After a protracted journey through Parliament totalling more than two and a half years, the Canada Consumer Protection and Safety Act (CCPSA) is now in force. This legislation will have a substantial effect on the operations of all companies involved in the consumer product supply chain, including importers, manufacturers, distributors and retailers. This update summarizes these developments and highlights those issues which should be given particular attention by businesses now subject to this new regime.
The CCPSA in Brief
The Hazardous Products Act of 1985 (HPA) has, until now, served as the primary legislative basis for a relatively benign consumer protection and safety regime in Canada. The HPA establishes a permissive regime that allows the introduction and trade of products in the Canadian marketplace unless specifically regulated or prohibited. The HPA only provides government with limited authority to intervene in and control the production and distribution of consumer goods. For example, the HPA does not provide government with the authority to issue product recall orders. Rather, the HPA is largely dependent on industry taking a voluntary approach to product recall and related matters out of concern for the potential legal and reputational consequences.
The CCPSA materially transforms this landscape through the introduction of a new comprehensive consumer product regulatory regime. Administered by Health Canada and the Minister of Health, the CCPSA establishes a host of regulatory powers designed to target the entire breadth of the consumer product supply chain, from manufacturers and importers to distributors and retailers. It provides for a general prohibition against products that pose an unreasonable danger to consumers. The CCPSA also introduces government ordered recalls, mandatory incident reporting and government authority to require product testing, among other things. Unlike the HPA, this constitutes a proactive regulatory regime capable of impacting various stages of the consumer product development and marketing industry previously immune to such regulatory intervention.
General and Specific Prohibitions Under the CCPSA
The CCPSA states that its purpose is to "protect the public by addressing or preventing dangers to human health or safety that are posed by consumer products in Canada, including those that circulate within Canada and those that are imported."1 First and foremost the CCPSA attempts this by establishing a general prohibition on the manufacture, import, advertisement or sale of a "consumer product" that is a "danger to human health or safety:"2
- "Consumer product" is defined broadly to mean "a product, including its components, parts or accessories, that may reasonably be expected to be obtained by an individual to be used for non-commercial purposes, including for domestic, recreational and sports purposes, and includes its packaging."3
- Similarly, "danger to human health or safety" is defined broadly to mean "any unreasonable hazard — existing or potential — that is posed by a consumer product during or as a result of its normal or foreseeable use and that may reasonably be expected to cause the death of an individual exposed to it or to have an adverse effect on that individual’s health — including an injury — whether or not the adverse effect occurs immediately after the exposure to the hazard, and includes any exposure to a consumer product that may reasonably be expected to have a chronic adverse effect on human health."4
The CCPSA also includes prohibitions against:
- distributing consumer products that are the subject of a recall order under the Act;5
- advertising, packaging or labelling a consumer product in a manner "that may reasonably be expected to create an erroneous impression" regarding its potential danger to human health or safety;6 and
- manufacturing, importing, advertising or selling specifically listed consumer products including, for example, polycarbonate baby bottles containing bisphenol A.7
The CCPSA significantly increases the ability of government to respond to perceived consumer product health and safety issues through the following measures:
- The CCPSA grants the Minister the authority to order a person who manufactures imports or sells a product for commercial purposes to recall a product where it is believed, on reasonable grounds, to be a danger to human health or safety.8
- When a recall is ordered, the Minister may also order that any manufacturing, importation, packaging, storing, advertising, selling, labelling, testing or transportation of the product be stopped.9
- Where there is non-compliance with the CCPSA, the Minister may order "any measure" that "relates" to a product considered necessary to remedy the non-compliance or to prevent "a danger to human health or safety that the product poses."10
The Minister is also authorized to order manufacturers and importers to conduct tests on a consumer product, to provide documents related to those tests and to compile any information considered necessary by the Minister to verify compliance with the CCPSA.11 These orders need not be tied to any recall orders or stop-manufacture orders and can be ordered at any time the Minister considers such tests "necessary" to verify compliance with the CCPSA.
Applications to Have Orders Reviewed
The CCPSA provides entities subject to section 31 and 32 orders the right to request a review of the order "on grounds that involve questions of fact alone or questions of mixed law and fact."12
The request must be provided to the Minister within seven days of the relevant order. However, this period may be abridged by specific wording to that effect in the order where it relates to a "serious and imminent" danger to human health and safety.13 The CCPSA provides that no review will be conducted where the request is considered frivolous, vexatious or made in bad faith.14
Reviews must be completed within 30 days of a request, though this period may be extended by as much as an additional 30 days where the reviewing officer is of the opinion that more time is required to complete the review.15
Obligations Imposed on Business — Incident Reporting and Document Retention
The CCPSA imposes several new and significant obligations on businesses in the consumer product supply chain.
