REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) is the new EU regulation on chemical substances and is directly applicable in all EU Member States as of 1 June 2007. It is a complete and radical review of policy on chemical substances. Most chemical substances currently placed on the EU market are subject to registration with the European Chemicals Agency (ECHA) by their manufacturers and/or importers. REACH will require registration for each chemical substance manufactured or imported into the European Union in quantities of one tonne or more per year with few exceptions.
Registration is completed by submitting a registration dossier consisting of a technical dossier and chemical safety report, with part of the technical dossier submitted jointly by manufacturers and/or importers of the corresponding substance ("same substance"). In addition, REACH imposes a data-sharing obligation on manufacturers and/or importers of the same substances to ensure that studies and tests are conducted only when necessary, especially if the tests involve animals.
A consortium is an association of two or more individuals, companies and/or organisations with the objective of pooling their resources for achieving a common goal. Consortia, whilst not a mandatory requirement of REACH, are the most efficient means of achieving the required levels of co-operation to comply with the REACH objectives and are a valuable tool for manufacturers and/or importers to guarantee that their business interests remain protected.
Registration is completed by submitting a registration dossier. If there are several registrants, they must make a joint submission and designate a lead registrant who is obliged to submit, on all registrants’ behalf, a part of the technical dossier. This includes: classification and labelling of the substance; study summaries; robust study summaries; and proposals for testing. Registrants may also opt for the lead registrant to submit the guidance on safe use of the substance and the chemical safety report. Each registrant must submit individually its identity, the identity of the substance and information on manufacture and use.
Refusal to sign up to a joint submission is only possible if: it is disproportionately costly for the specific registrant; the registrant needs to prevent disclosure of commercially sensitive information; or the registrant disagrees with the lead registrant on the selection of the information.
In addition to the joint submission, REACH contains a data-sharing obligation under which each registrant must analyse whether the registrant needs to perform tests for its registration dossier. REACH differentiates between two types of tests: tests on vertebrate animals; and other tests. If a registrant needs to perform an animal test, it must first ask the ECHA whether previous or other registrants have performed such a test. If so, the registrant must refer to that test result in its registration dossier. The owner of the test results must permit the registrant to refer to its test result, subject to payment of an appropriate licence fee. For non-animal testing, a manufacturer and/or importer may, but is not obliged to, request the previous or other registrants to share information. However, if requested, they are obliged to provide the information but are entitled to compensation. Compensation is always required where a substance has been registered in the last 12 years.
REACH has left many unanswered questions with regard to joint submission and data-sharing obligations. The lack of a legal framework provides a high stimulus to industry to protect its interests by building the contractual foundations for co-operation that REACH does not provide. A consortium structure can remedy this by creating a secure and flexible basis for REACH compliance for one or more substances.
The type and function of consortium bodies will depend on the specific industry and, in particular, on the number of participating companies and substances that are registered by the consortium. If the number of members is limited, the consortium may have a general assembly to take all decisions necessary for the functioning of the consortium and the attainment of its objectives, together with a secretariat to prepare the meetings and to manage the day-to-day work programme.
For larger consortia it will be appropriate for members to designate a steering committee to meet regularly and decide on issues related to the preparation of the registration dossiers. The general assembly would meet less frequently and the secretariat would assist both bodies. Such a consortium may also have technical committees which will be responsible for the preparation of the registration dossier(s).
The consortium members can agree on the precise powers granted to the different bodies, select lead registrants and determine which bodies can request the assistance of external experts, such as scientists, auditors, lawyers and trustees (to retain confidential information).
Consortium membership should be open to any interested party who agrees to be bound by the provisions of the agreement. Membership would typically include manufacturers and/or importers of the same substance(s) that wish to submit joint registration dossiers for one or more substances, and intend to co-operate during dossier preparation. Non-EU manufacturers may participate in such consortia but need to appoint an "only representative" who will perform the registration for them.
Consortia can include associate members that have a special interest in participating in the consortium, such as "downstream users", that do not need to register but need to ensure that their own uses are assessed. Associate members will normally have limited rights and obligations. Observers may be data holders who wish to offer their studies to the consortium or who may be interested in obtaining information.
The consortium agreement should determine the conditions and grounds for acceptance or expulsion from the consortium. In any case, even expelled members should be allowed to refer to the joint submission if they make the payments necessary to cover their part of the total costs.
The objective of the consortium is to submit a joint registration dossier on behalf of its members for the chosen substances. The main objective should therefore be to identify the substances that will be registered, including EINECS (European Inventory of Existing Commercial chemical Substances) number, and to agree on their classification and labelling.
