http://www.oliveoilsource.com/page/chem ... #Peroxides :
Peroxides are the primary products of oxidation of olive oil. Fats and oils such as olive oil are oxidized when they come in contact with oxygen. Oxygen may exist in the headspace of the container and dissolve in the oil. The oxidation products have an unpleasant flavor and odor and may adversely affect the nutritional value of the oil. Essential fatty acids such as linoleic and linolenic are destroyed, and certain fat soluble vitamins disappear. Fatty acids are oxidized by one of the following mechanisms.
Auto-oxidation occurs in the absence of air by reactive oxygen species or "free radicals". It is temporarily prevented by the natural antioxidants in the oil that absorb these free radicals. When the antioxidants are used up, the oil ages quickly.
Photo-oxidation occurs when the oil is exposed to natural and/or artificial light sources (including halogen lights and store lights). It causes serious deterioration of olive oil, as it can occur up to 30,000 times faster than auto-oxidation.
The more rancid or oxidized the oil, the more peroxides are present. Measurement of the peroxides in olive oil is a very simple procedure which can done at a testing lab or with a CDR tester. High quality extra virgin olive oils have a peroxide value of less than 10meq/kg. In order to be extra virgin, olive oil must have less than 20 meq/kg.