Material compliance is not just "nice-to-have" or relevant for the corporate image. Material compliance requirements are product requirements that are equivalent to other product requirements under liability law. Non-compliance leads to a variety of consequences that can very quickly put a company in a precarious position.
In addition to the potential consequences under public law through official market surveillance (including fines), substance restrictions and bans are also recognized under civil law as market conduct rules relevant under competition law. Contractual recourse claims play a major role within the supply chain relevant to compliance with substance law requirements. This can also lead to compensation for the removal and installation costs of affected components.
With the introduction of the Chemicals Sanctions Ordinance in Germany in 2013, a large number of violations of substance law requirements for a wide variety of product groups were also made punishable. As a result, we have been told by practitioners that market surveillance authorities have now moved to involving the public prosecutor's office or the police as the executing force in a quasi-standardized manner when violations of harmful substances are detected.
While criminal law, in regular product safety law, is only used as a last resort, for example in the event of personal injury, the simple exceeding of a legally regulated limit value for harmful substances is sanctioned under criminal law via the Chemicals Sanctions Ordinance. It does not matter whether there is specific damage or a specific risk to health or safety in order for the offense to be fulfilled.
There is currently no corporate criminal law in Germany. Instead, criminal liability is based on the individual culpability of the persons specifically responsible. Criminal investigations by the police and public prosecutor's office will naturally focus first on the company management (keyword: organizational culpability). As a rule, however, the investigations also include the person internally responsible for placing the contaminated products on the market as soon as this person is known.
Admittedly, many investigations are closed by the public prosecutor's office in return for a fine if it is the first criminal investigation. Nevertheless, the focus is then already on the company.
Companies are therefore strongly advised to organize their internal processes in the area of product compliance, particularly with regard to material compliance. This is because an increasing number of environmental product regulations, such as the Battery Regulation (EU) 2023/1542 or the recently adopted Ecodesign Regulation (EU) 2024/1281, contain material law requirements and/or refer to the REACH Regulation.
When it comes to the question "When have I done enough to meet the legal requirements?", the legislator leaves companies feeling alone. This feeling results not least from the fact that the requirements of (technical) product compliance cannot be transferred to the processes of material compliance, partly due to the use of specific standards as a tool. Only the international standard IEC 63000:2016 and the approach formulated therein is recognized by both the industry and the enforcing authorities.
Overview of possible penalties from different areas of law
| Public law | Criminal law | Civil law |
|---|---|---|
|
|
|
We are always happy to answer any questions you may have.
Author
Fully qualified lawyer Inken Green
Product & Material Compliance Expert
