Food safety standards are among the most stringent in the world—and rightly so. As a result, food manufacturers need to assure the public that their products are safe and that when there is a lapse in such a duty of care, they can put the problem right safely and immediately. Unfortunately, France’s Lactalis has seemingly failed on both counts.

The French dairy giant has been forced to recall baby milk from 83 countries after it emerged that its own tests had discovered salmonella at one of its key factories last August and November. In fact, it believes that the contamination could have stemmed from renovation work carried out in early 2017. The company, one of the world’s largest producers of dairy products, however, only informed France’s health authorities and the public in December—over nine months later.

In the two months since the scandal unfolded, Lactalis has suffered a PR disaster of its own making. The company’s bungled attempts to remedy the situation have forced it to widen its recall from those products linked to just one of its drying towers from February last year to the entire range of products manufactured in one of its main factories, irrespective of production date.

Lactalis carried out its first product recall on 2 December after discovering suspected salmonella contamination in its infant formula milk the day before. The salmonella agona bacteria is dangerous for young and elderly people and can provoke severe diarrhoea, stomach cramps and vomiting.

On 10 December Lactalis announced that it had decided to remove “some” batches of infant nutrition products manufactured after 15 February 2017 using a specific drying tower used to reduce milk, “despite the fact that all the batches exported … conformed to local rules.” The company said that not all of its products were affected by the recall as some were manufactured “in another industrial facility.”

The statement made no mention of the fact that on the same day, the country’s consumer protection agency, the DGCCRF, ordered the suspension of the sale and export of several baby food products made at the Lactalis Craon plant.

“This case is serious. It has given rise to unacceptable behaviour that will have to be punished.”
French Economy Minister Bruno Le Maire

On 21 December the company decided—as “a precautionary measure” taken in consultation with France’s health authorities—to carry out a further product recall that would include all infant and nutritional products manufactured or conditioned since 15 February 2017.

On 12 January, however—some six weeks after the contamination was officially disclosed—the company announced its third product recall would cover all infant formula made at its Craon plant, regardless of the manufacture date or batch number. The plant has been at a standstill since 8 December and has put 250 of its 327 staff on shorter working hours. It is expected to remain closed for several months.

As if the recall itself was not bad enough, French police, prosecutors, and health officials have also been crawling over the company’s premises since the scandal broke. Paris investigators opened a preliminary inquiry into the company on 2 December for suspected fraud as well as health and safety failings. Officials from the national anti-fraud bureau also swooped on the factory and found salmonella contamination on the assembly line where milk is transformed into powder.

On 17 January, French police and investigators from the DGCCRF and France’s public health agency OCLAESP raided the Lactalis’ headquarters in Laval, western France, as well as its nearby Craon factory where the contamination occurred. Searches were also conducted at the offices of Lactalis Nutrition Sante and Lactalis Nutrition Dietetique in Torce, Brittany, which hosts the group’s quality control services, according to sources. French prosecutors have now launched a judicial investigation into the contamination.

Fortunately so far, just 37 infants who have consumed the company’s infant milk products have been confirmed with salmonella infection (35 of which are based in France, with one case in Greece and another in Spain). Of the babies taken ill in France, 18 were hospitalised. All are now recovering well, according to France’s public health agency.

The company can also take comfort that its safety breach is in no way as severe as one that occurred in China in 2008, where six babies died and around 300,000 others fell ill after Chinese manufacturers added the industrial chemical melamine to their infant milk powder products.

Lactalis’ products are routinely shipped across Europe, Asia, and Africa, which means that the scale of the recall is massive: Currently, it affects 12 million boxes of powdered baby milk under the company’s Picot, Milumel and Celia brands across 83 countries.

EU rules on food product recalls

Rules outlining the duty of care that companies have regarding food product recalls are set out under the European Union’s General Food Law Regulation (EC) 178/2002. The key article of the legislation that applies to this case is Article 19 on “responsibilities for food: food business operators.”
This states that if a food business operator “considers or has reason to believe that a food which it has imported, produced, processed, manufactured or distributed is not in compliance with the food safety requirements, it shall immediately initiate procedures to withdraw the food in question from the market where the food has left the immediate control of that initial food business operator and inform the competent authorities.” It adds that where the product may have reached the consumer, “the operator shall effectively and accurately inform the consumers of the reason for its withdrawal, and if necessary, recall from consumers products already supplied to them when other measures are not sufficient to achieve a high level of health protection.”
Article 19 also states that a food business operator shall “immediately inform the competent authorities if it considers or has reason to believe that a food which it has placed on the market may be injurious to human health”. Operators shall also “inform the competent authorities of the action taken to prevent risks to the final consumer”, and shall not prevent or discourage any person from cooperating, in accordance with national law and legal practice, with the competent authorities, where this may prevent, reduce or eliminate a risk arising from a food.
Furthermore, the regulation says that “food business operators shall collaborate with the competent authorities on action taken to avoid or reduce risks posed by a food which they supply or have supplied.”
And the regulation does not apply solely to food producers: retailers also have obligations under Article 19. For example, it states that “a food business operator responsible for retail or distribution activities…shall…initiate procedures to withdraw from the market products not in compliance with the food-safety requirements and shall participate in contributing to the safety of the food by passing on relevant information necessary to trace a food, cooperating in the action taken by producers, processors, manufacturers and/or the competent authorities.”
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—Neil Hodge

The company has admitted that tracing affected batches will be difficult because it does not know how many boxes have already been consumed. But the situation has been made more difficult—and potentially more dangerous—after several retailers have admitted that they continued to sell the range of products to the public, despite being aware of the recall and the ban on their sale in December.

