Wolf Richter: Government By Eurocrats – The Olive-Oil Dispenser Debacle

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Yves here. This post illustrates a chief reason why regulation has become a bad word. It used to be that corporations would chafe under government rules for the obvious reason that they didn’t like being told what to do. The usual objection to regulation, that it reduces corporate profits, isn’t always true. For instance, McDonalds fought tooth and nail in the UK against giving up using styrofoam clamshells to keep takeout food warm. When it lost that battle, it found a more environmentally-friendly replacement that turned out to be no more costly. And regulations often spur rather than impede innovation. Detroit did itself a huge disservice in fighting fuel economy standards. The Big Three’s cars lost share in countries that had more stringent rules. Worse, foreign gas-sparing cars appealed to US consumers as well.

Major corporations have since learned to embrace regulations as a way to extract rents, by crippling smaller players and forcing customers to buy their product. In the case of the European olive oil fiasco, the product was simple and widely enough used that the media and consumers could see through the scam and made enough noise to put the proponents on the back foot. Too bad that didn’t prove true for health care and financial reform. But another contributing factor in the US is that our corporate lords and masters appear to have more lapdogs in the business press than their European counterparts do.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.

Like so many debacles in the EU, it started with the unelected European Commission. It’s immune to voters, but not to lobbyists and corporations. Under the guise of “consumer protection” or “food safety” or some other harmless moniker, it generates zany laws that tend to benefit large corporations. But last week, it went too far, even for Europeans – not that they don’t already have enough crises on their hands. It passed a law that banned restaurants from serving olive oil in refillable containers, such as cruets or dipping bowls.

On January 1, 2014, their use would become illegal. Instead, olive oil would have to be served in a one-use-only bottle, labeled in accordance with EU standards, and equipped with a tamper-proof “hygienic” spout. A restaurant owner in Germany, for example, who buys his special olive oil from an artisan producer in Southern France, would be out of luck; that small producer wouldn’t be able to comply with the costly stipulations. The restaurant would have to switch to an industrial supplier that can ship the special restaurant bottles with their tamper-proof spout and EU label. The small producer would be cut out.

The Commission’s decision was made under a Eurocrat procedure, called comitology – though it sounds like it, I’m not making this up! It allows for legislation that is binding for all 27 Member States to be passed into law automatically, without majority support from those Member States.

Exactly! The evil that this new law was supposed to cure: olive oil fraud. Admittedly, it’s a big issue in Europe, in the US, and elsewhere, and some of the largest industrial brands, such as Bertolli, have gotten caught with their pants down. But this law wasn’t going after fraud at the corporate level. On the contrary. It was passed under heavy lobbying from corporate producers.

The law targeted restaurateurs trying to make their own decisions about olive oil. Ostensibly it aimed to protect consumers and their taste buds from cruets or dipping bowls that had been refilled with low-quality or adulterated olive oil … the kind maybe that big brands like Bertolli and others were sued for selling in California. But when asked if they’d seen any evidence of adulterated olive oil on restaurant tables, an official told the Daily Telegraph, “We don’t have any evidence; it is anecdotal and that was enough for the committee.”

The decision exemplified what’s wrong with EU governance. But there were other issues with the harebrained law. It would create a cesspool of bureaucracy and mountains of additional trash, including the small one-use-only tamper-proof bottles with their spouts, boxes, and containers. And more oil would be wasted as the bottles – much like Ketchup bottles – would be designed to make it impossible to get all the oil out of them.

But this time, the Commission and its process of comitology were greeted with an outburst of loathing and mockery. Criticism was “universal and came from consumers and restaurant owners in all EU countries,” an EU official told the Telegraph. And it came from the very top. “This is exactly the sort of thing that Europe shouldn’t even be discussing,” explained UK Prime Minster David Cameron, with an eye on the real problems that are currently dogging Europe. “It shouldn’t even be on the table, to force a pun – so to speak,” he said. And Dutch Prime Minister Mark Rutte told his parliament, “I think it is too bizarre for words and incomprehensible to come with this sort of proposal at a time like this.”

