German authorities are investigating about 200 poultry farms for allegedly selling millions of eggs as organic and free-range products even though they came from battery hens.
The food scandal made front-page headlines Monday, coming weeks after revelations that horse meat has been found in frozen meals labelled as beef dishes in around a dozen European countries.
Under German rules, eggs can only be labelled "bio" or organic and free-range if the hens are held in spacious conditions and their feed is free of antibiotics, chemicals and genetically modified content.
Photographs obtained by an animal welfare group and published by German media on Monday showed hens packed tightly into cramped metal cages, many missing feathers and covered in wounds and sores.
Prosecutors are investigating about 150 farms in Lower Saxony and 50 more in other states as well as Belgium and the Netherlands, reported the news weekly Spiegel which uncovered the story.
Germany's consumer affairs minister, Ilse Aigner, said: "If the accusations hold true, this is large-scale fraud - fraud against consumers and against Germany's many honest organic farmers."
"Bio" foods and other products have captured a large slice of the German market, even though they are often slightly more expensive, as many consumers worry about food safety and animal welfare.
Under German guidelines, eggs labelled as free-range must come from hens which have at least four square metres of space.
Fraudulently mislabelling food as bio or organic if it fails to meet the tough production criteria, can carry fines and a prison term of up to one year for the producer.