Product Recall: An Indian Perspective
Trembled by the rising incidents of adulteration of food products manufactured in India and sold locally and abroad, the Food Safety and Standards Authority of India (FSSAI) is all set to usher in a ‘product recall’ procedure to ensure food safety in the country. This however, is not the first time FSSAI is addressing this issue. The product recall pilot meeting was held on 14.11.2011, wherein, inter alia, the objectives of global product recall portal were discussed. FSSAI has also prepared draft guidelines with regard to food recall procedures essentially to, “guide the food recall business operators on how to carry out a food recall through an efficient, rapid identification as well as removal of unsafe food and food that violate the Act and Rules & Regulations made there under from the distribution chain…”.
Post globalization, product recalls have become a key obligation for a manufacturer in various industries in meeting the safety standards of use of the consumers. Products containing inherent defects that cause harm to a consumer of the product are the primary subject matter of product liability claims. As India works towards increasing product exports manufacturing accompanied by the global outreach of Internet, which has facilitated online retailing, global trade has become the fact of life. Therefore, it becomes evidently important for the governments world wide to develop written set of procedures, practices and actions to be put in place for recalling products as a sensible precaution that not only meets the needs for business but also customers.
“If warning consumers of product risk will not suffice to protect their health and safety, then the product must be withdrawn from the market.”
A recall essentially means ordering back a product from the market, which is not in conformity with the standards committed to customers. It necessitates the return of a product that may risk the consumer and consequently put the manufacturer/seller at risk of legal action. A recall can only be initiated when the manufactured goods are with the end consumer, irrespective of the damage it has/could cause to its users or third parties.
Each country has separate provision for a recall in their respective laws enacted for consumer protection. For instance, The Driver & Vehicle Standards Agency (United Kingdom) has defined a safety recall as, “The action taken when a defect is identified which meets the definition of a safety defect –….- that could result in a risk of serious injury… .” The Australian Competition & Consumer Commission defines recall as, “When a safety problem in a consumer product is identified, suppliers or government regulators may determine that the product needs to be recalled.” The Food Safety Authority of Ireland defines a recall as, “the removal of an unsafe food from the market when it may have reached the consumer and the notification of the consumer.” India too has defined a recall in Article 2(viii) of the Food Authority’s Food Recall Procedures Regulations, 2009 as, “action taken to remove a marketed food from distribution, sale and consumption which is unsafe and violate the provisions of the Act and the rules & regulations made there under.”
The United States Consumer Product Safety commission (CPSC) has laid down the following objectives of a recall:
to locate all defective products as quickly as possible;
to remove defective products from the distribution chain from the possession of consumers; and
to communicate accurate and understandable information in a timely manner to the public about the product defect, the hazard, and the corrective action. Companies should design all informational material to motivate retailers and media to get the word out and consumers to act on the recall.
GLOBAL RECALL MECHANISMS
Essentially there exists a commonality in the product recall rules, procedures and standards globally. Prime reason for this is the need for consistent rules in international trade, and the general harmonizing principles established within the European Union, which have a global influence. The Organization for Economic Co-operation and Development (OECD) has introduced a global recall portal that encourages the conjoint functioning of the governments to ensure economic and social well being of people around the world. It has been developed by the OECD Working Party on Consumer Product Safety an organization that works closely with other international product safety organizations such as Asian-Pacific Economic Co-operation Forum (APEC), the Association of Southeast Asian Nations (ASEAN), the European Free Trade Association (EFTA), GS1 (a non-profit business organization), the International Consumer Product Safety Caucus (ICPSC), the International Consumer Policy Health & Safety Organization (ICPHSO), the International Organization for Standardization (ISO), The Organization of American States (OAS) and the United Nations Economic Commission for Europe (UNECE).
