European Union: European Commission Solidifies Reform To The Product Safety Regime

Summary and implications

The European Commission (the Commission) has published its proposals to revise the rules for the safety of consumer products marketed in the European Union (EU). To the extent that this removes uncertainty and promotes a more evolved regulatory regime in line with other regulated spheres, it can only be seen as good news for manufacturers and suppliers.

The prior three years of debate have culminated in the proposals which seek to bring the legislation in line with the "New Legislative Framework" agreed in 2008. For businesses in the consumer product supply chain, the reform package, once adopted, will have significant practical implications for manufacturers, distributers and sellers of products.

The new measures include, for example, the prospect of greater scrutiny and regulatory intervention when unsafe products are placed on the market and significant new labelling and documentation obligations. 

Product safety and technical document retention, including risk assessment

The proposed General Product Safety Regulation will be directly applicable and enforceable in every member state of the EU. It will encapsulate the current legislation in product safety within EU Directives and will include additional wider and more onerous obligations. An exception is where there are specific safety requirements such as the Toy Safety Directive or the Personal Protective Equipment Directive where these product specific requirements will remain.

Manufacturers will have to provide technical documents about the product, which include, in particular, a risk assessment and solutions to show mitigation or elimination of risks. This requirement will add to compliance costs and will need to be managed with care by all product manufacturers.

All economic operators (which includes manufacturers, own branders (a person who places a product on the market under his own name or trade mark), authorised representatives, importers and distributors) must be able to identify the economic operator that previously handled the product, and to whom they supplied the product, up to 10 years later.

Traceability

One of the key issues addressed by new Regulations is the concept of traceability of potentially dangerous products, as the Commission put it, to "reflect the challenges of a globalised market". There are significantly enhanced labelling requirements, including the labelling of all products with country of origin, the manufacturer and importer, type, batch and serial numbers.

Where products are likely to pose a serious risk to consumer health and safety, the Commission can require operators to put in place an electronic traceability system.

Duties down the chain

The proposed changes prescribe more explicit obligations on parties in the supply chain to take responsibility for the safety of products they are handling. Each economic operator below the manufacturer in the supply chain will be expected to ensure that the economic operator above them has complied with certain key duties, in particular:

• There are explicit obligations on importers to ensure that the manufacturer has complied with its obligations on labelling for manufacturer's identity and product identification, and has produced technical documents for the product.
• A distributor (including wholesalers and retailers) must verify that the manufacturer and the importer have complied with their obligations on labelling for identity and product identification, and that the product is accompanied by consumer instructions and safety information in the appropriate language as produced by the manufacturer or importer.

This is in line with the intention of the Commission to ensure that information about potentially dangerous products is quickly disseminated among the enforcement authorities.

Market surveillance regulation

The current rules on market surveillance are spread across the current legislation on Consumer Product Safety, creating uncertainties for both economic operators and national authorities. The proposed Regulation on market surveillance of products will enhance and strengthen co-operation and exchange of information between national authorities, and with those outside the EU.

A further key development relates to the concept of "risk" in the Regulation: it does not apply only in the context of the health and safety of consumers. It will set out powers and responsibilities for authorities to deal with any "product having the potential to affect adversely health and safety of persons in general, health and safety in the workplace, consumer protection, the environment and public security...". Where a product presents a risk (a widely defined concept), economic operators must take corrective action, ranging from affixing warning labels to product recalls.

Penalties

Member states would be free to determine national penalties for infringements by the relevant economic operator, despite the fact that the proposed EU Regulations will be directly applicable. Penalties must be calculated with reference to the size of the offending economic operator.

There are more explicit, and expanded obligations on national authorities to investigate and exchange information on product risks, including obligations to share information with authorities outside the EU, even if information is confidential to the business. There are also more explicit powers for national authorities to require manufacturers, importers and distributors to undertake recalls, and for the authorities to carry out recalls and other activities at the expense of the business.

The regime has been expressed to be a zero tolerance for formal breaches of labelling and documentation requirements.

Conclusion

The Commission asserts that the key to effective protection of consumers and the prevention of other risks is to ensure that the authorities have both the power and the obligation to enforce the regulations for which they are responsible.

In the case of harmonised products, an economic operator's non-compliance with labelling obligations, incomplete technical documents or failure to produce a technical document, will trigger action by national authorities. Such non-compliance will be considered sufficient reason for national authorities to decide that the product may present a risk and to require the economic operator to rectify the non-compliance, regardless of whether a risk assessment shows that the product does, in fact, present a risk. The product would be withdrawn from the market if the economic operator failed to rectify the non-compliance. The changes will result in increased costs for businesses and potentially greater risks in the event that unrecognised issues arise.

The reform package is now being considered by the European Parliament and Council of the EU. Depending on the outcome of that, the expected date for the new legislation to come into force is 2015. Companies should begin to plan now for the changes that they will need to make and budget for any extra costs that they may incur.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.