mortar suppliers operate with greater legal certainty, and enjoy greater protections (those of due process enshrined in administrative procedural rules), than those operating online.

References European Commission (2018) Overview report official controls on internet sales of food in EU Member States. Publications Office of the European Union, Luxembourg. https://doi.org/10. 2772/57153 Höller A (2019) An analysis of the European Legal Framework for e-commerce in relation to the information obligation applicable to pre-packed food: how consistent are German Webshops in their compliance with the mandatory food labelling rules applicable to pre-packed food?. Thesis, Wageningen University INTERPOL & UNICRI (2019) Artificial intelligence and robotics for enforcement. 2nd INTERPOL-UNICRI Global Meeting on Artificial Intelligence for Law Enforcement, Singapore, 2–4 July 2019 Kenney M, Zysman J (2016) The rise of the platform economy. Issues Sci Technol 32(3):61–69 Koops B (2013) Police investigations in internet open sources: procedural-law issues. Comput Law Secur Rev 29(6):654–665. https://doi.org/10.1016/j.clsr.2013.09.004

Identified by the European Commission in 2018 as ‘any information which is not in compliance with Union law or the law of a Member State concerned.’ See EC Recommendation on measures to effectively tackle illegal content online, C 2018/1177 final (2018), p. 10. 36 For instance, most national legislation regulating the measures to be adopted in case of non-compliance allow control authorities to order the cessation of sales or the withdrawal of products from the market only when foods have been adulterated or may pose a risk to the consumer, as well as when counterfeit or fraud has been established. 37 See Lachenmeier et al. (2013). 35

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Lachenmeier DW, Löbell-Behrends S, Böse W et al (2013) Does European Union food policy privilege the internet market? Suggestions for a specialized regulatory framework. Food Control 30(2):705–713. https://doi.org/10.1016/j.foodcont.2012.07.034 Miller K (2016) The application of administrative law principles to technology-assisted decisionmaking. AIAL Forum 86:20–34 Reidenberg JR (2003) States and internet enforcement. Univ Ottawa Law Technol J 213 Rolandi S (2017) Food E-Commerce as a new tool for the growth of the economy. European Legal Framework for Information of Prepacked Food Sold Online. https://doi.org/10.1007/978-3-31964756-2_11 Rücker M (2018) Bringt’s das? Lebensmittel-Onlinehändler im Ver-gleich. Foodwatch e.V., Retrieved on May 7, 2019 from https://www.foodwatch.org/fileadmin/Themen/ Lebensmittelkennzeichnung/Dokumente/2018-03_Lebensmittel-Onlinehaendler-imVergleich_foodwatch.pdf Savin A (2018) EU regulatory models for platforms on the content and carrier layers: convergence and changing policy patterns. Nordic J Comm Law 1:7–37 Stones C (2016) Online food nutrition labelling in the UK: how consistent are supermarkets in their presentation of nutrition labels online? Public Health Nutr 19(12):2175–2184