European Commission President José Manuel Barroso, son of a small olive oil producer, apparently intervened, and on Thursday, European Agriculture Commissioner Dacian Ciolos threw in the towel. The law provoked some “misunderstanding,” though it was “intended to help consumers, to protect and inform them,” he said. But now that it was “clear that it cannot attract consumer support,” he’d withdraw it.

Not everyone jubilated. “It is totally ludicrous that the commission just withdraws this measure due to political pressure,” said Pekka Pesonen, general secretary of COPA-COGECA, a lobbying group representing industrial producers, and one of the forces behind the law. “Perhaps it wasn’t explained well enough. But it was necessary to ban refillable bottles and the traditional aceiteras found on restaurant tables….” etc. etc.

The thing isn’t dead yet. Ciolos said that he’d have a huddle with opponents and critics of the law in order to somehow resuscitate it – because it’s just too good to let die. So this law about olive oil in restaurants has morphed into a symbol of governance by Eurocrats – and their raggedy efforts to manage the economy of the EU.

The solar-panel industry, once fattened by taxpayer subsidies and false hopes, has been in a death spiral. In Germany, it has been brutal. Even large companies are licking their wounds. And yet, when the European Commission tried to protect manufacturers against cheap Chinese imports, the unexpected happened. Read…. Germany Fires Live Ammo In Sino-European Trade War … At Brussels

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  1. Daniel From Paris

    The Telegraph certainly supports UKIP-leaning views on EC. And and,
    for part, a mildly nationalistic à la Tory kind of neoliberalism.

    It is one of my daily reading. But I find it curious that it has become one the first hand source of information for this liberal-biased blog:)

    Back to the subject… Should food industries be regulated. Is its regulation effective for European consumers?

    China food industries are lightly regulated. What is the output for the local consumer?

    US food industries are certainly under lower constrains than their European counterpart? Is is always a good point.

    European food was subject to local ie national regulations until we moved to European scale markets.

    Did they do badly?

    There is anecdotal evidence that the regulation is too heavy in its redtape volume and not enforced enough…

    My take: The Telegraph readers’ opinions is made and certainly interferes in their judgement on the matter.
    This is the first output of this ukip-leaning anecdote.

    Certainly worth reading but does it tells you anything on the global food picture in Europe. Nada, sir.

    Bruxelles is most certainly on par with Washington when it comes to insane lobbying. For sure that should be investigated in a serious way. On serious matters, such as pharmaceuticals…

    1. salvo

      yes, Daniel from Paris

      I suspect that you are one of those french dreaming of a new kind of french empire in the guise of a european unification, in the naive belief to being able to use the hegemonial power, germany, according to its interests. This could explain your biased interpretation of the article. The point you are willing to ignore is this: The EU in its real institutional form has no democratic legitimization at all, as the article says: It’s immune to voters, but not to lobbyists and corporations. There is no point in denying this. A look at the rise of the poverty rate and of unemployment, the destruction of national social standards, the fall of life standards of working people. I’m not nationalistic at all, formally, I’m half german, half italian, I live in germany and would love an european unification truly based on a democratic process, which involves its population and is not essentially the product of political elites totally alienated from the people they are supposed to represent.

    2. fajensen

      The EU needs to go the same way as the USSR it was designed to emulate, preferably before “we” have to live like they did in the Soviet sattelites.

      The problem is that, like in Russia, for any serious reform to be considered, it will first require tanks firing hundreds of rounds on the European Commision offices.


      One of the food-rulez that was implemented is the ban on selling regional food at distances more than a percentage of the circumference of the country – or somesuch. In Denmark the EU-defined distance limit works out to about 50 km, the average distance between larger towns, so it is essentially a ban on the production of regional foods in Denmark.

    3. from Mexico

      Actually, it might surprise you to find out that in the area of over-regulation and over-criminalization, a group of “Odd bedfellows” from the Heritage Foundation, the Manhattan Institute, and the Washington Legal Foundation to the National Association of Criminal Defense Lawyers and the ACLU have come together to fight the explosion of inane, vapid, brain-dead laws and regulations and draconian punishments that serve no other interests than those of the biggest corporations, as well as those of the control freaks and empire builders who run the state’s legal and regulatory aparatus, who, because of their own institutional interests, never saw a new law or regulation they didn’t like.

