Chemistry & Life Sciences

Roles Under REACH (Part 4)

REACH Demands that Competitors Work Closely Together — Certain Tasks Still Challenge Industry

06.05.2015 -

Almost eight years have passed since REACH went into effect, but some problems remain in regard to joint submissions. The cooperation of members within consortia is arranged by contracts that in most cases were signed after the preregistration period in the end of 2008 and previous to the first registration deadline in 2010.

As time was running toward the first deadline, the contracts signed before this deadline did not cover all important aspects in regard to data sharing and late(r) entrants, therefore consortia also have to find solutions to cover the needs of future registrants. Cost-sharing is an important topic, as it needs to be done in a fair, transparent and nondiscriminatory way, but the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) regulation itself does not define how this may be achieved in practice.

Covering the Needs of Late Entrants

Creating contractual documents for a letter of access to enable late entrants to participate in a joint submission causes extra costs, if this was not considered before the signature procedure in consortia agreements. Now there may be a need to involve lawyers again to create or check the letter of access contracts and also do necessary adaptations in already existing consortia agreements to cover the needs of late entrants appropriately. Cost-sharing needs to be discussed again and agreed on in consortia by respecting the rule that cost-sharing has to be done in a fair, transparent and nondiscriminatory way. Calculations in regard to splitting of the costs and eventual refunding to all former members is extremely time-consuming and causes an increase of consortium-management costs.

To save costs, consortia often agree on doing the refunding procedure only twice instead of a yearly recalculation. It seemed sensible to do that for the first time after the 2013 deadline, and it was common sense to do the second refund after the 2018 deadline. In general each member of the joint submission will be pleased to have a refund, but it is useful to reconsider whether a refund shall be done only when there is a considerable sum to be refunded. If only a few hundred euros need to be refunded, the time needed for transferring the money from a consortium account to the members of the consortium and also the double-checking of calculations and the bookkeeping within the member companies will exceed the profit. Therefore many consortia have agreed on a minimum amount under which no refunds will be made.

The Unpopular Role of the SIEF Formation Facilitator

The European Chemicals Agency (ECHA) demands Substance Information Exchange Forum (SIEF) surveys done by a SIEF formation facilitator, but usually the efforts of the company having this workload will not be compensated, because there is no contractual basis for that at this stage of the registration process. Therefore the willingness of preregistrants to become SIEF formation facilitators has decreased over the last eight years.

In particular, for substances that are manufactured in smaller volumes by the group of the preregistrants and that did not have a registration deadline in 2010, the originally foreseen procedure was amended by industry. If a company could fulfill all data requirements on its own, it started by registering on its own and then offered a letter of access to the other pre-SIEF members. Neither the REACH regulation nor ECHA intended this, but it often kept costs low for all involved parties.

How to Cope with Registrants-to-Be that Have Higher Data Requirements than the Former Lead Company

Difficulties may arise when a lead company registers with fewer data requirements (e.g., registration for a transported isolated intermediate only), but later a further registrant-to-be needs to register with higher data requirements (e.g., standard registration in a lower tonnage band). In such a case there are three ways to solve the problem, but each of them will require at least some discussions and a sort of agreement within the group of the registrants and registrants-to-be.

The first possibility to solve the issue is that the lead company updates the registration dossier to cover the needs of the registrant-to-be. One of the most important tasks will be to define who will bear the costs for further studies and tests, and also for the tasks that need to be done by the lead company for the benefit of the registrant-to-be.

The second option is to transfer the role of the lead company to the registrant-to-be with the highest data requirements. In this case, the former lead company may be interested in having a compensation for the work it had already done. The situation will become really difficult if there are already further registrants whose rights also have to be respected.

To avoid all the discussions in regard to financial issues and further contracts in these two options, a third option can be considered. The registrant-to-be with higher data requirements may prepare an own registration dossier and either opt out, or - if agreed on in the pre-SIEF - the pre-SIEF could be split into two groups: a registration group for a transported isolated intermediate only and another group for those that require a standard registration. The registrant-to-be then can become the lead company for the standard registration group.

Opt Out because Participation in a Joint Submission is too Expensive

Management of consortia is time-consuming and often has high costs - sometimes it is even more expensive than the studies and tests needed to prepare the registration dossier for a certain substance. That already has led to an increasing number of opt-outs in particular by companies that registered in a smaller tonnage band or for a transported isolated intermediate. This was less expensive for the single company but not for the benefit of ECHA as it originally demanded "one substance, one registration" and now has to examine several dossiers for the same substance.

Special Arrangements for Small and Medium Enterprises (SMEs)

Small and medium enterprises can pay lower fees to ECHA if they have proof of not being a large company. ECHA also had the idea that small and medium enterprises shall benefit from lower costs within consortia. If a consortium is willing to consider the company size of its members, that will lead to additional work to calculate costs for each member of the consortium. Furthermore, there remains the question whose obligation it is to double-check whether a company may benefit from SME status and what needs to be done when there is a change in a company's status. As the competition law always needs to be respected, it seems necessary to have an independently acting trustee (e.g., a consultant or a lawyer) who does the calculation and invoicing for each single member of a consortium.

A small company with few substances to register even when a higher volume band is required may have less total cost than a larger company that has to cover the registration of hundreds of small-volume substances on its own. Therefore some may question whether it is fair to make a distinction between small and large companies in regard to consortium costs.

An easier approach to share costs is to do it based on the type of registration and connected data requirements. As for the registration of a transported isolated intermediate above 1,000 tons per year, a registrant has to fulfill the same data requirements as a registrant for a standard registration in the smallest tonnage band of up to 10 tons per year. (Remark: In both cases, data requirements in accordance with Annex VII of the REACH regulation have to be fulfilled.) It seems to be fair, transparent and nondiscriminatory that costs for these two types of registration shall be the same.

Also read:

Roles under REACH - Part 1
Roles under REACH - Part 2
Roles under REACH - Part 3


Dr. Susanne Kamptmann