Nothing left to hide? Status quo on Dutch bill permitting active disclosure of food safety inspection resultsPosted: November 9, 2016
Recently, an amendment to the Dutch Health Act (Gezondheidswet) was voted in Dutch Parliament, allowing the Dutch Food Safety Authority (Nederlandse Voedsel en Warenautoriteit or NVWA) to actively disclose its inspection results. The change in the Health Act equally applies to inspection results obtained by the Dutch Health Inspectorate (Inspectie Gezondheidszorg or IGZ) and therefore, it received broad interest from the pharmaceutical, medical devices, and the food industry and their legal practitioners. Three meetings on this topics were organised by respectively the Dutch association of Food Law (NVLR), the Dutch Pharmaceutical Law Association (VFenR) and by the Dutch organisation for food retail and management VMT. This post will put you up to speed on the actual changes to be applied to the Health Act, as well as on the expected consequences of their implementation for food business operators (FBOs).
Importance of inspection results
Inspection results are important for whom it concerns directly (inspected companies, as they provide answers to questions such as: is your organisation compliant? Will a fine be imposed? Inspection results are furthermore of interest to others, such as consumers, journalists and other companies, including competitors, for a number of reasons. These reasons include (but are not limited to) knowing where to supply from and what places to avoid, the possibility to check if your supplier’s manufacturing processes are up to standards and the option to stay informed on what challenges your competitor is meeting.
Active vs. passive disclosure
All administrative bodies disclose information, on their website, in social media, in leaflets, etc. Under the Dutch Act on Public Access to Government Information (Wet openbaarheid van bestuur or WOB) citizens have the right to file a request for information on administrative matters. The disclosure of such information on request of a person is called passive disclosure. Such disclosure does not take place publicly, but the information concerned will solely be provided to the person who filed the request, unless it is rejected based on the limited grounds specified in the WOB. Active disclosure on the other hand means that the information is disclosed by an administrative body prior to any request for information. Such information is publicly available after disclosure. In case of inspection results of the NVWA, these will most likely be published on the website this administrative body.
Rationale disclosure inspection results
The rationale for both passive and active disclosure of inspection results is threefold.
(i) Transparency. Without information on the inspection, one cannot assess the quality of the inspection or view the results of the inspection. This transparency is also present in other areas such as inspection results of the Inspectorate of Education and the Health Care Inspectorate.
(ii) Trust. By showing the results, the public can see what the NVWA is doing and therefore the public can build trust in the NVWA.
(iii) Increased compliance. Negative results of an inspection can lead to serious problems towards consumers or customers, such as liability claims from suppliers who expected to be supplied with products produced in compliance with the applicable quality standards and hygiene regulations). In this way active disclosure increases the pressure on FBOs to comply.
The current system
Opposed to other inspectorates in the Netherlands, the active disclosure by the NVWA is currently not provided for in a specific Act. So far, the mechanism laid down in the WOB has been used as the framework for disclosure of inspection results. Article 8 WOB enables the NVWA to actively disclose information, provided this is done is a clearly understandable way and offering interested parties in due time the opportunity to comment. As far as a request for information by any company or citizen is concerned, there are predefined grounds on which an administrative body cannot freely disclose information, being absolute and relative grounds. The absolute grounds are found to be of such importance that publication is interdicted, like confidential commercial information relating to the safety of the state or information containing personal data. The relative grounds relate for instance to privacy matters or to disproportional harm that could be created by publication. Such grounds have to be weighed against the interests of disclosure. In the current framework, the interested party can express a provisional opinion with respect to any intended publication by NVWA, which has to be dealt with before publication. This mechanism will disappear under the new system.
The new system
When the amendment of the Health Act will enter into force, the NVWA will not only have the option to actively disclose information, but will be obliged to do so. In the legal framework, the assessment of interests is already taken into account, which makes it unnecessary to do another assessment each time the NVWA decides to actively disclose information. In future, the option to express a provisional opinion by the NVWA will no longer be available. The only way to ensure that the information is not disclosed is starting summary proceedings before a civil court. If any interested party is doing so, NVWA will then be forced to suspend its decision to disclose information until the court decides on the matter. In case the NVWA will disclose the inspection report, the NVWA will provide the option for FBOs to provide a reaction to the inspection results, which will be disclosed together with the inspection results. In addition to the change applied to the Health Act, an underlying decree needs to specify more detailed rules on what information exactly needs to be published in what format. In the discussions on the amendment of the Health Act another amendment was added which ensures the underlying decree can only be amended with the approval of Dutch Parliament.
