The ink has yet to dry, but the recently approved text of the long-awaited General Product Safety Regulation (GPSR) will cause quite a stir. The GPSR will replace the now-aging General Product Safety Directive (GPSD) and is expected to come into force at the end of 2024.
Like any other, the bicycle industry should take note of the GPSR now, because the implications will be significant, and infringement may lead to penalties. There is much to say about the new Regulation, but here I will focus on the provisions relevant to product recalls.
Let me start with some interesting statistics that speak for themselves. The word ‘recall’ (in some form) appears 81 times in the GPSR versus 17 times in the GPSD. The word ‘corrective’ (as in ‘corrective measures’) appears 31 times in the GPSR versus 0 times in the GPSR. More importantly, there seems to be a snag that apparently was overlooked by most (if not all) trade associations and other stakeholders during the drafting phase. A snag that can make the burden of a recall even bigger than it already is.
Although certain parts and chapters of the GPSR do not apply to products for which specific harmonised EU regulations already exist, the provisions relevant to product recalls apply to all product categories, unless their applicability is expressly excluded (for example, medicinal products, food and feed). Where European legislation normally excels in vague texts and open norms that need to be further fleshed out by courts, remarkably, the GPSR contains quite detailed recall provisions and instructions, which you would normally expect in the form of a guideline. For example, the GPSR prescribes that the headline of a recall notice must be ‘Product safety recall’. Furthermore, words or expressions such as ‘voluntary’, ‘precautionary’, ‘discretionary’, ‘in rare/specific situations’ as well as indicating that no accidents have been reported, should be omitted. In addition, consumers must be instructed to stop using the product immediately. The latter, in particular, seems very rigid and can potentially have very far-reaching consequences, which – so it seems – were overlooked during the drafting phase of the GPSR, especially when we take a closer look at the legal requirements of recall remedies.
In the event of a recall, the GPSR stipulates that consumers should be given a choice of at least two of the following remedies: repair, replacement, or a refund. Consumers may only be offered one remedy if the other remedies are impossible or disproportionate. The question then, of course, is what is disproportionate; in that respect I also refer to my previous blog that I wrote for Bike Europe. In any case, consumers are always entitled to a refund if the economic operator has not arranged for repair or replacement within a reasonable time without significant inconvenience for the consumer. A possible snag is the provision that prescribes that if products by their nature are not portable, the economic operator must arrange for the collection of that product. If we follow the text of that clause literally, this would mean that, in the event of a recall of an unsafe bicycle, consumers must immediately stop using it and the economic operator must collect the bicycle from the consumer. The question is whether this is really intended. After all, it would also mean that, for example, an unsafe car would have to be collected from consumers. Given the high number of automotive recalls, that would undoubtedly lead to a logistical nightmare and a huge financial burden. The European Automobile Manufacturers’ Association (ACEA) seems to have completely overlooked this in their feedback on the draft text. The only thing they worried about was that, instead of using a picture of an unsafe product, it should also be allowed to use an illustration…
It’s a phenomenon often seen in advertising: exaggeration, also known as “puffery”. Typically, puffing is not regarded as misleading advertising, even though the claims cannot be objectively verified. “We serve the best sandwiches in town!” Everyone will understand that such an advertising claim is completely harmless. For a long time perhaps something similar could be said about environmental claims used by corporates to market their products or services. Terms like ‘green’, ‘eco-friendly’, ‘conscious’ or ‘sustainable’ are all over the place and almost lost their meaning.[1]
However, in a relatively short period, the tide seems to be turning. NGOs, consumer initiatives, newspapers, activist shareholders, national authorities and the EU Commission are paying more and more attention to companies that use unsubstantiated or vague sustainability claims (also known as ‘greenwashing’), with the European Green Deal as an important driver. Not without consequences. And with the recent Shell-case, corporates with large carbon footprints may even have more to worry about.
In this article I will briefly explain the current legal perspective of environmental claims used by corporates to market their products or services, in particular on a business-to-consumer level.[2] What is allowed, and what not?[3] I will also briefly touch upon the Shell-case, which may be the first of alternative legal actions to be expected against climate change.
Unfair commercial practice
In the EU, sustainability is covered by a patchwork of regulations and directives.[4] On a business-to-consumer level, the overarching legal basis (or ‘safety net’) of ‘greenwashing’ can be found in Directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the internal market (“UCPD”). However, if you search the UCPD for key words like ‘environmental’, ‘sustainable’ or ‘greenwashing’, you won’t find any hits, despite the latest amendments made in November 2019. Indeed, it does not provide specific rules on environmental claims. Nevertheless, according to the EU Commission Notice on the interpretation and application of the UCPD (“the UCPD Guidance”), the UCPD provides a legal basis to ensure that traders do not present environmental claims in ways that are unfair to consumers. Interestingly, the UCPD Guidance uses the word ‘environmental’ 123 times and includes the following definition of ‘greenwashing’:
“The expressions ‘environmental claims’ and ‘green claims’ refer to the practice of suggesting or otherwise creating the impression (in a commercial communication, marketing or advertising) that a good or a service has a positive or no impact on the environment or is less damaging to the environment than competing goods or services. This may be due to its composition, how it has been manufactured, how it can be disposed of and the reduction in energy or pollution expected from its use. When such claims are not true or cannot be verified, this practice is often called ‘greenwashing’.”
Examples of greenwashing
An environmental claim can be misleading if it contains false information and is therefore untruthful. The UCPD Guidance includes many practical examples, including the following:
Using the term ‘biodegradable’ for a product which is not actually biodegradable or for which no tests have been carried out.
Presenting electrical appliances such as irons, vacuum cleaners, coffee machines, as ‘environmentally friendly’ (‘eco’), although tests show that they frequently do not perform better than similar products or where no tests have been carried out.
Presenting tableware containing bamboo as a sustainable, recyclable and eco-friendly alternative to plastic materials, when such products are in reality a mix of plastic, bamboo (sometimes bamboo dust) and resin made of melamine and formaldehyde that is necessary to produce various shapes (dishes, bowls etc.) and degrees of stiffness.
