On 17 July 2024, the new Labour government's legislative programme was unveiled in the King's Speech in London. This included a proposed new law called the Product Safety and Metrology Bill. In this Alert we look at:
- What the proposed new U.K. law aims to do;
- What the emerging new EU regime aims to do in parallel; and
- How these changes will affect the transportation, automotive and logistics sector.
What Will the New U.K. Law Do?
The idea behind this law is to enable the U.K. broadly to follow the developing European product safety regime, including:
- The new General Product Safety
Regulation(GPSR)
- This law governs product safety in the EU and is enforced by national regulators;
- It will come into force in the EU on 13 December 2024;
- The proposed amendments to the sister law, the consumer-facing
product liability directive
- This defines the circumstances in which manufacturers (and others) are liable to consumers for defective products; and
- The potential―but as yet still emerging― AI liability directive
- This is intended to complement the product liability directive; and
- Sets new rules for damage caused by the involvement of AI systems.
Since the U.K. is no longer part of the EU, the government needs to pass its own legislation if it wants to follow the EU's lead. The word "metrology" means using common standards, so in this sense, it's really a harmonization bill.
But there's a catch. The U.K. will not align with Europe if it's not in the best interests of U.K. businesses and consumers. How so? We don't know yet, but you can see the intent. If the U.K. doesn't like some part of the developing EU product safety regime, it will not adopt that part (e.g. the proposed directive seeks to establish a new presumption that a product is defective if the consumer can't prove defectiveness due to technical or scientific complexity (such as case of vehicle software), it will be enough to demonstrate that it is likely the product is defective). This cherry-picking notion is one of the intended benefits of Brexit.
As for enforcement, just as in the U.S., Europe and other markets, regulators will gain new and greater powers. These will include greater ability to share data with other regulators and market surveillance authorities.1
What Will the Emerging EU Regime Do?
All these laws have the same goal: to improve the safety of consumers, ensure compliance and (of course) enforcement. What's driving all this is the sense that the existing legislation doesn't do enough to protect the public from advances in technology.
After all, the new GPSR replaces an EU directive that dates back to 2001. Since then there have been huge advances in software, AI, supply chain complexity, robotics and powertrain technology, to name but a few. The new EU regulations will seek to meet all these challenges.
There will also be new product recall protocols (e.g., product safety recalls cannot place an "excessive burden" on consumers) and the new laws will even tinker with how litigation is handled. Expect more onerous disclosure requirements on defendants and new group action proceedings and changes to alleviate the burden of proof for consumers.
What Impact Can Be Expected on the Transportation, Automotive and Logistics Sector?
Subject Matter Experts
As ever in this sector, the technology is ahead of the regulation. With advances in technology, it will be vital that businesses acquire, develop and retain talent. In a world where the deck is increasingly being stacked in favour of consumers, it will be crucial to have subject-matter experts (SMEs) to address the higher burden being placed on defendants, particularly when it comes to software and AI. Those SMEs will need to be able to understand and explain technologies and complex systems.
Meanwhile, businesses facing claims will need to perform a balancing act between providing sufficient disclosure to defend themselves and protecting IP and trade secrets.
Supply Chains
More than ever, contracting best practice will be key. Given that so much technology is outsourced, it will be vital to have strong supply chain agreements in place to facilitate collaboration (whilst maintaining privilege). Contracts will need, among other things, to contain matching compliance and reporting obligations on suppliers, as well as audit rights and strong indemnities.
Processes
From a regulatory and risk mitigation point of view, now more than ever it will be vital that businesses have robust issue-spotting and escalation processes. Then comes the containment challenge. Businesses will need sophisticated expertise to identify and quarantine noncompliant products.
Consumers
In case you hadn't noticed, it's a consumer's world. While legislation like the GPSR would typically only be enforced by national regulators, it is expected that the provisions will give new remedies to consumers. This is particularly so in relation to recalls. Businesses will need to ensure that recall solutions are effective and that recalls themselves are managed efficiently. The difference between a well-planned and handled recall and an unstructured one can be the difference between facing isolated claims and a class action.
For More Information
If you have any questions about this Alert, please contact Alexander M. Geisler, Oliver Kent, any of the attorneys in our Transportation, Automotive and Logistics Industry Group or the attorney in the firm with whom you are regularly in contact.
Footnote
1. In 2018, the U.K. launched a new regulator called the Office for Product Safety and Standards (OPSS) to look after the safety of consumer products. The expectation is that the OPSS will be among the agencies to be granted new powers.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.