      Just a couple of articles that speak to this:

      “Restore the Law’s FOCUS”


      Libertariansim is not the goal of the corportists, but hypocisy. It’s laissez faire for them, and the jack boot of the state agaisnt the neck of everyone else.

  2. Walter Map

    There can be no effective, efficient regulation in an environment where the regulated are calling the shots. All you end up with are half-measures and distortions.

    Naturally the regulated hate regulations. It constrains their rapacity.

      1. Walter Map

        “You’re completely missing the reality of what is going on.”

        Not at all.

        Contrary to appearances, these guys aren’t stupid, and they are not self-deceived. They know exactly what they’re doing.

        For over two hundred years the goal of the world’s banking elite has been to subjugate the world in the interests of their wealth and power. They said so, they being assorted Rothschilds, Morgans, Rockefellers, and so forth.
        Carroll Quigley described the plan in some detail over 50 years ago, but he’s regularly dismissed as a conspiracy theorist. Similar warnings have also been issued by presidents Jefferson, both Adams, Jackson, Lincoln, Wilson, FDR, and Eisenhower, and also by leading economists on both the left and right from Adam Smith to Milton Friedman, all of whom are apparently conspiracy theorists as well.

        That there has been a substantial middle class at all for the last few decades is an anomaly, an aberration of history, because nearly all previous history has been characterized by a small wealthy class ruling a mostly-impoverished general population. This aberration of the middle class is presently undergoing correction and the historical model can be expected to be restored in a few years. More than just a rollback of the New Deal, the global financial cartel wants to push back the Enlightenment as well. With modern technologies and techniques they can make their totalitarian world order permanent. They have the means and the will to do that.

        All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.

        Once that’s done the herd can be culled. The world is way overpopulated and its owners can’t afford to waste planetary resources on excessive numbers of unproductive livestock. In fifty or a hundred years most of human civilization will be an overheated, depopulated, impoverished, toxic slum. There is no scenario that prevents it that is even remotely probable.

        It’s going to be ugly. After that it will get weird ugly.

        1. from Mexico

          But you’re completely missing the thrust of my criticism, which is this: It really is more complex than the simplistic libertarian position (all laws and regulations are bad) or the equally simplistic law and order position (all laws and regulations are good).

          The more complex reality was analyzed by Martin Luther King in his essay, “Love, law, and civil disobedience,” when he explained that the Civil Rights Movement

          says that it is as much a moral obligation to refuse to cooperate with evil as it is to cooperate with good. Noncooperation with evil is as much a moral obligation as the cooperation with good. So that the student movement is willing to stand up courageously on the idea of civil disobedience. And it is probably misunderstood more than anything else. And it is a difficult aspect, because on the one hand the students would say, and I would say, and all the people who believe in civil rights would say, obey the Supreme Court’s decision of 1954 and at the same time, we would disobey certain laws that exist on the statutes of the South today.

          This brings in the whole question of how can you be logically consistent when you advocate obeying some laws and disobeying other laws. Well, I think one would have to see that the students recognize that there are two types of laws. There are just laws and there are unjust laws. And they would be the first to say obey the just laws, they would be the first to say that men and women have a moral obligation to obey just and right laws. And they would go on to say that we must see that there are unjust laws. Now the question comes into being, what is the difference, and who determines the difference, what is the difference between a just and an unjust law?

          Nixon, the quintessential law and order advocate, struck back with this:

          [T]he deterioration of respect for law and order can be traced directly to the spread of the corrosive doctrine that every citizen possesses an inherent right to decide for himself which laws to obey and when to disobey them.

          –RICHARD NIXON, “If mob rule takes hold in the US: a warning from Richard Nixon,” U.S. news and World Report, August 15, 1966

          As Dan Baum has pointed out, Nixon, like many who would follow in his wake, was linking street crime to the civil disobedience of the civil rights movement.

