Yesterday, the Court of Justice of the European Union (“CJEU”) held that the obligations on importers to notify the European Chemicals Agency (“ECHA”) and on suppliers to inform customers under the REACH Regulation apply to each of the articles contained in a complex article and not only to the complex article as a whole. The CJEU’s decision sides with the “once an article, always an article” approach already followed by several Member States, and will require foreign manufacturers and EU/EEA importers and suppliers of articles to quickly adjust their REACH compliance programs. The decision will have most impact outside the EU/EEA, where it will increase the pressure on foreign supply chains to disclose, and keep track of, the presence of substances listed in the Candidate List of Substances of Very High Concern for Authorization(“Candidate List”) in all types of articles and their components (e.g., electronic equipment, paper and board products, textiles) that may be shipped to the EU/EEA.

Background

Article 7(2) of the REACH Regulation requires producers and importers of articles to notify the ECHA of the presence of Candidate List substances in their articles if: (i) the use of the Candidate List substances has not been previously registered; (ii) the concentration of that substance exceeds the threshold of 0.1% in the article; (iii) the quantity of the substance exceeds one ton per year per producer or importer; and (iv) it cannot be excluded that humans and the environment may be exposed to the substance during the article’s normal or reasonably foreseeable conditions of use, including disposal. Article 33 of the Regulation requires suppliers of articles that contain Candidate List substances in concentrations above 0.1% to provide their customers with sufficient information, including the name of the substance, to allow the safe use of the article.

Article 3(3) of the REACH Regulation defines an article as “an object which during production is given a special shape, surface or design which determines its function to a greater degree that does its chemical composition.” The Regulation, however, does not specifically address the situation of complex articles (articles produced by assembling other articles), i.e., most products marketed in the EU/EEA. The Commission, ECHA and a majority of Member States took the position that the 0.1% concentration threshold should be measured on the basis of the whole article (e.g., a computer). In contrast, France, Belgium, Germany and other Member States took the view that the concentration threshold should be measured on the basis of each of the articles (e.g., components of a computer) composing the complex article.

The Decision

The CJEU’s decision was in response to a reference for a preliminary ruling from the French Conseil d’État in the context of proceedings brought by French Federation of Businesses in the Trade and Distribution Sector and the Federation of DIY and Home Improvement Shops. The proceedings concerned the validity of a Notice of the French Ministry of Environment on the duty to communicate information on substances contained in articles in accordance with Articles 7(2) and 33 of the REACH Regulation. That Notice expressed the French view that the concentration limits should be measured on the basis of each of the articles composing a complex article.

Clearly influenced by the REACH Regulation’s objective to achieve a high level of protection of human health and the environment, the CJEU’s decision sides with the most restrictive interpretation and does not give much weight to proportionality and international trade concerns. The Court takes the view that under REACH an article “does not cease to be an article when it is assembled or joined with other objects in order to form with them a complex product.” According to the CJEU, an article remains an article “so as long as it retains its shape, surface or design which is more decisive for its function than its chemical composition or as long as it does not become waste.”

However, the CJEU distinguishes between the Article 7(2) notification obligations that apply to producers and importers of articles and the Article 33 information obligations that apply to suppliers of articles. On that basis, the Court allocates different obligations to the different operators taking into account the REACH Regulation’s objective of a high level of human health and environment protection, and its principles of industry (producer) responsibility and substitution:

Article 7(2) of the REACH Regulation

• EU/EEA producers must notify ECHA only of the presence of Candidate List substances in “their” articles. According to the Court, this means that producers are not required to notify ECHA of the presence of Candidate List substances in the articles that they use to assemble or produce their complex articles.

•  In contrast, importers of complex articles must notify ECHA of the presence of Candidate List substances in concentrations above 0.1% in any of the articles that compose the imported complex articles. The Court bases this interpretation on the REACH Regulation’s definition of importer, as “any natural or legal person established within the Community who is responsible for import” (emphasis added).

Importantly, the CJEU argues that any difficulties for importers to obtain the required information from non EU/EEA supply chains do not affect the interpretation of Article 7(2).

Article 33 of the REACH Regulation

• Suppliers of complex articles must provide their customers with information on the safe use of their products, including at least the name of the Candidate List substance, if any of the articles composing the complex article contain a Candidate List substance in concentrations above 0,1%. The CJEU’s decision argues that this interpretation is necessary to ensure the effectiveness of the duty to provide information all along the supply chain through to the final consumer.

The CJEU’s emphasis on the protection of human health and the environment and the principle of industry responsibility and its little concern for the possible impact of its decision on international trade is in line with the its prior ruling in C-558/07 S.P.C.M and Others on the concept of monomer substances under the REACH Regulation. In that case, the Court held that “in order to ensure genuine competition within the Community, importers of monomer substances must be subject to the same obligations as those to which manufacturers are subject or to similar obligations which lead to an adjustment of costs.” In fact, as the Advocate General stated in its Opinion, the Court’s decision will “disseminate the standards established by the REACH Regulation outside the European Union.”

While the decision is not likely to trigger immediate enforcement actions, it will require importers and suppliers to reconsider how they assess the presence of Candidate List substances in their articles. In effect, this increases the pressure on foreign suppliers, and the administrative costs of supplying information to professional users and responding to requests from consumers in the EU/EEA.

*David Haughan contributed to this article and he is a Stagiaire with Covington & Burling LLP.