This article is an extract from GTDT Product Recall 2022. Click here for the full guide.

The world of product safety, including product recalls and corrective actions, has changed fundamentally over recent years. In particular, it has been significantly impacted by recent global and geopolitical events, including the covid-19 pandemic, Brexit, the Russia-Ukraine war, and an increase in natural disasters and extreme environmental phenomena.

Product safety regimes internationally have historically been seen as synonymous with innovation, which is at the forefront of modern society’s advancements. Specifically, modern product safety systems are often thought to promote product innovation or simply reflect the relevant country’s appetite for and advancement in newer technologies.

Modern consumer trends are also reflected in product safety regulators’ enforcement agendas. This also applies to regulatory trends, such as an increase in product recalls and corrective actions or legislative reform in respect of underlying product safety regimes.

These phenomena have, at different times, served to both increase and decrease international convergence of product safety laws, corrective action and recall practices. This publication explores major themes that have emerged against this backdrop.

Readers are encouraged to consider these developments from the country-by-country viewpoint provided in each contributing chapter, but also to seek out and consider contextualising international trends.

There are some trends that are being noted in respect of modern-day product recalls, as outlined below.

 

Global product recalls

Given the global breadth of the consumer market for international companies, the size and impact of product safety recalls is increasing year on year. Even where companies have legitimate reasons to not commence corrective action for a specific product in a specific market, notwithstanding recalls elsewhere, consumers’ increased communications and pressure related to the same often results in worldwide recalls of affected products.

 

The modern-day consumer and changing bases for recalls

Modern-day consumers, with health-focused, newer technologies and environmental-oriented tendencies, have prompted companies to recall products for a number of new reasons. For example, allergen content and contaminants are a major cause for recalls in the modern day. More recently, environmental and corporate social responsibility failures, including revelations regarding slave or child labour or concerns over environmental toxins, have resulted in companies recalling products. Cybersecurity concerns have also given rise to unprecedented recalls.

 

Rise of the counterfeit

The existence of counterfeits has always posed a problem for consumer products, but this is now a topic that lands squarely in the domain of product safety regulators rather than intellectual property regulators, as has previously been the case. There is also an increase in food fraud or economic adulteration based on increasing pressure for tight margins while retaining profitability within supply chains.

 

International hot spots

Products originating in certain parts of the world, such as Asia, are linked with the highest recall rates, particularly in Europe and the United States. Chemical-related concerns are primarily the cause of these recalls. This illustrates the over-reliance of global supply chains on certain areas of the world, as well as the difficulty even in addressing known risks.

 

Regulators’ approach to international recalls and product safety issues

Emerging practices of global regulators in the space of corrective actions, recalls and product safety matters include the following:

  • The global impact of national regulators: national regulators continue to have a global impact as they increasingly agree to share more records and detailed reports from on-site audits and investigations among each other across the world, either through formal or informal mechanisms.
  • Responses to covid-19: there has been a global increase in regulatory inspections and enforcement action, including product recalls, following a brief lull as a result of the pandemic. Regulators have been quick to resume inspections and enforcement for products where regulatory requirements were relaxed or paused altogether during the pandemic. In many instances, even during the pandemic, regulatory activity or regulators’ scrutiny over reported matters increased as field work was replaced with desk-based work for many enforcement officers. In recent years, there has been a particular focus on certain product categories, including medicines, medical devices, PPE and hand sanitisers, due to the pandemic.
  • The impact of geopolitical events: the Russia-Ukraine war has severely disrupted global product supply chains, threatening the supply of essential products such as food and medicines. In certain sectors, this has led to shortages of certain products (eg, sunflower oil), resulting in manufacturers substituting ingredients or omitting them entirely. In response, some regulators have issued guidance on food labelling flexibility where certain allergens may present a risk to the consumer. 

 

The link between regulatory compliance, recalls and product liability

There is a well-recognised link between product compliance, recalls and product liability matters worldwide. The extent of this link is jurisdiction dependent. At the very least, the existence of a product recall can give rise to a prejudicial assumption regarding the existence of a product issue for the purposes of any subsequent litigation. Claimant firms and consumer groups are increasingly monitoring product safety websites and regulatory announcements for large-scale recalls that have the potential to evolve into group litigation or class action claims.  The ever-growing influence of social media also provides a platform for consumers to share information and enable the formation of a potential group action cohort. While this type of activity has always been typical in the US, it is increasing in Europe and the rest of the world, with the former thought to be due to the introduction of EU-wide collective redress mechanisms that are more akin to US-style class actions.

 

Legislative and policy changes’ impact on recalls

Product recalls operate within and are influenced by the relevant applicable product safety regimes, given that in many parts of the world product recalls are often triggered by non-compliance with applicable product safety regimes. More complex regulatory regimes have been linked with higher recall rates globally.

Some key legislative developments that are relevant in this context are as follows.

  • There has been a broadening of what is considered a ‘safe’ product under product safety regimes. The EU’s mainstay product safety regulations are currently being amended to include cybersecurity and connected device-related concerns as part of whether a product is safe and complies with the product safety regime. While this broader notion of product safety has existed in certain regimes in Europe for some time (eg, the medical devices regime), the expansion of this concept to general consumer products is a marked change and is likely to result in an increase of recalls or non-compliant products on the market, or both.
  • There is increased focus on enforcement of product safety regimes. The EU has made widespread amends to its laws to ramp up and further harmonise enforcement of product safety regimes on the basis of historic criticism that this area is a weak link in an otherwise well-regarded system.
  • There has been complication and multiplication of product safety requirements; the regulatory regimes for products are growing more complex in accordance with the products they apply to. Country-specific approaches are also increasingly being seen to either mark the country as a leader in the area or to reflect the state of innovation (or lack thereof) in some areas. The UK, for example, seeks to maintain its position as a leader in product safety by amending its EU-based laws now that it has autonomy to do so post-Brexit.
  • There is increased focus on particular product safety risks. It continues to be the case that regulators and legislators focus on particular product risks, including furniture tip-overs in the US, to produce new guidance and legislation. This attention to particular risks and product categories could result in an overall impact on certain industries where the identified issues are thought to be endemic.
  • Legislation is being made to address new product categories and product types, including across the world with respect to cannabis.
  • There has been a consumer demand-driven increase in focus on corporate social responsibility, the environment and sustainable and environmentally friendly products. Regulators, including in the US and UK, have focused on marketing related to this for specific product categories, recognising the willingness of consumers to change their purchase decisions based on greenwashing or other environmental claims.
  • There is increased guidance and expectations regarding recalls. There have recently been guidance documents produced, particularly in the UK, which seek to streamline and provide prescriptive steps for undertaking a recall. Such resources may become relevant to subsequent product liability litigation.

 

Impact on companies and businesses

Companies are advised to consider all these issues, including the input of legal experts, in navigating the complex and multifaceted world of product recall.