Memorandum submitted by the Health Food
Manufacturers' Association (HFMA)
1.1 The HMFA's submission focuses on point
two of the call for evidence for the Select Committee's inquiry.
This point asked for views on the role of the Ministry of Justice
in managing the United Kingdom's relationship with the Crown Dependencies
including inter-departmental liaison and coordination. Our submission
illustrates a particular problem that members of the HFMA have
faced because of the nature of the UK's relationship with the
Channel Islands. These problems have occurred in large part due
to the ambiguity in interpretation of Protocol 3 of the UK's Accession
Treaty to the European Union.
1.2 HFMA Member companies' trade and UK
consumer safety is being undermined by companies based in the
Channel Islands that sell health products containing ingredients
and/or making claims that would be illegal if the products would
be placed on the UK market directly. In addition, the industry
in the Channel Islands is able to undercut prices of responsible
UK businesses by taking advantage of Low Value Consignment Relief.
1.3 This ongoing illegal and unfair competition
would be halted if the Channel Islands would implement the necessary
legislation, as this would result in EU standards being applicable
on the islands as well. The Ministry of Justice, as the UK department
responsible for managing the UK's relationship with the Crown
Dependencies, should take a lead in ensuring that the appropriate
steps are taken to ensure legal and fair competition from the
islands. This goal could be reached if the Ministry takes the
appropriate steps to ensure that the necessary legislation is
implemented, and ensures that sufficient resources are allocated
for effective enforcement, by way of coordinating UK support from
UK regulatory bodies and agencies and continuing pressure on the
Channel Island authorities.
2.1 The Health Food Manufacturers' Association
(HFMA) is the lead trade association in the UK for manufacturers
and suppliers of natural health products including food supplements,
herbal products and health foods. We work to represent the interests
of the UK natural health products industry at all levels of the
legislative, regulatory and Parliamentary process. Currently we
have around 120 members from across the UK.
2.2 Our submission relates primarily to
point two of the call for evidence for this inquiry, which asked
for views on the role of the Ministry of Justice in managing the
United Kingdom's relationship with the Crown Dependencies including
inter-departmental liaison and coordination. The submission illustrates
a particular problem that members of the HFMA have faced because
of the nature of the UK's relationship with the Channel Islands.
These problems have occurred in large part due to the ambiguity
in interpretation of Protocol 3 of the UK's Accession Treaty to
the European Union.
3. THE CURRENT
3.1 In the UK, food supplements, herbal
medicines and other health food products are covered by a number
of Directives and Regulations stemming from the European Union,
including the Food Supplements Directive (FSD), the Nutrition
and Health Claims Regulation (NHCR), the Traditional Herbal Medicinal
Products Directive (THMPD), and the Medicines Directive. Due to
the reasons outlined below, the same rules do not apply to the
3.2 The Channel Islands are neither fully
in the UK, nor fully in the EU. The applicability of certain UK
or EU legislation to the Channel Islands is governed by Protocol
3 of the UK Accession Treaty to the European Community, which
provides for free movement of goods and trade between the islands
and the Member States. Therefore, legislation intended to ensure
the smooth running of the internal market, including the legislation
mentioned above, should have to be implemented by the Channel
Islands. However, there has been disagreement over whether or
not Protocol 3 covers legislation such as the FSD and the NHCR,
although both the Ministry of Justice and the islands have agreed
to take a pragmatic approach and the islands have consequently
decided to implement the FSD and NHCR. To date, this implementation
has not taken place.
3.3 Additionally, products sold from the
Channel Islands are able to benefit from Low Value Consignment
Relief (LVCR), which means that VAT is not payable on packages
which are less than £18 in value.
3.4 Many companies have now taken advantage
of this situation and set up business in the Channel Islands,
selling health food products directly to UK consumers via mail
order catalogues or the internet. These mail order catalogues
are often delivered by Royal Mail, and we have taken steps to
engage with them on this issue.