Environmental claims are likely to be misleading if they consist of vague and general statements of environmental benefits without appropriate substantiation of the benefit and without indication of the relevant aspect of the product the claim refers to. For example:
Traders increasingly make claims about carbon neutrality by investing in projects that compensate for CO2 emissions. For example, a car rental company offers consumers the possibility to ‘drive CO2 neutral’ by choosing an option that compensates for emissions. This practice may be problematic if the underlying carbon credits are of low environmental integrity or are not accounted for appropriately, so that they do not represent real and additional emission reductions.
A court considered that the marketing of hair and skin care products, where the trader had stated that their products are organic with claims such as ‘eco’ and ‘organic’, were vague and without clear qualifications. The court also assessed that it is not clear enough with only the graphic symbol/logo/label of a third-party certification label as a qualification of what organic and/or eco means.
According to the EU Commission, examples of claims that are likely misleading are ‘environmentally friendly’, ‘eco-friendly’, ‘eco’, ‘green’, ‘nature’s friend’, ‘ecological’, ‘environmentally correct’, ‘climate friendly’, ‘gentle on the environment’, ‘pollutant free’, ‘biodegradable’, ‘zero emissions’, ‘carbon friendly’, ‘reduced CO2 emissions’ ‘carbon neutral’, ‘climate neutral’ and even the broader claims of ‘conscious’ and ‘responsible’.
Furthermore, traders should not distort claims about the composition of the product (including raw materials). For example:
Advertising a product as containing ‘sustainable cotton’ could be misleading if the origin of the cotton is neither traceable nor separated in the production chain from conventional cotton.
Many more examples are explained in the UPCD Guidance, which guidance can be used as a valuable source for companies who want to better understand the legal aspects of unfair commercial practices, including greenwashing.
Half of the green claims lack evidence
In January 2021, the European Commission and national consumer authorities released the results of a screening of websites (so called “sweep”), an exercise carried out each year to identify breaches of EU consumer law in online markets. That year, for the first time ever, the sweep focused on ‘greenwashing’. The outcome was that half of the green claims lacked evidence. In many cases sufficient information for consumers to judge the claim’s accuracy was missing. Claims included vague and general statements such as ‘conscious’, ‘eco-friendly’, ‘sustainable’, which were often unsubstantiated.
The sweep was not without consequences for Decathlon and H&M. They were publicly reprimanded by the Dutch surveillance authority for using vague and unsubstantiated environmental claims. Both companies donated respectively €400,000 and €500,000 to charities as penance, and promised they would adjust their environmental claims. The Dutch authority therefore refrained from further penalties.
Which environmental claims are allowed?
As a rule of thumb, consumers must be able to trust environmental claims put forward by traders. Consequently, in order not to be misleading, environmental claims must be ‘truthful, not contain false information and be presented in a clear specific, unambiguous and accurate manner’. The UPCD contains the following example:
Highly polluting industries should ensure that their environmental claims are accurate in a sense of being relative, e.g. ‘less harmful for the environment’ instead of ‘environmentally friendly’.
The UCPD clarifies that any claim (including environmental claims) should be based on evidence which can be verified by the relevant competent authorities. Traders must be able to substantiate environmental claims with appropriate evidence. Consequently, claims should be based on robust, independent, verifiable and generally recognised evidence which takes into account updated scientific findings and methods. The burden of proof regarding the accuracy of the claim rests on the trader. Enforcement authorities have the power ‘to require the trader to furnish evidence as to the accuracy of factual claims in relation to a commercial practice’. Independent third party testing should be made available for the competent bodies if the claim is challenged. If expert studies give rise to significant disagreement or doubt over environmental impacts, the trader should refrain from the claim altogether.
Could greenwashing lead to a product recall?
Environmental product risks can be a reason for having to recall products from the market. That may for example be the case if a product contains certain hazardous substances in too high volumes. Whether greenwashing could lead to a recall, depends on the circumstances of the case. Volkswagen recalled millions of cars after admitting they had used a ‘defeat device’ to cover-up the actual pollution levels (also known as ‘Dieselgate’). Another example of a corrective action may be the obligation to change product and packaging due to incorrect labelling. Next to that, consumers may be entitled to get a refund based on consumer law (e.g. based on non-conformity). The result is de facto the same as a recall.
The unprecedented Shell-case
A corporate’s social and environmental responsibility may stretch a lot further than its commercial practices vis-à-vis consumers. The Shell group (“Shell”) is one of the world’s largest producers and suppliers of fossil fuels. The CO2 emissions of Shell, its suppliers and customers exceed those of many countries. This contributes to global warming, which causes dangerous climate change and creates serious human rights risks, such as the right to life and the right to respect for private and family life. It is generally accepted that companies must respect human rights. This is an individual responsibility of companies, which is separate from states’ actions. On May 26, 2021, the Hague District Court in the Netherlands has ordered Shell to reduce the CO2 emissions of the Shell group by net 45% in 2030, compared to 2019 levels, through Shell’s corporate policy.[5] This order has been given in proceedings initiated by seven foundations and associations as well as over 17,000 individual claimants. According to the court, the claimants were right to believe that Shell takes insufficient action, acts unlawfully, and should do more to reduce CO2 emissions. Shell’s reduction obligation follows from the ‘unwritten standard of care’ laid down in the Dutch Civil Code, which means that acting in conflict with what is generally accepted according to unwritten law is unlawful. From this standard of care follows that when determining Shell’s corporate policy, Shell must observe the due care exercised in society.[6]
The following scientific evidence was used in the Shell-case:
The total worldwide capacity remaining to emit greenhouse gases is referred to as the ‘carbon budget’. At present, global CO2 emissions amount to 40 Gt CO2 per year. So every year that CO2 emissions remain at this level, 40 Gt is deducted from the carbon budget. If global CO2 emissions are higher, more than 40 Gt will be deducted from the carbon budget. A carbon budget of 580 Gt CO2 was available from 2017 – a best estimate – for a 50% chance of a global warming of 1.5ºC. In 2020, 120 Gt of CO2 has been used and 460 Gt of CO2 remains. If emissions remain the same, the carbon budget will run out in the foreseeable future.
Concluding
The inconvenient truth is that we need laws (written and unwritten) and Green Deals to stop greenwashing and push corporates to implement truly sustainable practices. The Shell-case shows that, regardless of using environmental claims (true or false), companies may be legally forced to take appropriate measures across their supply chain to protect the environment. This raises the question if more court cases like the Shell-case can be expected.
