Protected designation of origin, EU competition law, and free movement of goods

Seminar Paper 2007 26 Pages

Business economics - Law



1.Question (1) Protected Designation of Origin
1.1 Introduction
1.2 Protected Designation of Origin (PDO)
1.2.1 Criteria
1.2.2 Application Process
1.3 Related Cases
1.3.1 The “Feta” Case
1.3.2 The “Dante Bigi” Case
1.4 Conclusion

2. Question (3) (a)
2.1 General Principles
2.2 Free Movement Of Goods
2.3 Article 25 EC (ex 12 and 16)
2.4 Conclusion Question 3 a) “Tennis Ball Case”

3. Question (3) (b)
3.1 Article 82 EC (ex 86)
3.2 Dominant Position and Relevant Market
3.2.2 The Relevant Product Market
3.2.3 The Geographic Market
3.2.4 The Temporal Market
3.2.5 Other Factors
3.3 Conclusion Question 3 c) “Green Bike Corporation Case”



Internet sources



Treaty Articles

1.Question (1) Protected Designation of Origin

1.1 Introduction

The central mission statement laid in article 2 of the treaty of Rome proves that “the Community shall have as its task, by establishing a common market and progressively approximating the economic policies of member states, to promote throughout the community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the states belonging to it".[1]

However, it is in the interest of the society that markets perform efficiently. A general principle accepted by economists is that free trade is a condition in which markets optimise output and income levels permanently. The common market in the EU is founded on the general principles of free movement goods whereas inter alia a creation of equal opportunities for trade should be guaranteed. Furthermore there is competition in such markets and the participants in the competitive process can be divided into two groups: on the one hand suppliers of goods and services and on the other hand customers.[2]

1.2 Protected Designation of Origin (PDO)

Markets are always influenced by variances. In the last years consumers were changing their perceptions for high quality products. The interest is directed towards to receive products with high quality standards. Indeed, quality can be a key to success therefore the increasing demand for high quality products also benefits producers.

As a result the EU adopted the Regulation (EEC) No 2081/92[3] on the protection of geographical indications and designations of origin for agricultural products and foodstuffs in order to satisfy both producers and consumers needs.

Protected designations of origin and geographical indications under Regulation (EEC) No 510/2006 offers the opportunity to buildup local value chains. These value chains are appropriate to satisfy consumer needs, to be conducive to local agriculture and to create jobs in local areas.[4] The EU distinguishes between two conceptions, on the one hand designations of origin (PDO) and on the other hand geographical indications (PGI). The PDO of agricultural products or foodstuffs based on Article 2[5] is awarded by the Community if

- “the quality or characteristics of the product is essentially or exclusively due to the particular geographical environment of the place of origin; the geographical environment is taken to include inherent natural and human factors, such as climate, soil quality, and local know-how and if
- the production and processing of the raw materials, up to the stage of the finished product, takes place in the defined geographical area whose name the product bears”.[6]

Different local areas have different images, e.g. the Black Forest in Germany or the Champagne in France. This special image can be a reference to a certain product and is reflected in natural conditions, local traditions and cultures of particular geographic regions. Consumers then have a defined imagination about the quality of a certain product which is manufactured in a particular geographic area. Consequently a PDO provides information about the quality of a certain product or foodstuff. For this reason a PDO becomes such as a certification mark or rather a brand name. To create a strong brand name or an image is always costly for enterprises. To establish a strong brand is only profitable if this enables the company to generate a greater value for particular goods or services e. g. providing it for a higher price. To avoid misuse and imitation of product names which is based on Article 13[7] of Regulation 510/2006/EC the EU adopted this safeguard. Furthermore it should help consumers by giving them information concerning the specific character of the products.[8]

1.2.1 Criteria

However, this safeguard is subject to strict conditions. The EU has laid down exacting criteria how the PDO can be obtained:

- Producing and processing of the product must be demonstrable traditionally in the designated geographical region.
- There must be a verifiable link between product and its geographical origin regarding to characteristic, quality and image.
- Producing and processing must be occurred by selected and reviewable guidelines which will be examined by an independent institution.[9]

The claim for a PGI by contrast is minor as it is for a PDO. Producing and processing of goods must not be in specific geographic area. The meat for the “Schwarzwälder Schinken” for instance can be delivered from other areas then the Black Forest. Only meat curing hast to be in the Black Forest. Applications for PDOs and PDIs can be put forward by any interested parties which respect the above mentioned criteria. The procedure for registration of designations of origin is defined in Article 5[10] of Regulation 510/2006/EC[11]. At present in total 696 products are registered inside the European Union. The following Table shows some examples:

illustration not visible in this excerpt

1.2.2 Application Process

“A group of producers must define the foodstuff according to precise specifications. The application, including the specifications, must be sent to the relevant national authority, where it will be studied first and thereafter transmitted to the Commission. After some control procedures a first publication in the Official Journal of the European Communities will inform those in the Union who are interested. If there are no objections, the European Commission publishes the protected product name in the Official Journal of the European Communities”.[12][13]

1.3 Related Cases

As mentioned above the safeguard of the EU allows to benefit producers as well as consumers and this will consequently also benefit trade between member states. But there are also complications and obscurities which makes it often difficult for the Court to judge certain cases. The following examples will show how the Court has reacted to specific cases.

1.3.1 The “Feta” Case

An example is „Feta“ which is an Italian expression and means slice, cuttings, or wheel. Influenced by Venetian this expression was implemented in the 19th century for the specific white cheese soaked in brine that have been produced for a long time, not only in Greece but in various countries in the Balkans and the southeast of the Mediterranean region. In 1994 the Greek Government applied under Article 17(1) of the Regulation 2081 / 92 for registration of the word ‘Feta’ as a PDO. In 1999 the Court annulled the registration and held that the name Feta had been also used for a long time in certain other member states and therefore it constitutes rather a generic name. This was based on Article 3[15] of the Regulation which simply states “that names that have become generic may not be registered”. After this judgement the Commission investigated the matter again and finally by judgement of cases c-465 / 02 and c-466 / 02 the Court held that “Feta” is not a generic name and it was once again registered as a PDO. In opinion of the Court are the qualities and characteristics of the Feta cheese a result of the specific geographic region in Greece. It is verified that the characteristics of Feta cheese because of its taste, colour, and aroma etc. is linked to the natural environment where it is produced and furthermore to the traditional manufacturing processes in Greece. Thus, “Feta” is an expression that describes a cheese which comes from an important region if Greece and its characteristics and qualities are primarily based on specific geographic circumstances. Consequently, the Court held that “Feta” is not a generic name and that the requirements for a PDO are satisfied.[14]

1.3.2 The “Dante Bigi” Case

Another example how the court has to deal with certain difficulties is the case c-66/00 Dante Bigi (Parmesan). In this case the PDO even demands that cheese grating and packaging must take place in a specific geographic area. Although this constitutes a measure having equivalent effect as quantitive restrictions based on Articles 28 EC (ex 30) and 29 EC (ex 34) the Court held that it is justified for the purpose of Article 30 EC[17] (ex 36) that allows prohibition or restrictions on import and export based on specific grounds. This indicates that the European safeguard has even more importance to the Commission than the principles of free movement of goods.[18][16]

1.4 Conclusion

Increasingly the origin of foodstuffs has become a major factor for consumers in order which products they prefer to buy. This fact applies not only for the consumers in the UK but also for other members of the EU. The safeguard of geographic designations is able to protect companies in terms of misuse and unfair practices (Article 13) and furthermore it avoids misguidance of consumers.