3.5 This ongoing situation has led to a
(i) Companies based in the Channel Islands are
able to market and sell products to UK consumers which contain
illegal ingredients, as well as making claims about the products
which would be illegal were the products to be directly placed
on the market in the UK. These include medicinal claims (such
as product X may cure cancer or heart disease) on food supplements
and herbal products, which are illegal according to EU medicines
legislation, as well as the Medicines (Advertising) Regulations
1994 here in the UK. Examples of the claims used can be found
in Appendix 1. The HFMA have also submitted a number of complaints
to the Advertising Standards Authority about such adverts. A list
of successful adjudications can be found in Appendix 2. However,
due to the fact that the companies are based in the Channel Islands,
enforcement action is extremely difficult, even if the UK law
is being broken.
(ii) The industry in the Channel Islands, which
is currently worth over £70 million per annum, takes advantage
of LVCR to avoid paying VAT. Because they are able to undercut
responsible UK suppliers, this has seriously undermined the profitability
of the UK industry, and diverted substantial revenues from the
Treasury. It does not seem fair that companies which are making
claims and using ingredients illegal according to UK law are able
to benefit from such a situation, which gives them an advantage
over responsible UK companies.
4. THE CONSEQUENCES
4.1 There are numerous consequences resulting
from the current situation.
4.2 The sale of products containing illegal
ingredients including melatonin (an unlicensed drug in the UK),
DHEA (a class C drug) and kava kava (banned in the UK in 2003
due to fears about liver toxicity) presents a potentially serious
risk to consumer safety.
4.3 The fact that companies are able to
make misleading, medicinal claims about their products means that
vulnerable consumers are being misled, and may even be discouraged
from seeking necessary medical attention for ailments ranging
from impotence to arthritis, to cancer.
4.4 As well as consumers, this situation
also has serious consequences for responsible UK businesses. The
products sold by the companies based in the Channel Islands may
well be more attractive to consumers due to the claims that companies
are able to make about them, the ingredients they are able to
use, and that fact that they can be sold at a lower price because
they are able to benefit from LVCR. UK businesses cannot compete
against such companies. Many have seen falling sales and some
even the possibility of going out of business.
5. THE ROLE
5.1 The Ministry of Justice is the main
channel of communication between the UK government and the Channel
Islands. They process legislation from Jersey, Guernsey and the
Isle of Man for royal assent and consult with the islands on extending
UK legislation in each jurisdiction.
5.2 In the case of health food products,
the Ministry of Justice has acknowledged that the Channel Islands
should implement the relevant legislation, in particular the FSD,
the NHCR and the Medicines Directive. They have been willing to
work with the HFMA on this issue, and have met with us on several
occasions to discuss the progress in implementation and other
concerns such as enforcement of the legislation once it is implemented,
and ways that the problem of unfair competition can be dealt with
in the meantime. They have also spoken directly to the authorities
in Jersey and Guernsey about this issue and it was raised in meetings
when Lord Bach, the responsible Minister, visited the islands
in early 2009. Since then Ministry officials have been pressing
the islands for updates.
5.3 However, to date, most of the relevant
legislation has not been implemented in the Channel Islands. The
Guernsey Medicines Law, which implements the Medicines Directive,
has achieved Royal Assent, and is expected to come into force
in October 2009. The Medicines and Healthcare Products Regulatory
Agency (MHRA) have stated that the Medicines Law is not fully
consistent with the Medicines Directive; however the MHRA is helping
to draft secondary legislation which they hope will fix some of
5.4 Discussions on the implementation of
the Medicines Directive in Jersey were opened in February 2009,
and are ongoing. There is a medicines law already in place which
makes it illegal to make medicinal claims on unauthorised products
or distribute unauthorised medicines, but it is difficult to enforce
in practice and only targets Jersey based suppliers and advertisers.
5.5 Neither the NHCR nor the FSD have been
implemented in either Jersey or Guernsey. In May 2009, after Dr
Brian Iddon MP held a debate on this issue in Westminster Hall,
Health Minister Phil Hope stated publicly that the Government
was asking for a timetable from Jersey on the implementation of
these two pieces of legislation, and an update from Guernsey on
5.6 Initially, Jersey had pledged to implement
both the FSD and the NHCR on the back of a review of their Food
Hygiene Law, with drafting due to begin in 2010. However, this
target has since been delayed and the implementation work has
not yet been included in their work programmes.