[1] Another issue is the jungle of green labels used for products. It is difficult for consumers, companies and other market actors to make sense of the many environmental labels and initiatives on the environmental performance of products and companies. According to the EU Commission, there are more than 200 environmental labels active in the EU, and more than 450 active worldwide. There are more than 80 widely used reporting initiatives and methods for carbon emissions only. However, this falls outside the scope of this article.
[2] The upcoming new or proposed legislation in the field of sustainability, which form part of the EU Green Deal, falls outside the scope of this article.
[3] For writing this article, I thankfully made use of the UPCD Guidance as one of my main sources.
[4] Among others Regulation (EC) No 66/2010 of the European Parliament and of the Council on the EU Ecolabel, Regulation (EU) 2017/1369 of the European Parliament and of the Council setting a framework for energy labelling, Directive 1999/94/EC relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars, Directive 2012/27/EU on energy efficiency, as amended by Directive (EU) 2018/2002, Directive 2010/31/EU on the energy performance of buildings, Regulation (EU) 2020/740 on the labelling of tyres with respect to fuel efficiency and other parameters, Directive (EU) 2019/944 of the European Parliament and of the Council on common rules for the internal market in electricity, Directive 2009/125/EC establishing a framework for the setting of ecodesign requirements for energy-related products, Regulation (EU) 2018/848 of the European Parliament and of the Council on organic production and labelling of organic products, Directive (EU) 2018/2001 of the European Parliament and of the Council on the promotion of the use of energy from renewable sources, Directive 2009/73/EC of the European Parliament and of the Council on common rules for the internal market in natural gas.
In France, a law on product labelling recently entered into force, which is causing quite a stir. The law, which requires companies to use the so called Triman logo and waste sorting pictograms, may have major consequences for companies selling consumer products in France, including sporting goods, apparel and shoes. The requirements of the new French labelling legislation are no sinecure and should not be underestimated. Companies that sell products throughout Europe are expected to adjust their labelling specifically for France. That entails an enormous burden and increase of cost. Large multinationals may – reluctantly – absorb this, but for SMEs, that may not be so easy. Moreover, extra labelling creates more waste, whereas companies – encouraged by the EU Commission – need to reduce their carbon footprint.
Many sources suggest this new law is mandatory, whereas non-compliance would lead to high fines. That is not entirely correct and needs to be nuanced. At the same time, a large number of industry associations (including FESI), supported by the EU Commission, are of the opinion that the French law is violating the EU Treaty. Furthermore, we may expect the EU to come with harmonised labelling in the near future. That leaves companies with a difficult question: should we comply or not? To help companies answering that question, in this article I will explain what the new French labelling requirements essentially are about and will share some insights and practical tips.
What is the law about?
As of January 1, 2022, a law has entered into force in France that requires companies to place the so-called Triman logo on products or packaging that are subject to ‘Extended Producer Responsibility’ (EPR). The OECD defines EPR as “a policy approach under which producers are given a significant responsibility – financial and/or physical – for the treatment or disposal of post-consumer products.” In other words, the polluter-pays principle.
The French Triman logo is not new. The use is mandatory since 2015, but the number of products involved was limited and the logo was also allowed to ‘only’ be placed on the website. However, the new law goes a lot further.
First of all, the list of products that fall under the EPR has been substantially extended. For example, sports equipment, including bicycles, as well as textile clothing and shoes are now also included. And since all packaging – including non-recyclable – now also falls under the French EPR scheme, most companies selling to consumers in France will be affected by the new legislation.
Secondly, in addition to the Triman logo, so-called Sorting Information must be depicted by means of pictograms. That means that symbols indicate how consumers should separate the waste from the product and where to dispose of it. If different elements, parts or waste of the product are subject to different disposal procedures, that should be specified element by element, which makes the new requirements a lot more burdensome.
What Sorting Information symbols do I need to use?
Although you would expect France to come up with a harmonised approach, unfortunately that is not the case. The design of the Sorting Information pictograms is left to each Producer Responsibility Organisation (PRO), subject to approval by the French authority. For example, the pictograms used for sporting goods (organised by Ecologic) may look different than the pictograms used for clothing and textile (organised by re_Fashion) and may look different than the pictograms used for packaging (organised by CITEO).
What is the deadline to comply?
The French law does not stipulate any harmonised fixed dates. Deadlines of implementation, and for disposal of stock, depend on the date of approval of the pictograms submitted by each individual PRO to the French authority. For example, for clothing and footwear, according to re_Fashion, by 1 February 2023 at the latest (or 1 August 2023 for products manufactured or imported before 1 February 2023) the information “must be affixed on all items of clothing, household linen and footwear”[1]. However, for packaging waste, according to CITEO, marketers have until 8 September 2022 to bring their packaging into compliance. Then, they have until 8 March 2023 to sell existing stocks of packaging manufactured or imported before 9 September 2022. As of 9 March 2023 all packaging must include Sorting Information unless exempted by law. These are just two examples. To know which deadlines apply, companies will have to check with each relevant PRO.
Challenges
Following the French labelling requirements, companies may face some practical challenges. For example, a shoe box may be shipped to a consumer in a carton box or a plastic bag. Some shoes may have a hang tag attached to it, some may not. There may be plastic or other material inside the shoe box that you don’t know about. Et cetera. If it is unknown upfront what elements are contained in a box and how a product will be packed and shipped, which Sorting Information pictograms should be used? It is very burdensome, if not impossible, to customise the Sorting Information per each Consumer Sales Unit and have different pictograms printed or attached to each element of your product and packaging materials.
Solutions
Although it is probably not envisaged by the French legislator, a practical solution may be to use a ‘one-type-fits-all’ Triman logo, consisting of pictograms of products and packaging materials that are likely to be used when shipping and selling your products (belonging to the same product family). The risk may be that a pictogram is shown of waste material that is actually not used, but what damage could that really do? Furthermore, instead of printing them on the product or packaging, the French law also allows for placing the Triman logo and Sorting Information on documents supplied with the product. Taking online D2C sales as an example, the Triman logo and Sorting Information pictograms could be shown on the order confirmation form included in the box or bag. When needed, pictograms can be changed very easily, making compliance within your supply chain a bit less burdensome.
