Drinks industry queries opinion on lot numbers

Date: 22/05/1997

By Simon Coss

THE drinks industry is warning that a forthcoming judgement from the European Court of Justice on trade-mark rules could well end up raising more questions than it answers.

The case was referred to the ECJ by a Netherlands court which had been dealing with a dispute between a number of alcoholic spirits manufacturers, including Scotch whisky-makers Ballentine and Dutch entrepreneur Frits Loendersloot.

Loendersloot is a so-called 'parallel trader' whose business is said to concern the buying up of brand-name bottles of spirits, relabelling them and then selling them on. As part of this process, he apparently removed the 'lot identification number' which allows the producer to trace specific batches of spirits - vital if products have to be recalled for any reason.

Parallel trading is permitted under EU law and when he gave his opinion on the case in February, Advocate-General Francis Jacobs advised the ECJ to find in favour of Loendersloot.

But industry insiders argue that in his conclusions, Jacobs somewhat missed the point and only concentrated on a very narrow aspect of the trade-mark issue. “All he did was to reiterate what everyone already knows. No one is disputing the principle of parallel trading,” said one.

Critics argue that the real issue at stake centres on the public health and legal implications of removing lot numbers from products.

An EU directive dating back to 1989 requires food manufacturers to mark all the batches they produce so that the items can be traced. Loendersloot apparently removed the numbers to stop the original producers preventing him from engaging in parallel trade by keeping tabs on the products he sold on.

But the industry says it cannot and does not use lot identification numbers to track down parallel traders. In addition, it argues that if Loendersloot or anyone else felt the industry was breaking the parallel trading rules, then they would have had the right to bring a complaint before the European Commission.

Drinks manufacturers concede that Jacobs did not actually make a 'wrong' statement, but say he chose to interpret the case very narrowly rather than attempting to clarify the wider issues involved.

“He essentially chose to disregard the implications of the lot identification directive. The whole point of that law is to make sure bottles bear a mark which allows producers and consumers to know where they come from,” complained one expert.

The industry says that even if the parallel trader adds a new number, it will still be difficult to trace a bottle back to source.

“Most complaints are addressed to manufacturers and we cannot be expected to know which batch a product came from if our numbers have been removed,” said one insider.

Drinks manufacturers say the end result of Loendersloot's actions is that products are finding their way on to the market without the necessary identification - which is illegal under the 1989 law.

Critics argue that Jacobs could have used his opinion on the Loendersloot case as an opportunity to shed some light on the decidedly murky question of lot identification laws.

The ECJ's final judgement on the case is expected later this year.

The Union's original rules on parallel trading were introduced in the 1970s and 1980s as a direct result of distortions in the EU pharmaceuticals market - drug prices can vary by up to 300&percent; between member states.

Before the rules were reformed, national laws meant traders could not buy pharmaceuticals in 'cheap' member states such as Greece and resell them in 'expensive' EU neighbours.

This situation suited multinational drug firms, who were able to protect their national markets, but was seen as running counter to the principles of cross-border trade within the Union.