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.
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.
This week the Trade and Industry Appeals Tribunal, (in Dutch: College van Beroep voor het bedrijfsleven) rendered its judgment (interim injunction) in the lawsuit that was filed by slaughterhouse annex meat processing company Van Hattem Vlees B.V. against an administrative enforcement decision from the State Secretary for Economic Affairs.
Recall large amount of meat
In her decision, the State Secretary imposed an administrative order to recall all meat produced or processed by Van Hattem between 1 January 2012 and 23 January 2014 (approximately 28.000 tons of meat). The request to suspend the order to execute the recall was rejected by the Court. Why? First of all, horsemeat was detected by the Netherlands Food and Consumer Product Safety Authority (NVWA) in a lot of meat that was solely labelled as beef. This is a matter of fraudulent labelling and not of food safety (see also my other articles concerning labelling and the horsemeat scandal here and here). As the investigation continued, Van Hattem failed to clarify the origin and destination of several slaughtered horses. Read below how this is relevant for to the safety of the meat.
Horses in the EU require a passport for identification according to Regulation 504/2008. The slaughterhouse has to check whether a horse is indicated for slaughter in its passport. If so, an official veterinarian has to perform an inspection of the live horse. Without a passport and inspection the horsemeat can be declared unfit for human consumption. Also, information in the passport such as drug use, can result in disapproval of the intended slaughter for human consumption as residues of veterinary drugs can pose a health risk for humans.
The risk of dark horses
Van Hattem was not able to fully trace the processed meat and the company’s administration showed an unclear discrepancy between the amounts of received meat and the amounts that left the company. More horses were slaughtered than were inspected and approved for slaughter. The processing of (now) unidentifiable “dark” horses poses the risk that horsemeat unfit for human consumption ends up in food products for consumers, putting consumer health in jeopardy. The placing on the market of unsafe food is illegal according to Article 14 of Regulation 178/2002 (The General Food Law).
Was the meat in the case of Van Hattem indeed unsafe? Even though there was no evidence of unsafe food, the risk of unsafe food was sufficiently substantiated to consider the meat unsafe. Thereby an order to execute a recall was triggered based on Articles 17, 18 and 19 of the General Food Law (Article 14 is not mentioned by the Court). The Court does not place its bets on a dark horse. The Court ruled that although the order to execute a recall has a far-reaching impact on the business of Van Hattem, the order is proportionate given the circumstances.
Comparable decision re. Selten
In the ruling re. Van Hattem, the Court explained the relation between the specific circumstances and the risk of unsafe food. In a comparable judgment resulting in a recall of horsemeat, no such risk was pertinent per se. The case related to meat processing company Willy Selten B.V. The rationale for seizure in that case pertained to the facts that horsemeat was detected, which was not declared on the label and Selten’s business records could not be used to trace and identify the meat. The requested interim injuctions by this company were rejected twice (see here and here). But was there any indication that processed meat that was placed on the market was unsafe? In fact, there were not. The reasoning of the Court basically came down to stating that because the meat was untraceable, the meat was unsafe. The Court further added that it was almost certain that the veterinary drug phenylbutazone was present in one of the seized lots. But the presence of this drug poses no food safety issues according this joint statement from the European Food Safety Authority (EFSA) and the European Medicines Agency (EMA). See also this press release from the European Commission concerning phenylbutazone. In it’s conclusion, the Court in the Selten case referred to Article 14(6) of the General Food Law which reads as follows:
‘Where any food which is unsafe is part of a batch, lot or consignment of food of the same class or description, it shall be presumed that all the food in that batch, lot or consignment is also unsafe, unless following a detailed assessment there is no evidence that the rest of the batch, lot or consignment is unsafe.’
As set out above, in this case there was no indication of unsafe food, therefore the imposed order should have been lifted. It seems a tall order to base the order on Article 14 General Food Law as the requirement of unsafe food has not been fulfilled. In my opinion, the correct reasoning in this matter would have been as follows:
Untraceable = ?
In the judgment re. Van Hattem, the Court mentions that the instrument of an order to execute recall has a far-reaching impact on the business of the company involved. In the case re. Selten, the company went bankrupt. Therefore, the instrument of recall should only be used if food safety is at stake. Especially in the case re. Selten, I have the impression that the administrative instrument of a recall is abused to punish the offenders and that the emotion and demand for action of consumers played a role here (I wonder if consumers would have responded differently if it were not horse but chicken that was mixed with beef, but that’s quite a different story). But the Court did have an escape. Without evidence of unsafe food, fraudulent labelling still constitutes a criminal offence and the offenders can be prosecuted for forgery under criminal law.
The supply chain of processed meats is complex and lengthy. The existing EU traceability systems are not adequate to pass on origin information, because the legislation is primarily based on the need to ensure food safety. The horsemeat scandal clearly showed this. The debate concerning COOL might therefore give rise to changes to the traceability systems and the proposed new Regulation on Official Controls aims to strengthen the enforcement of health and safety standards. Further, supermarkets in the Netherlands have announced to tighten the required certification for all suppliers. At end of this month the Global Food Safety Initiative will launch the module “Food Fraud”. The Dutch food industry federation (FNLI) welcomes this initiative and urges its members to add this module in their food safety system.