Protected Designation Of Origin - Essay Example

Protected Designation Of Origin (PDO) 1.1–PDO Defined Without a doubt one of the most prolific functions served by the European Union is the development of a unified set of standards governing the free exchange of goods and services within Europe as well as internationally. In so doing the concept of Protected Designation of Origin (PDO) becomes very apparent. Protected designation of origin is essentially a certification designed as a means of protecting the names of European foods. These names have associated with them an inherent quality of superiority and are known to originate from very specific parts of Europe. The characteristics are unique and as such, the European foods with specific characteristics are only approved for production by producers who adhere fully to the traditional methods of production within a given demographic area. Essentially, the notion of PDO delineates that certain food names are protected based on geographic origin or the recipe utilized. Inherent in this notion are clear guidelines for naming the food products.1 First and foremost, PDO was instituted in 1993 as a direct result of legislation of the European Union. Under this legislation, there were clear and concise guidelines for the systematic naming of foods based on a protocol as defined by the European Union. Utilizing this systematic naming protocol, EU certifies regional and traditional foods whereby these foods are guaranteed to be authentic and to have originated from the alleged region. Under this system, foods or beverages registered through the EU are given legal protection against imitation along with the right to litigate to protect those rights2 In order for a product to be registered and the producers offered the rights that accompany registration, there must be a formal application made to the Department of environment, food and rural affairs (Defra). The application must be accompanied by supporting documentation which indicates that the food product is produced, processed and prepared within a geographic area and by virtue of this, the product has inherent characteristics that derive from the geographic area. The application is then examined by the staff of Defra and any pertinent questions may be raised and correspondence incited between the applicant and the Defra officials. If the application proves to have some merit after the Defra investigation, it is then passed on to the European Commission for further investigation. When the application reaches the European Commission, the Commission is afforded up to six months to determine the validity of the claim. In so doing, the Commission is free to seek the assistance of the Scientific Committee which is established solely for this purpose. In offering assistance, the Scientific Committee can conduct tests and offer expert opinion with regards to the geographic origin of the product. If after consulting with the Scientific Committee, the Commission is satisfied that the product warrants PDO registration, a summary sheet of the product is published in the Official Journal of the European Community. At this point, the registration is open for objections for the next six months. If no objections are made, then the product is officially registered with the European Union and offered the status of PDO.3 This status affords the producers the following benefits: Legal protection throughout the European Union. This protection prevents the imitation of a PDO product and in cases where there is imitation, it offers litigious assistance. Increased awareness of the existence of the product and the potential to promote it both locally and throughout the European Union. Increased funding potential through the lure of public funds. Strategic product positioning at the high-end of the market. A larger customer base.4 Currently, there are twelve products which have attained the PDO designation. These products are Buxton Blue cheese, White stilton cheese - Blue stilton cheese and Dovedale cheese all of which are associated with the East Midlands, Beacon Fell traditional Lancashire cheese originating from the North West, Bonchester cheese, Orkney beef, Orkney lamb & Shetland lamb all originating from Scotland, Single Gloucester cheese, West Country farmhouse Cheddar & Cornish clotted cream from the South West and Swaledale cheese/Swaledale ewes' cheese from Yorkshire & The Humber.5 1.2—Litigation to Protect the PDO Designation C-465/02 and C-466/02 - Federal Republic of Germany and Kingdom of Denmark v Commission of the European Communities (The Feta Wars II) The European Union plays an integral role in the defense of the PDO designation. In so doing, many litigious actions have been incited by the European Union in defense of the individual producers whose products have been granted the PDO acceptance. One of the most prolific of those cases is that of Feta cheese. Feta cheese originates from Greece and is essentially a curd cheese which is exclusively made from goat’s milk as well as sheep’s milk. It is salted and cured in a solution of either whey or water. The process can take anywhere from three to six months. When it is removed from the curing solution, it dries rapidly forming a white cheese which usually takes the form of square cases. Feta cheese is indigenous to Greece; however, there are varieties of feta cheese produced in Albania, Bulgaria, Serbia, Turkey, Romania, Russia, Ukraine and Iran. These feta like varieties, however, do not share similar name. Denmark, however, produced a similar cheese with the same name. This incited a legal battle fought on the grounds that feta cheese was covered by the PDO destination and as such, Denmark was precluded from using the feta name. Denmark, on the other hand, argued that feta was just a generic name for the salty, crumbly white cheese. After a long battle Greece won the right to maintain the PDO destination of feta cheese. This action had implications for similar legal battles occurring against Greece and involving the UK, France and Germany.6 C-196/05—Common Customs Tariff — Tariff classification — Combined Nomenclature — Subheading 0406 10 (Case of Mozzarella di bufala & Other Fresh Cheese) Another case in which the PDO status was called to task was in the case of Mozzarella di bufala which was traditionally produced in the Campania region of