Venice Court on “Balsamic Vinegar” and unfair competition

 

By decision of 19 December 2023 (not appealed), the court of first instance of Venice ruled in favour of the Consorzio Tutela Aceto Balsamico di Modena (Consortium for the Protection of Balsamic Vinegar of Modena, "the Consortium") against two Italian companies for acts of unfair competition due to the breach of Regulation (EU) No 1169/2011 on the provision of food information to consumers and of the Italian Law of 12 December 2016 no. 238 (Law no. 238/2016) on the organic discipline of wine cultivation and wine production and trade. The contested products were condiments marketed under names such as “Balsamico di...” (Balsamic of …) or “Ristretto di Balsamico...” (Balsamic reduction), alone or combined with the word “Aceto” (vinegar).

Background of the case

The Consortium found that two Italian Companies marketed bulk condiments labelled with names such as “Balsamico di” and “Ristretto di Balsamico”. These condiments were then decanted, at the time of purchase, into glass bottles labelled by hand with the product name and the brand “Teatro del Gusto - sinfonia di sapori”.

The Consortium challenged the use of the term “Balsamic” on the labels, arguing that it evoked the protected geographical indication (GI) “Aceto Balsamico di Modena” (Balsamic Vinegar of Modena) without containing this product, leading the consumer to the belief that the dressings had similar characteristics to the protected GI, thus breaching Article 13(1)(b) and (c) of EU Regulation No. 1151/2012 (recently replaced by EU Regulation No. 2024/1143 of 11 April 2024). The Consortium further argued that the use in the labelling of the dressings of the term “Balsamic” breached Regulation (EU) 1169/2011, as it was not sufficiently clear on the real nature of the products, and that the use of the term “Vinegar” did not comply with the characteristics, provided by Law No. 238/2016, reserved for products obtained exclusively from the acetic fermentation of alcoholic or sugary liquids of agricultural origin. In fact, the contested dressings mixtures also included additional ingredients like sugar, sugar syrup, flavours, cooked must. The Consortium also complained that all the above conducts were to be considered as acts of unfair competition under Art. 2598 of the Italian Civil Code (acts aimed at creating confusion with the products and the activity of a competitor, appropriation of the product’s or business’ qualities of a competitor, acts contrary to professional correctness).

The defendants contested the claims.

The decision

As regards the evaluation of whether the terms “Aceto” and “Balsamico”, parts of the GI “Aceto Balsamico di Modena”, are generic, the Court of Venice referred to the case law of the Court of Justice according to which if a GI contains a generic name, the use of that name is not contrary to the regulations when any evocative effect is excluded (C-432/18; see the IPKat here). In this case the Court of Venice excluded the evocative effect with the GI because the indications on the products in question could not mislead consumers, given that the products were in no way associated with the geographical area of Modena. Moreover, the term “balsamic” was used to indicate a flavouring and not to suggest the presence of “Balsamic Vinegar of Modena”.

The Court of Venice then examined the case regarding the use of the term “balsamic” and the name “vinegar” in labelling, presentations and advertising. The Court held that the use of the names “Balsamico di” and “Ristretto di Balsamico” were in breach of Regulation (EU) 1169/2011, as the indication on the bottles was neither fully clear nor easy to understand by consumers. As for the use of the denomination “vinegar”, the Court held that it could not be lawfully used as the dressings were not produced according to the definition in Art. 49 of Law No. 238/2016 and therefore it was an undue use of a legal denomination, also prohibited by Regulation (EU) 1169/2011.

The Venetian court then concluded that the violations of the above cited rules became relevant as acts of unfair competition and namely as acts contrary to professional correctness (Art. 2598 of the Italian Civil Code). The Court emphasised that all the above cited EU and Italian rules are intended to place limits on entrepreneurial activity in the food sector not only with regard to the welfare of consumers and their conscious choices but also to the proper unfolding of competition among entrepreneurs.

The Court of Venice thus granted an injunction towards the defendants from the use of “Balsamico di …” and “Ristretto di Balsamico” as well as of the word "vinegar" for the contested condiments in their labelling, presentation or advertising, fixed a penalty for the possible breach of said injunction and condemned the defendants to pay damages (to be determined in a separate proceeding) in favour of the Consortium.

Comment

The decision of the Court of Venice is interesting because, apart from the question of the possible evocative nature of the use of the term balsamic (as recently discussed by the Italian Supreme Court, see The IPKat here), it confirms that the breach of European Union and Italian regulations on product indications on labels, presentations and advertising becomes relevant (also) as acts of unfair competition among competitors. It can therefore be highlighted a convergence between the interests of consumers and those of competitors on the market, both of which are protected by the rules on fair competition.

At the national level, various countries have developed unfair competition protection in different ways. To give competitors an effective remedy against the unethical and illegal business practices of their rivals is, at the very least, a goal that unites all these various strategies and that can be of benefit also for consumers.  Applying national laws for the protection against unfair competition requires determining whether a particular commercial act is against honest practices in industrial or commercial matters.  In all this, it is acknowledged that unfair competition occurs when businesses engage in commercial practices that mislead the public about themselves or their operations, especially when it comes to the local products they sell.

 

Image credit: focal point, Shutterstock