5.7 As for Guernsey, it recently confirmed
that work has begun on investigating the implementation of the
FSD and NHCR, but a clear timetable for implementation has still
not been provided.
6.1 There is also a concern that, once this
legislation is implemented in the Channel Islands, there will
be problems with ensuring that it is properly enforced. This is
largely due to a lack of resources within Jersey and Guernsey,
which are both small jurisdictions without a great deal of time
and staff resource.
6.2 If the Channel Islands are unable to
effectively enforce legislation then many companies will be to
able to continue selling products to UK consumers that would be
illegal if sold directly in the UK. If this happens, the unfair
and illegal competition will remain a problem, to the detriment
of UK consumers and businesses.
6.3 Therefore, the Ministry of Justice,
as the UK Government Department with responsibility for managing
the UK's relationship with the Channel Islands, should coordinate
UK action to assist Jersey and Guernsey in enforcing this legislation
effectively. It is likely that bodies including the Food Standards
Agency (FSA), the MHRA and Trading Standards will need to provide
Jersey and Guernsey with both advice and practical assistance.
These bodies are all already in contact with both Jersey and Guernsey,
providing input into the process of drafting and implementing
legislation, and providing assistance to ensure that what food
and medicines legislation already exists is enforced. It will
be vital to ensure that this continues once the legislation is
7. FUTURE DEVELOPMENTS
7.1 The problems caused to UK businesses
by the lack of implementation of the necessary legislation in
Jersey and Guernsey are set to be exacerbated by future developments.
In relation to the FSD, the European Commission is preparing to
propose, most likely by the end of 2009, maximum permitted levels
for vitamins and minerals in food supplements. So far, the indications
are that these levels will be set as disproportionately low levels,
meaning a number of health food products that are currently very
popular will no longer be able to be sold on the UK market. Additionally,
a number of transitional periods allowed for in the NHCR are due
to expire in early 2010, which will further reduce the claims
that UK suppliers are able to make about their products.
7.2 The net result of these developments
is likely to be that the UK health trade will shift increasingly
to the Channel Islands, where, due to the fact that neither the
FSD nor the NHCR have been implemented, companies will be able
to continue to sell higher potency products and make far stronger
claims about these products, making them much more attractive
to consumers. This will only disadvantage responsible UK manufacturers
further, while increasing concerns over consumer protection.
7.3 Therefore, it is becoming increasingly
important that both Jersey and Guernsey take steps towards implementing
both the NHCR and the FSD sooner rather than later.
8. WHAT SHOULD
8.1 As noted above, the Ministry of Justice
has worked with the HFMA in their efforts to ensure that the problem
of unfair competition is effectively dealt with. However, to date
progress towards implementation has been very slow, and it is
important that work on this problem continues. In particular:
The Ministry of Justice needs to
continue to exert pressure from a high-level on the authorities
in Jersey and Guernsey to ensure that the relevant legislation,
particularly the FSD and the NHCR, are implemented as soon as
Once the implementation is enforced,
the Ministry needs to coordinate efforts to ensure that there
are sufficient resources so that it can be enforced effectively.
This will make it necessary for the
Ministry of Justice to work effectively with other departments
and agencies, such as the Department of Health, the MHRA, the
Food Standards Agency, and Royal Mail, to ensure that the legislation
is implemented as soon as possible.
Until legislation is in place in
the Channel Islands, the Ministry needs to support other avenues
that can be used to deal with the problem, coordinating relevant
agencies and departments where necessary.