Italy. It is considered a protected trade product based on its geographic region of origin, its unique production process as well as the source of the milk utilized [buffalo]. It received specially protection under a Decree from Italy's Prime Minister's which as issued on May 10, 1993. Under this decree, any product utilizing the name of Mozzarella di bufala must originate from either the Campania or Lazio regions of Italy and must be made from the milk of water buffaloes. Additionally, special measures must be taken to ensure the freshness of the product. These measures include production at a specific temperature and the cheese must be produced within forty-eight (48) hours after being taken from the water buffalo. Essentially, the combination of the way in which the cheese is produced and the region in which it is produced warranted PDO status under EEC provisions number 2081/92 and number 2082/92. This brings to task an interesting possibility in that in the case of Mozzarella di bufala, it falls under the category of intellectual property and is governed by the statutes of the WTO Agreements on Trade-Related Aspects of Intellectual Property (TRIPS). Under the tenets of TRIPS, the unique method used to make Mozzarella di bufala is protected from replication. This notion has been the subject of litigation in that many U.S. companies began to make buffalo mozzarella under the Made in the U.S.A. designation. In the case of the U.S. production of similar product, all litigious attempts proved to be null and void in that the U.S. is not legally bounded to disclose its method of production as it is not a member of the European Union. In cases where the producing nation is a member of the European Union, the method of production has to be revealed and if it proves to be a duplication of the recipe, the recipe could not be utilized and the PDO designation is fully enforceable by the tenets of the trade regulations of the European Commission.7 CHAPTER 2—EUROPEAN LAW IN PRACTICE 2.1—Taxes and the Spanish Government The scenario described wherein the Spanish government is imposing a general tax on all tennis balls sold in Spain and utilizing the revenues generated from such sales to provide Spanish manufacturers with an unfair advantage is one that holds the potential to violate the anti-trust and cartels, liberalization and state aids tenets of the competition policy in the European Union. First and foremost, under the tenets of the antitrust and cartels rules of the European Union, if a single company has a dominant position within a given market; it is illegal for that company to drive its competitors out. In examining the notion that taxes are utilized as a means of increasing the strength of the Spanish tennis ball manufacturers, it can be argued that by unfairly increasing the strength of the Spanish tennis ball manufacturers, it is in fact establishing a cartel within Spain and among Spanish tennis ball manufacturers. This cartel may eventually possess enough inherent strength to drive its foreign competitors out of business. In examining the ramifications of this, one can clearly see that the collaboration with manufactures within Spain is likely to harm either the consumers or the other competing businesses. In so doing, the laws of the European Commission will prohibit the scenario described under the antitrust laws and its prohibition on the establishment of cartels. Under the antitrust and cartels statutes, there are cases where exceptions may be established. In examining the situation with the tennis ball manufacturers, no exception proves viable as building on the strength of the Spanish tennis ball manufacturers serve to the determent of the foreign tennis ball manufacturers. Additionally, the stifling of the competition can eventually transcend to the consumers in the increased in cost as a direct result of the elimination of competitive pricing.8 Another area of the European Union code that stands to be impacted by the decision of the Spanish government to increase taxes on the tennis balls is that of liberalization. Under the tenets of the liberalization clause of the European Code, the economy is open to free competition. In opening up the market to free competition, monopolies are very rarely justified. In so doing, high prices and poor service are prevented while the spirit of innovation is strongly encouraged. Liberalization has been very instrumental in opening up service markets such as transport, energy, postal services and telecommunications.9 Exceptions and subsidies are allowed for inherently uneconomic services, which can be considered a basic right, such as postal deliveries in rural areas. The Commission pays particular attention to making sure competition between older players and new entrants to the gas and electricity markets is fair and brings prices to consumers and business down. In examining the notion of liberalization as it relates to the case of the Spanish tennis ball manufacturers, it can be seen that by providing grants for Spanish tennis ball manufacturers to buy new machinery, the Spanish government is unfairly influencing the market in favor of the Spanish manufacturers. In so doing, the Spanish manufacturers are enabled to produce better tennis balls. The fact that the tennis balls produced by the Spanish manufacturers will improve and hold the potential of improving to a point where they are significantly better than tennis balls produced by foreign companies. The net effect of this will be an increase in the sale of Spanish tennis balls and a decrease in the sale of foreign made tennis balls. Following this rationale to an end, the tennis ball market will eventually experience a constriction which will in the long-term result in a Spanish monopoly on the production of tennis balls. Finally, the scenario depicted may be a violation of the state aid clause of the European Commission laws. The Commission is charged with the responsibility of monitoring the level of aid the member state governments make available to its businesses. In the course of monitoring, it examines loans and grants, tax breaks, goods and services made available at preferential rates and loan guarantees. One of the basic tenets of the state aid is to ensure that governmental intervention does not interfere with competition.10 In reinvesting the revenues from the added taxes on tennis balls, the underlying effect is interference in natural competition. In impacting manufacturing advances, the underlying quality of the balls produced is improved and subsequently, the sale of those balls. The increased sales in turn impact the cost as well as the ability for international companies to compete. The net effect is similar to those realized from a violation of the antitrust and liberalization codes. 