However, in Autumn 2007 the commercialisation of “Feta” cheese is only permitted within the EU for cheese which is produced in Greece. Although “Feta” is noticed in other member states e.g. Germany and Denmark as a generic name, cheese manufacturers have to marketing their products under different names. Obviously this causes serious problems for cheese manufacturers in other member states and could lead to costly processes and to a decrease in their revenues. Denmark, Germany, and France also produce large amounts of “Feta” for export purposes. These member states claimed that it is arguable if the term “Feta” is unique to Greek production, because the term “Feta” has been also used in the Balkan regions as well as in the Middle East. Furthermore, “Feta” is not a term for a geographic area. It is not evident whether consumers associate “Feta” with a specific cheese from Greece or just with a particular type of cheese as a generic name. They have also questioned if the link between quality and characteristic of the cheese is really related to the geographic circumstances.[19] The industry for foodstuffs should notice that the court despite to these serious counter-arguments decided to justify the registration of “Feta” as a PDO. If this case releases a trend which enables manufacturers to monopolise their position in a certain industry it will be very disadvantageous for producers as well as for consumers. The principles of fair competition are laid down in Article 81 EC (ex 85) and 82 EC (ex 86)[20]. But a PDO tends to eliminate competition by monopolising products which might be contrary to the basic principles of free movement of goods and competition law.

" the quality of expectations determines the quality of our action."

Stated by André Godin 150 years ago.[21]

2. Question (3) (a)

2.1 General Principles

In Article 2 EC[22] the Community laid down basic principles to establish inter alia a common market with common economic policies. In order to establish a common market the European Union recognised following obstacles listed in the EC Treaty:[23]

- custom duties on import and export: Articles 23 EC (ex Article 9)[24] and 25 EC (ex Article 12).
- charges having an equivalent effect to custom duties: Articles 23 EC (ex Article 9) and 25 EC (ex Article 12).
- discriminatory internal taxation on imported goods: Article 90 EC (ex Article 95).

2.2 Free Movement Of Goods

As a result the Community laid down general principles which are necessary to guarantee free movement of goods in a single internal market between the member states of the European Union which are as follows:

- remove economic frontiers, and
- remove legal obstacles, and
- create equal opportunities for trade,
- and ensure that incoming goods are treated equally.[25]


[1] See Birtwistle 2006 / 07

[2] See Lasok (2001)

[3] Now repealed by Council Regulation 510/2006/EC of 20 March 2006

[4] See http://www.origin-food.org/pdf/pdo-pgi.pdf

[5] See Appendix (EU Regulation 510/2006/EC)

[6] See http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2006/l_093/l_09320060331en00120025.pdf

[7] See Appendix (EU Regulation 510/2006/EC)

[8] See http://opus-ho.uni-stuttgart.de/hop/volltexte/2006/153/pdf/haa-nr12-2.pdf

[9] See http://ec.europa.eu/agriculture/publi/gi/broch_en.pdf

[10] See Appendix (EU Regulation 510/2006/EC)

[11] See http://opus-ho.uni-stuttgart.de/hop/volltexte/2006/153/pdf/haa-nr12-2.pdf

[12] See Appendix (EU Regulation 510/2006/EC) Article 4 and 5

[13] See http://ec.europa.eu/agriculture/foodqual/quali1_en.htm

[14] See cases c-465 / 02 and c-466 / 02

[15] See Appendix (EU Regulation 510/2006/EC)

[16] See case c-66/00

[17] See Appendix Art. 28-30 (Treaty Articles)

[18] See http://opus-ho.uni-stuttgart.de/hop/volltexte/2006/153/pdf/haa-nr12-2.pdf

[19] See http://www.lov-ww.com/germany/ControlServlet/de/publication/pubIssueId/3221/

[20] See Appendix (Treaty Articles)

[21] See http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/04/183&format=HTML&aged=0&language=EN&guiLanguage=en

[22] See Appendix (Treaty Articles)

[23] See Tilloston, Foster (2003)

[24] See Appendix (Treaty Articles)

[25] See Birtwistle (2006 / 07)


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Title: Protected designation of origin, EU competition law, and free movement of goods