Nutrition and health claims - call for and justification of governmental intervention from the consumers' perspective

In December 2006 the Regulation (EC) No. 1924/2006 on the use of nutrition and health claims (NHCs) on foods was enacted in order to prevent consumer deception and to harmonise law within the EU. Against this background, this paper analyses the potential costs and benefits linked with NHCs and the necessity for governmental intervention to regulate NHCs within a theoretical and empirical framework. The theoretical investigation shows that NHCs can induce direct economic effects as well as spillover effects in the market of information. Whether those effects are beneficial or adverse depends on the truthfulness of the NHCs, and consumers' perception and processing of such claims. As self regulatory forces of the market might not be sufficient to prevent market failure due to fraudulent claims, governmental intervention seems necessary. An analysis of the EU Regulation on NHCs reveals that this law focuses on preventing the authorisation of false or misleading claims. It is less concerned with not authorising a true and correctly understood claim. The results of the empirical analysis which is based on a standardised consumer survey reveal that the stated impact of NHCs on product perception considerably differs among consumers. While e.g. some consumers feel misled by NHCs on products with a negative nutrient profile such as candies, others point out that such claims have no impact on their product perception or even help them to make better choices. The results also indicate that the great majority of consumers is opposed to a ban of NHCs on products with a negative nutrient profile such as candies and salt.