Violation of the EU Treaty
But how about the European Union’s Holy Grail: the single market? Doesn’t this new French law create an obstacle to the free movement of goods? Can France impose these additional labelling requirements, just like that? It is true that, under certain circumstances, an EU Member State may not simply introduce national legislation if it creates an obstacle to the free movement of goods, unless there would be a justification. There is a principle in the EU known as the “mutual recognition principle”. Based on this principle, in the absence of harmonised rules, once a product is lawfully placed on the market of one of the EU member states, other member states cannot create market barriers based on national technical rules (including product labelling). In other words, if a product without the Triman logo is lawfully placed on the market of e.g. Germany or the Netherlands, France cannot stop this product from being sold in France, unless they have a justification. The key question is therefore whether France has a justification for imposing these new labelling requirements. The French legislator think they do, invoking the protection of the environment. The European Commission on the other hand – spurred on by a large number of business associations – does not[2], but to date it has not gone so far as to start infringement proceedings against France.
To comply or not to comply?
Although many sources suggest that the new labelling requirements are mandatory, the French law actually allows for different labelling than the Triman logo. However, the question is whether it will really help companies. Based on the French law, the Triman logo can only be replaced by another label if it is similar to the Triman logo and subject to mandatory law of the EU or a member state. According to my appraisal, that is a wrong codification of the mutual recognition principle. More importantly, the labelling requirements are likely violating the EU Treaty. That triggers the question for companies whether or not to comply. Although the French legislator remarkably has chosen for a relatively mild sanction regime (fines can be up to a maximum of €15,000), you can never be sure if your products will ultimately be banned from the French market. On the other hand, we may wonder if France would really be confident enough to let it come to legal proceedings, now that the labelling requirements are likely violating the EU Treaty.
Problem-solving procedure: SOLVIT
The decision whether or not to comply with the French labelling requirements may strongly depend on the risk of fines and perhaps even a sales ban in France, and consequently, expensive legal proceedings. However, for situations like these, the EU offers a service called SOLVIT that may be unknown to many companies.
SOLVIT[3] is a service provided by the national administration in each Member State that aims to find solutions for individuals and businesses when their rights have been breached by public authorities in another Member State. SOLVIT presents itself as an effective non-judicial, problem-solving mechanism that is provided free of charge. It works under short deadlines and provides practical solutions to individuals and businesses when they are experiencing difficulties in the recognition of their Union rights by public authorities. Where the economic operator, the relevant SOLVIT Centre and the Member States involved all agree on the appropriate outcome, no further action should be required. When the SOLVIT’s informal approach fails, the EU Commission would be empowered to make a decision within 45 working days. Since we already know the position of the Commission vis-à-vis the new French labeling requirements, the SOLVIT procedure may be an interesting option.
SOLVIT is only relevant for cross-border conflicts in the EU. For companies that produce locally in France, compliance with the French Triman logo will be a national matter. Therefore, the SOLVIT procedure unfortunately will not be accessible to them.
French dealer ban
For companies that sell in France through a dealer network, there is another risk. The French authority may visit a shop and impose a sales ban on products that do not comply with the labelling requirements. French dealers may therefore be reluctant to sell products that are not compliant. It will not be the first time that the compliance department of large French retail chain imposes a sales stop of products that do not comply with the applicable labelling requirements. The question is how sensitive French dealers will be for the argument that the French labelling requirements are actually violating EU law.
Conclusion
Although the French authority would like us to believe that the new labelling requirements are harmonised, implementation is left to individual PROs, resulting in a mess of different pictograms and deadlines and making compliance a headache for companies. Furthermore, the new requirements violate the EU Treaty. It is also expected that the EU will sooner or later come with harmonised labelling for the entire EU market. That triggers the question for companies whether or not to comply with the French labelling requirements. However, the risk of a French sales ban, either imposed by the French authority or French dealers, is not an attractive one. On the other hand, the question is whether the French authority would be confident enough to let it come to a trial. If so, SOLVIT seems like a fast, attractive and promising dispute resolution service. In any case, for companies selling in France, it’s a tough call!
Commission calls on FRANCE to ensure that its labelling requirements concerning waste sorting instructions comply with the principle of free movement of goods
The European Commission decided to open an infringement procedure by sending a letter of formal notice to France (INFR(2022)4028) for failure to address its labelling requirements concerning waste sorting instructions. To be placed on the French market, household products belonging to an extended producer responsibility (EPR) scheme have to be materially labelled with the ‘Triman logo’, signage informing that the product is the object of sorting rules, and the ‘infotri’, information specifying the methods for sorting.
The provision of waste sorting instructions to consumers is currently not governed by harmonised EU rules. National laws adopted in this field shall not create unnecessary burden internal market trade. In this context, the imposition of national-specific labelling requirements risks undermining the principle of free movement of goods and can lead to counterproductive environmental effects. Such measures can also lead to increased material needs for additional labelling and additional waste produced due to larger than necessary sizes of the packaging.
The French authorities do not seem to have conducted a sufficient analysis of the proportionality of their policy choice as other suitable options, less restrictive of trade between Member States, are available. France is also in breach of the notification obligations under the Single Market Transparency Directive (Directive (EU) 2015/1535) to the extent that the law was not notified to the Commission at a draft stage, prior to adoption. France now has two months to address the concerns raised by the Commission. Otherwise, the Commission may decide to send a reasoned opinion to France.
[1] Unlike what re_Fashion suggests, there is no obligation to affix the logo on the product. The logo can also be depicted on the packaging or on a document supplied with the product.
[2] See TRIS/(2020) 03628. Not publically available. Available for free with the author upon request.
Introduction
Last December, the text of the long-awaited EU General Product Safety Regulation (GPSR) was finalized, which will replace the outdated EU General Product Safety Directive. The GPSR is expected to come into force by the end of 2024. The ink has yet to dry, but one thing is certain: selling consumer products in the EU will never be the same. In this article I summarize the main highlights of the GPSR.
Regulation
First of all, it is a Regulation and not a Directive. A Regulation has direct effect in all EU Member States, without the intervention of national legislators. A Directive needs to be transposed into national law and often allows Member States to include deviating provisions, which obviously jeopardizes the single market principle. That is no longer possible with a Regulation. The provisions of the GPSR therefore apply in full in all EU Member States.
