Key points for successful cooperation with the market controlling authorities - International Law Office

Introduction
New directorate general structure
Successful replacement or recall programmes
Points of contact
Changing behaviour towards manufacturers and distributors
Steps to consider

Introduction

In compliance with EU legislation, in France, manufacturers and distributors may place on the national market only those products which are safe for consumers.(1) The General Directorate for Competition Policy, Consumer Affairs and Fraud Control is the authority in charge of ensuring such safety in France. Each year the directorate general sends a report of its actions to the European Commission to show that it has applied EU legislation to protect French consumers.

This year has been characterised by the desire of both the EU and national authorities to ensure the safety of consumer products placed on the EU market through the appropriate controls. On January 26 2010 the European Commission published new guidelines for the management of the Rapid Alert System for Dangerous Consumer Products (RAPEX) and the notification procedure established under Article 11 of the EU General Product Safety Directive.(2) The guidelines require national authorities to intervene even further in the activities of manufacturers and distributors. Also in January 2010, the directorate general published its first National Orientation Rules(3) to structure its actions.

These two texts have implemented major changes for manufacturers and distributors which place consumer products on the French market. Since the beginning of 2010, the directorate general has increased its controls and no longer hesitates to question the relevance of the corrective measures implemented when safety issues arise and to report such issues to the commission through the RAPEX system.

Therefore, cooperation with the directorate general is now, more than ever, a key issue on which manufacturers and their distributors must focus. Knowing how the directorate general is organised is also of fundamental importance, given that different types of agent may now take actions.

New directorate general structure

Objectives
The directorate general , created in 1907, has three main objectives. It must ensure:

• that the various players on the French market comply with market competition regulations;
• consumers' economic protection; and
• the safety of consumers.

In order to ensure consumer safety, the directorate general carries out both preventive and in-field verification actions.

Preventive actions consist of:

• carrying out risk assessments;
• informing consumers about dangerous products or the precautions to be taken when using a product;
• referring products to experts to test their safety/compliance, if necessary; and
• reporting dangerous products through the RAPEX system.

In-field verifications consist of:

• controlling the packaging, labelling and first marketing of products; and
• inspecting manufacturing sites (eg, their hygiene for food or cosmetic products, the traceability of the products and transport conditions).

To fulfil these objectives in the most effective manner, the directorate general focuses on:

• manufacturers which have previously been reported to the commission (either by the directorate general or by other national authorities);
• manufacturers of products that are considered to be "sensitive" (eg, toys, cosmetics, cars and household products); and
• manufacturers of innovative products.

The National Orientation Rules state that such controls should be reinforced in order for French consumers to have even more faith in the quality of the products that are offered to them:

"consumers' trust constitutes a major pillar of the economic support... Trust in the economy depends on confidence in a safer daily life. The security of products largely contributes to it."

Therefore, product safety has become one of the primary tools to be used by the French government to revive the national economy.

New structure
To ensure the increased controls mentioned above, the structure of the directorate general has been reorganised. Until recently, product safety was dealt with on two levels:

• The directorate general dealt with product safety notifications and complaints received by local agencies and with communications with the commission and other national authorities; and
• The local agencies (the regional directorates for competition policy, consumer affairs and fraud control at regional level, and the departmental directorates for competition policy, consumer affairs and fraud control at departmental level) were in charge of the in-field investigations and the assessment of the corrective measures implemented by manufacturers when safety issues arose.

The Decree of November 10 2009,(4) which came into force on July 1 2010, reorganised this dual-level structure. The directorate general's central services and its supervisory role have been maintained. However, the organisation and the role of the local agencies, at both regional and departmental levels, have changed. Since July 1 2010 the regional and departmental directorates no longer exist. Instead, 23 regional agencies, known as the regional directorates for companies, competition policy, consumer affairs, labour and employment, have been created. All these agencies operate under the authority of their respective regional prefect. As the name indicates, the regional agencies are in charge of more than simply ensuring product safety in the French market. However, a specific unit dedicated to product safety exists within each regional agency. This unit will instruct the departmental level agencies and gather all the information needed to report to the directorate general.