          1. jake chase

            Here’s the problem, Mexico. Once you have an omnipotent federal government and an entrenched bureaucracy (which we do) all regulation inevitably serves the interest of the most powerful corporate predators, because they make it their business to corrupt the regulators and you only get one or two Bill Blacks in a generation. What you end up with is rules and regulations hamstringing individual people and small business and simultaneously enabling corporate looting, fraud and crime. I have watched this happen for forty years as the Administrative State grew bigger and bigger and corporate consolidation eliminated more and more competition.

            To hope for better regulation is like jumping into a fourth marriage: the triumph of hope over experience.

          2. jrs

            But does “all regulation inevitably serves the interest of the most powerful corporate predators”? Can and is regulation used to serve the interest of the most powerful corporate predators. Of course! But are they really the only or main benefitors of regulation? That seems the triumph of ideology over experience. Of food regulation? It’s hard to use the U.S. as an example here as food is not regulated here like in Europe and any old poison is allowed in food (if we had European style regulations are food would be less of a toxic waste dump). Ok then are corporate predators the only or even main people who benefit from environmental regulation, workplace safety regulation etc.. That’s a sweeping case! Again that they can and do exploit the system, but of course, but I just don’t see them as the only beneficiaries. Now of course as the government grows more and more corrupt and bought out by money of course things get even worse.

  3. Skeptic

    From the EURO NOSTRA Olive Oil story:

    “…that small producer wouldn’t be able to comply with the costly stipulations.”

    This is what a lot of regulation is about: drive small businessmen and producers out of business and then the corporates can buy their market share for a pittance. And rig the monopolies/oligolopies better to generate more 1% Juice.

    Message: when buying anything, first ask: ” Is this vendor connected to large corporations. If so, in what way?” In many locales, for instance, you can buy food that is unconnected with AGRIBIZ.

    (In the rural area where I live, one sees this all the time. Small wood, food, fish and other producers are driven out of business or their costs made more onerous so that large corporations can come in and scoop up the remains. One technique is to impose more “safety” or “sanitation” requirements.)

    I suspect the above Olive Oil story would reveal that many varied corporate interests were at work to get this reg passed. For starters, there are the Trash and Bottlemaker interests. Probably also Olive Oil interests lined up to produce the product and monopolize/oligopolize it.

    That’s why I call them what they are: The EURO NOSTRA. Pass it on.

    1. HotFlash

      EURO NOSTRA, excellent, consider it passed on! My fave example of this (sorry, no linky, it was way BI [= Before Internet]) is a small dairy in the Maritimes that made excellent ice cream, but was forced at the insistence of Krafft (IIRC) to label their product as mere ‘iced dairy product’ b/c it *exceeded* the provincial requirements for butterfat in ice cream. That would have been late 70’s, early 80’s.

    1. from Mexico

      It’s government of the transnational corporations, by the transnational corporations, and for the transnational corporations.

      1. Expat

        “It’s government of the transnational corporations, by the transnational corporations, and for the transnational corporations…” which shall not perish from the earth?

        1. Walter Map

          Transnational corporations have no government. Governments are their tools, useful for controlling national populations to enable and expedite exploitation. As such, don’t think of them as ‘government’ in a conventional sense, but as state syndicates, a feature of totalitarianism like the Communist or Nazi Party, where only the leaders have power and non-members of the state syndicate – the general population – have none:

          ‘There really is a “world system of financial control in private hands” that is “able to dominate the political system of each country and the economy of the world” … They were responsible for World War I, World War II, the Korean War, and Vietnam, etc. … They brought Hitler, Mussolini, Stalin and Roosevelt to power and guided their governments from behind the scenes to achieve a state of plunder unparalleled in world history … the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole … For the last two and one half centuries wealth and power have been concentrating in the hands of fewer and fewer men and women. This wealth is now being used to construct and maintain the World Empire that is in the last stages of development. The World Empire is partly visible and partly invisible today … ‘

          Michael L. Chadwick

          Introduction to Carroll Quigley, Tragedy and Hope: A History of the World in Our Time. New York: The Macmillan Company (1966)

          If the American people ever allow private banks to control the issue of their currency… the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered… The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of [private] lending institutions and moneyed incorporations.