In particular, where an "incident" occurs, any person who manufactures, imports or sells a consumer product for commercial purposes has a positive obligation to provide the Minister and, if applicable, the person from whom they received the consumer product, "all the information in their control regarding [the] incident related to the product."16 This must be done within two days after the day on which the person became aware of the incident.17
Importantly, "incident" is defined broadly to capture, among other things:
- an occurrence or product defect that resulted or may reasonably be expected to result in serious adverse effects on health;18
- incorrect or insufficient information on a label or in instructions reasonably xpected to result in a serious adverse effect on health;19 and
- a recall or similar safety-related measure initiated by a foreign government or related public body.20
For manufacturers, or where a product is produced outside of Canada, importers, this duty includes the obligation to prepare a written report containing "information about the incident, the product involved, … any products that they manufacture or import, as the case may be, that to their knowledge could be involved in a similar incident and any measures they propose be taken with respect to those products."21 This report must be prepared within 10 days or within any other period specified by the Minister.22
These specific incident-related duties are in addition to the general obligation imposed by the CCPSA on manufacturers, importers, advertisers and retailers to prepare and maintain documents identifying from whom they obtain products and to whom they sell them.23 In the case of retailers, such documentation must also record the location where and the period during which products are sold.24 These documents must be retained for six years after the end of the year to which they relate. Furthermore, these documents must be maintained in Canada except where an exemption has been granted by the Minister.
Government Disclosure of Confidential Business Information Without Consent
The CCPSA grants the Minister unusual powers of disclosure, including the power to disclose confidential business information in certain circumstances:
- The Minister may disclose confidential business information to the public without the consent of and without prior notice to a company where such disclosure is "essential to address" a "serious and imminent" danger to human health or safety.25 Where this is done, the Minister must notify the person to whom the information relates not later than the next business day.
- The Minister may also disclose confidential business information at any time and regardless of any danger to human health or safety where the disclosure is to a government body responsible for safeguarding human health or safety or the environment and such body agrees in writing to maintain the confidentiality of the information.26 Where this is done, the Minister is seemingly under no obligation to notify the affected business or person of the disclosure.
Criminal and Civil Liability Under the CCPSA
Compliance with the CCPSA is encouraged through a multi-tiered system of substantial offences, fines and administrative monetary penalties that significantly expand on any similar liabilities established by the HPA:
- The contravention of certain provisions of the CCPSA can result in a fine of up to $5,000,000 or imprisonment for a term of up to two years or both.27
- The contravention of certain other provisions of the CCPSA, or contraventions committed knowingly or recklessly, can attract a fine in an amount at the discretion of the court or imprisonment for a term of up to five years or both.28
Further monetary penalties may be imposed for violations of recall or related measures ordered by the Minister pursuant to CCPSA sections 31 or 32.29 The exact penalties for such violations will be specified by the CCPSA’s regulations but are capped at a maximum of $25,000.30
Analysis and Conclusion
The CCPSA is intended to modernize Canada’s consumer product safety regime by bringing it in line with similar regulatory regimes currently in force in the United States and European Union. As such, this new regime provides government with the ability to intervene in many aspects of the consumer supply chain previously immune to such direct regulatory intervention.
The CCPSA also introduces a significantly strengthened fine structure intended to actively deter non-compliance. Companies with long-standing export markets in the United States are more likely to be familiar with this state of affairs than companies with purely domestic clients, particularly in relation to mandatory reporting requirements. However, the coming-into-force of the CCPSA will nonetheless introduce a period of significant adjustment for most affected companies.
This adjustment will be accompanied by a period of regulatory uncertainty. The CCPSA provides government with a wide range of powers not all of which are clearly defined. The Preamble to the CCPSA provides that "a lack of full scientific certainty is not to be used as a reason for postponing measures that prevent adverse effects on human health if those effects could be serious or irreversible." This provides government with a long leash with which to police suspected threats to consumer health or safety even in the absence of tangible evidence to that effect. It is also important to note that the CCPSA’s broad definitions of "consumer products" and "danger to human health or safety" combine to create a wide general prohibition the ultimate reach of which will likely be left to judicial determination.
Finally, it is important to highlight some of the idiosyncrasies and ambiguities of the CCPSA. For example, while the CCPSA expressly provides for the review of recall orders and stop-manufacture orders, it does not appear to provide the same right of redress in respect of orders to conduct products tests or studies. Similarly, the CCPSA is silent as to possible remedies available to industry should the Minister ever improperly exercise its powers of disclosure in respect of confidential business information and material damages or other business losses result.