‘Gold-diggers’, ‘jackals’ and other issues for REACH SIEFs

Global Business Briefing, December 2008/January 2009

From next year, many thousands of companies will be forced into groups around the substances that they manufacture, import or hold data for in order to work out equitable ways of sharing it so that they can register the substances under REACH. Mamta Patel reports on expert views on the issues that are likely to arise.

On January 5 when the European Chemicals Agency (ECHA) re-opens access to its REACH-IT system, companies will be able to find out who pre-registered the same substances as they did, and an unprecedented process under EU chemicals legislation will begin. Companies are required under the REACH Regulation to find ways to share toxicology data in order to avoid the need for duplicative animal testing. They will do this through mandatory substance information exchange fora (SIEFs).

Unlikely bedfellows

But at an Informa REACH conference in Brussels this month, experts warned of the complexities of this task. Chris Braun of Akzo Nobel Technology and Engineering noted that though many high volume chemical producers have experience of working in consortia to share data for their substances, REACH SIEFs will bring new challenges. In consortia, he noted, members had usually known each other well, knew their substances well and had voluntarily agreed to come together.

SIEFs on the other hand, will throw together company representatives with vastly differing degrees of expertise, varied objectives and motivations – some questionable – and divergent deadlines for delivering registration dossiers to ECHA. Moreover, Dr Braun noted, "some may be ready and willing to accept the inevitable, others will still be in the stage of denial, anger, reactive obstruction or be paralysed by fear of the costs".

Some members, he warned, may simply be in the wrong SIEF, which it will be the job of the SIEF formation facilitator (SFF) to determine. Some ‘pre-registrants’ may simply be consultants hoping for work, whom Dr Braun characterised as "gold-diggers", while others may be aiming to charge exorbitant rates for the data they have to offer, whom he described as "jackals". His predictions, he said, were based on many years of experience in consortia, including those in preparation for REACH.

"First tier first"

He warned also of the time pressures on SIEF members – and that some will be under more strain than others. High volume producers have a deadline to deliver their registration dossiers to ECHA by 1 December 2010, while smaller producers may be able to wait until 2018. As a result, Dr Braun advocates the controversial notion of "first tier first" in which the big players are allowed to agree on shared data requirements without having necessarily to consult smaller players until after they have met their deadline. With some pre-SIEFs known already to have some 2,000 members, he pointed out that otherwise, the act of sharing is likely to be a massive and very time consuming administrative task.

In consortia that he has been involved with, he noted, arguments over the reliability of studies, the discussion of toxicological end-points and costs can take several meetings – considerably increasing the costs for every participant in travelling, hiring venues and time out of the office. Given that the first REACH registrants now have less than two years to put together their dossiers, which he said was equivalent to "five minutes to midnight", he strongly urged SIEF members to "share data first, decide on costs later". Contractors should be allowed to get on with preparing data analyses with an agreement that the final cost will be shared on the basis of negotiation. Not least, he noted, the cost will depend on the usefulness of the data that is collated, and this can only be determined on completion of reports.

Classification and labelling

Dr Braun noted that a further task that all SIEF members will have to comply with by 1 December 2010 is to decide on the classification and labelling for each substance and notify this to ECHA. He warned that, again, this leaves little time to reach agreement on potentially very contentious issues surrounding classification outcomes and their impact on different end users.

Potential rows over data sharing were exemplified by another speaker, Ali Temara of Procter & Gamble, who said there was considerable confusion over which scientific studies could be cited for REACH registration without cost and for which the owners were likely to demand recompense. To the surprise of many delegates, he insisted that though studies may have been published in the scientific literature and industry may have been referring to them for many years, this did not automatically confer the right to companies to cite the data for REACH registration purposes, which is essentially a commercial objective. Such studies may have cost firms tens of thousands of Euros to carry out, he argued, and they would expect to protect their intellectual property rights as well as receive compensation for their investment

Consortia vs SIEFs

In anticipation of such issues to resolve, many sectors have been highly active in setting up REACH registration consortia to agree on data availability, cost sharing, joint dossier submission and other legal issues in time to meet the registration deadlines, particularly for high-volume substances. Nearly 100 such groups have already been set up, most of them over the last two years, each taking on average three to six months to establish CW REACH Consortia List.

Flavia Distefano of law firm McKenna, Long & Aldridge warned of the necessity for consortia and SIEFs to comply with EU competition rules. Participants had not always been trained in this subject and could fall into traps if not careful, she said. When it comes to REACH consortia needing to share their data with other SIEF members, she advised this will need careful consideration of whether rules on consortium membership, or allowing access to data owned by the consortium, are non-discriminatory. This would have to be decided on a case-by-case basis, she said, with a determination of whether a refusal to share data would put claimants at a substantial commercial disadvantage.

Unfairness

But Jean-Philippe Montfort of Mayer Brown pointed out that the reality of the REACH timetable leaves little time for case-by-case discussions and formation of consortia rules. He concluded that based on the number of substances that have been pre-registered, ultimately there may be more than 10,000 REACH registration consortia. Each of these would have its own rules and in his experience, these were not always fair, particularly to new or SME entrants.

He warned that many consortia had not adequately considered how they would relate to SIEF members on issues such as agreement on classification and labelling, data sharing and joint submission. Some SIEF members will not qualify for membership under certain consortia’s rules, while others will refuse to accept the terms already agreed by existing consortia.

New entrants, moreover, often face barriers from opaque administrative costs to lack of access to minutes of previous meetings and consortium budgets in order to make informed decisions about whether or not they should join. Consortia steering committees hold decision-making power in most groups yet new entrants are often not permitted. He also noted the excessive burden on corporate legal departments in potentially needing to sign off their company’s participation in hundreds of different consortia.

As a result of such formidable obstacles, Mr Montfort predicted that many firms would instead opt to go it alone in terms of buying and selling the relevant data and submitting independent registration dossiers. They would need to judge the costs of this approach against those of consortia membership.

Consortia code of conduct

He proposed the need for a voluntary ‘code of conduct’ to govern the creation of consortia and ensure that they operate in a fair, non-discriminatory and transparent way to achieve REACH objectives without breaching anti-trust laws. In addition, there could be a ‘scorecard’ or checklist of issues that consortia agreements should consider from membership categories to data sharing options. A further option could be to draw up a streamlined model REACH consortium agreement based on such a code of conduct, which could be no more than ten pages long, to guide companies in quickly establishing consortia.

Mamta Patel

 
 

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