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29 Jun 2010

Major consumer law changes bring new reporting requirement for product safety incidents

A new notification requirement for suppliers where consumer goods have caused (or may have caused) death or serious injury/illness has been introduced by the new Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010. The Bill passed Parliament on 24 June 2010 and is awaiting royal assent.

The new requirement is onerous, with suppliers only having two days from becoming aware of a death or serious injury/illness in which to report it. Everyone in the supply chain will need to review their internal reporting systems swiftly.

This represents a major shift away from the current system, in which the only general reporting requirement is to notify recalls after the recall has been initiated. Instead of a system where product safety incidents are largely investigated and managed by suppliers (as is currently the case), it is now likely that there will be greater involvement by the Australian Competition and Consumer Commission (“ACCC”) from the earliest stages of a potential product safety incident.

It is intended that the Bill will commence on 1 January 2011.

Notification requirement for goods causing death or serious injury/illness

Suppliers of consumer goods, or of product related services, will be required give notice to the Commonwealth Minister where the supplier “considers that the death or serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of the consumer good”. This is an extremely broad test - notice is required where the death or serious injury or illness "may" have been caused by the product.

The notice must be made within two days of the supplier becoming aware of the injury/illness or death. This is an unreasonably short period of time.

The obligation applies to all participants in the supply chain who become aware of the injury/illness or death - eg. retailers, distributors, importers manufacturers etc - and multiple reports from different parties may be required.

Reports that are suspected to be fraudulent will still need to be reported, as two days is an insufficient time to investigate whether a report is genuine.

Reports must be made both

  • where the supplier considers that the death or serious injury/illness was caused (or may have been caused) by the product; and
  • where the supplier becomes aware that “a person other than the supplier considers that the death or serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of the consumer goods”.

Those making reports will be protected in two ways:

  • the Bill provides that giving a notice is not an admission of liability in respect of the products or the injury/death; and
  • data protection provisions also apply to the reports.

Exceptions to the new notification requirement for product safety incidents

The notification requirements do not apply where the supplier or another person is required to notify the injury/illness or death under another law which is specified in the regulations, or under an industry code that is specified in the regulations.

Examples of possible exemptions may be reports made under Occupational Health and Safety laws, or adverse event reporting in respect of pharmaceutical products.

The exemption relates to the injury/illness or death, and not the product or class of products. This is relevant to suppliers of pharmaceutical products in particular, as it has the potential to create twin reporting requirements. The upshot is that if an incident is not required to be reported to the Therapeutic Goods Administration, a reporting obligation may still exist under the Australian Consumer Law.

What should suppliers do now?

The reporting timeframe is extremely short, and can be triggered by an email or phone call from a consumer. Because of the short timeframe, you will be unable to investigate the report properly, so in practice the reporting obligation will be triggered by any report, regardless of whether the supplier thinks that it is fraudulent or genuine.

The early involvement of the ACCC will mean that suppliers have less control over the conduct of the investigation, and will be required to respond to requests for information from the ACCC while simultaneously conducting their own investigations.

It's therefore important that suppliers:

  • review their internal reporting processes to ensure that these are adequate to deal with the new requirements. In particular, reports of injury/death need to be escalated quickly to allow for reporting within two days;
  • have adequate technical expertise available (internal or external) to be able to conduct a through investigation into product safety incidents quickly
  • ensure that any relevant test reports, such as those demonstrating compliance with mandatory standards, be readily available so that these can be provided to the ACCC swiftly
If a supplier is unable to reassure the ACCC that its product is “safe” then the supplier may be pressured into taking recall or other remedial action – even if an investigation later demonstrates that this was premature.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.