Safety net
Like the GPSD, the GPSR is a legal safety net, but it contains more extensive and more far-reaching provisions than the GPSD. Some of the provisions do not apply to products covered by Union harmonisation legislation since they are already covered in such legislation. Other provisions do apply in order to complement Union harmonisation legislation, for example when certain types of risks are not covered by that legislation. This sometimes makes it a difficult puzzle to determine which provisions of the GPSR do or do not apply to a specific product. It is important to note that the provisions on e.g. recalls and remedies apply to all products within the scope of the GPSR.
Introduction of ‘health’
Remarkably, the GPSR refers to the WHO definition of ‘health’: “The World Health Organization defines ‘health’ as a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” The term ‘product safety’ thus takes on a much broader meaning and a whole new dimension. The following examples show what this can mean in practice.
A Dutch company that sells tableware introduced a new product line called ‘Dutch Glory’. This product line – in addition to (the typical Dutch) pancakes, cheese, clogs and tulips – also featured an illustration of a smiling Anne Frank. After criticism, the company has withdrawn the products from the market.
Another example that comes to mind is a case where a manufacturer of play clay took a “phallic-shaped toy” off the market because some parents had complained about it.
Based on the broad interpretation that the GPSR uses for safety and health, we may expect more of these types of recalls.
Risk assessment (pre-market)
Compared to the GPSD, much more attention is paid to risk assessment in the GPSR. Unless already covered by Union harmonization legislation, the GPSR prescribes that manufacturers must carry out an internal risk analysis and draw up technical documentation. In other words, in most cases a manufacturer will have to carry out a risk analysis and prepare technical documentation before a product is put on the market. In line with the previous paragraph, it is remarkable that ‘mental health’ must also be included in that risk assessment.
The GPSR for example stipulates that a risk assessment “[…] should take into account the health risk posed by digital connected products, including on mental health, especially on vulnerable consumers, in particular children. Therefore, when assessing the safety of digital connected products likely to have an impact on children, manufacturers should ensure that the products they make available on the market meet the highest standards of safety, security and privacy by design in the best interests of children.”
This may influence the way we assess the risks of for example gaming and social media. And what to think of the metaverse?
QR code not accepted as sole means of product information
The QR code seems to be commonly accepted as a means to product information and instructions. However, despite heavy lobbying, the GPSR does not accept E-labelling as a replacement for old-fashioned labelling and thick multilingual manuals.
Online platforms are the new market surveillance authorities
An entirely new section has been included with obligations for ‘providers of online platforms’. This seems to be a real game changer for both providers of online platforms and all economic operators who sell products through online platforms. Although providers of online platforms are not liable for the compliance and safety of the products themselves sold through their platform, they must ensure – through a battery of due diligence obligations – that traders using their platform only sell products that comply with applicable laws and regulations.
This makes providers of online platforms de facto the new ‘gatekeepers’ when it comes to product compliance and safety. Since most traders sell products through online platforms, this could have a tremendous (and hopefully positive) impact on the level of product compliance and safety. If traders want to sell their products via Amazon or the like, they should be in control of their product compliance and safety processes. In case of repeated non-compliance, pursuant to the GPSR, providers of online platform will have to suspend their services to this trader until further notice.
Traders outside the EU selling directly to the EU should establish in the EU
Pursuant to the GPSR, without having a representative established in the EU, economic operators established outside the EU can no longer sell directly to consumers in the EU through online channels. The representative established in the EU will be the person or company to be addressed if products do not comply with EU legislation.
Accident reporting duty
The GPSR introduces an obligation for manufacturers to report “without undue delay” accidents caused by products they have placed on the market. Accidents are defined as occurrences that resulted in an individual’s death or in serious adverse effects on their health and safety. The report must be made to the competent Market Surveillance Authority of the Member State where the accident occurred. Importers and distributors also play an important role: they must report accidents to the manufacturer.
Do you have a recall plan?
The GPSR prescribes that economic operators shall ensure that they have internal processes for product safety in place, allowing them to comply with the relevant requirements of the GPSR. This also means there must be a recall plan in place. Again, a reservation must be made in regard to products subject to specific Union harmonization legislation. In any case, it is highly recommended to properly safeguard internal processes for product safety within an organization.
Recall? At least two remedies
In the event of a recall, the GPSR stipulates that consumers should be given a choice of at least two of the following remedies: repair, replacement or a refund. Consumers may only be offered one remedy if the other remedies are impossible or disproportionate. This obviously leads to discussion about what is meant by ‘disproportionate’.
A snag that can make the burden of a recall even bigger than it already is
EU legislation normally excels at vague texts and open norms, which need further clarification by means of guidelines or are expected to be further fleshed out by judges in court. It is therefore remarkable that some provisions of the GPSR contain very detailed provisions, which you would normally expect to see in the form of a guideline. On the one hand that is commendable, on the other hand it can be very tricky.
To give an example: the GPSR prescribes that in the event of a recall, the consumer must be instructed to immediately stop using the affected product. In addition, the GPSR stipulates that, in the event of a recall, the economic operator must collect the unsafe product from the consumer if it is not portable. If we take this literally, for example, consumers should stop using an unsafe car immediately and the car should be collected from the consumer by the manufacturer (or dealer). The question is whether this is really intended. It would undoubtedly lead to a logistical nightmare and a huge financial burden. Stakeholders seem to have overlooked this in the drafting phase of the GPSR.
It will be easier for consumers to submit complaints to authorities
The ‘Union rapid information system’, also known as ‘RAPEX’, will be modernised to enable more efficient corrective measures to be taken across the EU. One of the aims is to make it easier to inform the public and enable consumers to submit complaints. Manufacturers and their reputation for product quality and safety will therefore be more exposed.
Penalties
As a final comment, it is important to realise that the GPSR introduces penalties for those who violate the GPSR. It is not yet clear how high these penalties will be, but it is expected that they will play a significant deterrent effect for economic operators.
Concluding remarks
A new wind is blowing in the EU in the field of product safety. Although the GPSR is not perfect, we can only welcome its arrival. Clearly, if you sell consumer products in the EU, you need to have your product compliance and safety processes in place. Only companies that take product safety seriously will be the winners in a market where product laws and regulations are becoming increasingly complex and demanding.
