EU Court clarifies the calculation of SVHC in articles and related notification duties
On 10 September 2015, the European Court of Justice delivered an important judgment in case C-106/14 Fédération des entreprises du commerce et de la distribution (FCD) and Fédération des magasins de bricolage et de l’aménagement de la maison (FMB) v Ministre de l’Écologie, du Développement durable et de l’Énergie. The case is a request for a preliminary ruling from the French Conseil d’État (Supreme Court) and it concerns the concept of ''article'' under the REACH Regulation, and the duty to notify the presence of Substances of Very High Concern (''SVHC'') which are present in the article at a concentration of 0.1% weight by weight (w/w).
Fieldfisher published an article on Advocate General Kokott's Opinion on the case in March 2015, which is available here.
REACH defines "articles" as “an object which during production is given a special shape, surface or design which determines its function to a greater degree than its chemical composition”. Article 7(2) in conjunction with Articles 57 and 59 of REACH imposes on producers and importers the obligation to provide information to the European Chemicals Agency ("ECHA") when an article contains more than 0.1% w/w of an SVHC. The same duty is imposed by Article 33 on suppliers vis-à-vis recipients and consumers of such articles. A notification is not required for a substance in articles which have been produced or imported before the substance has been included on the Candidate List for authorisation.
The question arises as to whether, in the case of a product composed of one or more articles within the meaning of Article 3(3) of the REACH Regulation, Articles 7(2) and 33 of that regulation must be interpreted as meaning that the concentration threshold for a SVHC of 0.1% w/w referred to in those provisions must be established in relation to the total weight of that product or only the component part in which it is present.
The issue of how to calculate the concentration where an article is made up of different articles has been subject to many disagreements between Member States since the entry into force of REACH in 2007.
In particular, the European Commission, supported by the majority of the Member States, takes the view that the proportion of a SVHC should be calculated by reference to the assembled article in total. Other Member States — such as France in these proceedings — contend that the threshold must be related to the individual components of the article. It is in this context that the two French trading company federations were contesting the government's position.
In summary, the Court concluded that in the case of complex articles the calculation of the 0.1 % w/w threshold must be made by reference to each component that qualifies as an "article".
The Court and the Advocate General analysed two legal points – firstly, the concept of 'article' under Article 3(3) of REACH; and secondly, its relevance for the duties to provide information under Articles 7(2) and 33 of REACH.
Concept of "article"
It should be noted that REACH does not contain any provisions governing so-called ''complex'' product. In the absence of any specific provisions, the Court held that "there is no need to draw a distinction not provided for by the REACH Regulation between the situation of articles incorporated as a component of a complex product and that of articles present in an isolated manner".
Thus, the classification as an article remains applicable to any object meeting the criteria of Article 3(3) REACH and forming part of the composition of the complex product. Therefore, when such an article contains a SVHC in a concentration above 0.1% w/w, it should be notified to ECHA pursuant to Article 7(2) of REACH and to the recipient of the article pursuant to Article 33 of REACH.
Duties of market players
The Court held that a producer's duty to notify articles under Article 7(2) concerns those articles which "they make or assemble themselves". It follows that a producer's obligation to notify articles is not applicable to an article that was made by a third party. This is the case even when the article is used by that producer as an input. The third party, on the other hand, is subject to the duty to notify articles that it makes or assembles.
In its observations the Commission stated that it can be difficult for importers to obtain the required information from their suppliers that are established in non-EU countries. According to the Court, difficulties of that nature do not, however, affect the interpretation of Article 7(2) of REACH. Thus, the Court concluded that the importer of a product, comprising one or more of the objects defined as articles, must also be considered to be the importer of those articles and has a duty to notify ECHA.
With regards to suppliers, the Court said that their duty to provide information under Article 33 has to be applied to successive operators all along the supply chain and is "therefore intended to follow the article to which it relates through to the final customer." Further, the Court held that it is for the supplier of a product containing an SVHC above 0.1% w/w "to inform the recipient and, on request, the consumer, of the presence of that substance by providing them, as a minimum, with the name of the substance in question."
This ruling of the European Court of Justice has far-reaching consequences for the chemicals industry because it changes the approach taken by the Commission and ECHA in the past towards the calculation of the 0.1% w/w threshold for SVHC in articles. Based on a literal interpretation of Article 3(3) of REACH the Court took the view that there is no support for adding a distinction that is not provided for by the REACH Regulation between the situation of articles incorporated as a component of a complex product and that of articles present in an isolated manner.
The judgment thus shows that ECHA's interpretations are not always necessarily correct and that the Courts are ultimately in charge of interpreting EU law. In other words, it is not always permissible for ECHA to add distinctions and criteria going beyond the wording of REACH.
It will be interesting to see if and how this ruling will affect other ongoing discussions of a similar nature where ECHA has added distinctions or additional criteria, e.g., the definition of intermediates, on which there is some disagreement between ECHA and the industry.
For more information or questions please contact Claudio Mereu