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Product recalls

General requirements

Are there any statutory criteria under which a product must be recalled or other corrective action be taken?

The Commodities Act prescribes that a matter requires notification if a producer or distributor supplies a product that it knows or should know can be dangerous for humans when used as intended. The type of measure to be taken will depend on the level of risk of the product. Based on the Dutch case law and literature available, the adequacy of the measures depends on, among other things:

  • the nature of the product;
  • the probability that accidents will occur from further use of the product (likelihood of dangers);
  • the gravity of the consequences (damage) deriving from a potential accident (seriousness of the danger);
  • the burden of taking adequate precautions; and
  • the probability that someone will not exercise the required attention and care.

The Netherlands Food and Consumer Product Safety Authority provides tools on its website that can help to determine whether a general consumer product is dangerous. Reference is made to the Guidelines for the Notification of Dangerous Consumer Products to the Competent Authorities of the Member States by Producers and Distributors in Accordance with Article 5(3) of the EU Directive 2001/95/EC.

Notification

What rules and procedures govern notification of the product recall to government authorities and the public?

Article 21(b) of the Commodities Act stipulates that when a producer or distributor knows that it supplies dangerous products, it should inform the competent Dutch authority immediately and outline the measures that it will or has already undertaken to ensure safety.

Besides the Commodities Act, sector-specific legislation (eg, for food products, medicines and cosmetics) may provide for distinct rules and procedures regarding notification requirements.

Repairs, replacements and refunds

What rules and procedures govern repairs, replacements and refunds for defective products?

Under Dutch consumer law, a producer or other supplier must offer to repair or replace recalled products or, if repair or replacement is impossible, offer other compensation.

Non-compliance

What penalties apply for non-compliance with the legal provisions governing product recalls?

Civil law penalties do not exist under Dutch law for non-compliance with the legal provisions governing product recalls, but failure to comply with these laws can give rise to liability under the Civil Code. Administrative and criminal penalties exist under Dutch law.

Non-compliance with the Commodities Act can be dealt with by enforcement by the authorities (administrative enforcement) and enforcement by the public prosecutor if the non-compliance is also classified as a criminal offence (under the Economic Offences Act or the Criminal Code). If the public prosecutor has instituted criminal proceedings and the examination in court has started, or if the public prosecutor has issued a penalty order, an administrative fine cannot be imposed (in accordance with the ne bis in idem principle, Article 5(44) of the General Administrative Law Act). Enforcement by the public prosecutor is possible only where an intentional or reckless offence causes a direct danger to public health and safety or the administrative fine will be significantly exceeded by the offender's economic profit (Article 32a, Paragraph 3 of the Commodities Act).

Administrative penalties A specific decree is available in regard to administrative fines for violating decrees and regulations under or in accordance with the Commodities Act: the Administrative Penalties (Commodities Act) Decree. The fine may be increased if the natural person or legal entity to which the violation can be attributed has already been fined for a similar offence in the past two years and the seriousness of the offence demands an increased penalty (Article 3, Paragraph 4 of the Administrative Penalties Decree). The maximum administrative fine is €820,000.

The Administrative Penalties Decree also allows for turnover-related fines. Therefore, if a company violates a provision of the Commodities Act or related legislation, a fine can be imposed of a certain percentage of their annual turnover. However, this fine is limited to large companies with an annual turnover of €10 million or more. Turnover-related fines can be imposed only where there is either intention or gross negligence on the side of the perpetrator.

Culpability is a key factor with a distinction drawn between:

  • intentional violations; and
  • violations resulting from gross negligence.

For gross negligence, a fine of 0.5% of the annual turnover can be imposed. For intentional violations, the fine may rise to 1% of the annual turnover. The Administrative Penalties Decree creates the possibility to impose higher fines in cases of repeat offenders. The maximum amount for turnover-related fines is set out in the sixth category of Article 23(4) of the Criminal Code (currently €820,000).

Criminal penalties If a producer fails to take appropriate action, it could be subject to the following penalties under the Economic Offences Act:

  • a maximum of two years’ imprisonment, community service or a criminal fine of up to €20,500 (Article 9 of the Criminal Code in conjunction with Article 6 of the Economic Offences Act);
  • a maximum criminal fine of up to €82,000 if the value of the goods with which the criminal offence was committed or of the goods obtained by means of the criminal offence exceeds one-quarter of the amount of the fine (€20,500);
  • a maximum criminal fine of up to €82,000 if the offender is a legal entity and a lower fine would not be appropriate;
  • if both situations apply, a criminal fine of up to €820,000 – the highest category for criminal fines under the Penal Code (if a sixth category fine is not deemed to be an appropriate penalty, a criminal fine of up to 10% of the legal entity’s annual turnover);
  • a possible one-year ban in trading for businesses; and
  • publication of the court judgment.

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