8.2 Ultimately, the unfair and illegal competition
provided by companies based in the Channel Islands is bad for
both UK consumers and law-abiding UK businesses. The Ministry
of Justice, as the UK Department responsible for managing the
UK's relationship with the Crown Dependencies, should take a lead
in ensuring that the appropriate steps are taken. Legislation
needs to be implemented, sufficient resources for effective enforcement
need to be allocated, and, until the necessary legislation is
in place, appropriate action needs to be taken to minimise the
damage caused to UK consumers and businesses.
|Prostboost "a very effective ally in the fight against prostate cancer, by inhibiting tumour formation and, where already present, slow spreading"
||Living and Loving mailing, September 2008|
(ASA adjudication received in March 2009)
|Hi Strength Lycopene "can help a range of conditions such as heart disease, prostate cancer, other cancers, and some other serious diseases"
||Wellform Direct Mailing, September 2008|
(ASA adjudication received in January 2009)
|Ginkgo Biloba "A preliminary study... suggests leaf extracts of the Ginkgo Biloba tree may help prevent Alzheimer's disease"
||Simply Supplements catalogue, Summer 2008|
(ASA adjudication received in January 2009)
|Rosehip "offers great relief from the pain caused by arthritis and osteoarthritiswithout the side effects of anti-inflammatory drugs"
||Prime Health Direct mailing, June 2008|
ASA adjudication received in January 2009)
EU/UK legislation defines a "medicinal product"
"Any substance or combination of substances presented
as having properties for treating or preventing disease in human
Any substance or combination of substances which may be used
in or administered to human beings either with a view to restoring,
correcting or modifying physiological functions by exerting a
pharmacological, immunological or metabolic action, or to making
a medical diagnosis"
Food supplements, containing such familiar substances as
vitamins, amino acids or minerals, are generally subject to food
safety and food labelling legislation rather than medicines control
unless they contain a pharmacologically active substance or make
medicinal claims (eg claims to treat or prevent disease, or to
interfere with the normal operation of a physiological function
of the human body).
The ultimate decision of what is a medicinal product rests
with the MHRA: hence the borderline for food supplements is, in
practice, "policed" by the MHRA rather than food law
enforcement agencies. In making a decision, the MHRA considers
each individual product on its merits and any information which
may have a bearing on the product's status, for example, the claims
made for the product, the pharmacological properties of the ingredients,
whether there are any similar licensed products on the market,
and how it is presented to the public through labelling, packaging,
promotional literature and advertisements.
The example claims shown above are clearly (and grossly)
Examples of the sorts of claims used on food supplements
which are accepted as not being medicinal are:
"Omega-3 fatty acids may help maintain a healthy heart"
"Antioxidant nutrients help protect the tissues against
the damaging effects of excess free radicals"
"Calcium is essential for helping maintain strong bones"
"Vitamin C helps support a healthy immune system"
"B vitamins are involved in the release of energy from
"X and Y may help maintain hormone balance"
New EU legislationthe Nutritional and Health Claims
Regulation which entered into force in January 2007requires
all health claims to have prior approval from the EU authorities.
|Melatonin "anti-ageing hormone"
||Prime Health Direct brochure, October 2008
|Kava Kava "anxiety, nerves, insomnia, depression"
||Wellform Direct mailing, September 2008
In 2002-03, the MHRA & Food Standards Agency created
parallel medicines and food legislation to prohibit the sale of
and import from outside the UK of the herb Kava kava following
concerns about liver toxicity.
Melatonin is classified as an unlicensed medicine.
|Name of the Company||Company Address
||Delivered by||ASA correspondence
Simply Supplements, Guernsey
|PO Box 204,|
Guernsey, GY1 3NB
||Adjudication published on 16 January 2008|
|(Also known as Pinnacle Health Ltd)||PO Box 204,|
Guernsey, GY1 3NB
|Royal Mail||Adjudication published on 7 January 2009.|
|Healthy for Life, Jersey||PO Box 216,|
Jersey, JE4 9SE
|Royal Mail||Adjudication published on 2 July 2008|
|PO Box 216,|
Jersey, JE4 9SE
|Royal Mail||Adjudication published 10 September 2008|
|Life Healthcare, Jersey||Freepost JE723|
Jersey JE1 1AF
|TNT||Adjudication published on 4 June 2008|
Jersey JE1 1AF
|TNT||Adjudication published on 4 June 2008|
The Towers Business Park,
Staffordshire, WS15 1UX
|Royal Mail||13 JuneComplaint was informally resolved, with ZipVit promising not to repeat the claims.
