Medicines or Food Supplements: How to Avoid the Pitfalls of Real Estate Commercialisation?

Imagine you own a shop in Dax, in the thermal district. You wish to diversify your income by offering for sale products based on local plants, such as those famous pine extracts from the Landes region whose virtues are praised. But here's the catch: are these products simply food supplements or medicines requiring specific authorisation? The question is not trivial, as the answer determines your entire liability.

In the commercial streets of Mimizan, how many shops today offer 'natural' products with enticing health promises? And how many landlord-lessors are unaware that the nature of products sold by their tenants can implicate their own liability? This blurred boundary between food supplement and medicine is at the heart of a major decision by the Court of Cassation.

The judgment of 19 May 2009 forcefully reminds us that this distinction is not a mere administrative formality. It implicates consumer safety and the legality of commercial activities. For property owners, tenants, and real estate professionals, understanding this case law is essential to avoid costly disputes. But what exactly does this change for your daily activities?

The Facts: A Story That Happens Every Day

The story begins with Mr Bernard, director of a company specialising in the commercialisation of products based on natural extracts. Established in a commercial zone in the Mont-de-Marsan region, he has been offering for several years various products composed of cartilage extracts and medicinal plants listed in the pharmacopoeia (official list of medicinal substances). These products are sold as food supplements, without requiring medical prescription.

The problem? Mr Bernard is not a pharmacist. However, if it turns out that his products are actually medicines, their commercialisation by an unqualified person constitutes a criminal offence. The health authorities, alerted by reports, initiate prosecution. They consider that these products, by their composition and the claims accompanying them, meet the legal definition of a medicine.

At first instance, the court acquits Mr Bernard. The judges consider that the products are indeed food supplements. But the public prosecutor appeals, considering that the qualification was not correctly analysed. The court of appeal confirms the acquittal, but its decision will be quashed by the Court of Cassation. Why? Because the magistrates did not sufficiently justify their decision. They did not examine all the legal criteria for distinguishing between medicine and food supplement.

undefined, I have encountered cases where owners of commercial premises in Dax found themselves involved in similar proceedings, simply because their tenants sold products with unclear regulatory boundaries. Mr Bernard's story is therefore not isolated: it illustrates a very real risk for all actors in the real estate sector.

The Court's Reasoning — Analysed

The Court of Cassation, in its judgment of 19 May 2009, reiterates a rigorous methodology for qualifying a product. The judges criticise the court of appeal for having too quickly dismissed the qualification as medicine without having conducted the complete analysis required by law. In short, the lower court judges did not complete their investigative work thoroughly.

The legal basis rests on Articles L. 4211-1 and L. 5111-1 of the French Public Health Code. Article L. 4211-1 defines a medicine as 'any substance or composition presented as possessing curative or preventive properties with respect to human diseases'. Article L. 5111-1, meanwhile, concerns medicines by function, i.e., those that act on the human body. In other words, a product can be qualified as a medicine either by its presentation (what is said about it) or by its function (what it does).

The Court of Cassation requires a case-by-case analysis, taking into account all the characteristics of each product. This includes: its exact composition, its pharmacological (effects on the body), immunological or metabolic properties established scientifically, its modes of use, the extent of its distribution, consumers' knowledge of it, and potential health risks. It is a complete checklist that every judge must go through.

The crucial point: when a product can be considered both a medicine and a food supplement (defined by the decree of 20 March 2006 as having nutritional or physiological properties), the doubt must benefit the qualification as medicine. This precautionary principle aims to protect public health. The court of appeal failed in this obligation by not verifying whether the products were presented as having curative properties, and by not examining each product individually.

This reasoning represents a confirmation of prior case law, but with particular emphasis on the rigour of the analysis. Mr Bernard's arguments (invoking the natural character of the products) were not sufficient to dismiss the qualification as medicine. The Court thus reminds us that the natural origin of a substance does not automatically exempt it from the medicine regime.

