• EUROPEAN PERSPECTIVES

    The Unkindest Cut?

    For over 2,000 years, pigs in the Po Valley region of Italy have provided the raw material for the well known variety of cured meat known as Parma ham. Under Italian law, pre-packaged sliced meat is prepared in a very particular manner and then sliced and packaged in Parma under the supervision of the Consorzio di Prosciutto de Parma. In 1996, the Consorzio sought to extend their rights in the name by obtaining protection for Parma ham as a European designation of origin. The relevant European law was Council Regulation 2081/92 and Commission Regulation 1107/96 which established a system for the registration and supervision of European Union protected designations of origin and geographical indications. The Consorzio’s European application not only contained information on the place and method of rearing the pigs and the curing of the hams but also references to the Italian rules for slicing and packaging. Under these Italian rules, the slicing and packaging of the ham is required to take place in the region of production.

    The UK supermarket chain, Asda, wished to sell Parma ham at a price cheaper than that demanded for the pre-packaged sliced product by the Consorzio. They therefore began importing genuine whole Parma hams stamped with the famous Ducal crown and arranged for them to be sliced and packaged in England (by a company called Hygrade Foods). This was said to cut about 25% off the price to their customers. The Consorzio sought an injunction from the English High Court against Asda’s activities, under the EC Regulations protecting designations of origin.

    The Consorzio accepted that the ham sold by Asda was genuine Parma ham and that its quality was not inferior to the meat that was sliced and packaged in Parma. However, they claimed that, under the EC Regulations, a product could only be called Parma ham if the whole manufacturing process, including slicing and packaging, took place in Parma. Asda accepted that to be called Parma ham the meat must be produced in a particular manner in a particular Italian region. However, they did not accept that, in order to call their product Parma ham, it was also necessary to slice and package the meat in the same Italian region.

    The Deputy Judge (Mr Collins) agreed with Asda and refused to grant the injunction requested. In the Deputy Judge’s view, the protection offered by the European Regulations on designations of origin extended only to the “agricultural” stages of production and not to “industrial” activities, such as slicing and packaging. The addition of the Italian rules on such industrial stages did not automatically extend the Italian protection to a European level. In addition, the Italian rules on slicing and packaging might amount to quantitative restrictions on exports, and the Regulations should not be interpreted in such a way as to allow such restrictions and thereby prevent the freedom of movement of goods. Mr Collins believed that action taken by the Community had to be proportionate to its objectives. The primary reason given for requiring slicing and packaging to take place in Parma was to ensure that the sliced pre-packaged meat was genuine. Asda was selling genuine Parma ham and to require that it also be sliced and packaged in the Parma region was not proportionate with the Community’s activities.

    This decision was confirmed by the Court of Appeal. The Consorzio (joined by another party Salumificio S. Rita) appealed further to the House of Lords. The House of Lords asked the ECJ for a preliminary ruling on the following question:

    “As a matter of Community law, does Council Regulation (EEC) No. 2081/92 read with Commission Regulation (EC) No. 1107/96 and the specification for the PDO Prosciutto di Parma create a valid Community right, directly enforceable in the court of a Member State, to restrain the retail sale as Parma ham of sliced and packaged ham derived from hams duly exported from Parma in compliance with the conditions of the PDO but which have not been thereafter sliced, packaged and labelled in accordance with the specification?”

    In response, the ECJ made these rulings:

    • The use of a designation of origin (e.g. Prosciutto di Parma), protected under Regulation No. 2081/92, could be subject to the requirement that the product was sliced and packaged only in the region of production.

    • Such a requirement represented a quantitative restriction on exports within the EU. However, such a restriction could be justified, under Community law, on the basis that close control of the slicing and packaging process was necessary in order to maintain the quality and authenticity of the end product offered to consumers. In the ECJ’s view, given the rules that must be followed during the industrial process, the necessary control could be exercised better within (rather than outside) the region of production.

    • Since the precise rules governing the slicing and packaging of Parma ham were not published in the Consorzio’s Community designation of origin, except by way of reference to the terms and conditions set out in the earlier Italian (and Italian language) designation of origin, it could not be presumed that they were known to the EU public or to companies, such as Asda. It followed that these rules could not be relied on in the present proceedings and presumably that Asda could therefore continue to obtain Parma ham that had been sliced and packaged in the UK

     

    Comment

    Prior to this ruling, the Consorzio had been singularly unsuccessful in maintaining its monopoly on sliced pre-packaged Parma ham in the UK. In another case, brought against the retail store Marks & Spencer, a passing off action to prevent the slicing of genuine hams in the UK also failed. This illustrated the pro-competition tendencies of the UK Courts, whose first instinct is to place limits on what they see as the unjustified extension of intellectual property rights. By contrast, outside the UK, the Consorzio had been almost universally successful in protecting its rights to the full.

    The European Court has now favoured the Consorzio’s broader interpretation of their rights in the term Parma. In doing so, they have decided that the need to guarantee the quality and the authenticity of a product should override considerations affecting greater competition and lower prices. Such a view will be welcomed by trade mark owners but not by consumers and some Governments. In the writer’s opinion, this ECJ decision gives regional producers, such as the Consorzio, a level of commercial power that is unjustifiable in an allegedly free market. It is also disproportionate, bearing in mind the original objectives of European designations of origin.

    In a closely related case (Ravil v Bellon import and Biraghi), the ECJ decided that the application of the Community designation of origin Grana Padano to a certain type of Italian grated cheese could also be restricted to cheese that was grated and packaged in the region of production. In this case, a French company (Ravil) had been importing ungrated cheese to France and then grating and packaging the cheese in that country. It is illustrative of the difference in attitudes of the French and UK Courts in this area, that the Italian owner of the Grana Padano designation of origin had succeeded in their unfair competition action against Ravil before the French authorities.

    Given the ECJ’s comments on the availability of the Consorzio’s precise rules to the EU public, it is to be expected that all of the relevant producers will now publicise their specifications in a manner that will satisfy EU legislation.

    ferred over the ruling of the ECJ.