Key Points: The new notification requirement for goods causing serious injury/illness or death means the ACCC will become involved in product safety investigations at a much earlier stage.

On the face of it the Australian Consumer Law Reforms appear to change very little about Australia's product recall system. While the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 includes some provisions regarding product recalls - for example, an express power allowing the Minister to order a product recall where the identity of the supplier is unknown - these changes amount to little more than tweaking around the edges.

However, there are other signs that point to a significant change in the way that product recalls will be conducted in Australia. In particular, the Act introduces a notification requirement where consumer goods have caused (or may have caused) death or serious injury/illness. This means that the ACCC will likely become involved at an earlier stage where there is a product safety incident involving an injury/death than is presently the case.

The ACCC has also recently conducted a review into Australia's product recall system. We think that there will be shift away from a system where product safety incidents are largely investigated and managed by suppliers, to one with greater intervention by the ACCC.

The Act commences on 1 January 2011. The ACCC has reviewed its recall guidelines and released them in draft form. Comment on the draft guidelines is being sought by 20 September 2010.

Outline of changes relating to recalls

The Act introduces the following changes specifically relating to recalls:

  • a power to order a product recall where it appears that a "reasonably foreseeable use (including misuse)" of the goods will or may cause injury to any person. The previous test (which remains) was that the goods "will or may cause injury";
  • a power allowing the Minister to order a product recall where the identity of the supplier is unknown;
  • requiring that compulsory product recall orders be published on the internet rather than in the Gazette;
  • the inclusion of specific obligations of suppliers in relation to compulsory product recalls - for example, that where the goods are repaired that the suppler ensure that the defect identified in the recall notice is remedied;
  • a provision where a State or Territory recall order will be overridden by a Commonwealth recall notice for the same goods;
  • a provision prohibiting any person from supplying goods that are subject to a compulsory product recall. Previously only the supplier named in the notice was prohibited from supplying the recalled goods (except where of course the goods did not comply with a mandatory product safety standard or banning order);
  • some specific requirements regarding the content of notification of voluntary recalls - for example where the goods being do not comply with a mandatory product safety standard a requirement that the notification set out the nature of the non-compliance;
  • a streamlining of the notification process, with notification of a voluntary recall only required to be made to the Federal Minister for Consumer Affairs (and not the various State/Territory Ministers).

While many of these changes are sensible (particularly the streamlining of the notification requirements) it would probably be stretch to describe any of them as significant.

Impact of new injury notification obligation

In addition to the recall specific changes, the Act introduces a new a requirement that suppliers of consumer goods give notice to the Commonwealth Minister where the supplier “considers that the death or serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of the consumer good”. Such notification must be made within 2 days of the supplier becoming aware of the injury/illness or death.

The clear purpose of the notification requirements is surveillance - meaning that it is reasonable to expect that reports will be investigated by the ACCC.

Currently, the only general reporting requirement (other than those existing, for example, under Occupational Health and Safety laws or in respect of specific products such as therapeutic goods) is a requirement to notify recalls.

A supplier will be unable to fully investigate an incident in two days, meaning that the ACCC's investigations will be conducted at the same time as the suppliers' investigations. This represents a shift away from a system where product safety incidents are largely investigated and managed by suppliers, to one with greater involvement and intervention by the ACCC.

Review into the product recalls system

Against this backdrop the ACCC recently conducted a review into the Australian product recalls system.

The report clearly indicates that the ACCC will take a much more active role in relation to future recalls, saying:

"Analysis showed that the recall was more effective when the regulator actively managed and had a greater level of involvement in all aspects of the recall process."

For our part we have already noticed some changes to the ACCC's procedures relating to recall - for example, the ACCC's new practice of asking a long list of questions upon being notified of a recall.

The report includes a number of other issues, including:

  • the use of social networking sites such as Facebook and Twitter to publicise recalls; and
  • including a definition of "recall" in the recall guidelines that would include things such as trade-level withdrawals and safety alerts.

The ACCC has reviewed its recall guidelines and released them in draft form. Comment on the draft guidelines is being sought by 20 September 2010.

Conclusion

Even though the Act contains little in the way of significant reform specifically relating to recalls, expect changes. The impact of the new notification requirement for goods causing serious injury/illness or death, once commenced, will be that the ACCC will become involved in product safety investigations at a much earlier stage. This, along with the report on the review into the Australian product recalls system, signals a shift towards a more interventionist ACCC.