Who said the European Union was intended to create an internal market? Perhaps that was true in the past, but it is hardly true after today’s verdict of the European Court of Justice about the 2002 food supplements directive. The health food industry had complained that the directive was invalid. The Court dismissed such a claim as well as the legal opinion of the advocate general.
The directive, that will come into force on August 1st, “restricts the sale of food supplements and allows only vitamins and minerals on an approved list to be traded.” That means that the “internal market” is not at all a market, at least as far as food supplements are concerned. In fact two groups of food supplements are created: the group of products the EU bureaucrats dislike (which most Europeans will no longer have access to), and the group of supplements that will be included in the list. According to some estimates “some 5,000 products are threatened by the legislation, including more than 200 nutrients.” The abrupt end of a flourishing trade might drive several companies out of the market, with a decrease in GDP and consequently job losses.
What is the rationale of the directive? Sure enough it has little to do with health and safety. Indeed, the health food industry has to comply with a number of other regulations, both at the national and European levels. Even assuming that stricter regulation implies safer products (which is highly questionable), keeping a product that has already been approved within national borders does not make people in other countries safer. Rather it prevents consumers from getting what they want, and producers from meeting that demand. Thus almost everybody is worse off.
“Almost” means that there must be somebody who is better off. First there are the EU bureaucrats, whose power increases as they may or may not include products in the list – thus deciding which companies will survive. Of course that puts them in the position of being very sensitive targets for corruption, if the expected profits from selling a specific product are high enough. The other group that benefits from the new regulation is that of the less efficient national companies, that are sheltered from most international competition. This latter group may have an interest in corrupting bureaucrats too, in order to keep a competing product out of the list.
Several consumers’ associations have been strong supporters of the directive. Again, these associations are not defending the consumers’ interests. There is no reason to prevent trade of safe products on the basis that national regulations differ slightly. The point is that people in the consumers’ associations tend to believe that the free market is bad in itself – so they tend to endorse any regulation that gives more power to political or bureaucratic elites. One might point out that they are a vested interest, since they tend to be involved in the decision making process as “experts” or as if they really were consumers’ representatives, which they obviously are not.
Ironically the European Court of Justice has completely reversed the most famous quote from the father of economics, Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their self-love, and never talk to them of our own necessities but of their advantages.” As from August, Europeans will have to rely on EU bureaucrats’ benevolence for their food supplements.