Legal Week October 20, 2005 SAFETY FIRST With the General Product Safety Regulations 2005 now in force [in the UK], producers and suppliers of consumer products are under scrutiny to deliver safety, with heavy fines and penalties for abuse. By Rod Freeman On 1 October, 2005, the General Product Safety Regulations 2005 (GPSR) came into force, marking a fundamental change in the way consumers are protected from product safety risks in the UK. The new regulations enhance the level of consumer protection by imposing onerous new obligations on producers and suppliers of consumer products, by giving new powers and responsibilities to enforcement authorities and by increasing the risks and penalties for businesses that do not comply. The GPSR applies to all categories of consumer products except to the extent that their safety is governed by sector legislation at European Union (EU) level. In practice, this means that the GPSR will apply -- at least in part -- to all consumer products except for food and (arguably) pharmaceuticals, which are both covered by their own comprehensive sector-specific safety regulations. The GPSR implements, albeit belatedly, Directive 2001/95/EC on general product safety. This new directive itself is a reworked version of an earlier General Product Safety Directive (92/59/EEC), with the new provisions intended to increase the level of consumer protection provided by these measures. The deadline for implementation of the new directive was, in fact, 15 January, 2004. The UK is one of the last member states to implement it, ahead only of The Netherlands and Luxembourg. The general safety requirement The GPSR are based around a 'general safety requirement', that is, the obligation on producers and distributors of consumer products to place only 'safe' products on the market. A 'safe' product is defined in terms of it presenting no risks, or presenting only the minimum risks compatible with the product's use, considered to be acceptable and consistent with a high level of protection for the safety and health of persons. Factors such as the provision of instructions and warnings, and whether particularly vulnerable categories of consumers are at risk, are to be taken into account. This is a demanding test, and sets a low threshold for when the risks presented by a product will be considered to be unacceptably dangerous. New obligations for producers and distributors Producers are now required to mark products with details of their name and address (unless it is not reasonable to do so) and in most cases they must maintain a register of complaints about the safety of their products. In many cases, producers will also be expected to have a programme for conducting sample testing of marketed products. They will also need to have taken reasonable steps to be in a position to be able to trace products and undertake effective corrective action if an unexpected risk does arise. Product recall For the first time in the UK, producers of products will be under a direct legal obligation, where justified by the circumstances, to recall dangerous products. Where they neglect to do so, the authorities will have the power to conduct the recall and claim the costs back from the producer. One of the most important innovations of the new directive is the obligation on producers to immediately notify the competent authorities when they become aware that they have put an unsafe product on the market. This is the first time such an obligation has been imposed generally on producers and distributors of consumer products in the UK. It is a strict obligation and has proved to be one of the most difficult aspects of the new regime for producers and distributors. The Department of Trade and Industry (DTI) has published guidelines which, in line with guidance published by the European Commission (EC), suggest that the term 'immediately' means no later than 10 calendar days from the date of knowledge of the potential risk (three calendar days for 'serious' risks). This is, in itself, a very short time frame to assess a risk, particularly where knowledge of it emerges over time. The guidance published by the EC also seeks to provide some assistance on how to determine when the notification obligation arises by setting out a 'risk assessment methodology'. This methodology, while finding some acceptance with enforcement authorities in the EU, has been met with criticism, and there are already moves to produce a more workable risk assessment model. Nevertheless, the implications of a failure to notify can be significant, and the tight time frames for notification, combined with the uncertainty surrounding what is a proper approach to risk assessment for this purpose, highlight the need for producers and distributors to call upon the right level of both technical and specialist legal expertise as an urgent matter, as soon as a potential risk is identified. The possible implications of a notification to national authorities are amplified by the enhanced information-sharing procedures in the EU that accompany the new directive. These ensure that notified information about 'serious' risks is promptly communicated the EC and the other member states via the Rapid Alert System for Non-Food Products (RAPEX) system. Such information is also made public on the EC's website. The EC has also, this year, entered into an agreement with the Consumer Product Safety Commission in the US for the sharing of information about product risks. Practical difficulties with pan-European recalls The new notification obligation presents challenges for producers and distributors that market their products in more than one member state, and may therefore have to ensure all relevant authorities are notified 'immediately' in accordance with the local implementing laws. Systems to create a central notification system are still being developed, but in practice, producers that are concerned about protecting their reputation in local markets will wish to liaise directly with national authorities in each country where the product has been marketed. This process does not have to be unduly onerous, but it does require careful planning, management, and usually the involvement of a network of local counsel experienced in liaising with the local safety authorities. The new directive requires member states to ensure that the safety requirements are enforced adequately. The GPSR therefore provides a range of powers to trading standards authorities, including powers to withdraw products from the supply chain, to oblige producers to provide warnings/instructions and to conduct product recalls. Controversially, in determining what action is appropriate in relation to a particular risk, the authorities are now required to take account of the 'precautionary principle'. The GPSR provide for increased penalties for non-compliance, with the more serious offences attracting penalties of up to u20,000 and/or 12 months' imprisonment. Some aspects of the new directive are similar to those that have operated for some years in the US under the Consumer Product Safety Act and which have been particularly burdensome for producers and suppliers of consumer products in that jurisdiction. The European model will present similar challenges. Indeed, the European regime is, in some important respects, more difficult for producers because the threshold for notifying authorities of risks is lower, there is less protection for confidential information and,unlike in the US, there is no centralised system of enforcement. With more than 18 months' experience of the new regime in some member states, there are some trends that are now starting to emerge. There is a marked trend in the number of dangerous products being reported to the EC through the RAPEX system. Generally, safety authorities across the EU are becoming increasingly active in scrutinising any potential safety risks that may arise for consumers within their responsibility. Producers and distributors across the EU have generally been actively reviewing their systems and contracts to make the adjustments required of them. For those producers that have had to deal with unexpected product risks in the EU over the past 18 months, the need to be properly prepared has been already brought home in no uncertain terms. Unsurprisingly, product safety lawyers have seen a significant increase in the demand for compliance and regulatory advice from their clients as the obligations and risks of the new regime are starting to become understood. Now that the new regulations are in force in almost every member state, the next phase will almost certainly involve a period of increased enforcement activity by the authorities. As has been the experience in the US, one might expect that this will be accompanied by a few high-profile and well-publicised prosecutions of some producers which have not responded sufficiently quickly to the requirements of the new regime, and which have been caught out by the enhanced enforcement measures that now exist in the UK and throughout the rest of the EU. Rod Freeman is a partner at Lovells and a specialist in product liability and product safety law.