Current status of the amendment
On the 11th of October the House of Representatives of the Netherlands (Tweede Kamer) accepted the proposed changes to the Health Act and amended some parts. The Dutch Senate (Eerste Kamer) accepted the amendments without making any additional amendments on the 1th of November. However, the change of the Health Act has not yet entered into force and it is currently still unclear when the exact date of entry into force will be. Guestimates are hinting at June 2017, however the Ministry of Health Welfare and Sport is still working on the underlying decree on what information has to be published and in what format. There is a fair chance the amendment will only enter into force simultaneously with this underlying decree. In such case the entry into force of the changes to the Health Act will most likely be later than the guestimate mentioned above.
Situation in other EU countries and NVWA pilot
Other EU Member States already have a system of active disclosure of inspection results for restaurants in using a system of easily understandable designations or colours (Denmark and Ireland for instance). In those countries, the outcome of the inspection is presented at the entrance of the inspected restaurant, in order to give the public an overview of the level of compliance at first glance. For instance, a green colour or a happy face means that the restaurant is compliant and colours closer to red or a less happy face mean the place was less compliant. In the Netherlands, the NVWA launched a pilot for disclosure of inspection results for lunchrooms, which were disclosed via an app. This app subsequently displayed the results on a map. The map showed the lunchrooms in four different colours, depending on the level of compliance. The idea was to provide a quick overview of the lunchrooms and the level of compliance. However, the reaction of the minister of Health, Welfare and Sport to this format was negative due to interpretation issues, particularly interpretation of the colours. There are also lists of inspected products instead of inspected FBOs. The experience gained therewith and during the pilot will have to be evaluated in order to choose an acceptable form for the disclosure of over 200.000 inspections done each year in the Netherlands by the NVWA.
The proposed changes to the Health Act have been much criticised. The active disclosure of the inspection results together with the imposed sanctions can be viewed as punitive sanction in addition to the sanction itself imposed based on the findings during the inspection. In the explanatory notes on the amendment of the Health Act, the government explains that active disclosure should not be perceived as a punitive sanction and therefore not a criminal charge in the sense of Art. 6 ECHR. In case the disclosure will be viewed as a punitive sanction, article 6 ECHR will be applicable, meaning the procedural safeguards embodied in this article will apply. Basically, the government states that the disclosure does not aim at punishing the inspected party, and therefore is not an additional sanction. However, the arguments provided by the government in the explanatory notes are not very convincing. Assuming the disclosure will lead to more transparency, consumers and customers will be aware of the non-compliance due to the disclosure. This disclosure can in turn decrease the trust in the non-compliant producer, which could mean a decline in sales or even liability claims from consumers or customers. It is not the fines imposed by the NVWA, but the disclosure of the inspection results, which leads to these (potential) damages of the producer, whom will not have had the chance to remedy the situation before it is out in the open. This is all the more important, as so far there is no evidence that such public disclosure indeed will lead to an increased level of compliance. Moreover, this situation does not seem to be in line with competition law, which constitutes the regular level playing field of any FBO, just like it is for manufacturers of medical devices or medicinal products. Therefore, competition law elements should in our opinion be an aspect of the legislation concerning disclosure. In the explanatory notes to the amendment, this aspect has not even been mentioned.
As a result of a change applied to the Dutch Health Act, the first steps towards active disclosure of inspection results from the NVWA have been initiated. The actual implementation thereof depends on the underlying decree, which is still under construction. This is why is not clear as of when the legal basis for active disclosure of NVWA inspection results will be operational. As of this moment however, FBOs will be subject to increased enforcement measures, without the effect thereof being necessarily positive. We will keep an eye out for you and report on any relevant development in this field, as they are likely to have an important impact for each FBO.
The author thanks Floris Kets for his contribution to this post.