QuickScan
Placing only safe products on the market should be part of every consumer goods organizations strategy and corporate culture. It should not be the responsibility of one person or department, but a responsibility that is shared across multiple disciplines. Creating and enhancing a product safety culture within your organization is first or all a matter of connecting the dots. To help organizations enhancing their product safety processes, RecallDesk has developed a QuickScan. This QuickScan is largely based on ISO standards 10377 and 10393, added with own knowledge and experiences. The ISO standards have multiple layers that allow you to go as deep into your product safety processes as your company may wish. This QuickScan has filtered out only those product safety aspects that – when solved or paid attention to – may offer you quick wins.
Product compliance
Before placing them on the market, make sure your products are safe and comply with the relevant applicable laws and standards. RecallDesk can help you with that. In case RecallDesk does not have the required expertise, we work with a number of selected business partners who are specialized in the specific product industry. We can also work with the preferred business partners of our clients.
Risk assessment (pre-market)
When bringing a new product to market, it’s important to take the time to conduct a thorough risk assessment before launching. This process helps to identify potential hazards associated with the product and ensures that steps are taken to mitigate these risks.
By performing a product risk assessment, you can:
Identify potential hazards: A risk assessment can help you identify potential hazards associated with your product, such as safety risks, health risks, and environmental risks.
Evaluate the likelihood and severity of those hazards: Once potential hazards are identified, you can evaluate the likelihood and severity of each hazard. This helps you prioritize which risks are most critical to mitigate.
Develop risk mitigation strategies: With an understanding of the potential hazards and their severity, you can develop strategies to mitigate those risks. This may include modifying the product design, changing manufacturing processes, adding warning labels or instructions, or providing protective equipment.
Ensure compliance with regulations: Conducting a risk assessment can also help ensure that your product complies with relevant regulations and standards, reducing the risk of liability and potential legal issues down the line.
Overall, performing a product risk assessment is an essential step in ensuring that your product is safe, compliant, and successful in the market. Don’t skip this critical step – take the time to assess potential risks and put mitigation strategies in place before launching your product.
Product manual
A good product manual is an essential component of any successful product. It provides customers with the information they need to use your product safely and effectively, and can also help reduce the number of customer support inquiries and returns.
Here are some of the reasons why a good product manual is so important:
Helps customers use the product safely: A well-written product manual provides clear and concise instructions on how to use the product safely. This includes information on any potential hazards or risks associated with the product, as well as instructions on how to avoid them.
Improves customer satisfaction: When customers have access to a clear and easy-to-use product manual, they are more likely to be satisfied with their purchase. A good manual can help customers feel more confident in their ability to use the product, reducing frustration and increasing overall satisfaction.
Reduces customer support inquiries: A comprehensive product manual can also help reduce the number of customer support inquiries you receive. When customers have access to clear instructions and troubleshooting information, they are less likely to need additional assistance from your support team.
Minimizes returns and warranty claims: A good product manual can also help reduce the number of returns and warranty claims. When customers have access to clear information on how to use the product and troubleshoot common issues, they are less likely to return the product or make a warranty claim.
A good product manual builds on the risk assessment (pre-market) and is an essential tool for any product-based business. It helps ensure customer safety, improves satisfaction, reduces support inquiries and returns, and can even help increase sales. If you’re launching a new product, be sure to invest the time and resources into creating a high-quality product manual. RecallDesk can help you with that.
Contractual arrangements
With our legal expertise RecallDesk can help you making sure that responsibilities and liabilities around product compliance and recalls are contractually well-stipulated, in the upstream as well as downstream supply chain.
Recall plan
Having a recall plan ready gives you immediate control in times of crisis, saving time and money. A recall plan typically includes a recall procedure, the names/functions of the recall team, a checklist, a contacts list, useful templates, and so on. A recall plan should be tailored to the organization using it.
Recall training & workshops
For companies having a higher risk of product recalls, it may be very helpful to organize recall training and workshops. A recall simulation may be very useful in order to train a recall team and prepare the organization, just in case.
Webinars
Rutger Oldenhuis LLM speaks regularly as an expert at various occasions and events. Reach out to us if you are interested to host or join a webinar.
Is a recall really necessary? Carry out a risk assessment
A product recall is a corrective action, but a corrective action is not always a recall. A recall is typically regarded as a last resort remedy. In situations where the safety risk is not serious, other corrective actions may be considered that go less far than recalling a product from the end-user. Making a risk assessment is the basis for every (potential) corrective action. Provided it is done correctly and objectively, it will show whether the safety risk is either low, moderate or serious. A product recall is regarded as a last resort remedy and in principle ‘only’ necessary in case the product risk is serious. For situations of low or moderate risk, other corrective actions may be sufficient. An example is ‘market withdrawal’, which means that products need to be withdrawn from the market, but not recalled from end-users. If you are in doubt whether or not you need to recall a product from the market, RecallDesk can help you assessing the risk and advise you on the appropriate corrective actions, if any. If a specific case requires it, RecallDesk works with a number of reputable test institutes that can support with making a risk assessment.
Recall management (leading the recall team)
A recall can be a huge and complex project involving many different disciplines, including product design, QC, production, supply chain, warehousing, marketing & communication, sales, legal and finance. Having a recall expert leading the recall team will add value to the recall and the performance of the recall team. It will also lower the stress and burden on key employees. It is worthwhile noting that a well-conducted recall may not harm your brand, but instead even increase your customers’ trust.
Liaising with/representing towards safety authorities
Authorities want to be informed about a (potential) unsafe product. Decisions whether or not to recall a product, including ‘voluntary’ recalls, are typically (if not mandatorily) made in liaison with the responsible safety authorities.
Submission of notifications
Timely reporting of dangerous products to the authorities of the relevant countries worldwide is crucial. Some countries keep rather short and strict deadlines. Key challenge here is to work towards the same go-live date in all applicable countries. After notification the authorities may want to get regular updates on the progress of the recall and may require additional actions to be taken.
Drafting communication
Many stakeholders need to be informed and updated about a (potential) recall, including for example distributors, retailers and consumers. Having communication templates ready, tailored to your organizational style, culture and needs, will help speeding-up the recall process. Ideally these templates are prepared in a Recall Plan. If not, it is recommended to have templates ready as early in the process as possible and finalize them once all details are available.
Claiming damages
Components or ingredients worth €10 may cause a recall worth several millions. For a number of clients, RecallDesk succesfully recovered substantial amounts of recall damages. If applicable and (legally) possible, certain recall damages may be recovered from e.g. suppliers or their insurance companies.
