In effect for more than two years, the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH Regulation) presents its first registration deadline in less than one year. While many companies will only have to register their pre-registered substances by later deadlines, the joint submission is likely to have to be submitted by November 30, 2010. The mandatory joint submission of certain information to the European Chemicals Agency (ECHA) requires cooperation and data sharing between registrants, but also must be in compliance with European Union (EU) competition law. Member states are responsible for enforcing REACH obligations and have already taken enforcement actions, with many more expected to follow. In preparing the joint submission, companies must comply with regulation guidelines and EU competition laws and understand the potential penalties and enforcement actions by member states.
Joint Submission/Individual Submission
REACH registrants are required to jointly submit some information to ECHA. The main purpose of substance information exchange forums (SIEFs) is to organize the data sharing and the subsequent preparation of joint registration dossiers. Participation in a SIEF is mandatory. Nevertheless, the joint submission of data does not eliminate the obligation for each registrant (manufacturer, importer, or only representative) to submit an individual dossier as well.
The lead registrant makes the joint submission of part of the technical dossier on behalf of the other registrants in the SIEF. The joint submission must include:
Registrants also may agree to jointly submit the Guidance of Safe Use of the substance and the Chemical Safety Report (CSR), although this is optional.
The individual dossier will include all other required information, i.e., the identity of the registrant, the identity of the substance, information on the manufacture and uses of the substance, and exposure information (for substances in quantities of one to 10 tons).
Under specific conditions, registrants may be allowed to opt out from the joint submission, fully or only in part, in which case they will have to include more information in their individual dossiers. The right to opt out does not apply to the data-sharing obligations and must be fully justified. One of the following three reasons must be invoked by a registrant wishing to opt out:
The joint dossier must be submitted by the first registration deadline that applies to the SIEF members, regardless of which deadline applies to each individual member. For many substances, this means that the joint dossier will have to be submitted before the November 30, 2010 deadline. Preferably, the joint dossier will be submitted well in advance since individual dossiers can only be submitted once the lead registrant has received its registration number, and this may take a few weeks from the submission of the joint dossier.
Member states are responsible for REACH enforcement. At the moment, almost all member states have established the sanctions and penalties for infringement of REACH provisions in their national legislations. While some countries have only administrative fines, many also have established criminal sanctions such as fines and imprisonment.
In Belgium, for example, fines for failing to comply with the “no data, no market” principle can be as much as €4 million and/or imprisonment of up to three years. In the United Kingdom, penalties for contravening certain REACH provisions include an unlimited fine and/or up to two years of imprisonment following conviction on indictment. The Netherlands has the most severe imprisonment penalty for REACH violations: up to six years.
Enforcement actions are already taking place all across the EU, under the coordination of the Forum for Exchange of Information on Enforcement (Forum). Although enforcement is handled by authorities at the member states level, this coordination at the EU level ensures that all member states are actively checking REACH compliance, although it is up to each member state to decide how many companies to inspect. The results of this project will be collected by the end of 2009 and the Forum Working Group will produce a report in early 2010. The Forum also is preparing a second coordinated project to be launched in 2010.
Manufacturers and importers impacted by REACH should ensure that a documented evaluation of their supply chain is readily available to national inspectors in Europe, or that the only representative maintains a copy of such evaluation. For any substance in which a pre-registration under REACH is necessary, companies must ensure that a REACH pre-registration number is documented and available.
Antitrust Issues of REACH Compliance
REACH compliance requires companies to join SIEFs and cooperate on a number of areas. In particular, it imposes a data-sharing obligation that cannot be avoided. EU competition law, however, is inherently skeptical of coordination among competitors, as it may lead to a restriction of competition. The REACH regulation clearly specifies that EU competition law applies to all REACH-related activities. Therefore, to comply with both REACH and EU competition law, companies need to find the right balance between their conflicting obligations to cooperate and to not restrict competition.
To avoid infringing EU competition law, it is recommended that companies adopt and follow a compliance program that takes into particular account the potential dangers of information exchange and data sharing. Information exchange should be limited to what is strictly required by REACH, not sensitive information such as business plans or information on the market behavior of companies. If sensitive information must be exchanged, precautionary measures should be used. It also is preferable to limit the participation of marketing and business people in SIEFs and consortia. Companies should note that participation in meetings in which sensitive information is exchanged can in itself be problematic, even if the company did not actively exchange information.
Consortia pose additional problems regarding compliance with EU competition law. A consortium may not regroup all members of a particular SIEF. However, it is important to have non-discriminatory membership rules, based on objective criteria, as the exclusion of a legitimate applicant may have a foreclosure effect and breach competition law. Requirements for cost sharing must be fair and justified. Data sharing also must be done on fair, transparent and non-discriminating terms.
REACH registrants should start preparing their joint and individual submissions to meet the first deadline of November 30, 2010. Time should be allowed for the potential need to contact REACH authorities during the preparation of the registration, as well as for the possibility that a joint submission will need to be completed before it is accepted by ECHA. A delay could jeopardize the ability of other registrants to comply with the registration deadline. Registrants will need to balance REACH submission requirements for data sharing with applicable EU antitrust laws, or face penalties for violations of REACH requirements or EU competition law.
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If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following individuals:
Timothy J. Sheehan
Howard W. Fogt, Jr.