This contribution aims to provide you with a brief overview of the EU Organic legislation and recent developments. Being able to market products as ‘organic’ could be a plus for the food business operator (FBO) as the demand for sustainable production and organic food increases. This contribution focuses on the EU-system of organic certification of food products and will specifically look at the position of organic microalgae manufactured in the EU. Under the current legislative framework, these could not be marketed as such in the EU. This has changed since an interpretative note of the Commission of last summer. If you are an FBO interested in marketing organic microalgae, this for sure is of interest to you.
Organics Regulation – scope
First of all, what is ‘organic production’? According to recital 1 of the Organics Regulation organic production is: “(…) an overall system of farm management and food production that combines best environmental practices, a high level of biodiversity, the preservation of natural resources, the application of high animal welfare standards and a production method in line with the preference of certain consumers for products produced using natural substances and processes” (see also the definition in Article 2(a)).
What is covered by the Organics Regulation? Only agricultural plants, seaweed, livestock, aquaculture and animals are regulated under the Organics Regulation. For example, if an FBO wants to produce organic seaweed, all the processes have to be in compliance with the Organics Regulation. This approach is known as the ‘farm to fork approach’, which means every step in the production process throughout the supply chain has to comply with the Organics Regulation.
Organics Regulation – structure
The Organics Regulation has a layered structure. The following three layers of provisions can be found:
- General production rules (articles 1, 7 – 10), which apply to all forms of organic production.
- Production rules for different sectors (articles 11 – 21): general farm production rules and production rules for specific categories of products and production rules for processed feed and food.
- Detailed production rules (article 42).
If there are no production rules for the sector (layer 2), only the general production rules (layer 1) apply.
Compliance with the Organics Regulation has to be demonstrated by obtaining certificates from a certification body. (See the following link for a list of competent certification bodies in different Member States). In the event a certification body audits the FBO marketing organic products and it encounters violations of the Organics Regulation, it can decide to block certain non-compliant batches of products pending an investigation. Depending on the outcome, the certification body can subsequently decide to withdraw the certificate. If the certificate is withdrawn, the FBO is no longer allowed to market the products as ‘organic’. In case of severe violations, the competent authority may impose a recall of the products. In the Netherlands, Skal Biocontrole is the designated Control Authority responsible for the inspection and certification of organic companies in the Netherlands, within the context of Regulations: (EC) Nr. 834/2007 (Organics Regulation), (EC) Nr. 889/2008 and (EC) Nr. 1235/2008 (import of organic products from third countries). Skal monitors the entire Dutch organic chain on behalf of the Dutch Ministry of Economic Affairs.
The EU organic logo
The EU logo is regulated in a separate Commission Regulation. The main objective of the European logo is to make organic products easier identifiable by the consumers. Furthermore it gives a visual identity to the organic farming sector and thus contributes to ensure overall coherence and a proper functioning of the internal market in this field. For practical information regarding the EU logo, see this link and this link.
Prior to July 2015, FBO’s could not obtain an organic certification for microalgae manufactured within the EU for the use in their food products. FBO’s from third countries (non-EU) could market their products in the EU based on either the import procedure as set out in Article 33 (2) (import from recognised third countries) or the import procedure laid down in Article 33 (3) of the Organics Regulation (import of products certified by recognised control bodies). The strange situation was created where ‘organic’ microalgae could only be imported into the EU and not be produced within the EU.
How come? All agricultural products were considered to fall within one of the different production rules for specific categories of products (layer 2) and microalgae for food production were not included. Furthermore, detailed EU production rules for microalgae were absent (layer 3). (Article 42 (2) Organics Regulation).
The Interpretative note of the European Commission (Directorate-General for Agriculture and Rural Development) of July 2015 opened up the possibility for companies in both EU Member States and third countries to produce microalgae, which can be marketed as ‘organic’ and carry the EU organic logo. Both the existing production rules for plants (Article 12 Organics Regulation) and seaweed (Article 13 Organics Regulation) could be suitable for microalgae.
‘Until an implementing act adopted on the basis of Article 38 (of Regulation 834/2007) has clarified the situation, operators producing organic micro algae (except for use as feed for aquaculture) have therefore to comply with the general production rules, which apply to all forms of organic production (“layer 1”) and with the production rules for the sector of plants or seaweed (“layer 2”).’
