The Weekly Pulse: 26th Sep – 30th Sep

What’s HOT in our Regulatory World at the moment?

What are our clients looking at?

This week’s trending sources in C2P

• EU: Classification, Labelling and Packaging of Substances and Mixtures, Regulation (EC) No 1272/2008 – Proposed Amendment – (on new hazard classes and criteria for substances with endocrine disrupting, PBT, vPvB, PMT and vPvM properties) Draft Regulation, September 2022
• EU: Electromagnetic Compatibility, Directive 2014/30/EU and Others – Proposed Amendment – (on emergency procedures for conformity assessment, technical specifications and prioritisation of market surveillance activities for crisis-relevant products) Draft Directive, September 2022
• Compliance and Risks: Your Guide To Regulatory Developments In South Korea, White Paper, September 2022

What is our Content Team talking about?

EU Proposal on Product Liability In The Digital World: What Manufacturers Should Know – Joyce Costello

The EU Commission has adopted revised product liability rules adapted to the nature and risks of products in the digital age and circular economy.

In a proposal circulated on 28 September 2022, the Commission has set out its vision for a revised product liability directive, appropriate for both the green and digital transition, and modern global value chains.

The new rules will retain the principle of strict liability of manufacturers, with the claimant required to prove the defectiveness of the product, the damage suffered and the causal link between the defectiveness and the damage. However, an expanded scope and expanded obligations mean that economic operators including product manufacturers, importers and authorised representatives should all be aware of the implications of the strengthened liability rules for their operations.

What were the shortcomings in Directive 85/374/EEE?

The existing rules

• Fail to expressly recognise categories of products emerging from new digital technologies, like smart products and artificial intelligence (AI)
• Are unclear on how to determine liability for defective software updates, defective machine learning algorithms or defective digital services that are essential for a product to operate
• Are unclear on how to determine liability in the event product is a substantially-modified one that is already on the market
• Are silent on the situation regarding products directly imported from outside the Union by a consumer.

What products would the revised rules cover?

The rules would apply all products, including software and AI systems embedded in other products or placed on the market as a digital product in their own right.

Article 4 (1) ‘product’ means all movables, even if integrated into another movable or into an immovable. ‘Product’ includes electricity, digital manufacturing files and software.

What happens if a product placed on the market is later modified?

The new rules would also support the circular business model in clarifying that the Directive would apply to remanufacturers and other businesses that substantially modify products in case these products cause damage to a person, unless they show that the defect relates to an unmodified part of the product. So manufacturers can be held liable for changes they make to products they have already placed on the market, including when these changes are triggered by software updates or machine learning.

Article 7(4) Any natural or legal person that modifies a product that has already been placed on the market or put into service shall be considered a manufacturer of the product for the purposes of paragraph 1, where the modification is considered substantial under relevant Union or national rules on product safety and is undertaken outside the original manufacturer’s control.

Is physical injury to the consumer the only type of actionable damage?

No. In addition to the traditional notion of physical damage, medically recognised psychological harm, property damage and data loss can constitute actionable damage.

Article 4(6) ‘damage’ means material losses resulting from:

(a) death or personal injury, including medically recognised harm to psychological health;

(b) harm to, or destruction of, any property, except: (i) the defective product itself; (ii) a product damaged by a defective component of that product; (iii) property used exclusively for professional purposes;

(c) loss or corruption of data that is not used exclusively for professional purposes.

Will the burden of proof still rest with the consumer (claimant)?

Yes, to a certain extent. The new Directive is proposing a relaxation in the burden of proof on the consumer in complex cases, e.g. certain cases involving pharmaceuticals or AI.

Article 9 (4) Where a national court judges that the claimant faces excessive difficulties, due to technical or scientific complexity, to prove the defectiveness of the product or the causal link between its defectiveness and the damage, or both, the defectiveness of the product or causal link between its defectiveness and the damage, or both, shall be presumed where the claimant has demonstrated, on the basis of sufficiently relevant evidence, that: (a) the product contributed to the damage; and (b) it is likely that the product was defective or that its defectiveness is a likely cause of the damage, or both.

What are the new disclosure requirements?

Manufacturers will be required to disclose information under the new PLD: companies must disclose evidence that a claimant would need to prove their case in court.

Article 8 Member States shall ensure that national courts are empowered, upon request of an injured person claiming compensation for damage caused by a defective product (‘the claimant’) who has presented facts and evidence sufficient to support the plausibility of the claim for compensation, to order the defendant to disclose relevant evidence that is at its disposal.

Is anyone liable for defective products manufactured outside the Union?

Yes. Importers can be found liable for defective products manufactured outside the Union. Where consumers buy products from outside the Union directly, without an importer, they may seek compensation from the non-EU manufacturer’s representative. Given that the Market Surveillance Regulation mandates the presence of an EU-based representative, this is the person who becomes liable when the manufacturer is not located within the Union.

Article 7(2) Member States shall ensure that, where the manufacturer of the defective product is established outside the Union, the importer of the defective product and the authorised representative of the manufacturer can be held liable for damage caused by that product.

Next Steps

The proposal must now be examined and adopted by the European Parliament and the Council.

What are our Knowledge Partners talking about?

Denmark – Packaging: Denmark to implement EPR for all packaging by 2025 – Sagis

An agreement between the government and the Danish Parliament on EPR for packaging and the public clean-up of single-use plastic (SUP) litter reveals the planned implementing principles of the country’s upcoming regime for household and industrial packaging waste, to be in place before 2025.

