21 Aug 2015
French Parliament Adopts Draft Law on Built-in Obsolescence of Commonly Sold Consumer Goods; Heavy Penalties Defined
On 22 July 2015, the French Parliament adopted a Draft Law on the Energy Transition for Green Growth, following extensive debates dating back to October 2014. One of the many aims of the Draft Law is to promote the so-called “circular economy”, from product design to product recycling. In that regard, combating built-in obsolescence of consumer products is considered as key to achieving this objective.
As Hong Kong traders may be aware, product obsolescence can, allegedly, be achieved by manufacturers in various ways. In electronic and electrical products, such as TVs, mobile telephones, washing machines or computers, manufacturers may construct their product in such a way that if a unique component breaks down, then the entire product would no longer be functional and must be replaced.
A product – such as a computer or a mobile telephone - may also be rendered useless by manufacturers if it can no longer be updated by a compatible new software.
Hong Kong traders should know that the concept of built-in obsolescence has been legally defined for the first time in France. Pursuant to the Draft Law, this concept has been defined as “all the techniques by which a placer on the market deliberately shortens the service life of a product for the purpose of increasing its replacement rate”.
Interestingly, when comparing this definition to the ones adopted in previous parliamentary debates, the extent to which this definition has evolved is striking. The National Assembly had previously defined built-in obsolescence as “all the techniques by which a placer on the market aims at, including through product design, deliberately reducing the service life or the potential use of this product in order to increase its replacement rate. These techniques can include the voluntary introduction of a defect, a fragility, a scheduled or a premature stoppage, a technical limitation, an impossibility to repair or a non-compatibility”. The same concept has also been previously defined by the Senate as “any scheme by which the service life of a good is deliberately shortened by design, thereby limiting its duration of use for business-model reasons”. Thus, the final version of the definition appears to be a compromise between the positions advocated by both chambers of the French Parliament.
Commenting on the adopted definition, the French association Zero Waste France has stated that “while we are heading in the right direction, the definition is very vague. It will be difficult to enforce this open-ended law. Case law will further clarify this concept as we go on”. It therefore remains to be seen in what circumstances and to what extent, in practice, the French authorities will actually enforce this law.
It is also noteworthy that the product scope is not defined within the Draft Law. Given its general scope, it appears that the law would apply to all products, or at least those that can conceivably suffer from built-in obsolescence, including electrical appliances and electronic products, toys, durable textile articles, etc.
Knowledge of what constitutes an infringement of built-in obsolescence would be particularly important to Hong Kong and other traders and manufacturers, in view of the hefty fines they might face should a violation be discovered. Companies placing on the market products that breach their obligation may face fines of up to EUR 300,000, while responsible individuals identified as such could face up to two years in prison. In certain situations, the fine imposed can even be up to 5% of the annual turnover of those placing the product on the market, the amount of which will be proportional to the gains obtained by them.
The final version of the Draft Law is also important for what it finally did not contain, namely, a mandatory labelling requirement. This will likely come as a relief to Hong Kong sellers, as extra labelling requirements usually lead to extra costs. In this regard, it appears that the labelling requirement was dropped from the Draft Law because the National Assembly and the Senate could agree neither on the nature nor on the scope of the requirement.
The National Assembly had initially included a mandatory obligation on the placer on the market to display the service life of certain products when their value exceeded a certain threshold – set at 30% of the French minimum wage (minimum wage valued at € 1,457.52 gross on 1 January 2015). In contrast, the Senate favoured basing its labelling requirement on the basis of a voluntary approach, stating that “experimentations can be voluntarily launched with respect to the labelling of the service life of the good in order to promote the extension of the good’s duration of use on account of consumer information. [These experimentations] contribute to the establishment of norms shared by the economic actors of the relevant sectors on the notion of service life”.
The Draft Law as adopted has been sent on 24 July 2015 to the French Constitutional Court for examination. Pursuant to the French legislative procedure, the Draft Law must be approved by the Constitutional Court and then published in the Official Journal for it to become law.
Hong Kong manufacturers and traders may click on the following link to view the Draft Law. The latter is currently only available in French.