Feature

In-depth: The rights and wrongs of packaging

Legislation has been in force for several years that is intended to restrict the amount of packaging used by companies, writes Elizabeth Hyde.

However, many businesses remain unaware that even if they do not produce the original packaging, they may still be required to comply with this legislation. More importantly, the authorities are getting new powers from 1 April to use the civil regime to enforce the law.

The Environment Agency, which is responsible for enforcing the legislation, has recently prosecuted a number of businesses that failed to comply with the legislation. One retailer was fined more than £50,000 for being in breach of the Producer Responsibility Obligations Packaging Waste) Regulations 2007. The company had imported clothes from abroad and sold them straight on to various shops. It was unaware that it was affected by the legislation because it did not open or interfere with the packaging containing the clothes while under its control.

More recently, in October 2010, Sainsbury's avoided prosecution for excessive packaging in relation to an upmarket beef joint, but the supermarket retailer had to agree to
significant voluntary reductions.

So which businesses are affected by this legislation and what are the implications of failing to comply?

UK regulations

Packaging legislation in the UK is governed by the EU Packaging Directive 94/62/EC, which is concerned with minimising the creation of packaging waste material and promoting recovery, reuse and recycling of packaging.

These measures have been in force in the UK in one form or another since March 1997 and are currently implemented through the Packaging (Essential Requirements) Regulations 2003 and the Producer Responsibility Regulations.

Both sets of regulations have led to reductions in the amount of packaging used and many businesses are working hard to use less material than they would have done a few years ago. In the long run, it is envisaged that retailers will save money if they reduce the amount of packaging used.

What does the definition of 'packaging' cover?

The definition of 'packaging' is complex, but it is basically any material used for the containment, protection, handling, delivery and presentation of goods.

The definition applies to: sales and primary packaging (for example, packaging containing components); grouped or secondary packaging (such as the larger box used to contain a number of component boxes); and transport packaging (the material used to hold a number of the larger boxes together when shipped from the factory, such as pallets and
wrapping materials).

There are exemptions, but these generally relate to packaging manufactured before December 1994.

The Essential Requirements Regulations provide that the volume and weight of packaging must be limited to the minimum amount necessary to maintain levels of safety, hygiene and acceptance for the packed product and for the consumer. Packaging must also be manufactured so as to permit its reuse or recovery and noxious or hazardous substances in packaging must be minimised.

Are you obliged to comply?

The Essential Requirements Regulations apply to businesses that pack products or fill packaging; affix their name, trademark or other distinctive mark on packaging (even though they may not have directly packed the product); have reconditioned packaging for reuse (for example, where packaging has been remanufactured, repainted or altered for a different use, it will be considered to be 'new' packaging); or have imported the packaging.

Every business involved in the retail chain (from the importer through to the shop selling the product) may be liable. Companies that are most likely to be in the firing line are those that place their own brand or trademark on the packaging.

A defence is available where a company can show that it took all "reasonable steps and exercised all due diligence to avoid committing the offence". Invoking this defence will include showing that the offence was caused by the act or default of another (for example, the packer of the product) or due to reliance on information given by another (such as a "guarantee" that the packaging was compliant).

Companies will only be able to rely on information supplied by another where it is reasonable to do so. In particular, the court will consider what steps were taken to verify the information supplied.

Businesses can face fines of up to £5,000 for every offence in the magistrates' court or an unlimited fine in the Crown Court for the most serious offences. For example, a retailer was fined £5,000 and ordered to pay more than £2,000 in costs after packing chocolate fingers in a tin significantly larger than was necessary.

The Essential Requirements

Regulations currently contain some loopholes that mean that Trading Standards has not been able to enforce them as rigorously as it would have liked. This has not gone unnoticed by a number of environmental pressure groups.

At present, the loopholes are being addressed by a government campaign, which is encouraging consumers to "vote with their wallet" and buy only loose produce or products contained in minimal packaging.

Many producers are therefore taking steps to reduce the amount of packaging used. Producers not taking these steps should beware. The existing loopholes will almost certainly be closed. At that point, enforcement will be made easier.

Although there have been only a handful of successful prosecutions under the Essential Requirements Regulations, many businesses are now subject to an additional set of regulations: the Producer Responsibility Regulations. The Environment Agency is actively prosecuting companies for failing to comply with these regulations and there has been an increasing trend for the courts to impose higher fines.

Recovering and recycling packaging waste - the basics

Since 1997 businesses have been obliged to recover and recycle certain levels of packaging and packaging waste. The Producer Responsibility Regulations require applicable businesses to register their recovery/recycling obligations directly with the Environment Agency or via a compliance scheme; to recover and recycle specified tonnages of packaging waste every year; and to furnish a certificate of compliance confirming that the recovery and recycling
obligations have been met.

Recovering and recycling - are you obliged to comply?

Businesses that handle in aggregate more than 50 tonnes of packaging or packaging waste a year and have an annual turnover of more than £2m are obliged to comply if they fall into one of the following categories:

  • Manufacturers (those who manufacturer raw material for packaging);
  • Converters (those who use or modify packaging materials in the production or formation of packaging); 
  • Packers/fillers (those who place goods or products into packaging); 
  • Sellers (those who supply packaging to a user or a consumer of that packaging); 
    Service providers (businesses that lease/hire out packaging such as wooden/plastic pallets to other companies);
  • Importers (companies that import packaging/packaging materials/packaged goods into the UK).

For example, the manufacturer of the raw materials for packaging the component boxes will have to comply. These packaging materials will then be sold to a converter in order that they may be converted into boxes. This business will be obliged to comply. Once the converter has produced the appropriate packaging, this will be then sold to the company that packs the boxes, which must also comply. Finally, the retailers that sell the boxed products to consumers will also be affected.

The Producer Responsibility Regulations set a formula for how much packaging waste must be recovered or recycled. It is important to note that businesses do not have to recover and recycle their own packaging waste. They must merely demonstrate that they have recovered or recycled packaging waste equivalent to the amount that they handled or
supplied in the previous year.

The Environment Agency has adopted a tough stance in respect of non-compliance. The agency recommends prosecution in all cases of non-compliance, even where companies were unaware of their obligations. Courts are increasingly looking to fine companies a sum of money that reflects the financial 'savings' made by such companies in failing
to comply.

It is worth noting that, from 4 January 2011, for some offences in the area of waste, including waste packaging, the Environment Agency may use civil sanctions to deal with breaches of environment law.

This is not intended to replace existing enforcement options such as criminal prosecution; it should introduce more flexibility. The civil regime under the Regulatory Enforcement and Sanctions Act 2008 allows for fixed and variable monetary penalties as well as compliance,
restoration and stop notices.

Although both sets of regulations have reduced the amount of packaging used and increased recycling and recovery of packaging, critics argue that more still needs to be done to reduce the amount of packaging used in the first place.

Given the Environment Agency's hard line against those businesses that fail to comply with the regulations, retailers and manufacturers are advised to take immediate steps to comply to minimise their criminal exposure and foster their green credentials.

Elizabeth Hyde is a solicitor-advocate at Eversheds LLP


This was first published in January 2011

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