Posts Tagged Health

No sugar rush. CJEU rejects appeal in Dextro Energy labelling case.

The CJEU held yesterday in Case C-296/16P Dextro Energy (text of judgment available in French and German only at the time of posting), an appeal against the General Court’s ruling in T-100/15. The General Court had declined to annul the European Commission Regulation which refused to authorise certain health claims made on foods, other than those referring to the reduction of disease risk and to children’s development and health. Dextro Energy had wanted to include health claims such as  ‘glucose supports normal physical activity’ and ‘glucose contributes to normal muscle function’. The EC had refused: citing (in Regulation 1215/8)

‘Pursuant to Articles 6(1) and 13(1) of Regulation … No 1924/2006 health claims need to be based on generally accepted scientific evidence. Authorisation may also legitimately be withheld if health claims do not comply with other general and specific requirements of Regulation … No 1924/2006, even in the case of a favourable scientific assessment by [EFSA]. Health claims inconsistent with generally accepted nutrition and health principles should not be made. [EFSA] concluded that a cause and effect relationship has been established between the consumption of glucose and contribution to energy-yielding metabolism. However, the use of such a health claim would convey a conflicting and confusing message to consumers, because it would encourage consumption of sugars for which, on the basis of generally accepted scientific advance, national and international authorities inform the consumer that their intake should be reduced. Therefore, such a health claim does not comply with point (a) of the second paragraph of Article 3 of Regulation … No 1924/2006 which foresees that the use of claims should not be ambiguous or misleading. Furthermore, even if the concerned health claim was to be authorised only under specific conditions of use and/or accompanied by additional statements or warnings, it would not be sufficient to alleviate the confusion of the consumer, and consequently the claim should not be authorised.’

The General Court performed its standard review in the face of a wide discretionary room for manoeuvre for the EC, and decided the EC had not exceeded its authority in holding as it did – even in the face of more lenient EFSA recommendations. The Court of Justice has now entirely sided with the General Court. The Judgment is a good reminder of aforementioned standard test (no de novo or merits review; annulment in the event of manifest transgression of power or error in judgment only), and readers best refer to reading the judgment itself.

One consideration however, I should like to highlight: Dextro Energy had suggested the health claims needed to be assessed in light of the target group (determined in the product’s advertising), which, it was suggested, were physically active people for whom consumption of the glucose tablets in question is not harmless. The Court rejected this approach: the population as a whole, for whom the product is available, are the group which the EC justifiably seeks to protect. The manufacturer’s professed target group is not the relevant group to consider (do bear in mind that this is a product which is widely available and not restricted in any way at points of sale):

At 76-77: si les allégations de santé en cause étaient autorisées, elles s’adresseraient à la population en général, pouvant ainsi encourager la consommation de sucres par les personnes autres que les hommes et les femmes bien entraînés. Dans ces conditions, le Tribunal n’a pas commis d’erreur de droit lorsqu’il a rejeté, au point 57 de l’arrêt attaqué, l’argument de Dextro Energy, selon lequel c’était le groupe cible qui importait aux fins de l’appréciation des allégations de santé en cause.

Geert.

 

 

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Cheers to that! The CJEU on excise duties, alcohol, packaging and regulatory autonomy in Valev Visnapuu.

Postscript 10 December 2015 For a similar exercise, see Sharpston AG in C-472/14 Canadian Oil.

Less is sometimes more so I shall not attempt to summarise all issues in Case C-198/14 Valev Visnapuu. The case makes for sometimes condensed reading however it perfectly illustrates the way to go about dealing with obstacles to trade put in place for environmental, public health or, as in this case, both reasons.

Mr Visnapuu essentially forum shops Estonia’s lower prices on alcohol by offering Finnish clients home delivery of alcoholic beverages purchased there. No declaration of import is made to Finish customs and excise, thereby circumventing (accusation of course is that this is illegal) a variety of excise duties imposed for public health and environmental reasons, as well as a number of requirements relating to retail licenses and container requirements (essentially a deposit-return system) for beverages.

Confronted with a demand to settle various tax debts, as well as with a suspended prison sentence, Mr Visnapuu turns to EU law as his defence in a criminal proceeding. The CJEU then had to settle a variety of classic trade and environment /public health questions: whether the packaging and packaging waste Directive is exhaustive on the issue of deposit-return system (answer: no and hence the system additionally needs to be assessed vis-a-vis EU primary law: Article 34 ff TFEU or Article 110 TFEU); whether in the context of that Directive excise duties on packaging may be imposed (yes) and packaging integrated into a functioning return system exempt (yes; in the absence of indications that imported systems are less likely to enjoy the exemption); whether the relevant excise duties fall under Article 34 ff TFEU or Article 110 TFEU (answer: it is part of an internal system of taxation hence needs to be judged vis-a-vis Article 110 TFEU); and finally whether the retail licence requirement needs to be judged viz Article 34 or Article 37 TFEU (answer: mixed, given the various requirements at stake). Final judgment on proportionality is down to the Finnish courts.

