Horizon scanning seems a difficult task right now – if 2020 taught us anything, it's that the world can be hard to predict. But we know that for products businesses, at least, Brexit continues to dominate with important changes to product compliance. We touch on this and other issues to look out for in 2021 below.
Brexit
The UK's existing product liability and safety regime is underpinned by EU laws including the Product Liability Directive and the General Product Safety Directive. How much of this will change following Brexit remains to be seen. Consumer confidence in UK products will need to be maintained together with opportunities for manufacturers to develop new products and innovate at a time when pressures on supply chains due to the impact of COVID-19 continue. In the meantime, there are important product compliance changes in force now, particularly in relation to product labelling as well as new UK legislation which has brought additional obligations for certain businesses in the supply chain.
The TCA (EU-UK Trade and Cooperation Agreement) will govern the future trading relationship between the UK and EU. While the UK had been angling for more mutual recognition of product conformity assessments, it was ultimately unsuccessful. The TCA offers no mutual recognition on product standards, meaning UK regulatory bodies can't authorise a product for sale in the EU. If you're selling a product in both jurisdictions, you'll need to comply with both their product regimes. Goods imported from the UK to the EU and vice versa can be subject to physical checks, but pharmaceuticals, motor vehicles, wine, chemicals and organics products will benefit from regulatory compliance mechanisms.
Products businesses need to keep on top of the development of UK product standards and the impact (if any) on their existing conformity assessments and technical files. With the UK's regulator, the OPSS, working hard to protect consumers from unsafe products – particularly when sold on online marketplaces – manufacturers will need to closely monitor these changes as they emerge. Some key changes include:
- The UK and EU agreed to allow detachable labels to be applied in their respective territories. If you're an importer amending product labels for post-Brexit compliance, you won't have to completely re-label your products but can instead place new labels over the old ones, and can do this in the customs area of the country of import.
- Under the amended General Product Safety Regulations (GPSR), the way "producer" is defined has changed. If you're a person established in the UK who places a product from outside the UK on the market, you'll be deemed a "producer" as opposed to a "distributor" within an EU Member State. This means that the new labelling obligations fall on producers, who will have to ensure that the correct marking is placed on their products, including their name, address and a product reference where necessary. The GPSR place more obligations on producers than on "distributors", including the requirement to give consumers, producers and distributors information that allows them to assess a product's inherent risk, to conduct sample testing, and to investigate complaints.
- Similar changes apply to importers. Some importers are now liable for the products they ship from the EU and sell in the UK, regardless of whether they had any hand in producing the product. If you are an importer, you will have to display your name, address and a product reference number when importing products into the UK. You will also be liable for ensuring that the product meets UK standards. If, for instance, a faulty product results in property damage or a personal injury claim, then under the Consumer Protection Act (CPA), a consumer can bring a claim against an importer for the losses. Importers must therefore make sure they are adequately insured for the possible losses.
Allergens
Food allergens remain a hot topic and we expect food business operators to continue to be under the spotlight in 2021 with their systems and procedures facing scrutiny. Any business selling food that is pre-packed for direct sale will also need to comply with "Natasha's Law" from 1 October 2021. From then on, food sellers must make sure their products show the name of the food with a full list of ingredients directly on the packaging or label. Any of the 14 mandatory allergens should be highlighted in some way (for example, in bold text). You can read more about these changes here.
Collective redress
Products businesses are often surprised that the UK does not have a similar class action regime to the US for product liability litigation. We have a range of procedures for managing group litigation and EU Member States are widening the availability of collective redress following an infringement of certain consumer laws. A Directive on representative actions for the protections of the collective interests of consumers was published in the EU's Official Journal on 4 December 2020 and will be implemented by its members over the next two years.
Under these changes, only "qualified entities" designated by a Member State that fulfil certain criteria can bring a representative action on behalf of a group of affected consumers. To bring cross-border claims, qualified entities will be required to meet harmonised standards as set out under the Directive. While the Directive won't apply to the UK, if the new European regime finds success, it may be that existing mechanisms in the UK (eg group litigation orders, collective actions etc) start to become more prevalent and/or changes will be introduced to encourage such actions in the UK. We discuss the changes in more detail here.
It's not currently clear how the framework will be used against unharmonised systems like the UK's, but class actions may find their way into the product liability regime in the future. With this change now going in the same direction in the EU, we expect some "qualified entities" to bring class actions through the UK courts.
Data safety, data breaches and product liability
Turning to the types of product liability litigation we expect to see in 2021, crossover between IoT data breaches and product liability and safety is likely to emerge as manufacturers and software developers continue to integrate IoT technology into smart products. IoT is more commonly used by consumers in daily life including cars, home security systems, digital health, connected toys and baby monitors.
This raises not only questions of data privacy but genuine concerns for consumer safety. Many arguments arise as to liability and, in particular, whether a data breach amounts to a defect under the existing product liability regime. We'll be closely following developments in the regulatory frameworks for both data and product safety to see how they might come together over the months ahead.
We discuss the overlap between data security and product safety in more detail here.
Find out more
If you'd like to discuss any of the issues raised in this article in more detail, please reach out to a member of our Product Liability & Safety team.