|Healthspan Ltd, Guernsey||Healthspan,|
PO BOX 425,
The Peter Port, GY1 3BT
|Royal Mail||Adjudication published 12 November 2008|
|Woods Supplements, Guernsey/Healthy Marketing Ltd
PO BOX 9600,
Channel Islands, GY9 3LY
|Royal Mail||Adjudication published 15 October 2008|
|Prime Health Direct||Prime Health Direct Limited,|
Guernsey, GY1 5SS,
Channel Islands UK
|Royal Mail||Adjudication published 14 January 2009|
|Stirling Health||Stirling Health Ltd,|
PO Box 622
St Peter Port
Guernsey GY1 4PZ
Stirling Health Ltd,
Jersey, JE1 1AF
|Guernsey Post, 2nd Class ?||ASA adjudication published 10 December 2008|
|Living and Loving||Living and Loving,|
PO Box 634,
Jersey, JE4 8YP
|Royal Mail||Adjudication published on 25 March 2009.|
PO Box 134,
Jersey, JE4 9QY
|Royal Mail||Adjudication published on 14 January 2009.|
The Channel Islands: Illegal and Unfair Competition
A BRIEFING NOTE
The UK specialist health food industry is being undermined
by illegal and unfair competition from businesses based in the
The problem is twofold:
(i) Companies based in the Channel Islands market and sell
products that contain illegal ingredients and/or make illegal
claims, including medicinal claims (eg product X may cure cancer
or heart disease), which are illegal according to EU medicines
legislation, as well as the Medicines (Advertising) Regulations
(1994) here in the UK, and thus potentially jeopardise consumer
(ii) This industry in the Channel Islands, currently worth
over £70million per annum, uses the low value consignment
relief (LVCR) to avoid paying VAT seriously undermining the profitability
of responsible UK suppliers (both retail and mail order) and diverting
substantial revenues from the Treasury.
The Channel Islands' (CIs) unusual status of crown dependencies
means that they are not fully in the UK, nor are they in the EU.
The applicability of certain UK or EU legislation to the Islands
is governed by the Protocol 3 of the UK's treaty of accession
to the European Community, which provides for free movement of
goods and trade between the islands and the member states.
Illegal claims and ingredients
In recent years, a number of operators, whilst targeting
the UK market, have located in CIs jurisdictions to take advantage
of the obscure legal status that these territories have. Virtually
all CI operators make medicinal claims for (unlicensed) food supplements
and herbal products; some make wildly exaggerated claims for "miracle
cures" for serious conditions; and some offer substances
ostensibly as food supplements that are classified as medicinal
in the UK, or containing other illegal ingredients. One effect
is that members of the public who are ill, risk being deflected
from seeking appropriate medical advice. Furthermore, CI operators
escape the need for compliance with standards similar to those
contained within UK food safety or pharmaceutical legislation.
Only recently the CIs adopted the necessary legislation to
deal with illegal medicinal claims. However, it remains to be
seen how effective enforcement will be not least because of the
lack of resources. The Medicines and Healthcare products Regulatory
Agency (MHRA) and Trading Standards Officers have power to take
steps against UK operators contravening the rules on "promotional
health claims" but they have no immediate jurisdiction in
the Channel Islands.
There is already widespread concern about the inequities
of low value consignment relief (LVCR) for Channel Island companies
to avoid paying VAT on deliveries valued at less than £18.
This is sometimes compounded by operators splitting parcels for
orders in excess of £18. Many CI businesses also contravene
the "contract for purchase" requirements for purchases
from an off-shore vendor. The rapid growth and predicted future
growth of trade from the CI in relevant sectors will exacerbate
the loss of VAT revenue to the Treasury (official estimates predict
a rise in lost revenue to £200 million pa).
The freedom to make illegal medicinal claims with impunity
combined with the price advantage generated by the LVCR has led
to CI operators capturing a substantial share of the UK food supplements
market (audited value £362 million in 2005). There are no
significant barriers to further growth and without effective intervention
it is inevitable that the CI share of the market will continue
to increase, with responsible EU and UK operators unable to compete
on a level playing field.
