Roger Pearson examines the positive affect that successful litigation can have on a supermarket chain's reputation
A recent High Court battle over the rights of supermarket chain Asda to sell ham that was produced in Italy but packaged and sliced in the UK as Parma ham, has served as a practical example of how successful litigation can bring dual advantages to the client.
The case involved complex EC laws which the Italians claimed meant that, legally, Parma ham had not only to be produced in Italy, but packaged and sliced there as well.
Jonathan Sinclair, a commercial litigation partner at Eversheds' Leeds offices, and Adam Collinson, head of the firm's EC/competition practice, say the case is not only a legal victory for their client, Asda. They believe it had significant commercial value in that demonstrated how Asda is prepared to fight for a ruling which will enable it to keep the price of a product as low as possible.
'Obviously the prime target of the litigation is a legal one. But this case also gets a message over clearly to the customer that Asda is prepared to fight to give them the best value they can,' says Sinclair.
The action was launched by Consorzio Del Prosciutto Di Parma, an association of Parma ham producers. It had asked the court for an order banning Asda Stores and food packagers Hygrade Foods from selling the UK-sliced product under the name Parma ham. The ham in question was purchased from one of the largest Parma ham producers, Cesare Fiorucci, but was then sliced and packaged in England by Hygrade.
Deputy judge Lawrence Collins QC threw out the Italian association's claim. He said there was no complaint about the standard of the product and no claim that it was not genuine Parma ham.
But Consorzio del Prosciutto claimed that this was not enough. It said that under Italian law the meat could only be described as Parma ham if sliced and packaged in plants in Parma under its supervision.
However, the judge accepted Asda's argument that regulations of the Council and Commission of the European Communities, which protect the designations of origin of agricultural products and foodstuffs, did not give the association the right to prevent the sale of Asda's product. He said the regulations did not incorporate the Italian rules on slicing and packaging.
Eversheds has previously helped Asda to set the agenda in battles over the Net Book Agreement and pharmaceutical resale price maintenance. The firm has fought on behalf of the supermarket chain in moves aimed at entitling it to charge lower prices for books and pharmaceuticals. The Net Book Agreement has now collapsed and resale price maintenance for over-the-counter medicines is the subject of a current reference to the Restrictive Practices Court.
'All these cases illustrate that you can, by taking on these issues, also get the message across to the customer that, if necessary, you are prepared to go to court and fight for the right to give the customer the best value you can,' says Sinclair.
Collinson adds that another area that the case emphasises is the increasing ability of courts in the UK to decide EC points.
'There is a huge amount of EC legislation which has a direct effect in the UK and is justiciable in the UK,' he says.
'EC law is something everyone in business in this country needs to have regard to. In the past, there has been a feeling that any disputes involving EC law will ultimately end up going to Brussels or Luxembourg. But that is not the case. They can frequently be dealt with in the national courts.'