The decision of the European Court of Justice (ECJ) in Fédération des entreprises du commerce et de la distribution (FCD), Fédération des magasins de bricolage et de l’aménagement de la maison (FMB) v Ministre de l’Écologie, du Développement durable et de l’Énergie2 is likely to affect the interpretation of REACH and in turn impact actors in the supply chain.
REACH was put in place with a view to protecting human health and the environment by regulating the production, import and trade of chemicals within the European Union and setting out informational requirements regarding those chemicals.
REACH refers to chemicals as “substances”, which may be present on their own, in mixtures or in “articles”3. Where a chemical substance categorised as being a Substance of Very High Concern (SVHC) for health or environment, particularly because of its carcinogenic, mutagenic or toxic properties, is present in a particular article above a concentration of 0.1% weight by weight (w/w), REACH Article 7 requires the producer or importer to submit a registration/notification for such SVHC to the European Chemicals Agency (ECHA). The producer or importer cannot place such an article on the market unless the specific use has been authorised. The presence of a SVHC at the stipulated concentration also obliges the supplier of the article under REACH Article 33 to provide the recipient with information.
It is not possible to obtain a blanket authorisation – each use must be specifically authorised, failing which such use will be prohibited. The process can be slow, costly, and strict time limits apply. In addition, it can be difficult to obtain required information from non-EU suppliers, or in complex supply chains, relating to each component in an article. Accordingly, it is important for actors in the supply chain to be clear whether they are obliged to seek authorisation and/or to supply information to users and consumers of the article in question.
Until now, there has been uncertainty as to whether, in the case of a complex product made up of several individual articles, these obligations apply where the concentration of the SVHC exceeds 0.1% (w/w) in the completed product, or whether the concentration in each individual component needs to be considered.
Although it is not legally binding, many actors in the supply chain rely upon guidance issued by the ECHA regarding the interpretation of REACH to help them to comply with their obligations, or to assess whether such obligations exist. In April 2011, ECHA guidance on requirements for substances in articles indicated that the duties to notify and provide information applied only if the SVHC concentration exceeded 0.1% w/w in the finished product as a whole. Several Member States, including France, adopted a more restrictive interpretation, which was less favourable to industry.
On 8 June 2011, the French Minister for Ecology, Sustainable Development and Energy (Minister) issued a notice which stated that the concentration limit should be referable to each component part of the finished product, where such component could also be classed as an article under the REACH definition in Article 3(3). In FCD/FMB the French Conseil d’État referred the following question to the ECJ for a preliminary ruling:
“Where an article within the meaning of REACH is composed of several elements which themselves meet the definition of “article”...are the obligations resulting from Article 7(2) and Article 33 of the regulation to apply only with regard to the assembled article or to each of the elements which meets the definition of article?”
In a significant departure from the view previously adopted by the ECHA, the ECJ upheld the view taken by the French Minister. According to the ECJ, there was no distinction between an article incorporated as a component of a complex product and an article present in isolation. Each article incorporated as a component of a complex product was covered by the duties to notify and provide information if it contained a SVHC in the relevant concentration. The important factor to consider was whether the component articles ceased to be articles in the making of the new product, for example, by a change to their shape, surface and design. The ECJ also decided that the duty to provide information extended beyond producers and importers to all operators along the supply chain. The ECHA has announced that it will update its guidance to reflect the FCD/FMB decision.
In the meantime, actors in the supply chain should ensure that they are REACH compliant, for example, by revisiting SVHC testing and information in relation to articles to be placed on the market in the EU. It may also be necessary to reconsider counterparty contracts and supply chains. While the ECJ’s test may sound straightforward, assessing a finished product in this way can be complex. Many articles likely to be affected by this interpretation may have been sourced from various countries and suppliers. This may lead to changes in the sourcing of such components or in the contractual requirements in the supply chain.
The ECJ commented that, while proportionality must always be considered, the purposes of REACH would not be served by seeking to minimise administration at the expense of limiting the protection afforded to human health and the environment by the provision of information regarding SVHCs. Ultimately, part of the intention of REACH is to encourage viable alternatives to SVHCs, to limit their use and to force the market to provide adequate information regarding their hazardous properties.
The short-term consequence is likely to be a considerable increase in the regulatory and administrative burden in the supply chain. However, the ruling removes the previous uncertainty and may serve to reduce the risk of large quantities of SVHCs being ‘lost’ in bulk article supplies, as well as stimulating research and development into alternatives.