          President Thomas Jefferson (letter to the Secretary of the Treasury Albert Gallatin, 1802)

          The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the government of the U.S. ever since the days of Andrew Jackson.

          President FDR, letter to Edward M. House

          It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

          Henry Ford

  4. Ignacio

    The olive oil issue looks somehow surreal to me. At least in Spain if such law is ever approved, it could not be operatively enforced. It may seem anecdotic but it is a good example, as Mr. Richter says, of how corporate interests easily find their way through the EU commision without any opposition from the populace which is conveniently kept in total ignorance of what is going on.

    The comission has become a kind of religiously superior institution well beyond good and evil. Sad, very sad.

    1. Ignacio

      I forgot to comment that, of course, the Comission did not probably quantified the environmental costs of such “consumer safeguarding measure” in the form of tons of plastic used in olive-oil monodosing or the extra costs of keeping those EU-approved, although most probably improperly supervised, industrial bottlers/suppliers. Fraud would simply shift hands.

    2. HotFlash

      Interesting you should say “religiously superior institution”. Went to see the COC prod of ‘dialogues des carmélites” last night. You are right, I can see that the corporations have stepped into the shoes of the 18th C church. The aristocrats are still the aristocrats, so far as I can tell, but we rarely see them. They send their third sons to the corps and rule that way.

      Intermarriage is also a traditional way of ensuring cooperative action. I was, for instance, fascinated to read the bio of Joan Dillon Moseley de Bourbon (Princess of Luxembourg) de Noailles (Duchess de Mouchy), here http://www.thepeerage.com/p10124.htm for starters. This is how it works, folks, and as G Carlin says, we aren’t in.

  5. Random Lurker

    “the unelected European Commission”
    It sounds like if mr. Richter believes that the EC is not a democratic body.

    European citiziens first elect (each with its own democratic procedure) their head of state. Those premiers compose the European Council ( http://en.wikipedia.org/wiki/European_Council ).

    European citiziens then elect the European Parliament through direct elections ( http://en.wikipedia.org/wiki/European_Parliament ).

    The undirectly (but still democratically) elected E Council proposes the President of the E Commission.
    Then the directly elected European Parliament approves or vetoes this proposed President.
    This President then appoints the rest of the commission.
    The directly elected European Parliament then can approve or veto the E Commission.

    So the “unelected European Commission” is, in pratice, proposed by the heads of state of the EU countries and then appointed or vetoed by a directly elected body (the E Parliament).

    This is more or less the same that happens for the Italian Government (proposed by the head of state and then approved by the parliament), so according to this logic all Italian governments since the end of WW2 are unelected.
    I smell some anti-europeanism.

    I did vote for Italian elections, and I did vote for the European Parliament. In what sense can we say that I didn’t elect the European Commission (along with other Europeans)?

    1. Random Lurker

      Just to be clear, I agree that such regulation is likely just a gift to some powerful lobbyst.
      But the implication here is that this happens because the EU in undemocratic, as opposed to the much more democratic EU nation states.

      In reality, this kind of regulatory capture clearly happens at the national level too, and is a general problem for democracies, not of the EU in particular.

  6. allcoppedout

    I’m not keen on olive oil or Popeye’s choice in girlfriend. The Mexico-Map critique (all of us really) is very 70-80’s and still right. Thanks for the overcriminalisation paper Mexico – useful to another area of interest.

    It seems unlikely when one reads Derrida (etc.), but there is a real underlying problem on decision in the olive oil trivia. Much human activity does not need decision making as solutions become habitual. The question is why we have so many people “making decisions” – and here the ostensibly deep philosophy is as quiet as Plato on slavery.

    There are no democracies, so the EU on fails like everywhere else on that score. UKIP is living proof of how dumb Britain is and the failure of education, as the olive oil saga is in another way (university educated twerps). Politics and economics as we have them establish a decision making class. We need to deconstruct this, including the way we biologically default to hierarchy. I don’t let my blind friend take his own decisions on crossing roads when I’m about. He tends to do negotiation where my temper wouldn’t help. His disability once led colleagues to suggest he leave the difficult undergraduate programme (first) or learn to read more. His PhD is one of the few of any interest I’ve read, quietly lampooning disability in academic history. We need to understand incompetence, chronic lack of ambiguity and massive, heavily rationalised self-interest in politics and economics. We can’t even call the olive oil twerps to account.