Insurance matters
As regards insurance matters, RecallDesk has value adding knowledge on insurance law that may be unknown territory to many companies. A substantial portion of your recall costs may be subject to recovery. RecallDesk has a 100% successful track record in this area.
Wheels that come loose, brakes that don’t work, seatbelts that don’t tighten, and a wrong brake pedal that gets in the way when using the clutch. This is not about bicycle recalls but a selection of recent automotive safety issues that were categorized as ‘serious risk’ and therefore led to a product recall. It doesn’t take much of an imagination to realise what can happen if your car loses a wheel, can’t brake or doesn’t have a properly working seatbelt while driving.
When non-food products pose a serious safety risk and are recalled, market surveillance authorities typically require companies to include in their recall notice the instruction to stop using the product immediately. This is in line with EU recall guidelines.
Car recalls
But when you analyse car recalls, for an industry known for its rigorous quality control processes it is first of all shocking how many serious defects are reported monthly. Along with toys, motor vehicles top the recall rankings. More remarkably, you probably won’t find any mention that car owners should stop using their car immediately. The most common instruction is that car owners make an appointment with their car dealer to have the problem fixed. There are a few known cases where car owners had to park their car outside in a safe place due to the risk of battery fire.
According to an official of the UK’s Driver and Vehicle Standards Agency, “the ‘top level’ of recall is known as a Stop Drive Recall. This is where affected vehicles should not be driven. These are very rare and are akin to aircraft being grounded.”
General rule for other industries
So, while a Stop Drive Recall is ‘very rare’ in the automotive industry, for other non-food products and certainly for bicycles, a ‘stop use immediately’ instruction seems to be the general rule. Remarkably, in the USA, the CPSC recently adopted an internal policy, according to which manufacturers are, by default, requested to consider offering end-users a full refund. Based on my experience, you need robust argumentation to convince the CPSC that other corrective actions are more appropriate.
For end-users and manufacturers, the instruction to immediately stop using a bicycle can be quite onerous. Consumers may need their bicycle to commute, and manufacturers may need time to ensure sufficient replacement parts are in stock and resources available to start a repair programme. Furthermore, a full refund for a bicycle that can be repaired really seems disproportionate and would definitely not meet the sustainability goals of the EU Green Deal.
‘Serious risk’
We can assume that ‘serious risk’, by definition, has a similar meaning for a car, a bicycle, or any other product. According to the EU risk assessment methodology, if we take the highest severity injury level (level 4), there is a ‘serious risk’ if the probability of damage during the foreseeable lifetime of a product is more than 1/10,000. A car recall may easily involve hundreds of thousands, if not millions, of cars. A quick math tells us that in the event of a serious risk, between the announcement of the car recall and the repair, many (new) incidents could have already occurred. Yet car owners are not instructed to stop driving their cars. To put things into perspective, not many bicycle or component recalls will affect more than 10,000 products. However, manufacturers still need to tell their end-users to stop using their bicycles immediately.
Why the difference?
We may wonder why market surveillance authorities treat similar situations differently. Of course, we understand the practical implications of not being able to drive a car anymore. Still, as mentioned before, the same goes for bicycles and other vehicles that are used daily for commuting. And when do you ever see a car manufacturer offering end-users a full refund?
We can only guess why cars are compared to aircraft when it comes to recalls. Perhaps it’s their notoriously strong lobbying forces? Of course, serious safety risks call for quick and proper corrective action, but what car recalls tell us is that a Stop Drive Recall in the bicycle industry often seems disproportionate and excessive and should therefore be the exception rather than the rule. Perhaps it is time for the bicycle industry to compare itself more to the car industry. Aircraft will be the next step.
“The health care turmoil in the US is only temporary,” Philips’ CEO said in an interview in 2017. Today, Philips itself seems to be in its worst turmoil ever. The company is recalling millions of medical devices due to the breakdown of foam (PE-PUR) used in the Philips Respironics ventilators and other medical devices, causing serious potential health risks.
And things only seem to get worse – the latest developments are that Philips enlarged the scope of the recall yet again, and their CEO announced he would step down. Typically, we read all of this in the newspapers, but interestingly, the US Food and Drug Administration (FDA) has published observations of their inspections carried out at Philips Respironics Inc., the US-based company that produces the affected medical devices.
Serious observations
The observations provide very detailed insight into the product design and safety processes that FDA claims Philips is not sufficiently in control of. Based on 21 company inspections, they made eight serious observations. Each observation is extensively substantiated with examples.
To mention just a few… According to the FDA, there was no documented investigation, risk analysis, or design failure mode effect analysis to support Philips’ rationale for which products were affected by the recall. Philips had not sufficiently demonstrated that other devices, also containing PE-PUR foam, should not be included in the ongoing recalls, as well.
A known problem
Furthermore, already in 2015, Philips was aware and knowledgeable of a preventative maintenance servicing procedure implemented by another Philips entity on affected products, but no further investigation, health hazard evaluation, risk analysis, or design review was performed or documented.
The FDA also claims that the analysis of quality data, such as complaints, was not adequately performed to identify or detect quality problems. No formal Corrective And Preventive Action (CAPA) was initiated or implemented, when appropriate, and no verification of effectiveness was performed. The FDA goes on to say that management with executive responsibility has not ensured that the quality policy is understood, implemented and maintained at all levels of the organisation.
Not addressing user needs
Finally, the intended patient population of affected ventilator devices are individuals requiring mechanical ventilation, that potentially lack typical and healthy lung and bodily functions. However, the FDA observed that Philips’ health hazard evaluation documented typical and healthy lung and bodily functions and did not conform to or address the user needs of the intended patient population of these ventilatory medical devices, including patients with a tracheostomy or that lack typical and healthy lung and bodily functions.
So, what can we learn from this?
Companies need to be in control of their product safety and recall processes, before and after market launch. For that purpose, the list of observations could easily be used as a (non-limitative) checklist. For example, ask yourself the following:
Do you have an adequate risk analysis procedure in place?
Do you have a CAPA procedure in place?
Do you have proper design validation procedures in place, considering the intended users and use?
Do you have a proper complaint system in place?
Does the executive management team take ownership of product compliance and safety within your company?
Do you have proper procurement procedures and supplier agreements in place?
