Tricks and traps when working in SIEFs
Hans-Jochen Lückefett, managing director and Eva Hink, REACH consultant, at K&L Compliance Services, specify the difficulties companies have to face when participating in a SIEF for REACH registration
EU legislators have discovered that there are advantages in outsourcing tasks and responsibilities. One very good example of this is the legal stipulations about the registration of substances under the REACH regulation.
For so-called phase-in substances, the legislator organises all registrants into so-called Substance Information Exchange Forums (SIEFs) and obliges them to collaborate on the preparation and submission of - ideally - one registration. The regulation itself has very few legal stipulations about how to participate and in particular how to organise the work of the SIEFs.
The legislators believe that companies themselves are best positioned to organise themselves without interference from government and the Competent Authorities of EU Member States. Nevertheless, they are effectively challenging registrants to operate in quite a difficult environment for such a kind of cooperation. Industry is expected to sail around numerous cliffs and sands, notably:
- Mandatory participation but no legally required structure
- Mandatory cooperation between competitors but no exemption from EU competition law
- Open discussion about the substances to be registered and their identity but no disclosure of business secrets
- An invitation to joint registration but in consortia with an expensive infrastructure
- No distinction between global players and SMEs
- Price fixing without knowing the number of users or customers
- Sharing of data but no definition of liability
With this background, working in SIEFs may become a difficult undertaking, in particular for companies that are not familiar with government proceedings and cooperation with competitors in a pre-competitive environment. This article aims to help companies navigating in such difficult water.
SIEF working can open many traps for unwary participants
Who is going to volunteer?
The European Chemicals Agency (ECHA) invites a member of a SIEF to act as a leader on a voluntary basis. It states: "In order to initiate and conduct discussions ... REACH-IT will allow pre-registrants to volunteer to be SIEF-formation facilitators (SFFs)..." Before coming to any decision, however, companies must know what is involved in assuming responsibility for such a role.
The key activities to be undertaken by a SFF are: to organise the discussion about substance identity; to propose how to exchange information about the substance; to initiate a confidentiality agreement and/or the appointment of a trustee; and, to propose the scope of co-operation and how to cooperate (internal rules). With this background, CEFIC proposes a SIEF agreement between the SIEF team and the other participants.
This list of activities raises a difficult question for everybody dealing with the registration of a phase-in substance and whose managers may ask if they have authorisation to spend money and time on these activities. From the company's point of view, what is the justification for investing such resources?
With this background here is a recommendation. Before assuming responsibilities you do not like, try to talk to companies in your SIEF with whom you already have a working relationship - via an industry association for instance - to see how to organise yourself. There is an old German saying to back up this recommendation: 'Talking is silver, being silent is gold'. This means in the case of REACH that silence can save money.
Am I in the right SIEF?
Substance identity causes discussions among the members of a SIEF. Such discussion can lead to the result that some companies may find themselves in the wrong SIEF and this may lead to the unpleasant result that these companies do not have the correct pre-registration.
K&L presented on SIEF working at Chemspec Europe 2012
On the one hand side, REACH-IT offers companies the opportunity of gaining access to the SIEF of related or similar substances. However, this procedure does not change the original pre-registration and cannot be used for changes of the chemical identity of the pre-registered substance.
The legal framework for SIEFs is laid down in Article 28 ff of the REACH regulation. CEFIC believes that additional legal aspects of the corporation within a SIEF must be covered in a SIEF agreement. The topics of such agreement are:
- Operating rules, such as confidentiality, compliance with EU competition law and regular reporting about the status of joint registration
- Data sharing, including the obligations of the Lead Registrant (LR) and access to joint registration
- Financial compensation for access to joint registration
- Other legalities, such as ownership of information, limitations of liability and the terms of the agreement
From a legal point of view, you should have a clear answer to the following questions before signing an agreement:
- Do I understand the stipulations of the SIEF agreement? And are they in the interest of my company or at least acceptable?
- Do I need support for the negotiations with the LR or any other representative of the consortium or the leading group of the SIEF?
- Do I run the risk of disclosing confidential information when dealing with substance identity?
Again, signing such an agreement may have financial implications, too. Therefore this article is going to focus on some financial aspects of SIEFs before coming to conclusions regarding the SIEF agreement proposed by CEFIC.
Liability & other financial aspects
Typically, the SIEF agreement does not cover liability for the correctness of the dossier and its acceptance by ECHA. Buying a Letter of Access does not necessarily mean that companies will get access to the Lead Dossier in full. Usually only the right to refer to the lead registration is granted, which means that joint registrants have to buy the proverbial pig in a poke.
Before signing a SIEF agreement, every company should address the key liability issues
So, what is your liability if you take part in a joint registration, the Safety Data Sheet turns out to be wrong and the wrong recommendation causes injuries? There are no answers at all to this question yet, since no LR has yet been challenged in court.
The sharing of costs is one of the main and most important issues within a SIEF. Companies that are not actively participating in the registration must more or less accept the costs that will be calculated for the Letter of Access to a registration dossier.
Although the REACH regulation requires there to be fair and transparent cost sharing, there are no rules about how the process has to be set up. Before signing a SIEF agreement, companies should therefore answer the following questions:
- Do I need access to all of the open elements of the joint registration or do I have the opportunity to opt out?
- Are the cost contributions expected by the LR fair and transparent or should I opt out?
- Does the SIEF agreement offer refunds? This is very important!
- How will follow-up costs, such as updates, be handled?
What does this analysis leads to?
It is strongly recommended that you understand all aspects of the work in a SIEF as described here and of a SIEF agreement before kicking off any communication and in particular before signing a contract. In some cases, the possibility of opting out according to Article 11 of the REACH regulation is not so far off.
From Online Issue: October 2012