If the countries around the world willfully embrace this global portal, it would safeguard the interests of the consumers worldwide and also help businesses to meet the internationally established safety standards, enable all-around competitive and developed markets and economies, provide more options to the consumers at large and as a consequence promote globalization. Let us take a look at some of the leading organizations/countries and their established product recall safety legislations and standards.
Two directives of the European Parliament govern the field of product liability and product safety within the European Union (EU):
Council Directive 85/374/EEC of July 25,1985 concerning liability for defective products; and
Directive 2001/95/EC on general product safety.
With the enactment of the aforementioned provisions, EU has incorporated consistent strict common legislation containing provisions on the general obligations of manufacturers and suppliers/traders/distributers towards the health and safety of the consumers. It has further ensured that its member states incorporate specific legislations that not only protect and maintain the necessary safety standards but also ensure that divergence among different laws of different member states do not distort competition or affect the movement of goods within the common market. These directives are applicable to products irrespective of their selling techniques.
The establishment of Rapid Exchange of Information System (RAPEX) has facilitated rapid exchange of information, which inter alia relates to products causing a serious risk to the health and safety of the public at large and also to the measures ordered by national authorities within the EU or those taken ‘voluntarily’ by the manufacturers and distributors. RAPEX has added the much-needed transparency to the operations of the manufacturers at large in all the member states of the EU and has ensured a systematic and strict system of checks and balances.
The prime product recall agencies include Medicines & Healthcare products regulatory agency (MHRA) regulating the medicines, medical devices and blood components for transfusion in the UK, The United Kingdom Association of Fire Investigators (UK-AFI) which has been established primarily for preservation of life and property particularly by developing and ensuring the highest professional standards of competence in investigation of fire and arson and procedures and providing that knowledge to the public, Food Standard Agency (FSA) ensuring maintenance of food safety standards, Driver and Vehicle Standards Agency (replacing Vehicle and Operator Services Agency in April 2014) setting and ensuring standards for road safety, Chartered Trading Standards Institute (CTSI) supporting and ensuring trading standards in the UK and Electrical Safety First (ESF) dedicated to reducing deaths and injuries caused by electrical standards.
Penal consequences for not following the established product safety regulations and standards include being sued by anyone who is harmed by the said product, even if they did not buy the product on their own and also being sued for damage or loss to private property if the damage costs more than £ 275. One of the major examples of product recall and safety practices followed in the UK is the detaining of 15,000 hoverboard scooters by the Trading Standards Officers identifying major safety risks with the boards, which included issues with the plug, cabling, charger, battery and cut-off switch. As a consequence, Halfords and Costco issued recall notices for the said Air Runner-branded boards.
The EU General Product Safety Directive governs consumer products safety in Germany. On the basis of the said directive, the German legislators have adopted the Geräte-und Produktsicherheitsgesetz (The Equipment and Product Safety Act) (GPSG). Apart from the GPSG there exist other legislations as well that deal with imposing safety requirements such as, Gesetz über Medizinprodukte (The Medical Devices Act) and the Arzneimittelgesetz (The Medicinal Products Act) which deal with ensuring quality, efficacy and safety of medical devices and medicinal products. Besides this there are numerous organizations such as the Bundesanstalt für Arbeitsschutz und Arbeitsmedizin (BAuA) that has the responsibility for monitoring and processing product recalls of non-food items in Germany and Bundesinstitut für Arzneimittel und Medizinprodukte (BfArM) is responsible for processing all pharmaceutical and medical device recalls and safety alerts. Non-compliance of the statutory laws may result in penal consequences in the form of a monetary fine and imprisonment in exceptional cases such as wrongfully death or injury. Contravening GPSG, may result in monetary fines ranging from € 3,000 to € 25,000.
