Tatsuru Shibuya: Stamp out false labeling by rewarding
tip-offs
THE
ASAHI SHIMBUN
2009/5/20
To eradicate false labeling of food products, lawmakers have
enacted legal amendments to immediately punish offenders, without
issuing warnings or orders to rectify. The Diet on April 22 passed
the bill that incorporates such a clause to the Japanese
Agricultural Standards (JAS) Law.
Several times a year, I take part in consumer seminars on food
labeling as a lecturer. At the seminars, I also heard voices
calling for the reinforcement of the JAS Law and stricter
inspections of food labeling by the central and local
governments.
Some people had argued that false food labeling incidents were
rampant because the JAS Law was too soft on violators.
The law had dealt with companies that falsely label their products
according to the following three steps: 1) Instruct them to correct
and disclose false labeling; 2) Issue an order to companies that do
not comply; and 3) Punish those who ignore the orders.
As long as businesses make reasonable judgments, the labeling would
be corrected by the time an order is issued at the latest and
consequently no punishment is imposed. Therefore, the law lacked
deterrence, critics had argued.
Imposing heavier punishment is said to have been effective in
reducing accidents caused by drunken drivers. Given the situation,
some people think the introduction of stricter and more direct
punishment will also serve as an effective deterrent to prevent
false food labeling. But such a view is too rash for the following
reasons.
Firstly, administrative organizations had applied the JAS Law to
cases of false labeling that were deemed devious, and sometimes
violators also directly faced punishment under the Unfair
Competition Prevention Law. In some cases, offenders were charged
with fraud. Companies contemplating false food labeling would not
care either way if they broke the JAS Law or the Unfair Competition
Prevention Law.
Therefore, introduction of direct punishment under the JAS Law
would not be so effective.
Secondly, companies that plan to falsely label their products weigh
the advantages and disadvantages if they go ahead with their plans
or desist, and make decisions accordingly. For that reason, even
after direct punishment is introduced, they would only put their
plans into practice taking into account the risks of direct
punishment.
At the core of the problem is the fact that manufacturers are far
better informed about the products they sell than the consumers who
buy them. I call this situation "asymmetry of information."
Many of the false labeling scandals were exposed as a result of
whistle-blowing by insiders who inform authorities by such means as
the food labeling hotline set up by the Ministry of Agriculture,
Forestry and Fisheries. Therefore, first consideration should be
given to designing a system that would allow the market and buyers
to have more or less the same level of information as the
sellers.
Under the existing legal framework, the whistle-blower protection
law is believed to be the most effective means of deterrence. The
law, which went into force in 2006, protects whistle-blowers by
prohibiting companies and other organizations from dismissing or
otherwise harassing workers in retaliation for them informing
relevant authorities and the media about wrongdoing.
The Diet discussed the introduction of a system to pay cash rewards
to informers under the law. However, due to strong criticism from
industry, the law was enacted without the cash rewards. But a
supplementary provision of the law requires the government to
re-examine the law approximately five years after it comes into
force.
Introduction of cash rewards would prompt more people to come
forward to offer inside information. The government should give
first consideration to re-examining the whistle-blowing system and
introducing cash rewards for tip-offs.
* * *
The author is enrolled in a doctoral course at the Graduate School
of Agricultural Science, Tohoku University.(IHT/Asahi: May
20,2009)