The consortium members must approve the registration dossier to be submitted by the lead registrant. The consortium agreement may contain provisions on how such an approval should be granted and what will happen in the case of conflicts. It may also include provisions to allow members to opt out of joint submission but use the studies for which they have contributed. The lead registrant then has to list in the registration dossier all consortium members participating in the joint submission. The other consortium members will refer to the joint submission when they submit the individual part of their registration dossiers. In view of the many registration dossiers that are expected to be submitted to the ECHA, it is important to plan the submission date in advance, particularly where this may have an effect on the right to place the chemical substances on the market.
The lead registrant could be obliged to update the registration dossier, answer ECHA queries and appeal ECHA decisions, where necessary, on behalf of all consortium members.
Data ownership: The consortium members may have rights to existing studies and/ or data (studies) which REACH requires them to share. The consortium agreement can deal with issues of exchange and retention of rights. One option would be that each consortium member retains its rights and allows the other members to refer to its studies by means of a letter of access. Another option would be to establish a licensing mechanism.
The consortium may also develop studies that members agree will be jointly owned. If the consortium is built on a licensing system, the studies may be owned by a trustee and licensed to the consortium members. Sometimes the consortium may need to purchase and use studies available to persons outside the consortium. In such a case, it is essential that a consortium body is empowered to contract for the necessary studies.
Finally, data sharing requires that the consortium and its members provide the available studies for consideration by third parties. This means that the consortium agreement should contain a licensing or similar mechanism.
Confidentiality: REACH does not contain sufficient guarantees that the exchanged information will remain confidential. In some cases, consortium members will not only be allowed to refer to a particular study but will also be in possession of this study or will obtain key information concerning the study. It is therefore important to regulate in the consortium agreement the consortium members’ use of the received information.
Exchange of information: REACH does not provide a procedure for exchange of information, but consortium members can agree such a procedure. In particular, the consortium members can regulate the collection of information concerning existing studies, the mechanism to assess the quality of the studies and the selection of the studies necessary for the preparation of the registration dossiers. If consortium members have extensive experience in co-operating with each other on health and environmental issues, there may not be any need for a detailed procedure.
The consortium members have to make a financial contribution to the consortium for the fulfilment of its objectives. The amount of the contribution or the cost sharing formula can be agreed upon by the consortium members, usually before signing the agreement, and they are not bound by the cost sharing rules set out in REACH. This means that equal sharing of the costs among consortium members regardless of their size is not a mandatory requirement.
If the consortium members decide to base their cost-sharing formula on volume or value of production and/or imports, they should ensure that this data is collected by a trustee and is not disclosed to the other consortium members. This is to ensure that the parties do not exchange sensitive information which may lead to restriction of competition in the European Union, contrary to competition law rules. The consortium agreement may contain provisions on the procedure for the adoption of the budget and the control of its implementation.
Other Consortium Issues
The duration of the consortium is also determined by its members. If the objective of the consortium is to submit a joint registration dossier, the consortium may be dissolved with the submission of the last dossier. The consortium may also have a fixed duration of 12 years from submission of the registration dossier, during which period consortium members would benefit from data protection under REACH and could require compensation from registrants of the same substance wishing to refer to their registration dossier.
The activity of the consortium should be strictly limited to co-operation for compliance with REACH. Any further exchange of sensitive market information such as volume, value of sales, market shares, division of markets, price increases, marketing strategies and others could lead to restriction of competition in the EU market and would violate EU competition rules. If the consortium members need to provide information on volumes under the cost-sharing agreement, then they must ensure that these figures are communicated to a neutral third party trustee who is bound to keep this information confidential. The consortium agreement should contain provisions which ensure that competition law is respected and may contain liability clauses for breach of these provisions.
The consortium agreement may address the issue of liability of consortium members against the other members for breaches of the consortium agreement and, in particular, the confidentiality provisions. The agreement may contain further provisions on the liability of the secretariat and additional liability of the lead registrant. The consortium members may limit the liability in certain cases.
Governing Law and Dispute Settlement
The consortium agreement bears the typical features of any other agreement and should therefore provide for a governing law and a dispute settlement mechanism. In practice, the governing law can be the law of any EU Member State, provided that international private law rules are observed. The consortium members may also agree on a dispute settlement mechanism which may include mediation and/or arbitration procedures.
REACH obligations for joint submission and data sharing lead to the conclusion that REACH compliance is not possible without co-operation among manufacturers and/or importers of the same substance. REACH, however, does not provide detailed rules for such co-operation. The attainment of REACH objectives will therefore depend entirely on the manner in which the industry organises itself. A consortium agreement can have a number of positive effects, such as clear membership rules, control over costs, reduced labour intensity and also provide a means of choosing best quality studies, whilst protecting confidential information. The consortium members may also determine the degree of flexibility they will enjoy when preparing the registration dossier for the selected substances. The consortium agreement is therefore a convenient tool to organise compliance with REACH obligations and at the same time safeguard the essential business interests of the participating companies.