What's in a Name?

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German bakers are very upset over a new machine at Aldi that produces "fresh baked bread" at a moment's notice:


Germany--Standing in Aisle 1 of a local Aldi supermarket, between the €2.59 ($3.62) bottles of sparkling wine and the packaged bread, German master baker Wolfgang Schäfer is in enemy territory.

The third-generation baker lobs 15 cents into the massive, beige-colored automat before him, presses a button and cocks his ear to the machine for any clues to what's transpiring inside. Almost instantly, a warm wheat roll plunks into the bin below.

"Not even two seconds," says the 55-year-old Mr. Schäfer, who had switched out of a white shirt embroidered with his family bakery's insignia into a less conspicuous checkered button-down for the stealth fact-finding mission. "Whatever goes on in there, it's certainly not baking."

What exactly does happen inside the automats has become a matter of dispute between Aldi Süd, a discount supermarket chain, and most of Germany's 15,000 traditional bakeries, since the company began installing the machines in hundreds of its German stores this year. The automats are emblazoned with the word Backofen, or "baking oven," and pictures of bowls of whole grain and bouquets of wheat. Aldi markets the rolls and bread the machines dispense as "fresh out of the oven--direct into the bag."

But to thousands of German bakers, Aldi's freshness claim is half-baked. Worse, they charge, it misleads customers who might equate the German discounter's baked goods with the bread they and their employees knead, shape and bake through the wee hours of every morning.

The German Bakers' Confederation, steward of the country's centuries-old bread-making tradition, is taking Aldi Süd--one of the two companies that make up the Aldi empire--to court on claims of deceptive advertising. Aldi Süd says it rejects the claims in the lawsuit.

I am certainly not against all false advertising statutes--the government's role in ensuring transparency is extremely important.  But this seems like an egregious abuse of the statute.  The bakers are not altruistically worried that consumers will be hurt by their decision; they're worried about competition cutting into their profits.

Indeed, it's hard to see how a consumer could be hurt by this.  Fresh baked bread does not have some sort of magic, hard-to-observe qualities like preventing cancer; it just tastes better.  Consumers are in a very good position to observe whether the bread they buy at Aldi does, in fact, taste better; if not, they can always go back to their local bakery.  What purpose, then, does suing for false advertising serve? 

One could ask the same about France's rigid rules about regional naming, making it illegal to call anything Bordeaux unless it comes from a rigidly defined geographical area.

The US is not quite as bad about this sort of thing as many European companies are, but we have a fair amount of this nonsense, particularly surrounding food--so that there are strict rules, for example, about how much beef a soup must have before you can call it "beef soup with vegetables" rather than "vegetable soup with beef".  Yet the amount of meat in a soup is easily observed directly by the consumer, and if they don't like it, they can always buy a different brand of soup.

Transparency should focus on products that are costly and qualities that are hard to observe--ensuring that kosher food is actually kosher, and low-fat food is low in fat, and that the car alleged to have a v-6 engine and passenger-side airbags actually does.  Quibbling over semantic labeling distinctions wastes time and energy--and worse, often serves as a forum for anti-competitive maneuvering.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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