  7. nobody

    A post about this law came across my FB feed a couple of days ago. In part:

    “Well done EU! From now on olive oil in restaurants needs to be sold in original bottles with a proper label! Thank heavens! End of disgusting containers of disgusting oil that had not seen an olive and which you find on the tables of nine out of ten Croatian coastal restaurants! At best you are paying poor quality olive oil [bought] on the black market, but usually it is not even olive oil. So how can professional Croatian olive oil producers who invest in technology, promotion, brand ever make it to the market…? Well done EU, enough black economy and cheating!”

  8. glib

    There are workarounds of course.

    Example I: casu marzu banned due to vague health concerns (alas, thousands of years of eating this wonderful cheese are not proof enough). Status: casumarzu still produced in abundance and traded or bartered privately.

    Example II: fragolino wine banned because the EU wants to eradicate vitis labrusca (presumably to serve the interests of big wine producers). Status: there is as much fragolino now as there ever was, it is just traded privately. Last time in Italy I even had a wonderful, unheard of white fragolino, surely made with the champagne method, meaning the market is still good enough that there are vintners doing fragolino R&D.

    I can imagine bring your own oil restaurants, restaurants selling oil, civil disobedience, and the carabinieri ignoring the law, at least in Italy. or they send you to an old lady two blocks away. It is also an extremely fragmented market, basically one mill (frantoio), one village, you could expect collaborations between mills and restaurants to pop up overnight. Last time I visited a frantoio I was shocked to see no storage facilities. Basically as they start pressing a line forms out the door, of people with their own containers, and when they run out the line goes away. Take the riviera slice of the market? maybe. but this would have never worked in Italy.

  9. p78

    Meantime, not far from EU HQ in Bruxells, some Dutch greed:

    “85 Polish migrant workers […] were employed at a meat processing plant in the Netherlands that was raided by the Dutch authorities in February as part of their investigation into horsemeat fraud.

    […] thousands of horses allegedly entered the food chain in place of beef over many years at the Willy Selten factory in Oss, south of Rotterdam.

    […] the horsemeat was processed at the end of the day, after the normal shift had finished and the plant had been cleaned, and that workers were tasked with cutting and mixing beef, some of it defrosted from consignments with labels as old as 2001, with horse deliveries.

    They had to cut out “green” putrid beef, which smelled so bad that they could keep working only by tying towels around their faces.”


  10. MarioPa75

    That’s an interesting thread, for it combines strict facts (is olive oil served in unlabeled bottles in restaurant more dangerous than olive oil served in one-use portions, and how much so?) with regulatory will (will a ban on said unlabeled bottles improve the situation and protect from food fraud?) and enforcement (what use is a law if it is not enforced or poorly enforced) and regulatory capture (is this law just made in the best interest of big oil producers, stifling competition?).

    Just passing by, will read more of this later.

  11. Igor Vuksanovic

    This law is widely supported among small olive oil producers (not corporations) in many countries, like Slovenia (where I come from). It was mostly supported in southern part EU (of course not by restaurant owners!), and cynically attacked in the North, for simple reason that Germans, Britons, Dutch and Scandinavians do not understand, appreciate, or generally give a damn about prevention of olive oil fraud. They rarely even use olive oil. This article exemplifies that.

    This article is not very informative and probably does not deserve to be put on this excellent site. Special bottles would not bring high additional costs. For very small increase in price (born by buyer of oil and in the end spread among his customers for in barely noticeable amounts) they would efficiently prevent replacement of high quality olive oil with garbage (in original bottle)which is very widespread fraud amongst restaurant owners in the South.

    Excuse my emotional tone … But excellent olive oil must be almost religiously worshipped :-). Nikos, Juan, Federico and Stjepan can understand that. And Wolf Richter could humbly learn….

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