Can a food manufacturer bring legal proceedings against a measure imposed on a retail chain? Yes, said the Supreme Administrative Court.

Can a food manufacturer and brand owner challenge in court a measure that has formally been imposed on one of its buyers, such as a retail chain? This issue was addressed by the Supreme Administrative Court,[1] and its conclusion may have a significant impact on practice in the field of food law and administrative justice in general.

WHAT HAPPENED?

The State Agricultural and Food Inspection Authority (“SZPI”) imposed a measure on a retailer requiring it to ensure that the product it sold was not labelled in a misleading manner. The problem lay in the marketing slogan on the product’s packaging, which suggested that the goods were fresh, even though they were in fact defrosted.

However, it was not the retailer itself who brought the action against the SZPI’s decision, but the supplier and owner of the trading brand of the product in question, who was not a party to the administrative proceedings. The latter claimed that the contested decision directly affected their rights — for it effectively declares that he, as the owner of the brand, is placing a product on the market contrary to the law.

JUDGEMENT OF THE COURT OF FIRST INSTANCE

The court of first instance dismissed the claim on the grounds that it had been brought by a person who was manifestly not entitled to do so. The court based its ruling on the fact that the SZPI had imposed obligations solely on the retailer, and not on the claimant, i.e. the supplier and owner of the trading brand for the product in question. According to the court of first instance, the claimant was not prohibited from continuing to use the slogan in question on its products. The court described the impact on the supplier’s brand, reputation and marketing strategy as mere speculation.

HOW DID THE SUPREME ADMINISTRATIVE COURT RULE ON THE MATTER?

The Supreme Administrative Court (“NSS”) rejected this conclusion. It reiterated a key principle of administrative justice: standing to bring an action is always deemed to exist where, in view of the claimant’s contentions, it is not possible to state clearly and unequivocally that an infringement of their legal rights could not have occurred under any circumstances.

One key factual detail proved decisive: the product was not sold under the retailer’s private-label brand, but under the supplier’s own brand — and the slogan in question was an integral part of its standard labelling. Although the SZPI formally imposed the obligation on the retailer as the entity subject to inspection, it effectively concluded that the product labelling used by the supplier was in breach of EU law. The measure itself consisted of an obligation on the retailer to ensure that the product was not labelled with misleading information — in other words, to effectively relabel the product, or cover up the contested claim. The Supreme Administrative Court therefore concluded that it cannot be automatically ruled out that such a measure directly interfered with the supplier’s legal rights: the product supplied under its brand name could have been sold under an altered designation, which could have affected its trade name, strategy and reputation on the market. 

At the same time, the Supreme Administrative Court defined the scope of its conclusion by referring to earlier case law: the brand under which the product is sold plays a crucial role. If a product is sold under the retailer’s private-label brand, responsibility for its labelling lies primarily with the retailer, and the supplier does not, as a rule, have standing to take legal action. Conversely, where a product bears the supplier’s own brand, a measure imposed on the retailer may directly affect the supplier’s legal position — and the supplier may, under certain circumstances, seek judicial review, even if the obligation was not imposed directly on them.

The outcome of the dispute on the merits of the case is not yet known — the Supreme Administrative Court has referred the case back to the court of first instance, which will further examine whether the claimant’s rights were in fact infringed. It is therefore not certain how the court will ultimately rule; however, it will be bound by the legal opinion of the Supreme Administrative Court. 

WHAT ARE THE PRACTICAL IMPLICATIONS?

The decision has significant practical implications: The Supreme Administrative Court admitted that an action against an administrative decision or measure may, under certain circumstances, be brought even by a party on whom the obligation was not directly imposed, provided that the decision or measure is capable of directly affecting that party’s rights – for example, the right to use their own brand or marketing designation. 

However, this conclusion will not automatically apply in all cases, and it will always be necessary to take the specific facts of the case into account. The Supreme Administrative Court expressly pointed out that this conclusion cannot be extended to proceedings concerning administrative offences. It has, however, opened up an interesting possibility, which raises a number of further procedural questions — for example, whether the manufacturer will be able to lodge an appeal against the measure itself, or whether the only recourse available to them will be an administrative action.

If you work in the food sector and find yourself in a similar situation, please do not hesitate to contact us and we will be happy to discuss everything with you.