On 2 June 2017, the Brussels Court of Appeal (the "Court of Appeal") sided with Ferrero, producer of Nutella®, in the cease-and-desist proceedings which it had brought against retailer Delhaize regarding its communications involving its private-label hazelnut spread and the absence of palm oil in its products (Brussels Court of Appeal, 2 June 2017, 2016/AR/703, Ferrero SA v. Delhaize Le Lion/De Leeuw SCA).

The dispute concerned various marketing communications of Delhaize emphasising the absence of palm oil in its private-label hazelnut spread. Ferrero, whose flagship hazelnut spread Nutella® contains palm oil, claimed that these communications were illegal, misleading, denigrating and provocative and that they misused the consumer's feelings of fear or worry regarding the use of products containing palm oil (First Claim). Furthermore, Ferrero challenged what it considers to be an unlawful use by Delhaize of the term "choco" for describing its hazelnut spread, which contains cocoa powder but no "chocolate" (Second Claim).

Delhaize won the battle at first instance before the President of the French-speaking section of the Brussels Commercial Court (the "President"), who dismissed Ferrero's cease-and-desist action on 25 November 2015 (See VBB on Belgian Business Law, Volume 2016, No. 4, p. 15, available at www.vbb.com).

In its judgment of 2 June 2017, the Court of Appeal partially overturned the decision of the President and ordered Delhaize to cease and desist from making further use of its communications regarding its private-label hazelnut spread.

First Claim

With respect to Ferrero's First Claim, the Court of Appeal analysed, amongst other communications, Delhaize's press release of 19 September 2013 regarding its private-label hazelnut spread, which provided that "[t]he cooperation between nutritionists, doctors and suppliers enabled us to develop a spread with a smooth and melting texture, rich in hazelnuts (13%) and skinny cocoa (7%) but definitely without palm oil", that "[t]hanks to the removal of palm oil, Delhaize's spread contains 43% less fat" and that its spread would be "[b]etter for your health and better for the planet." In addition, the Court analysed a promotional poster of September 2014 of Delhaize as well as various other communications.

The Court of Appeal concluded that the press release of 19 September 2013 constitutes unlawful comparative advertising because it fails to compare in an objective manner the essential, relevant, verifiable and representative characteristics of both hazelnut spreads, including the environmental impact of palm oil (as contained in Nutella®) and that of sunflower oil, cocoa butter and coconut oil (as contained in Delhaize's private-label spread). The Court of Appeal noted that the press release: (i) qualifies as advertising within the meaning of the Royal Decree of 17 April 1980 on advertising for food products (Koninklijk Besluit van 17 april 1980 betreffende de reclame voor voedingsmiddelen/Arrêté royal du 17 avril 1980 concernant la publicité pour les denrées alimentaires); the Code of Economic Law (Wetboek van Economisch Recht/Code de droit économique – the "CEL"); and Regulation No. 1924/2006 of 20 December 2006 on nutrition and health claims made on foods (the "Food Regulation"); and (ii) identifies a competing product to the extent that, even though the name Nutella® was not mentioned, consumers would inevitably establish a link with Nutella® since Nutella® is the market leader of hazelnut spreads and is well known to contain palm oil.

The Court of Appeal held that these communications infringed the Food Regulation in that they: (i) suggest a link between hazelnut spread without palm oil and health; and (ii) refer to the recommendation of a health professional. Amongst others things, the communications concerned suggested that Delhaize's hazelnut spread would have a beneficial effect on consumers' health. Yet, they failed to use the specific health claims that are permissible pursuant to the Food Regulation. Furthermore, the Court of Appeal considered that the message contained in these communications was provocative or misused the consumers' feelings of fear or worry. Hence, the Court of Appeal concluded that Delhaize had failed to behave diligently and committed an unfair market practice towards consumers.

Further, with respect to Delhaize's promotional poster of September 2014, the Court of Appeal found the claim that Delhaize's private-label spread would "contain 48% less fat than traditional spreads" qualifies as false and misleading comparative advertising within the meaning of Articles VI.17, 1° and 3° and VI.104 CEL. Therefore, the Court of Appeal ordered Delhaize to cease and desist from making any further use of this poster.

The Court of Appeal dismissed Ferrero's claims to the extent that they were directed against: (i) Delhaize's general communications regarding palm oil, such as its communication on its website regarding sustainable entrepreneurship and its goal to replace palm oil in every product as far as possible; and (ii) Delhaize's communications regarding palm oil in products other than hazelnut spreads, such as pizzas and frozen fries.

Second Claim

With respect to Ferrero's Second Claim, the Court of Appeal held that Delhaize's communications constitute unfair commercial practices regarding a main characteristic of the product. The Court of Appeal specified that, by using the terms "with choco" and "with chocolate", Delhaize had led consumers into believing that the spread contained hazelnuts and choco, as an abbreviation of chocolate, within the meaning of the Royal Decree of 19 March 2004 relating to cocoa and chocolate products intended for human consumption (Koninklijk Besluit van 19 maart 2004 inzake cacao- en chocoladeproducten voor menselijke consumptie/Arrêté royal du 19  mars 2004 relatif aux produits de cacao et de chocolat destinés à l'alimentation humaine – the "Royal Decree"). According to the Court of Appeal, this led consumers to make a commercial decision which they would not have made otherwise and also damaged or potentially damaged Ferrero to the extent that it may provide a competitive advantage to Delhaize.

In relation to the use of the single term "choco", the Court of Appeal confirmed the ruling of the President that this term is not protected by the Royal Decree and merely refers to chocolate spread or choco spread, which is perceived by consumers as a spread containing sugar, vegetable oil and cocoa powder. Also the expression "with chocolate taste" was considered to be acceptable by the Court given that this expression refers to the mere taste of the product and does not assert that the product would actually contain chocolate.

In view of the above, the Court of Appeal ordered Delhaize to cease-and-desist from making any further use of its unlawful communications, subject to a penalty of between € 500 and € 25,000 per infringement.

The judgment offers a fresh illustration of the fraught relationship between brand owners and retailer customers which are at the same time private-label competitors.

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