New product safety and product recall regime

The new Australian Consumer Law (the ACL) is revising the product safety and product recall regimes currently found in the Trade Practices Act 1974 (the TPA). Businesses that supply “consumer goods” and "product-related services” must familiarise themselves with these changes.

On 1 January 2011, the TPA will be renamed the Competition and Consumer Act 2010 (Cth) (the Act) and the final parts of the ACL, which is a schedule to the Act, will come into force.

Consumer goods and product related services

The new regime applies to “consumer goods”, which are defined in the ACL as meaning:

“goods that are intended to be used, or are of a kind likely to be used, for personal, domestic or household use or consumption, and includes any such goods that have become fixtures since the time they were supplied if:

(a) a recall notice for the goods has been issued; or

(b) a person has voluntarily taken action to recall the goods.”

It is important to remember, therefore, that this definition does not just include goods that are sold to individuals, e.g. the kettle one might buy from a department store, but also goods that are supplied to a business if the goods are “of a kind likely to be used for personal, domestic or household use or consumption.”

A “product related service” means a service for or relating to the installation, maintenance, repair, cleaning, assembly or delivery of consumer goods.

Product recalls

The essence of the regime in respect of product recalls, both compulsory and voluntary, has not materially changed, but there are a couple of important changes businesses should be aware of.

The first is the introduction of the need to recall not only where it appears that “the goods will or may cause injury to any person”, but also where it appears that “a reasonably foreseeable use (including a misuse) of such goods will or may cause injury to any person.”

The intention is that goods will need to be recalled not only where it looks like they may cause injury, but also where the good is used or even misused for a purpose other than that for which it was primarily intended, as long as that use or misuse is reasonably foreseeable.

This, therefore, places an additional burden on manufacturers and suppliers of consumer goods.

The second important change relates to voluntary recalls. The TPA is frustratingly vague when it comes to assisting businesses in determining whether to undertake a voluntary product recall. The ACL sets these obligations out more clearly. This should be of some assistance to businesses and their advisors. The obligation to advise the Minister within 2 days of commencing a voluntary recall remains, however, so businesses will need to continue to be well prepared when undertaking a voluntary recall.

Supplier reporting obligations

The ACL will introduce a new obligation on suppliers of “consumer goods” and “product related services” to report to the Minister, within 2 days of becoming aware, where a consumer good or product related service is associated with the death or serious injury or illness of any person.

This obligation applies whether 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 (or the consumer goods to which the services relate); or
• becomes aware that another person considers this to be the case.

This obligation does not apply if:

• it is clear that that the death or serious injury or illness was not, or it is very unlikely that it was, caused by the use or reasonable misuse of the consumer goods (or the consumer goods to which the services relate); or
• the supplier, or another person, is required to notify the death or serious injury or illness under certain specified laws or industry codes of practice.

What do businesses need to do?

Any business involved in the supply of consumer goods or product related services, at any point in the supply chain, needs to be familiar with both its obligations to recall and report to the Minister.