The use of microalgae as feed for aquaculture is not covered in the Interpretative note, as microalgae as feed are already subject to the detailed production rules. The rules for the collection and farming of seaweed apply according to Article 6a of Commission Regulation (EC) No 889/2008.
The interpretation opens up the possibility to certify microalgae to be used as food (or as an ingredient in food) as being organic. When an implementing act will be published and enter into force is still unknown. A proposal for a new Regulation repealing the Organics Regulation has been published. On 5 November 2015 a report from the Committee on Agriculture and Rural Development on the proposal was published, introducing 402 amendments. The current status of the proposal is available through this link.
Aside from enforcement by a national control authority in case of non-compliance with the Organics legislation, consumers and other interested parties often also have the possibility to lodge a complaint relating to advertising of organic products. However, advertising of (organic) products is a topic to be covered in another contribution on Food Health Legal. Stay tuned!
On 11 September 2015 new legislation amending the current Commodities Act (in Dutch: Warenwet), partly entered into force. Under the new legislation the maximum administrative fine to be imposed on Food Business Operators (hereinafter: ‘FBO’s’) by the Dutch Food Safety Authority (NVWA) is increased dramatically compared to the prior maximum fine. The Dutch legislator has clearly increased existing fines to make them stronger and more effective to increase compliance with food safety regulations. The NVWA has more teeth, but will it bite?
The rationale behind the increased fines
A reason to increase the maximum fines can also be found in the battle against food fraud in general. Until recently the NVWA could impose a fine on an FBO on the basis of Article 32 of the Commodities Act. The maximum fine was set at € 4.500. According to its latest annual report, the NVWA imposed 2808 fines on FBO’s in 2014. The average amount of a fine was € 1.206,– and the total amount of imposed fines was € 3.413.893,–. Considering the costs of compliance with hygiene and administration standards, these penalties are merely peanuts for the average FBO and do not have the desired effect of contributing to compliant behavior as is confirmed by the statement further down in this post.
Fines linked to system under Dutch Penal Code
Fines in other areas such as data protection law are also subject to revision and they will both increase and expand (meaning an increased number of provisions will be subject to potential fines in case of non-compliance and those fines tend to increase as well). With a political climate both in the EU and in the Netherlands that leans towards stronger enforcement instruments, it was just a matter of time before the fines under the Commodities Act would be increased. The Dutch legislator seems to try to harmonize the several fines in different legal acts by referring to the categories of fines specified in the Dutch Penal Code. These categories are linked to the severity of the violation. The first category is the lowest and the sixth category the highest. The maximum fines are now set at the maximum of the sixth category: € 810.000,– (or 10% of the annual turnover). This means a 180 fold higher maximum fine!
In relation to the increase of administrative fines politician Sjoera Dikkers (Dutch Labour Party – PVDA) stated: “it is clear that a fine of € 4.500,– is cheaper for practically every company, then acting in compliance with hygiene practices in the Netherlands. For a fine of € 81.000,– this can be similar for big companies, depending on the nature of the infringement. That is why we would like to further increase the maximum penalty to the sixth category. This is the only way to scare companies enough to make sure they comply with hygiene requirements.”
The exact amount of the fine will have to be proportionate and therefore depend on factors such as the number of employees, the degree of culpability, the severity of the violation and/or the turnover of an FBO. The NVWA has to assess all individual circumstances in order to establish the amount of the fine.
Although relatively low fines indeed might give rise to profit for FBO’s from non-compliance and fraudulent behavior, drastically increasing the fines could have a downside for both the NVWA and the FBO’s. Imposing higher fines requires more effort and expertise from the NVWA. For fines that exceed the amount of € 340,– additional procedural requirements, similar to criminal law, have to be met by the NVWA. For FBO’s a high fine could indeed have a significant impact and even potentially mean bankruptcy. As we have seen in Dutch cases relating to the horsemeat crisis, the NVWA can impose the execution of a recall that can lead to bankruptcy. We will keep you informed on how this potential powerful enforcement instrument of high fines in the hands of the NVWA is handled in practice and dealt with in court. Hopefully, this will serve FBO’s in establishing what should be done to avoid or annul the decision of the NVWA to impose such fines, which is a part of our active practice.
The author is grateful to Floris Kets, trainee at Axon Lawyers, for his valuable contribution to this post.