Abstract

Modern-day supermarkets and hypermarkets have been introducing new market strategies that aim to simplify the traditional production and distribution system. Among these novelties is the surprising conversion of retailers into producers through the use of their own brands (‘private labels’). The retailer assumes full control over the production and distribution of private label products. He is responsible for the product’s quality and conformity, a role that was traditionally reserved to producers. Council Directive 85/374/EEC, of 25 July 1985 adopted an economic concept of ‘producer’ that includes ‘any person who, by putting his name, trade mark or other distinguishing feature on the product presents himself as its producer’ (the so-called ‘apparent producer’). On this day and age, the brand is a channel of information between supply and demand, exercising a communicative function that can be viewed as a position of liability that its holder assumes for products that he puts into circulation. By labeling products with his own brand, the retailer assumes the same risk as real producers. The trade mark holder shall be liable for the damage caused by defective products jointly and severally with the product’s real manufacturer. The inclusion of the trademark owner in the concept of producer is closely linked to consumers’ expectations. Consumers see the trade mark on the product and are reasonably confident that the holder of such mark had some control over the production and will, accordingly, be liable for any damage caused by the product. In this article we analyse the connection between product liability and consumer expectations, determining whether the consumer may directly sue the hypermarket if the product is defective and causes damages.
Full Paper
Fernando Dias Simões
Senior Research Associate

Summary

Modern-day supermarkets and hypermarkets have been introducing new market strategies that aim to simplify the traditional production and distribution system. Among these novelties is the surprising conversion of retailers into producers through the use of their own brands (‘private labels’). The retailer assumes full control over the production and distribution of private label products. He is responsible for the product’s quality and conformity, a role that was traditionally reserved to producers. Council Directive 85/374/EEC, of 25 July 1985 adopted an economic concept of ‘producer’ that includes ‘any person who, by putting his name, trade mark or other distinguishing feature on the product presents himself as its producer’ (the so-called ‘apparent producer’). On this day and age, the brand is a channel of information between supply and demand, exercising a communicative function that can be viewed as a position of liability that its holder assumes for products that he puts into circulation. By labeling products with his own brand, the retailer assumes the same risk as real producers. The trade mark holder shall be liable for the damage caused by defective products jointly and severally with the product’s real manufacturer. The inclusion of the trademark owner in the concept of producer is closely linked to consumers’ expectations. Consumers see the trade mark on the product and are reasonably confident that the holder of such mark had some control over the production and will, accordingly, be liable for any damage caused by the product. In this article we analyse the connection between product liability and consumer expectations, determining whether the consumer may directly sue the hypermarket if the product is defective and causes damages.

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