A second decree, dated December 3 2009,(5) created 101 departmental directorates for the protection of the population, also called departmental directorates for social cohesion and protection of the population. These regional agencies are the result of a merger between the previous regional directorates and the Departmental Veterinary Services Agencies. They now carry out the work allocated by their respective regional agency. They mostly investigate in the field and are the new points of contact for manufacturers and distributors. They operate under the authority of the prefect of their respective department and are organised as follows:

• a general secretariat, which manages notifications and complaints on a daily basis. The agents working in this secretariat are now the direct points of contact for manufacturers and distributors. The secretariat is divided into four units – food, economic protection, animal health and the environment;
• a unit specialising in receiving safety alerts sent by consumers and in reporting safety issues at national level; and
• a unit specialising in controlling the export of animals and products.

Other regional and departmental units have been created to manage specific areas, such as the Competition Policy, Consumer Affairs, Fraud Control and Metrology Unit,(6) which deals with issues relating to:

• the economic safety of consumers;
• the transparency of the market; and
• the methods of measurement used.

However, the High Competition Authority is now responsible for the investigation of competition issues.

The new structure described above is designed to ensure that only highly specialised and trained agents are in charge of product safety issues. This should be a positive outcome for both consumers and manufacturers, as their contact with the authorities will bring more effective results. Having said that, although all levels will eventually have to follow the broad guidelines and objectives set down at national level, the new organisational structure should give local authorities more flexibility in order to improve the safety of the French market through decisions that will be adapted to the local environment in question. This is likely to lead to difficulties in terms of equality of treatment of manufacturers, according to the department or region where they are located.

Successful replacement or recall programmes

On June 1 2010 the directorate general published its report relating to its activities in 2009. According to this report, in 2009 the directorate general:

• carried out 900,132 controls;
• visited 164,872 sites;
• took 37,660 samples of products for analysis; and
• monitored 7,353 websites selling products in France.

Following these actions, the directorate general:

• issued 120,000 warnings, followed by a second warning in 50% of cases;
• seized products in 800 instances; and
• requested that criminal proceedings be launched against manufacturers in 16,000 cases.

The report stated that, in relation to pure safety issues, in 2009 it focused its attention on:

"products for children (toys and childcare products), leisure products (lawn mowers, Christmas fairy lights), products used on a daily basis and eco-products."

It also carried out specific industry sector investigations into:

• cosmetic products (it investigated 256 products on 131 sites and detected dangerous substances in 30% of the products analysed);
• automatic smoke detectors (it analysed 22 models and noticed that 12 models were not offering the expected safety); and
• telephone cards sold on the Internet (it seized 793,000 counterfeited cards).

During the first quarter of 2010, the directorate general registered 27,127 complaints from consumers.

Points of contact

Since the reorganisation of the directorate general, manufacturers will have two points of contact:

• at national level, the directorate general when a manufacturer needs to inform the authorities of a safety issue; and
• at local level, the relevant departmental directorate for the protection of the population (ie, the directorate of the department in which the head office of the concerned subsidiary of the manufacturer is established), during an investigation that will be carried out following a notification or a complaint from a consumer. It is to the departmental directorate that manufacturers must prove that the corrective measures which they have implemented are effective enough.

Changing behaviour towards manufacturers and distributors

Since January 2010, there have been various changes in the behaviour of the directorate general and its local agencies towards manufacturers and distributors.

First, the directorate general now reports safety issues to the European Commission through the RAPEX system more systematically. Until recently, France was known as one of the EU member states that reported to the commission only rarely. This appears to have changed, as the directorate general now reports without contacting the manufacturer first to discuss the safety issue.