Readers in need of a tipple would be advised to postpone until after reading the judgment. Again though the case shows that if one keeps a clear head, classic structures of applying EU law go a long way in untangling even complex matters of law and fact.

Geert.

 

 

 

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Metamorphosis: Can an investment loose such qualification because of its negative externalities? The Philip Morris v Uruguay arbitration

Update 9 July 2016: the panel sided with Uruguay on the merits, in a move which must boost those rejecting criticism that international trade law, including BITs, MITs and TTIP, deny States’ regulatory autonomy.

A very interesting debate in the PMI v Uruguay arbitration on plain packaging. The decision on jurisdiction (which was taken in July this year) rejected the notion that an ‘investment’ under a BIT looses such qualification as a result of, in effect, its negative externalities. Uruguay had argued that PMI’s interests in Uruguay do not constitute a protected investment since not only do they fail to make any contribution to the Country’s development, but they actively prevent and interfere with such development, due to the health impact of tobacco consumption.

The Panel, having to establish its subject-matter jurisdiction, gave the notion ‘investment’ a broad meaning, in the absence of express language to the contrary in the BIT concerned. With reference to ICSID precedent, the tribunal declined to make ex-post economic /financial  evaluations determine its jurisdiction – all the more so since such business, economic, financial… ex post evaluation is subject to tit for tat data and figures.

The case will therefore continue on the merits.  Interesting material.

Geert.

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WTO Appellate Body in Clove Cigarettes – Faites vos Jeux

Postscript 8 January 2016: the Advocate General of the WTO referred to the WTO case, in a challenge to the EU’s ban on menthol cigarettes, suggesting the EU wouldbe in WTO trouble had it not banned their sale.

The WTO Appellate Body’s Report in ‘Clove cigarettes’  was issued on 4 April. It is a dream ‘Trade and public health’ case and therefore generally a superb ‘trade and regulatory autonomy’ case. Under appeal were a number of the findings of the Panel in first instance. The WTO summarises the dispute as follows:

‘(the case) concerns Section 907(a)(1)(A) of the Federal Food, Drug and Cosmetic Act (“FFDCA”), which was added to the FFDCA by Section 101(b) of the Family Smoking Prevention and Tobacco Control Act.  This measure bans the production and sale of clove cigarettes, as well as most other flavoured cigarettes, in the United States.  However, the measure excludes menthol-flavoured cigarettes from the ban.  Indonesia is the world’s main producer of clove cigarettes, and the vast majority of clove cigarettes consumed in the United States prior to the ban were imported from Indonesia.’

Discrimination, necessity, the link between the Agreement on Technical Barriers to Trade (TBT – new under the WTO) and the General Agreement on Tariffs and Trade (applied since 1947 and with a richer case-law history), the possibility of employing regulatory objectives to decide upon ‘likeness’ between products: these and other issues are all dealt with by both Panel and AB. Per usual and not surprisingly (the same holds for many courts, nationally and internationally), the jury is out on many of the topics addressed. This leaves uncertainty of a similar ilk as after the Brasil Tyres case, the consequences of which I have analysed for JEL here.

Geert.

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Compulsory licensing – India move will test room for manoeuvre under WTO and TRIPS

India’s ‘Controller of patents’ has granted Natco a ‘compulsory license’ (‘CL’) for Bayer’s Sorafenib Tosylate (marketed as Nexavar). The drug extends the lives of terminal liver and kidney cancer patients. Put differently: the controller has forced Bayer to grant a license to Natco, to produce the drug, specifying inter alia a (low) sales price and royalties to be paid to Bayer.  Natco is an Indian pharmaceutical company (no surprise there), with an increasing portfolio in pharmaceutical R&D. In other words reportedly not a typical ‘generics’ company.

The ruling is of course subject to appeal. It is also the subject of intense debate under the WTO, in particular the TRIPS Agreement. TRIPS (Articles 30-31) leaves room for a CL system and prima facie leaves a lot of room for manoeuvre to WTO Members to grants such licenses. However underneath Article 30-31’s surface lies quite a bit more than might be assumed. Moreover, even if one takes Members’ discretion in applying these Articles at face value, the articles must not be applied stand-alone. In other words they do not give carte blanche for introducing requirements leading to CL which might otherwise be WTO inconsistent.

Watch this space: this case is a nugget for, yet again, disciplining regulatory autonomy (see here and here) under the WTO.

Geert.

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