Fieldfisher's EU Regulatory team wins another appeal before ECHA's Board of Appeal against ECHA's decision on data and cost-sharing under REACH

On 15 December 2020, in Case A-005-2019, ECHA's Board of Appeal (BoA) annulled an ECHA decision rejecting an application by the Appellants, represented by Centro Reach S.r.l. (the ‘Appellants’ representative’), to refer to the studies on vertebrate animals contained in the registration dossiers for numerous dyes (the 'Substances').

Background

Between November 2012 and March 2018, the Appellants' representative took part in data and cost-sharing negotiations with REACH & Colours Kft, representing itself as lead registrant for some of the Substances in question, and also the lead registrants for the remaining Substances and the data owners for all of the Substances.

During these negotiations, REACH & Colours Kft refused a request by the Appellants' representative to provide an itemization of data and costs for the Substances, unless the Appellants' representative provided a 'universal unique identifier' for each Appellant (potential registrant) and 'confirmation of substance sameness' for each substance for which the Appellants were potential registrants, and confirmed pre-registration of each of these substances.

The Appellants' representative provided a list of the Appellants' names, and a list of the substances in question with the relevant tonnage bands for each substance, but did not provide the information specified by REACH & Colours Kft. It also disagreed with REACH & Colours Kft's proposed cost-sharing model.

In March 2018, the Appellants' representative submitted an application to ECHA for the Appellants' permission to refer to the studies on vertebrate animals contained in the registration dossiers for the Substances.

In December 2019, ECHA rejected the application, considering that the Appellants' representative had not justified its refusal to share the information requested from REACH & Colours Kft, and had failed to make every effort to reach an agreement.

The Appeal

The Appellants contested ECHA's decision on two grounds, including ECHA's commission of a manifest error of assessment of the case. They argued that the information requested by REACH & Colours Kft was not a pre-requisite for data and cost-sharing negotiations, and that ECHA was wrong to find that the Appellants' representative, in refusing to provide such information, had failed to make every effort to reach an agreement.

Referring to Implementing Regulation 2016/9 and settled precedent, the BoA noted that ECHA must grant a potential registrant permission to refer if "the previous registrant fails to comply with the requirements for data and cost-sharing to be transparent, fair and non-discriminatory". As previously established in its Tecnofluid (II) decision (Joined Cases A-014-2018 to A-021- 2018, 23 July 2020), in order to comply with the transparency requirement, at the potential registrant's request, the previous registrant must provide "clear and comprehensible explanations on", amongst other factors, "which information is to be shared and on what basis". As such, pursuant to Article 2(1)(a) and (2) of the Implementing Regulation, the previous registrant must provide the potential registrant with an itemization of data and costs, if requested.

The BoA found that, whilst identifying which Appellant intended to register which Substance is an essential element for the conclusion of a data and cost-sharing agreement, the information requested by REACH & Colours Kft was not a prerequisite for negotiations to start, and the absence of such information was not prohibitive to providing the requested itemization.

According to Article 2(1)(a), data and cost itemization only concern the nature and cost of information available for registration of a substance, and not the identity or number of potential registrants for this substance. Additionally, it might be impossible for a potential registrant to ascertain at the beginning of negotiations whether it would register a substance, as this could depend on information exchanged during the negotiation process.

Furthermore, the BoA noted that the information provided by the Applicants' representative permitted REACH & Colours Kft to verify which Appellant was a member of which SIEF and therefore a potential registrant of which substance.

The BoA therefore concluded that in failing to provide the itemization of data and costs, REACH & Colours Kft breached its obligation of transparency under Article 2(1)(a) and (2) of the Implementing Regulation.

As ECHA's decision did not refer to this breach, the BoA considered that ECHA had not examined the parties' "compliance with objective requirements of transparency, fairness and non-discrimination" during negotiations, instead basing its decision on a subjective analysis of the intentions and behaviour of the parties. Additionally, the BoA found that ECHA should not have denied permission to refer based on a failure of the Applicants' representative to provide the information requested by REACH & Colours Kft, as this information was not a pre-requisite for providing an itemisation of data and costs.

ECHA's decision was therefore annulled. As the BoA did not have the necessary information to adopt a decision granting permission to refer, the case was remitted to ECHA for further action.

Your Take-Away

The BoA's decision confirms that, in data sharing negotiations under REACH, the communication by the data owner of cost itemization cannot be made subject to first establishing the sameness of the substance and the specific identity of each applicant for each substance. Indeed, applicants may ultimately decide not to register a substance also on the basis of the data costs. Cost itemization therefore must be provided upfront, in a fair, transparent and non-discriminatory way.

The Appellant was represented by Claudio Mereu and Iacopo Zonca of Fieldfisher's EU Regulatory team.