The European Union has recently introduced a raft of directives
and regulations imposing further restrictions on the sector, including
the Food Supplements Directive and the Regulation on Nutrition
and Health Claims made on foods, which the responsible UK operators
have complied with.
The UK Government's view has previously been that the CIs
are responsible for their own regulation of activities relating
to medicinal products. However, in the course of the HFMA campaign
to highlight the problem with illegal and unfair competition,
the Government has changed their view. In May 2007, a Minister
"The United Kingdom view is that the Nutrition and Health
Claims Regulation, the Food Supplements Directive and the Medicines
Directive remove barriers to the free movement of goods with the
European Union| [I]t is our view that the directives should apply
to the Channel Islands under Protocol 3." [House of Lords,
23 May 2007.]
The UK Government must now do everything in its powers to
encourage the authorities in the CIs to recognise their obligations
and effectively implement the above regulations without further
The UK Government and officials in the relevant institutions
should also work with other UK authorities and businesses including
the postal authorities, advertising regulators, periodical publishers,
Her Majesty's Revenue and Customs and others to ensure that every
avenue is explored to protect UK consumers and the responsible
UK health food trade.
Current status of legislation in Guernsey
Guernsey recently adopted a Commencement and Amendment Ordinance
that intends to implement the Medicines Directive 2001/83/EC,
through their primary legislation, Medicines (Human and Veterinary)
(Bailiwick of Guernsey) Law (2008). By adopting the Commencement
act, large parts of the Medicines Law have become applicable since
1 October 2009.
So far, Guernsey has not made a great deal of progress in
implementing the Food Supplements Directive or the Nutrition and
Health Claims Regulation, as they were concentrating on the Medicines
Law. Guernsey did recently confirm that the Board of the Health
and Social Services Department have directed their officials to
investigate the implementation of this legislation, which is a
positive step forward, although so far no firm commitments towards
an actual timetable for drafting the legislation have been made.
Now that the requirements of the EC Medicines Law have been enacted,
Guernsey will be able to focus fully on the implementation of
these essential pieces of law.
Current status of legislation in Jersey
Originally, both the Food Supplements Directive and the Nutrition
and Health Claims Regulation were meant to be implemented in Jersey
on the back of the implementation of the Food Safety Law in 2010.
However, Jersey has informed us that they have delayed that target
and that they have not included the Food Supplements Directive
and the Nutrition and Health Claims Regulation in the work programme
for the implementation of the Food Safety Law.
This delay is highly frustrating, especially as implementation
of this legislation by both Jersey and Guernsey Islands is becoming
even more pressing due to the forthcoming proposal for Maximum
Permitted Levels for vitamins and minerals allowed in food, as
set under Article 5 of the Food Supplements Directive. In addition,
the expiration of some transition periods in the Nutrition and
Health Claims Regulation puts additional pressure on UK companies
who, unlike their CI counterparts, will no longer be able to make
The fact that Europe is making further progress with the
Food Supplements Directive and the Nutrition and Health Claims
Regulation makes it even more important that Jersey and Guernsey
make progress with implementing this legislation and do not allow
it to fall off the agenda.
The UK Government must now ensure that it receives a timetable
from Jersey on the implementation of the Food Supplements Directive
and the Nutrition and Health Claims Regulation, as well as an
update from Guernsey with regards to their intentions to implement
this legislation, as soon as possible.
The HFMA (Health Food Manufacturers' Association) is a non-profit
organisation that was founded in 1965 to represent manufacturers
and suppliers of specialist health products in the UK. Our c120
member companies include many suppliers of specialist food supplements
and health foods. The HFMA operates long-standing codes of practice,
including a Code of Advertising Practice that is recognised by
the MHRA, to ensure that member companies adhere to high standards
and offer good quality, safe products supported by responsible,
lawful information, to UK consumers.
The issue of unfair and illegal competition from the Channel
Islands is identified by our members as one of the most important
issues impacting adversely upon their businesses.