United States of America
USA currently has six federal agencies pertaining to different jurisdictions that can issue directions for recalling a defective or harmful product, pertaining to their specific areas. These include, CPSC established under the Consumer Product Safety Act (CPSA), and is responsible for protecting the public from unreasonable risks of injury or death associated with consumer products, National Highway Traffic Safety Administration (NHTSA) established under the Highway Safety Act, 1970 dedicated to protection of highway safety and ensuring motor vehicle safety, United States Coast Guard (USCG), safeguarding US’s maritime interests including marine vehicles and related products and environment around the world, United States Environmental Protection Agency (EPA) protecting human health and the environment, Federal Aviation Administration (FAA) administering aviation safety, Food and Drug Administration (FDA) protecting public health through regulating food safety, tobacco, products, dietary supplements etc. and United States Department of Agriculture (USDA) regulating and executing the federal government policies on farming, agriculture, forestry and food etc.
Just like EU, USA has also established a ‘one stop shop’ with an intention to protect the consumers from unsafe or defective products by providing the latest recall information. Recalls.gov has unified the aforementioned six federal agencies and have combined six vastly different jurisdictions. The first complaint under the employee protection provisions of Food Safety Modernization Act (FSMA) whistleblower provision was filed in federal court against a New York based food and beverage company in 2013.
In Australia, businesses/suppliers are expected to use quality control measures and ensure that their products meet acceptable levels of safety. The consumer product safety regulators constantly survey and monitor the new and existing products in the market. Consumers are expected to buy products that comply with bans and mandatory standards and keep themselves updated about the information pertaining to product recalls. The development of productsafety.gov.au has created a single entry point for all interested consumers, businesses etc. seeking information that helps to minimize risks associated with unsafe products.
The Australian Competition & Consumer Commission (ACCC) administers the said online initiative i.e. Product Safety Australia on behalf of all Australian consumer product safety regulators in Australia such as Australian Capital Territory Fair Trading, Australian Competition and Consumer Commission, Consumers Affairs Victoria, New South Wales Fair Trading, Northern Territory Consumer Affairs, Queensland Fair Trading, South Australia Office of Consumer and Business Affairs, Tasmania Fair Trading, Western Australia Consumer Protection. Penalties and consequences such as bans, fines (ranging up to $220,000 for an individual or $1.1. million for a body corporate) and strict liability are imposed on a supplier who fails to comply with the set safety standards.
At present, FSSAI is the only product recall body operational in India. No other body has been entrusted with a recall with regard to manufactured goods. India relies on the manufacturers accountability towards their customers to remove the defective products shown to cause a potential safety hazard from sale or distribution.
To illustrate this, reliance can be placed upon stringent steps taken by the FSSAI to address the ongoing nation wide concerns with regard to ‘Maggi instant noodles with tastemaker’ a product of M/s Nestle India Limited and other products. Vide order dated 05.06.2015, the FSSAI directed the withdrawal and recall of all the 09 approved variants of its Maggi Instant Noodles from the market having been found unsafe and hazardous for human consumption and further issued a show cause notice to the concerned company so as to why the product approval granted by the FSSAI be not withdrawn. Faulty manufacturing and product recall however has not only been confined to food safety standards, but has also extended to automobile manufactures. Some of the most enviable and trusted brands have been subjected to recall on their own right for faulty manufacturing. These include companies such as Audi, Honda, Nissan and Maruti Suzuki who have been swift in taking actions with regard to faulty manufacturing or defects on the basis of initial complaints by the customers. Historically, Maruti Suzuki effected one of the most major recalls in the history of Indian automobile industry where it gave effect to free of cost changeover of steering pinions of nearly 60,000 cars between Jan 5, 1997 and April 11, 1997.