Municipalities currently responsible for household waste packaging

Denmark remains the only EU member state to have not regulated an EPR-based waste management regime for packaging. Although certain elements of the EU Packaging Directive have been transposed, including the recovery/recycling targets and the eco-design requirements, no recycling obligations have been imposed on producers* and municipalities remain responsible for arranging the curbside collection of household waste, including waste packaging.

As part of the country’s efforts to meet the requirements of the EU CEP

• a Jun-20 amendment to the Environmental Protection Act (EPA) enabled the Minister to issue implementing legislation to introduce EPR on packaging from 2025 (as required under Art. 7.2 of the amended EU Packaging Directive);
• a Dec-20 Waste Order newly required municipalities from Jul-21 to provide curbside collection for 11 waste fractions uniformly throughout the country, irrespective of whether waste is considered packaging or not;
• a Jun-22 amendment to the EPA a) prohibits from Jul-22 municipalities from treating household or industrial recoverable/recyclable wastes (i.e. packaging) themselves and b) introduces stricter financial supervision over the waste sector.

*The Waste Order allows producers to set up voluntary take-back schemes for waste from their packaging.

Upcoming EPR waste packaging regime a collaboration between municipalities and producers

On 3-Sep-22, the Danish Parliament approved a long-awaited overarching political agreement ‘on EPR for packaging and SUP products’. It follows the recent legislative progress and provides a framework for the design and implementation of an EPR regime for packaging (and the clean-up of SUP litter) by 2025, while leaving the minutiae to be deliberated between municipalities and industry to allow for flexibility and avoid overly detailed regulations.

The Agreement was built on recommendations published in Jul-21 by the EPR Cooperation Forum, a body established in Sep-20 by the Ministry of the Environment to investigate and collect suggestions from public and private parties for the implementation of EPR for packaging in Denmark. The key points of the agreement are as follows:

• Municipalities will remain responsible for the collection of (dry) household waste and household waste packaging from citizens, while the collected (dry and packaging) waste will be handed over to the producers (packers/fillers) via ‘collective schemes’ (PROs) who will arrange for their treatment thereafter and report treatment data to the Danish Producer Responsibility System (DPA) [Producers will be permitted to individually or collectively establish DRS’ in parallel to the municipal take-back mechanism].
• The financing mechanism for the collection of household waste packaging and SUP littler clean-up activities will shift from citizen-funding to producer funding whereby producers of household packaging and SUPs will reimburse municipalities’ collection costs through their packaging PROs [The switch to producer funding is estimated to lower the average annual waste fee per household by DKK 600 (EUR 80)]. Municipalities costs for the collection of household dry-fraction non-packaging waste will not be reimbursed by producers but instead recouped through rates charged directly to households.
• The packaging PROs will be required to cover all packaging materials and operate on a national scale. Although the agreement does not impose restrictions on the ownership and control of the PROs, it is stated that they may have a profit objective. The agreement facilitates the existence of multiple packaging PROs (as per the other EPR waste streams) and approvals will be issued for 5-year periods.
• Producers’ financial contributions to the PROs are to be modulated to disincentivize excessive packaging and incentivise the use of recycled content and packaging that is reusable or recyclable. The government will be tasked with determining the principles/criteria for fee modulation.
• Packers/fillers who POM less than 8 tonnes of packaging will be presented with simplified reporting requirements. However, they will remain subject to the financing requirement, for which no de-minimis exemptions are foreseen.
• The operational and financing conditions/arrangements are to be bilaterally negotiated (on a continual basis) between the municipalities and producers. The EPR Cooperation Forum is to operate permanently as a means to mediate the negotiations (through a ‘negotiation committee’) between the parties.
• The scope of the DPA – which currently operates the producer register for EEE and batteries – will be expanded to cover producer registration and reporting/data collection for packaging. An EPR authority (‘producentansvarstilsynet’) – to be financed collectively by producers – is to monitor the regime, the PROs and free-riders.
• Business/industrial waste packaging will continue to be collected and managed by the private waste treatment sector (who will also be responsible for reporting treatment data to the DPA), while producers will be presented with a financial role only and compensate treatment operators (through collective arrangements).
• In view of insufficient data on current national recycling rates and the upcoming revision of the EU Packaging Directive, binding recycling/reduction targets will be set at a later date.
• The packaging regime will undergo a re-evaluation in 2027 to monitor its operational/economic efficiency and ensure teething issues are tackled quickly.
• The total estimated annual cost to producers of household packaging in 2025 (under the new regime) is estimated at:
  * DKK 3,168 m (EUR 426m) in 2025 [This includes waste management costs (household packaging of DKK 1,504m (EUR 209m), SUP clean-up costs of DKK 56m (EUR 7.5m) and administrative (producer-financed state and PRO) costs of DKK 272m (EUR 36.5m)) as well as initial (one-off) start-up costs of DKK 1,335m (EUR 180m)].
  * DKK 1,903 m (EUR 256m) by 2030 (-40% when compared to 2025).

What are our Clients asking about?

For China, Is it mandatory to have a crossed-out wheelie bin symbol on the battery/cell label? –Answer by Chelsea Ní Chuinneagáin

Producers and importers of WEEE products must label products with information about harmful materials content and suggested recycling or disposal means per Article 11 of the Regulation on the Management of Collection and Disposal of Waste Electrical and Electronic Products which can be found here, however, there is no mandatory legislative implementation of the crossed out wheelie bin symbol in China. 

Stay Updated On Global Regulations

This information is based on the most viewed regulations on C2P this month.

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