Supermarket chain Carrefour has said that it had sold 434 boxes of baby milk produced by Lactalis that should have been withdrawn, while Leclerc said it had sold 984 since the recall, and Auchan 52. Hypermarket chain Casino has admitted selling a total of 403 items covered by the recall, and Systeme-U says it has also sold 384 boxes.

French Economy Minister Bruno Le Maire has described the contamination, delayed recall, and continued sale of the products an “abnormal failure.” The country’s Agriculture Minister Stephane Travert has similarly said that “this is a major dysfunction in the withdrawal and recall by the operators who bear the responsibility.”

Le Maire has since met France’s National Consumer Council to discuss ways to improve withdrawal and recall procedures. He has also threatened action. “This case is serious. It has given rise to unacceptable behaviour that will have to be punished,” he said on 12 January.

Naturally, Lactalis has attempted to improve its image, with one of its spokespeople attempting to downplay the rift between the company and the government, and trying to convince the public instead that the firm was working “in perfect collaboration” with officials to contain the outbreak. The claim was swiftly rebuffed by Le Maire, who told French television: “If there had been perfect collaboration, I wouldn't have had to sign an order on December 9 demanding the recall of more than 600 shipments of baby milk.”

For a family-owned company that courts high-ranking politicians but shuns public statements, it has been left to its chief executive Emmanuel Besnier to try to fight fires in the press. In an interview with a local newspaper, Lactalis’ media-shy boss rejected criticism of the recalls’ mismanagement, as well as allegations that the company had slowed the process to curb financial losses.

"We have never ignored the risk of salmonellosis. Recall is a maximum precaution. Our job is to put healthy products on the market ... But we consider that there were no failures on our part on the procedures," Besnier told the weekly Le Journal de Dimanche in his first interview in nearly 20 years. He also denied claims that Lactalis lied about the dates and amount of stock affected by the salmonella outbreak. “At no point was there any intention of hiding things,” he said.

Hundreds of families have already filed lawsuits against the company, and Besnier has proposed to pay (unspecified) damages to the families whose infants have been affected. However, Quentin Guillemain, the president of the victims' families association, said, “families want the truth. They are not waiting for compensation, but that such a scandal is not renewed.”

The scandal surrounding what Lactalis knew about the contamination (and when) is likely to rumble on for some time. In the meantime, the company is counting the cost of production being effectively shut down at one of its key plants, as well as calculate what provision it may need to make to settle likely legal costs and fines. So far—and unless a baby dies—there has been no talk of specific criminal sanctions against the company, the retailers or any individuals, other than a vague warning that some form of “action” will be taken.

But experts think that the case highlights a number of issues that organisations and compliance officers need to consider if they are ever faced with a recall. The most obvious impact is financial. For example, Cadbury Schweppes took a £20m (U.S.$37.5M at the time) hit and a one percent drop in market share in 2006 when it was forced to recall one million of its chocolate bars due to a salmonella scare.

“Product recalls can be expensive, but most manufacturers are insured against such scenarios,” says Kiran Nayee, head of recall at insurance broker JLT Specialty. “However, where it really bites is when factories are forced to close. Companies might be insured against recalls, but they may not be covered for business interruption, or if they are, the level of cover is not adequate.”

To avoid financial and reputational disaster, Nayee says that companies need to have suitable systems in place to ensure that sourced products are checked and can be traced, and that similar checks are carried out for finished products too. He also says that companies need to ensure that quality control procedures are robust, conducted regularly and monitored, so that the time that any contamination takes place can be more easily and accurately determined. Product recalls should also be conducted in line with regulatory guidelines “to the letter” and that industry best practice (if available) should also be followed.

Alistair Mackenzie, a product liability barrister at 2 Temple Gardens, says that the case has revealed some “very worrying” details. “Food production is one of the most regulated industries in the world and it is troubling that a company of this size can link contaminated products back to February and beyond but seemingly have taken no discernible action to prevent their sale until December,” he says.

“It is also very troubling that retailers should continue to sell potentially contaminated products that have been banned by a government department and are undergoing a recall. These companies could be found liable for not withdrawing these products from sale,” he says.

Mackenzie says that the problems at Lactalis reinforce the need for food operators—as well as companies generally—to ensure that they have full traceability of the materials used in the product’s manufacture, as well as the final products’ sale and distribution.

He also says that when a product recall is necessary, companies should alert the necessary authorities “immediately,” as well as use their advice and expertise. “Those regulatory bodies that oversee recalls will have more experience and expertise than your company will about how to trace products, detect possible contamination, and remediate systems and processes to get production up and running again safely. Use their expertise—it can save you a lot of money in the long-run.”