The General Product Safety Directive (GPSD), as implemented by each of the member states of the European Union (EU), introduced a new safety regime to the EU. Through various national implementing measures, new obligations have been imposed on producers, suppliers and distributors of consumer products.
Certain consumer products, such as toys, cosmetics and electrical appliances, are covered by sectoral directives. Where a product is subject to specific safety requirements imposed by a sectorial directive, the GPSD will only apply to the aspects and risks or categories of risks not covered by the sectorial directive.
The general safety requirement
The GPSD provides for a primary obligation for producers and distributors of consumer products to place only safe products on the market. A ‘safe’ product is one which, under normal or reasonably foreseeable conditions of use, does not present any risk to consumers, or only the minimum risks compatible with the product’s use. All other products are deemed to be ‘dangerous’ products.
Supporting obligations
This general safety requirement is supported by various secondary obligations which require producers and distributors of consumer products to share and report information concerning risk, and to take appropriate action to manage such risk, including, if appropriate, recalling the products.
In particular, producers and distributors must immediately notify a competent enforcement authority where a product is known to pose a risk to consumers that is incompatible with the general safety requirement and immediately inform the competent authority of any action taken to prevent risks to consumers.
If a competent authority considers the risk to consumers to be ‘serious’ (i.e. requiring rapid intervention), it is obliged to notify the Commission with ‘due dispatch’. The Commission will share this information with other member states through RAPEX, its rapid alert system for dangerous consumer products. Sharing the information via RAPEX will discharge any obligation to notify other national authorities in the RAPEX area.
The competent authorities are obliged to promote and encourage voluntary action, but where a competent authority has reasonable grounds for believing that a product is dangerous and the voluntary action taken by a business is deemed insufficient compared to the risk to consumers, it can order the business to take appropriate measures, including recalling the product (sometimes at very short notice).
In addition to ensuring that information about dangerous products is quickly shared, RAPEX also maintains a comprehensive record of product safety data. Its 2006 report confirmed that the number of notifications has continued to increase since the introduction of the GPSD. However, the RAPEX data also reveals a lack of uniformity in the enforcement of the safety regime in the EU: some countries prefer voluntary action, while others lean towards compulsory action. This lack of uniformity in remedial measures can reduce the benefits of the ‘one-stop shop’ in RAPEX notification: while RAPEX discharges the obligation to notify other national authorities, these authorities can demand different actions in their territories.
The increase in notifications is the inevitable result of the heightened focus on product safety in the EU that has followed the implementation of the GPSD. Another significant factor is the growing number of products, such as children’s toys, imported from low-cost manufacturing countries. In 2006, the category of products most commonly the subject of notifications was toys (221 notifications, 24%) and countries in Asia formed the majority of the countries of origin of these recalled products. This factor prompted the Commission to embark on its two-month stocktaking exercise, using toy safety as a case study.
A stocktaking review
The review had two main objectives. First, to obtain an overview of the existing legislative framework and related activities in member states and their main international trading partners; and secondly, to identify and remedy weaknesses in the system.
Key messages derived from the Commission’s findings are:
- The current EU legislative framework, including legislation in the pipeline (for example the revised Toy Directive, which is due in the first quarter of this year), is capable of ensuring a high level of consumer protection and facilitating intra-community trade.
- Enforcement is key - while reputable businesses are making a significant effort to ensure the safety of their products, at the lower end of the market, further efforts are required. In this regard, traceability is paramount. Currently, this is limited to the EU (an economic operator placing a product on the European market is responsible for its safety and that operator must, therefore, be identified); however, the Commission wants to improve traceability, ideally all the way to the source of a product.
- Businesses must take full responsibility for the safety of their products (as laid down in the GPSD). Outsourcing this responsibility is not acceptable.
- The Commission will step up its work with national surveillance authorities. Priority will be given to enhancing co-operation between customs and market surveillance authorities, particularly to strengthen the interoperability of risk information systems in customs (RIF) and consumer and food rapid alert systems (RAPEX and RAFF).
- Co-operation with international trading partners is crucial. Although considerable progress has been made in preventing dangerous consumer goods entering the EU market, more will need to be done in relation to enforcement and traceability of goods.
Liability under the GPSD
Failure to comply with the obligations arising under national laws implementing the GPSD can not only result in significant reputational damage for a business, particularly in the event of a product recall, but also give rise to criminal liability under national laws. In England and Wales, the penalty for each offence can be a fine of up to £20,000 and/or up to 12 months of imprisonment.
Practical guidance
All businesses that produce, import and/or supply consumer products must comply with the safety standards prescribed by the GPSD. That being so, all such businesses should carefully evaluate their internal systems for quality assurance and the management of risk. In particular, where businesses import products directly from markets with histories of product safety concerns, it is their duty to ensure that such products are safe and the various obligations provided for by the GPSD are complied with. Reliance upon warranties from non-European manufacturers that products have been adequately tested may not be sufficient and additional quality controls to ensure that their products are safe may be required. Moreover, in the light of recent highly-publicised disputes along supply chains, it is advisable to review existing contractual documentation to make sure that it has a clear delineation of responsibility for failures of quality assurance, as well as robust dispute resolution provisions.
Additionally, given the speed with which producers and distributors of consumer products are now expected to report risks arising in relation to their products and the corrective action they have taken to minimise the risk to consumers, it has never been more important to establish a rapid response system to deal with information concerning risk and to implement a crisis management plan to enable swift and thorough product recalls.
The RAPEX 2007 Annual Report is expected in April this year.
John Colahan is a partner in the competition practice and Mark Clarke an associate in the litigation department at Latham & Watkins in London.
