15 October 2015

CJEU decision increases burden on producers, importers and suppliers of components

SVHCs in component parts above 0.1% concentration must be notified

In a ruling with significant implications for producers, importers and suppliers of complex articles, the Court of Justice of the European Union (CJEU) has followed an earlier Advocate General's opinion that producers and importers of articles must notify ECHA if any of the components in their articles contain a substance of very high concern (SVHC) above a concentration of 0.1% weight by weight. Suppliers of products comprising any individual component will also have to provide information to recipients and, upon request, consumers.

Background

Since the REACH Regulation first came into force, there has been fierce debate between the European Commission and certain Member States on notification and information requirements for information on SVHCs in complex articles.

Article 7(2) of REACH requires producers or importers of articles to notify ECHA if an SHVC is present in quantities of more than one tonne per producer or importer per year at a concentration of 0.1% weight by weight (w/w). The requirement will not apply if the producer or importer ensures that there will be no exposure to humans during normal or reasonably forseeable conditions of use. In that situation, the producers or importers must instead provide instructions to recipients on safe use. It also does not apply to substances which have already been registered for the same use.

Under Article 33 of REACH, suppliers of complex articles have a duty to to provide a recipient of the article containing an SVHC in a concentration above 0.1% with enough information as is available to the supplier to allow safe use of the article, providing, as a minimum, the name of the substances.  "Suppliers" includes producers, importers, distributors or any other actor in the supply chain placing an article on the market.

The European Commission's guidance on Substances in Articles took the view that these obligations on substances in articles referred to the entire article rather than to its' component parts. This followed an earlier Commission Opinion that stated that objects which meet the definition of an article "cease to be individual articles and become components once they are assembled into another article" with the result that the notification and information obligations "...apply only with respect to such assembled article, and not with respect to its individual articles".

Several Member States[1], however, disagreed with this approach and the European Commission's own guidance noted the differing views.

The Judgment settles a preliminary issue referred by the French Government after two trade bodies challenged a ministerial notice that the obligations under Articles 7(2) and 33 apply to component parts of a complex product. In February 2015, Advocate General Kokott of the CJEU issued an Opinion supporting the view of the ministerial notice. As is frequently the case, the CJEU has now come to the same conclusion.

Complex products and articles

Under Article 3(3) of the REACH Regulation, an 'article' is an object "which, during production, is given a special shape, surface or design which determines its function to a greater degree than does its chemical composition".

The judgment notes that, under the REACH Regulation, manufactured objects only cease to be articles in two situations. Firstly, if a production process alters the special shape, surface or design which is more decisive for its function than their chemical composition and, secondly, if they become waste as defined under the Waste Framework Directive[2].

The CJEU concluded that isolated articles and articles incorporated into a complex product should not be treated differently. The Court noted the REACH Regulation's "legislative silence" on component parts and stated that the issue must be construed in the light of the principal objective [of the REACH Regulation]" to monitor chemical substances "when they are contained in articles".

Ruling on Notification under Article 7(2)

The judgment confirms the AG's opinion that a producer must determine whether an SVHC is present in a concentration above 0.1% w/w of any article which it produces and, further, the importer of a product made up of more than one article must also make the same determination for each article. The producer does not have this obligation in relation to component parts which it uses as an input into a complex article (although, in this case, the third party producer will have the notification obligation for parts which it produces or assembles). If the article is then used downstream by a second producer as input for a complex product, the second producer will not also be required to notify ECHA of the SVHC.

An importer also has SVHC notification obligations in relation to each component part of a complex product. The CJEU states that this position is not altered by the fact that importers of complex products from non-EU suppliers may have difficulty in obtaining the necessary information.

Ruling on information under Article 33

The Court ruled that the duty to provide information to recipients (meaning any industrial or professional user, or distributor) and, on request, to consumers applies to every operator in a supply chain in respect of each article meeting the SVHC concentration threshold. The minimum amount of information required to be supplied is the name of the SVHC.

What does this mean for producers, distributors, importers and suppliers?

The ruling has major implications for every operator in the supply chain. In relation to Article 7(2),  the producers of any components face the increased burden of determining the potential threshold content of SVHCs in each part they manufacture or assemble.  They must also ensure that this information has been properly shared with any other component producers in the production process to avoid duplicating compliance.

Similarly, the duty in Article 33 to provide information to every operator in a supply chain will require additional product verification and organisation of information throughout the supply chain.

Next steps

Producers, importers, distributors and suppliers will need to begin planning to comply with these new obligations, considering the quality and extent of information on articles in complex products. This will involve knowledge of factors such as whether any substances in components have already been registered and of which entity holds the technical information on each component.

The judgment is a preliminary ruling in the French case and the national court in France will now apply the decision.  However, the ruling has immediate application for the wider interpretation of the REACH Regulation.  ECHA has already stated that it is planning to amend its' Guidance on Substances in Articles to reflect the decision and organisations will have little time to ensure compliance.

[1] Austria, Belgium, Germany, France, Sweden, Denmark and Norway

[2] Directive 2006/12/EC

Matthew Townsend +44 203 088 3174
London
Tom d'Ardenne +44(0)203 088 3534
London

This ePublication is for general guidance only and does not constitute definitive advice.

© Allen & Overy LLP 2019 This document is for general guidance only and does not constitute definitive advice.
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