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Product safety:law and trendsLynne AthertonLeonia Chesterfield
5 September 2006
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3
• Traces of salmonella in chocolate bars
• Detected salmonella in January 2006
• Levels too low for health risk
• Problem corrected March 2006
• Salmonella infections
• Chocolate bars recalled
• Estimated costs £20 million
• Possible claims against Cadbury
4
European general product safety regime
• Standardise levels of protection
• General Product Safety Directive 2001
• UK General Product Safety Regulations 2005
5
General safety regime and sectoraldirectives
• General product safety regime complements existing sectoralregulations
6
2001 General Product Safety Directive
• Aim: to ensure that all products placed on the market are safe
• Obligations on producers and distributors:
– Identifiable and traceable
– Monitor safety
– Take appropriate action
• Greater power to enforcement authorities: mandatory recall
7
Exchange of information within the EC: RAPEX system
• RAPEX system for exchange of information in EC
• For all non-food products (except pharmaceutical and medical)
8
RAPEX system: objectives
• To ensure rapid exchange of information about:
– Dangerous consumer products
– Measures taken to prevent harm to consumers
9
RAPEX system: operation
• Dangerous product identified on market of Member State
• Member State notifies European Commission
• European Commission examines notification
• European Commission disseminates information to all Member States
10
RAPEX system: statistics
• Useful source of data
• Caution required
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Trends in product safetyNumber of notifications made by EC countries to the EC RAPEX system
2002 - 2005
0
100
200
300
400
500
600
700
800
2002 2003 2004 2005
Number of Notifications
12
UK notifications to the RAPEX system
0
10
20
30
40
50
60
Number of notifications
2004 2005 2006 (to 31 July)Year
13
Reasons for increase in notifications to the RAPEX system
• Enlargement of the EC
• Increased awareness and ease of usage
• Implementation of the General Product Safety Directive 2001
14
UK General Product Safety Regulations 2005
• Came into force on 1 October 2005
• Increase in notifications to RAPEX because of:
– Wider scope of products falling within the regime
– Increased duties and responsibilities on producers and distributors
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Safe products
• An offence for a producer to place a product on the market unless it is safe
• “Safe” means any product which under normal or reasonably foreseeable conditions of use does not present any risk or only the minimum risks considered to be acceptable and consistent with a high level of consumer protection
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Scope of products within the regime
• All products intended for consumer use
• 2005 Regulations expand the definition of products covered to:
– Products supplied in the course of a service
– Products originally designed for use by professionals but which have “migrated” into use by consumers
– Antiques and products supplied for reconditioning and repair
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Duties on producers and distributors
• Product markings and traceability
• Post market surveillance
• Notification
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Duties on producers and distributors: notification obligations
Issues for producers:
• Whether to notify
• When to notify
• To whom to notify
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Enforcement authorities
• Precautionary principle
• Mandatory recall
20
Enforcement authorities
• Appeals
• Compensation
21
Impact of the UK General Product Safety Regulations 2005
• Mandatory recall provisions caused concern during consultation process
• EC RAPEX statistics provide insight into impact of the 2005 Regulations
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Product withdrawal and recall
05
10152025303540
Voluntarywithdrawal
Obligatorywithdrawal
Voluntaryrecall
Obligatoryrecall
Measures adopted following UK notifications to the EC RAPEX system2004-2006 (projected forward)
200420052006
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Recent recalls: Johnson & Johnson
A well managed recall:
• Poisoning of drug, Tylenol, by terrorists in the 1980s
• Took immediate action
• Openness built trust
• Rebuilt brand and reputation
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Recent recalls: Perrier
A badly managed recall:
• Traces of benzene found in bottled water
• Claimed contamination resulted from isolated incident
• Benzene in bottles in Europe
• World-wide recall
• Criticism for disregarding public safety
25
Product bans and warnings
0
0.5
1
1.5
2
2.5
3
Voluntaryban
Obligatoryban
Voluntarypublic
warning
Obligatorypublic
warning
Measures adopted following UK notifications to the EC RAPEX system 2004-2006 (projected forward)
200420052006
26
Trends in product safety
• Categories of products
• Nature of risk
• Origin of products
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Categories of products notified by UK to RAPEX – 1st January to 31st July 2006
Lighting equipment
19%
Hobbies/sports appliances
8%
Clothes4%
Motor vehicles20%
Cigarette lighters
8%
Children's equipment
2%
Cosmetics2%
Household appliances
4%
Electrical appliances
4%
Other8%
Toys21%
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Risk arising from products notified by UK to RAPEX
0
5
10
15
20
25
30
35
40
45
Chemicalrisk
Choking Fire/burns Risk ofinjury
Electricshock
Healthrisk
2004-2006 (projected forward)
200420052006 (projected)
29
Exploding laptops: Dell
Risk of serious injury publicised by the internet prompted speedy recall
30
Country of origin of products notified by UK to RAPEX – 1st January to 31st July 2006
China59%
Italy2%
France2%
Germany2%
USA2%
Thailand2%
South Korea4%
Unknown4%
Poland2%
Netherlands4%
UK15%
Australia2%
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Product recall insurance: UK recall insurance market
• Increased number of recalls has led to increased demand for product recall insurance
• Product recall insurance market responding to increasing demand
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Product recall insurance: relationship between insurance policy coverage and trends in product recall in the UK
• Voluntary recall
• Obligatory recall
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Conclusions
• Increased notifications
• Implementation of the General Product Safety Directive 2001
• “Voluntary” action to prevent harm to consumers
• Well managed and early product recalls
• Increased number of product recalls led to an increased demand for insurance cover
• Trends in product safety provide important information for insurers