Second, when a manufacturer informs the directorate general of a potential or low safety risk (ie, a risk which need not be notified or reported to the commission under the directive), the directorate general will insist that the manufacturer complete a business application reporting form, even though such form must be submitted only when the risk assessment reveals a reportable risk.(7) It is becoming increasingly difficult to convince the directorate general that such an application need not be completed, particularly as most of its agents argue that the application assists them in managing their cases better. Experience has shown that submitting the business application directly without contacting the directorate general beforehand through an informative letter makes it difficult to know which agent will be in charge of the case and will handle the corrective action plan and publicity, as well as the confidentiality of the data sent. Therefore, it is advisable to inform the directorate general first of a safety issue through a format chosen by the manufacturer and only then, once the case is allocated to a specific agent and only if the latter insists, use the business application.

Furthermore, although the directorate general is usually satisfied with the corrective measures suggested by manufacturers (provided that all distributors and end users are informed in an effective manner), it now requests regular updates in order to assess the effectiveness of such measures. Before 2010, the directorate general would usually ask for only one update, one month after having received the initial information. The directorate general is also more proactive when it is unsatisfied with the effectiveness of the implemented corrective actions. It frequently orders the publication of press releases in consumer association publications such as UFC Que Choisir or 60 millions de consommateurs.

Finally, the directorate general is no longer satisfied when it receives information with no corrective actions suggested. In the past, the directorate general would accept information about a potential risk without any suggested corrective action. This was a way for manufacturers to inform the directorate general at a preliminary stage in case injury occurred while further testing was being carried out. It is no longer advisable to take such a step, as there is a real risk that the directorate general will treat such information as a notification and require the manufacturer to implement corrective measures, even though no actual risk has been shown.

Steps to consider

When recalling or replacing voluntarily products that are already on the market, the main issue for manufacturers is to ensure that such a recall or replacement is handled quickly and effectively, and that there is a minimum of additional publicity around the recall or replacement. As shown above, the directorate general is increasingly inclined to report to the European Commission or to order the publication of press releases, making such exercises even more difficult to handle.

Without going into the details of the commission's guidelines on the assessment of a safety risk, it is important to note that in France, as in the rest of the European Union, the manufacturer is supposed to inform the directorate general "immediately" should a safety risk come to its attention.(8) However, unlike the law of most member states, French law provides no specific penalty for breach of the obligation to notify the directorate general. However, if a consumer informs the directorate general of the existence of such a risk, the manufacturer will find it difficult to justify the absence of notification and may, if a consumer is injured, face criminal liability.

Attention should therefore be given to the way in which the notification or information sent to the authority is drafted. In particular, the directorate general will focus mainly on the following points:

• the number of incidents/accidents, the percentage of the total number of products marketed worldwide that the incidents represent and the worst-case scenario. The information written in the section of the notification relating to "information on the risk" is therefore crucial;
• the question of whether the product is traceable to the end user;
• the evidence provided to show that the manufacturer's distributors/installers and end users have been effectively informed. The directorate general always asks for a copy of the letters sent to the distributors/installers and of the letters sent to the end users or, if the product in question is untraceable, a copy of the web announcements or press release published; and
• how many products are on the French market and whether a batch of defective products was identified by the manufacturer.

Manufacturers should be ready to provide any information requested by the agent in charge of their case, and especially to provide evidence that all players that must be informed have been informed effectively. Manufacturers should also be ready to meet with the agent on several occasions on site, as agents prefer face-to-face meetings. Manufacturers should never refuse such meetings, as this would send the message that safety is not a priority, when it should be. Such meetings provide opportunities to inform the directorate general of how other national authorities are handling the same safety issue. Experience has shown that when other national authorities consider that a risk is low or under control and that the corrective measures implemented are effective, the directorate general tends to follow their lead.

For further information on this topic please contact Thomas Rouhette or Sylvie Gallage-Alwis at Hogan Lovells (Paris) LLP by telephone (+33 1 53 67 47 47), fax (+33 1 53 67 47 48) or email (thomas.rouhette@hoganlovells.com or sylvie.gallage-alwis@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

Endnotes