Product Recalls and Reporting Obligations in Europe

1. Product Recalls and Reporting Obligations in Europe Presentation to ICPHSO Asia-Pacific Symposium Seoul, Korea, 31 October to 2 November 2011 Rod Freeman Partner – Product Safety and Product Liability rod.freeman@hoganlovells.com

2. Problems when dealing with international product recalls and notifications • Timing and message control are critical, and increasingly slow. Poor control of the public message undermines an effective recall • Reporting obligations are inconsistent around the world • different triggers for reporting ("risk" v "incident" v "corrective action") • different time limits • different content • Rapidly changing regulations in parts of the world • eg new reporting obligations in the Middle East, Vietnam • rules in a state of transition in Europe • Inconsistent levels of respect for confidential information around the world • Inconsistent expectations as to what is required when conducting a recall • eg different views/regulations on whether newspaper/television advertising is necessary

3. Solutions for businesses when dealing with international product recalls and notifications • The manufacturer needs good information in the crisis to form the basis of its decisions. This is assured by: • proper planning – have good information systems, good procedures in place now • proper expertise – experienced in-house personnel and/or outside expert advisers ready to jump into action • Be very, very, careful to keep control of the public message, to ensure only accurate and reliable information is communicated anywhere in the world. It is essential that control of information is centralised by the company in any international product safety issue • Know the regulatory framework that comes into play in the relevant markets. Get expert advice if you are not sure. • Don't be tempted to take short cuts • if the reputation of the company, or its products is at stake, it makes no sense to compromise

4. Product recall laws in Europe • Primary laws for consumer products based on the General Product Safety Directive (Directive 2001/95/EC) • No express obligation to conduct a product recall • Main obligations to recall arise under manufacturer's general law duties to take due care to protect consumers • General obligation under the GPSD is to be in a position to take appropriate measures...

5. The General Product Safety Directive – Article 5(1) "Within the limits of their respective activities, producers shall adopt measures commensurate with the characteristics of the products which they supply, enabling them to: (a) be informed of risks which these products might pose; (b) choose to take appropriate action including, if necessary to avoid these risks, withdrawal from the market, adequately and effectively warning consumers or recall from consumers." • "Recall shall take place as a last resort"

6. The General Product Safety Directive – Article 8 Powers of the national authorities in the Member States: "...for any dangerous product: ... (ii) to order or coordinate or, if appropriate, to organise together with producers and distributors its recall from consumers and its destruction in suitable conditions." But major recalls are typically the result of responsible companies undertaking corrective actions that they deem to be appropriate rather than mandatory action by an authority.

7. The notification obligation in Europe "Where producers and distributors know or ought to know, on the basis of the information in their possession and as professionals, that a product that they have placed on the market poses risks to the consumer that are incompatible with the general safety requirement, they shall immediately inform the competent authorities of the Member States thereof under the conditions laid down in Annex I, giving details, in particular, of action taken to prevent risk to the consumer." - GPSD, Article 5(3) Note: • Obligation is risk-based – a risk assessment is needed (see below) • Obligation is not notify the authorities in each member state where the product has been marketed (see below) • Notification must be given to each authority "immediately" the triggering information is available

8. Risk assessment for consumer products in Europe

9. Notifying in multiple Member States • For any business with a good reputation to protect, the fundamental objective has to be to control communications, and maintain a dialogue with the authorities who will be making decisions about the situation • This means ensuring a good line of communication (in the right language) with the applicable national authorities • "Short-cut" options for dealing with notification obligations in Europe are possible, including on-line "Business Application" tool. But not always suitable where good dialogue with authorities may be important