In India no specific statute governs the product liability of manufactures. Having said that it does not necessarily mean that product liability claims cannot be redressed in India. Different rights arise from different enactments which include, the Consumer Protection Act, 1988, the Sales of Goods Act, 1930, the Indian Contract Act, 1872, Food Safety and Standards Act, 2006, the Drugs and Cosmetics Act, 1940, the Legal Metrology Act, 2009 etc. As far as product liability claims are concerned the remedies that the consumers may avail include compensatory damages under the Consumer Protection Act on account of any injury/loss suffered on account of the negligence of the seller or under the Indian Contract Act on account of breach of contract. Non-compensatory damages could involve removal of defect, replacement of the product, refund of the purchase price, orders refraining manufacturers from manufacturing hazardous goods or withdrawal of such goods etc. Any form of criminal liability only arises on a manufactures/trader/seller/distributor failing to comply with the orders of the National Commission, State Commission or District Forum under the Consumer Protection Act.
However, no separate provisions have been determined for recalling a product under the Consumer Protection Act or any other legislation for the time being in force. Apart from nutritional products, the government cannot force any company to recall any faulty product without seeking intervention of the Courts. Aggrieved by a defect in a product, consumers are either expected to approach the Company or get involved in extensive litigation against a company seeking relief. Therefore, India needs to adopt certain effective practices and strong legislations enforcing and effecting product recalls and eventually protecting consumers at large. Therefore, lets enumerate the practices that can be adopted to ensure that India consumers are not discriminated against their counterparts in developed countries.
ADOPTING THE BEST PRACTICES
A comprehensive recall policy
As discussed, product recall practices in India are largely governed by the principles of justice, equity and good conscience with FSSAI being the only exception. Establishing a general product safety directive or legislation could be a means to evolve from the current state of affairs. If India needs to establish globally competent standards of practice with regard to product safety, it needs to address the issue of establishing a proper product recall mechanism that may enable the manufacturers to function accordingly. Penal consequences need to be defined under the legislations as well, which shall make the manufacturers more attentive towards maintaining adequate safety standards. Separate recall agencies also need to be established dealing with separate manufacturing areas, which could lead to better monitoring of manufacturers and their products. Effective guidelines and stringent monitoring would ensure better product safety standards and product quality.
Unification of product safety agencies
Once separate product safety agencies have been established, the next step would be to unify the said agencies under a common head. Prime example of such unification is recalls.gov (USA). With such unification a general body of rules and regulations can be established determining the penal consequences for breach of product safety standards. Furthermore, as India does not have a common databank, an international brand banned elsewhere could find a safe access in India. Therefore, an effective centralized database would ensure such information is provided to the consumers, businesses etc. and further guarantee that a systematic and strict system of checks and balances is established.
Product Safety Certification
Mandatory safety certification ensures that the particular product is not potentially dangerous to its customers. It avoids recalls, as the product has to pass the safety test. It is therefore, advantageous to both the manufacturer as well as the consumer.
Indian government has taken certain commendable initiatives to increase consumer awareness with respect to any loss or injury caused due to a defective product. One such initiative is the ‘Jago Grahak Jago’ campaign that makes the consumers aware of their rights and duties in the form of advertisements. With high illiteracy rates prevailing in the country, more such initiatives need to be taken to make the consumers aware of their individual rights, as the consumers in the country are more prone to being vulnerable to the exploits of manufacturers.
“A remedy in need of a repair”
Product recalls are widely spread across various industries. A strong government, stringent legislations and alert consumers are driving forces behind product recalls. Therefore, it is essential that effective recall guidelines are incorporated to ensure consumer safety and further strategies are offered for preparing for a product recall or market withdrawal. India is one of the largest and fastest growing economies in the world with manufacturers launching improved variants of their already launched consumer products, it should look to safeguard the interest of the consumers while promoting fair competition and free movement of goods both locally as well as internationally.
One may, therefore, conclude this article by urging the need for codification and consolidation of the law governing product liability under one statute in India and thereby enacting comprehensive product recall procedures effectuating a global product recall.
Disclaimer: The views and opinions expressed in this article are based on extensive and thorough research. In no way does the author or the law firm claim ownership of the ideas and concepts presented in this paper. Information so provided is to be strictly considered for general reference of the subject matter, which has been adequately referenced. Specialist advice should be sought about any specific circumstances directly from the law firm.
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