2.2—Fair Competition and the European Union In examining the case of the Green Bike Corporation, it is prudent to state that if the claims made by DanRad prove to be true, the actions of the Green Bike Corporation prove to be egregious and a blatant violation of the laws governing free competition. More specifically, it violated the basic EU tenet of offering protection against abuse of a dominant position and contained in Article 82 of the EU treaty. Article 82 states, that “Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market insofar as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”11 Under Article 82 of the EU treaty, there is a specific focus on the exploitation of their market position by large firms wherein the large firms utilize their market power to stifle their smaller competitor. This practice is one that represents the epitome of anti-competitive practice and is strictly prohibited under the laws of the European commission. Additionally, under the laws of the Commission, any merger which creates or serves to strengthen an already dominant position is also prohibited.12 A more in depth look at Article 82 begs an examination of the exclusionary abuses of this article with specific emphasis being placed on predatory pricing as well as the facilitation of single branding and the refusal of supply. Exclusionary abuses as defined in Article 82 may be based on the price or it may be based on maintain a single brand in a given geographic area. In the case of the Green Bike Corporation, there were both price based and non-price based exclusionary abuses. The non-price based abuse in this case is evident in the fact that Green Bike Corporation withheld supplies of spare parts a means of punishing distributors for carrying and selling a competitor’s product. The evidence of price based can be seen in the fact that Green Bike Corporation often sold its product at a loss in Denmark and the Netherlands.13 This is counteractive to the main purpose of conducting business, however, it serves to facilitate a monopoly which in the long-run can be very lucrative for the Green Bike Corporation but very detrimental to its customers as well as DanRad and other businesses which may prove to be viable competitors. Another point worth exploring is the notion that Green Bike Corporation is selling at a loss in the Netherlands and Denmark and is doing so as a means of establishing market dominance. The mere claim that Green Bike Corporation is selling at a loss is a blatant violation of the principles of business and more directly violates Article 81. Article 81 of the EU treaty, offers strict restriction or distortion of competition whereby there is a limit or control placed on production, markets, technical development or investment as well as share markets or sources of supply.14 In offering incentives aimed at preventing distributors from carrying the product, Green Bike Corporation is effectively restricting the sale of the DanRad product in Denmark and the Netherlands. Finally, it is prudent to state that if the actions of the Green Bike Corporation as maintained by DanRad prove to be truthful, this Corporation is in violation of the treaties of the European Union. Should the European Union find this corporation in violation, it can impose sanctions on individual companies. It is prudent to note, however, that this governing body does not have the right to criminal prosecution. It can only undertake punitive measures aimed at impacting the financial as well as social standing of the company. This is a risk that no viable corporation would want to risk. References Commission of the European Community. (2006). Report from the commission: report on competition policy 2005. Retrieved on December 31, 2006 from, http://ec.europa.eu/comm/competition/annual_reports/2005/en.pdf. Department of food, environment and rural affairs (Defra). (2000). EU Protected Food Names Schemes. Retrieved on December 18, 2006 from, http://www.defra.gov.uk/foodrin/foodname/pfn/approc/pdf/infopack.pdf Department of food, environment and rural affairs (Defra). (2002). Letter to Trade Association Members. Retrieved on December 18, 2006 from, http://www.defra.gov.uk/foodrin/foodname/pfn/intro/pdf/letta.pdf Department of food, environment and rural affairs (Defra). (2003). Protecting Food Names Guidance on EC Regulations. Retrieved on December 18, 2006 from, http://www.defra.gov.uk/foodrin/foodname/pfn/approc/pdf/guidance.pdf Europa. (2003). Treaty establishing the European community Section 1 - Rules applying to undertakings. Retrieved on December 18, 2006 from, http://europa.eu/eur-lex/en/treaties/selected/livre218.html#anArt1 European Commission. (2003). Article 81 of the EC Treaty (ex Article 85). Retrieved on December 18, 2006 from, http://ec.europa.eu/comm/competition/legislation/treaties/ec/art81_en.html. European Commission. (2005). DG Competition discussion paper on the application of Article 82 of the Treaty to exclusionary abuses. Retrieved on December 18, 2006 from, http://ec.europa.eu/comm/competition/antitrust/art82/discpaper2005.pdf. European Parliament (2006). Protecting local food and drink. Retrieved on December 18, 2006 from, http://www.europarl.europa.eu/news/expert/infopress_page/032-5887-072-03-11-904-20060307IPR05886-13-03-2006-2006-false/default_en.htm Food Safety Authority of Ireland. (2003). Information note on Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) & Traditional Specialty Guaranteed (TSG). Retrieved on December 18, 2006 from, http://www.fsai.ie/industry/forums/artisan/docs/PDO_PGI_TSG_Info_Note.pdf. Office of Fair Trading. (n.d.). Running a business—Competition act. Retrieved on December 18, 2006 from, http://www.oft.gov.uk/Business/Running+a+business/CA98.htm#two. Tait, N. & Minder, R. (2005). UK dismay as Greeks win feta cheese rights. Retrieved on December 18, 2006 from, http://www.ft.com/cms/s/a01bdebe-4571-11da-981b-00000e2511c8.html Read More