I would like to add another observation. Respironics Inc. was acquired by Philips in 2008 for US$5 billon. The affected products were sold from 2009. We can only guess if the product design and safety processes of Respironics were assessed during due diligence. If only Philips could turn back time. However, they must still invent a machine for that…
Did you see the horror crash of Formula 1 racer Zhoa at Silverstone this year? He survived, miraculously, due to a mandatory safety measure that was introduced in 2018 by car sports federation FIA: the halo. The halo is a titanium part that is placed over the driver’s cockpit. The design has a strong resemblance with the upper part of a flip-flop – just look at your Havaianas.
Perhaps that was the reason why nobody in car racing really liked the introduction of the halo until they saw it actually serve a purpose. Since its introduction, several drivers owe their lives to the halo, including Zhoa. It’s a great example of ‘safety by design’ and the FIA can take pride that they have pushed through with this innovation, despite all the opposition. And from flip flops, it’s only a small jump to e-bike battery safety.
Thermal runaway
Battery fires, mainly caused by so-called thermal runaway events, are an increasing concern in the bicycle industry. In e-bike paradise, the Netherlands, there are 6-8 battery fires reported every week, but the real number is probably even higher. Thermal runaway events can have many different causes and the risks can be serious. Some batteries are ticking time bombs and should not be on the market in the first place. So, what can the industry do to minimise the risks?
Risk assessment
One of the goals of product design is to minimise the product risks that have been identified with the risk assessment. Complying with a harmonised standard is essential, but only relevant for the risks and risk categories that are covered by that standard. A producer is expected to carry out a risk assessment and check whether the harmonised standard covers all risks of the product.
Safety hierarchy
Once the product risks have been identified, they can be minimised following the Safety Hierarchy principle, which is like a 3-stage rocket. Step 1 is about applying inherently safe design measures (‘safety by design’). Step 2 is about applying safeguarding and complementary protective measures (e.g., a chain guard). Step 3 is about reducing risk through information for use, e.g., a warning on the product and/or in the manual. Typically, all three steps are being used, but with a clear preference and hierarchy. Step 3 is a last resort measure.
Is a warning in a product manual sufficient?
Despite the instructions and warnings for use in product manuals, consumers tend to charge batteries in their bedroom, park their e-bike in the burning sun and continue using their battery after it has dropped or suffered from a crash. Whether that behaviour would lead to an exemption of producer liability is arguable. If warnings are notoriously and continuously ignored, then such careless behaviour becomes foreseeable, and the producer will have to act on that by taking extra precautionary measures.
Risk reducing measures
For example, why not sell an e-bike with a sun protective battery bag? Why not have more safety features built in the Battery Management System, like overheating, drop or crash detection, combined with a push message on a mobile app? Most modern mobile phones have a simple strip indicating if there is water damage. Why can’t a battery have a simple crash-sensitive device that indicates if a battery has suffered from external impact? Imagine how that could improve not only the safety of consumers but also reduce the risks for companies using e-bikes for B2B services, like postal, rental and bike-sharing services.
A call on the industry
The increasing number of battery fires are harming the e-bike image. Only safe e-bikes should be allowed on the market. Harmonised safety standards are developed together with industry experts. When developing standards for e-bikes, there is a great opportunity for the industry to raise the bar and improve the safety standard for batteries based on the current state of technical knowledge and possibilities. Take FIA as an example. If flip-flops can do it for Formula 1…
In France, a law on product labelling recently entered into force, which is causing quite a stir. The law may have major consequences for companies selling consumer products in France, including bicycles. An informal ‘round the table’ with various sources suggests, however, that this new French law is not known yet to everyone in the bicycle industry. So, what is it about?
Triman logo + Sorting Information
As of 1 January 2022, a law has entered into force in France that requires companies to place the so-called Triman logo on products or packaging that are subject to ‘Extended Producer Responsibility’ (EPR). The Triman logo has been mandatory in France since 2015, but the number of products involved was limited and the logo was also allowed to ‘only’ be placed on the website. However, the new law goes a lot further.
The Triman logo has been mandatory in France since 2015.
Firstly, the list of products that fall under the EPR has been substantially extended. For example, sports equipment, including bicycles, as well as textile clothing, shoes, batteries, and accumulators, are now also included. And since all packaging – including non-recyclable – now also falls under the French EPR scheme, most companies selling in France will be affected by the new legislation.
Secondly, in addition to the Triman logo, so-called ‘Sorting Information’ must be depicted. That means that symbols indicate how consumers should separate the waste from the product and where to dispose of it. If different elements, parts or waste of the product are subject to different disposal procedures, they should be specified element by element.
The requirements of the new French labelling legislation are no sinecure and should not be underestimated. Companies that sell products throughout Europe must adjust their labelling specifically for France. That entails an enormous burden and increase in costs. Large multinationals may – reluctantly – absorb this, but for SMEs, that may not be so easy. Moreover, extra labelling creates more waste, whereas companies – encouraged by the EU Commission – need to reduce their carbon footprint.
Violation of the EU Treaty
But how about the European Union’s Holy Grail: the single market? Doesn’t this new French law create an obstacle to the free movement of goods? Can France impose these additional labelling requirements, just like that? Good questions. It is true that, under certain circumstances, an EU Member State may not simply introduce national legislation if it creates an obstacle to the free movement of goods unless there would be a justification. The key question is therefore whether France has a justification for imposing these draconian labelling requirements. The French legislators think they do, invoking the protection of the environment. The European Commission, on the other hand – spurred on by a large number of business associations – does not, but to date, it has not gone so far as to start infringement proceedings against France.
To comply or not to comply
Although many sources claim the new labelling requirements to be mandatory, the French law actually allows for different labelling than the Triman logo. More importantly, it is likely violating the EU Treaty. That triggers the question for businesses of whether or not to comply with it. Although the French legislator has chosen a relatively mild sanction regime, you can never be sure if your products would ultimately be banned from the market. On the other hand, would France really be confident enough to let it come to legal proceedings now that the labelling requirements are likely to violate the EU Treaty? Tough call! On the bright side, France has made an important exception: wine is excluded from the new labelling requirements. However, I am afraid it will not make the headache any less.
By Rutger Oldenhuis LLM
QuickScan
Risk assessment (pre-market)
Contractual arrangements
Recall training & workshops
Is a recall really necessary? Carry out a risk assessment
Submission of notifications
Claiming damages