Why did the European Commission adopt this initiative?
The European Commission has adopted the proposal for a Directive on common rules promoting the repair of goods as part of its third circular economy package, supporting the objectives of the European Green Deal (see: LNB News 22/03/2023 105). The proposal has been designed by the Commission to encourage consumers to repair rather than replace goods by making it easier and more cost-effective to do so as well as reducing the burden on the environment. The demand for repairs creates an incentive for producers and sellers to adopt and maintain sustainable business models. The initiative also forms part of the Commission's broader goal of becoming the first climate neutral continent by 2050 (see: LNB News 27/10/2021 51).
Which products are covered?
The Directive will need to be implemented in each Member State to confirm the ultimate scope however, it applies to the repair of goods purchased by consumers in the event of a defect of the goods that occurs outside the liability of the seller, pursuant to Article 10 of Directive (EU) 2019/771, the EU Sale of Goods Directive (EU SGD). This may be the case where the defect did not exist yet at the time that the goods were delivered to the consumer or where the lack of conformity becomes apparent only after the liability period. The proposed Directive also introduces changes to the remedies systems concerning defects that fall within the liability of the sellers pursuant to Article 10 of the EU SGD.
The Directive adopts the definition of ‘goods’ from the EU SGD except water, gas and electricity—definition set out below:
‘Goods’ means:
- any tangible movable items; water, gas and electricity are to be considered as goods within the meaning of this Directive where they are put up for sale in a limited volume or a set quantity;
- any tangible movable items that incorporate or are inter-connected with digital content or a digital service in such a way that the absence of that digital content or digital service would prevent the goods from performing their functions (‘goods with digital elements’)
Who will the proposed Directive apply to and what are the key obligations?
The proposed Directive requires Member States to legislate to ensure that:
- upon the consumer’s request, the producer must repair, for free or against a price or another kind of consideration, goods for which and to the extent that reparability requirements are provided for by EU legislation listed in Annex II (nine categories of products including mobile phones, refrigerating appliances, vacuum cleaners, dishwashers and washing machines). The producer is not obliged to repair such goods where repair is impossible. The producer may sub-contract repair in order to fulfil its obligation to repair. This duty falls on the authorised representative where the producer is established outside of the EU. Article 5 of the proposed Directive >
- producers must ensure that independent repairers have access to spare parts and repair related information. Article 5(3) of the proposed Directive >
- the introduction of a European Repair Information Form, through which consumers may compare repair offers, creating a transparent service for consumers. Article 4 of the proposed Directive >
- producers inform consumers of their obligation to repair pursuant to Article 5 and provide information on the repair services in an easily accessible, clear and comprehensible manner, for example through the online platform referred to in Article 7. Article 6 of the proposed Directive >
- at least one online platform exists for their territory that allows consumers to find repairers. The Directive sets out a number of functions that the platform must have. Article 7 of the proposed Directive >
- there is an enforcement regime.
In addition, there will be the development of a European quality standard for repair services, ensuring an EU-wide minimum standard. Article 7(1)(a) and (d) of the proposed Directive >
How will the proposed Directive amend the EU SGD?
Article 12 of the proposed Directive adapts the conditions of Article 13(2) of the EU SGD under which consumers have the choice between repair and replacement. Article 13(2) of the EU SGD states the consumer may choose between repair and replacement unless the remedy chosen would impose disproportionate costs on the seller. Article 12 of the proposed Directive maintains this position, however adds an additional sentence promoting repair over replacement, stating the seller must always repair goods when replacement costs are equal to or more than repair costs.
What will be the practical impact for businesses and what steps can they take to prepare for the changes?
While the proposed Directive is not yet in force, businesses should begin adapting to ensure compliance with the substantial new obligations once the implementation deadline is set.
Practical steps businesses should consider:
- preparedness for increased repair jobs by storing spare parts. They should also factor in the need for increased or continual manufacture of such spare parts. As product designs change, manufacturers should keep a supply of parts from previous models for all potential repair jobs
- with regard to the above, businesses might consider having less updates on their products and instead focus on more durable and robust design practices and materials, with the objective of building products to last for as long as possible
- awareness that increased repairs are likely to eventually result in decreased new sales, therefore businesses must ensure effective repairs systems and departments are in place. Businesses should consider whether they themselves will carry out repairs or contract them out, and if so, to whom
- if businesses chose to carry out the repairs themselves, they must consider whether they need to employ additional staff and invest in resources in order to run effective repairs departments
- businesses should have online systems in place in preparation for using the online voluntary platform and the online Repair Information Form
- businesses should closely follow the development of this initiative alongside other circular economy initiatives to ensure comprehensive compliance in this area
What are the next steps and the likely timeframes? Is there any transition period?
The Commission adopted the proposal on 22 March 2023, but it still requires adoption by the European Parliament and Council of the EU. This process will at best take months, and it is just one of several European Green Deal proposals currently heading through this process.
Once in force there is a 24-month transition provision set out in Article 16 of the proposed Directive relating to:
- Article 5(1) and (2) (right for consumers to claim repair services)
- Article 6 (obligation on producers to inform customers of their repair obligations)
- Article 12 (amendment to the EU SGD) shall not apply to sales contracts concluded before the date which is 24 months after entry into force
It is clear that the goalposts and risk associated with price promotions and time limited offers online have adjusted – businesses need to carefully consider these topics before launching future campaigns.
Please note this analysis was first published on Lexis®PSL on 13/04/2022 and can be found here (subscription required).
Interviewed by Diego Salinas.
Please get in touch with our contacts below to discuss how to mitigate your risk in this area.