What This Changes for You — Practically

For landlord-lessors, this decision is a warning signal. If you lease a commercial premises in Mimizan to a tenant who sells natural products, you must ensure that these products are correctly qualified. In case of health inspection and erroneous qualification, your tenant risks criminal prosecution, and you could be held civilly liable if the lease includes guarantee clauses. Imagine a product sold as a food supplement in a shop on the seafront, but later qualified as a medicine: the financial consequences can be heavy.

For commercial tenants, vigilance is required. Commercialising a product as a medicine without authorisation exposes one to penalties of up to 2 years' imprisonment and a €75,000 fine (Article L. 4211-6 of the French Public Health Code). If you are in this situation, you must imperatively verify the qualification of each product with a regulatory expert before market placement. Verification delays can take several weeks, but it is a necessary investment.

For purchasers of business assets, this case law adds an additional due diligence (preliminary verification). Before buying a shop specialising in natural products in Dax, demand a complete regulatory audit of the products sold. A defect in qualification can lead to nullity of the sale or compensation. In a recent case, a purchaser discovered after the purchase that 30% of the business's products were actually unauthorised medicines, resulting in a loss of value of €50,000.

For co-owners of shopping centres, the management of commercial activities must integrate this risk. The co-ownership regulations can include clauses prohibiting the sale of products on the medicine/food supplement boundary without prior authorisation. Be careful, however: these clauses must be proportionate and not unduly hinder freedom of commerce.

Four Tips to Avoid This Type of Dispute

• Systematically verify product qualification: Before leasing premises to a trader who sells natural products, require a certificate from a regulatory expert certifying that each product is indeed a food supplement and not a medicine. This document must be updated annually.
• Include protective clauses in your leases: Insert a specific clause in the commercial lease obliging the tenant to comply with medicine regulations and to assume all financial and criminal consequences in case of breach. Providing a financial guarantee (deposit or insurance) can be wise.
• Raise awareness among your tenants about risks: Organise an information meeting with your commercial tenants to explain the criteria for distinguishing between medicines and food supplements. Active prevention significantly reduces the risk of disputes.
• Document all exchanges on the subject: Carefully preserve all written exchanges (emails, letters) with your tenants regarding the nature of products sold. In case of dispute, this documentation will be crucial to establish your good faith and diligence.

Deep Dive: Related Case Law and Developments

This decision fits into a consistent line of case law. Already in 2003, the Court of Cassation (judgment no. 01-85.678) had reiterated that the qualification of medicine must be examined with rigour, particularly for plant-based products. The trend of the courts is clear: faced with the development of the natural products market, judges are tightening their control to protect public health.

A prior divergent decision could have created confusion. In 2005, a court of appeal had acquitted a trader by considering that similar products were food supplements without thorough analysis. The 2009 judgment corrects this overly lax approach. What few people know is that this evolution corresponds to a 2004 European directive strengthening the regulation of herbal medicines.

For the future, this case law means that controls will multiply. Health authorities, particularly in tourist regions like the Landes where local products are valued, will increase their vigilance. Real estate professionals should expect more frequent inspections in shops selling natural products. How to react? By anticipating and strictly complying with regulations.

In Practice: What to Do

Here is a numbered checklist to guide you:

1. If you are a landlord-lessor: Before signing a lease with a trader of natural products, require a complete file including exact product compositions, their marketing authorisations, and an expert certificate. Particularly verify health claims on packaging and advertisements.

2. If you are a commercial tenant: Consult an expert in health product regulations before commercialising any new product. Maintain an up-to-date register of all your verifications. Train your staff on the limits of what can be said to customers regarding product effects.

3. If you are in ongoing dispute: Do not attempt to settle a dispute on product qualification alone. Immediately call upon a lawyer specialised in health law and real estate law. Prescription periods are short (generally 3 years), act quickly.

4. If you are considering a business asset sale: Include in the sale deed a specific guarantee clause concerning the regulatory qualification of products. Have an independent audit conducted whose conclusions will be annexed to the deed.

5. If you are a co-owner of a shopping centre: Propose at the general meeting the adoption of a resolution creating a commission to control commercial activities, including a section on compliance of products sold.

Do you find yourself in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →