Official control fees, wholesale trade and meat

Dear Dario,

We ask you for clarification on the difference between wholesale and retail trade, for the purposes of applying the tariffs for official controls established in Legislative Decree 32/21, Article 6.6. The specific cases concern:

a) an authorised establishment which produces cheese and sells 60% of its annual production in the attached sales outlet. Does the flat rate for establishments apply (see Annex 2, Section 6)? Is this a wholesale or retail trade?

b) a registered company that packages meat in properly labelled trays and sells it to supermarkets, other butchers and delicatessens. Should this activity be considered wholesale or retail trade?

Thanks as always, Mario and Giacomo

Lawyer Dario Dongo, Dr. Sarah Lanzilli and Dr. Claudio Biglia respond

Dear,

Legislative Decree 2 February 2021, n. 32 'establishes the methods of financing official controls and other official activities carried out to ensure the application of the legislation on:

– food and food safety;

– materials and objects intended to come into contact with food (MOCA);

– feed, animal health, animal by-products and derived products, animal welfare;

– placing on the market and use of plant protection products,

– in implementation of the Official Controls Regulation (EU) 2017/625, Title II, Chapter VI' (1,2).

The implementation of this decree in Italy also requires a detailed analysis of both the EU regulations referred to therein and the previous national provisions implementing them. Remembering that the organization of official controls, in compliance with the criteria established in the EU, remains entrusted to the concurrent legislation of the individual Member States.

1) Official control fees, wholesale

'The local health authority, for official controls carried out on the establishments listed in Annex 2, Section 6, Table A' of Legislative Decree 32/2021 'who sell wholesale to other operators or other establishments - other than the annexed one and the functionally connected one that sells or supplies to the final consumer - a quantity greater than 50% of their goods deriving from one or more activities referred to in the same table of this decree, applies the relevant annual flat-rate rates differentiated into three risk bands, without prejudice to the indications provided in the same table'. (3)

2) Application of tariffs

These rates, please note, are applied regardless of whether the official control is carried out. In the event that an establishment carries out one or more registered or recognized activities referred to in Annex 2, Section 6, Table A, of Legislative Decree 32/2021, the Local Health Authority applies a single tariff that corresponds to that of the activity of the same Section with the highest risk level among those attributed to the establishment.

The distribution platforms of food products from large-scale retail trade, third-party food storage, storage for wholesale food and beverage activities and 'cash & carry' are in turn subject to the tariffs set out in Annex 2, Section 6, Table A, of Legislative Decree 32/2021.

2.1) Additional fees and exclusions

Additional rates – calculated on the basis of the work carried out and/or the hours spent carrying out official controls and other official activities – are owed to the local health authorities by certain establishments, when the conditions established in Articles 5, 6 and 7 of Legislative Decree 32/2021 apply.

However, they are excluded from the payment of the fees referred to in Article 6.6 of Legislative Decree 32/2021 brokers and commercial intermediaries with headquarters other than a physical establishment.

3) General Food Law

General Food Law Regulation (EC) No 178/02 defines ‘retail trade’ as:

- 'the handling and/or processing of food and its storage at the point of sale or delivery to the final consumer, including distribution terminals, catering establishments, factory and institutional canteens, restaurants and other similar catering establishments, shops, supermarket distribution centres and wholesale outlets'(art. 3.1.7).

The definition The above is not, however, suitable for drawing a clear line of distinction between wholesale and retail trade activities.

4) Italy, trade regulation

In Italy, the legislative decree of 31 March 1998, n. 114 – containing the reform of the regulation relating to the trade sector – clearly distinguishes between the two hypotheses of wholesale and retail trade, referring to the professional or non-professional nature of the buyer. It is understood as follows:

'a) wholesale trade, the activity carried out by anyone who professionally purchases goods in his own name and on his own account and resells them to other traders, wholesale or retail, or to professional users, or to other large users. This activity may take the form of domestic trade, import or export;

b) for retail trade, the activity carried out by anyone who professionally purchases goods in his own name and on his own account and resells them, on private areas in a fixed location or through other forms of distribution, directly to the final consumer' (Article 4). (4)

5) Cheese production plant

The factory referred to in the first question - since it is recognised for the production of cheeses, and regardless of retail trade in its own annexed sales point - is therefore subject to the tariff that corresponds to that of the activity of the same Section, with the highest risk level among those attributed to the establishment itself.

6) Meat processing company

The food business referred to in the second question, since it is dedicated to the processing and packaging of meat, meat-based preparations and products – whether fresh, frozen/deep-frozen, seasoned, raw or cooked – it is instead subject to recognition pursuant to Regulation (EC) 853/2004, and not only to the registration pursuant to Regulation (EC) 852/2004.

Food Hygiene 2 Regulation (EC) No 853/2004 applies in fact 'to retail trade when the operations are carried out for the purpose of supplying food of animal origin to other establishments', except for the sole cases in which:

i) 'the operations are limited to storage or transport, in which case the specific temperature requirements set out in Annex III still apply'; (5) or

(ii) 'the supply of food of animal origin is carried out solely by a retail establishment to another retail establishment and, in accordance with national legislation, such supply constitutes a'marginal, localized and restricted activity'(Article 1.5).

7) Application of Regulation (EC) 853/04, further information

Application of the regulation (EC) 853/04 to the activities of 'retail trade, where the operations are carried out for the purpose of supplying food of animal origin to other establishments' only in cases where the activity can be classified as 'marginal, localized and restricted":

a) marginal, if practiced occasionally and unorganized, i.e. without regular production deadlines. It must therefore be an ancillary activity, with small business volumes compared to the overall revenues of the company (which for example distributes a variety of foods and occasionally processes small quantities of meat for this purpose);

b) localised, if delimited within a restricted geographical area, such as for example the territory of the same competent authority which can best verify its health and hygiene requirements and monitor its marginal characteristics;

c) restricted, not in geographical but in operational terms. The local health authority - taking into account the simplicity of the production process, the limitation of the variety of the offer, the low volumes of finished product and the number of customers, as well as the level of training and culture of food safety of the workers - can therefore impose rules and limitations on the exercise of 'derogation' activities.

8) Conclusions

A retail outlet annexed to the production plant – as an activity separate from it and not subject to authorization – is not subject to a fee. Except in cases where the local health authority finds a non-compliance that requires further checks to verify compliance with the relevant requirements.

A company which carries out processing and/or packaging of meat for its distribution to other companies is instead subject to due recognition. Except for the cases of registered butchers who occasionally sell very limited quantities of individual meat products to other activities, in a restricted territory, without competing with the production of recognized establishments.

Dario, Sarah and Claudio

Footnotes

(1) Legislative Decree 2 February 2021, n. 32. Provisions for the adaptation of national legislation to the provisions of Regulation (EU) 2017/625 https://tinyurl.com/483hfy7f

(2) Dario Dongo, Amarantha Traversa, Sarah Lanzilli, Claudio Biglia. Official controls, Legislative Decree 27/21. Implementation of reg. EU 2017/625. GIFT (Great Italian Food Trade). 14.3.21

(3) Legislative Decree 32/2021, article 6.6

(4) Legislative Decree 31 March 1998, n. 114. Reform of the legislation relating to the trade sector https://tinyurl.com/39uv4wpp

(5) Dario Dongo, Sarah Lanzilli. Matured meats and transportation temperatures of meat, official controls. GIFT (Great Italian Food Trade). 17.7.24