REACH Article 126 requires that REACH Regulation penalties must be "effective, proportionate and dissuasive." Article 126 also requires that EU Member States take all measures necessary to ensure that penalties are implemented. This is to serve as both an incentive for companies to pursue REACH compliance and to remind EU member states to set and enforce penalties.
To wit: REACH is a "regulation," meaning it's a piece of legislation which EU member states are tasked with regulating; REACH is not regulated at an uber-governmental or "federal EU" level. Thus, each member state can set its own fines and penalties. The result is unique, you could say inconsistent, penalty structures for each country. This can work to your disadvantage, but can also work for you if you can keep up with the regulations and penalties and, as a company, be agile in the marketplace. Everyone, and perhaps Risk Managers most of all, are taking note of the discrepancies between fines and penalties in various countries in the EU. Below is a chart for a visual perspective.
Poland and the UK are quite strict with penalites, other countries maybe not so much.
The amount of an administrative fine can vary significantly from one entity to another. For instance, there is a maximum of less than 1000 EUR in some countries for certain types of minor offenses, including in Latvia, Greece, Cyprus to a maximum of 2,500,000 EUR in Poland for very serious offenses with a fault from the offender. The Polish - it can be said - are not joking.
Useful chart on EU REACH fines and penalties
Usually, countries have provided different categories or classes of fines. These depend on the seriousness of the infractions. Countries approaching fines this way include Belgium-Federal level, Bulgaria, Cyprus, Greece, Hungary, Latvia, Liechtenstein, Lithuania and Romania. Other countries have one range of fines applying to all types of offenses; these countries include Czech Republic, Estonia, France, Poland and Slovenia. This chart is from the EC December report on penalties, from study conducted by Milieu Ltd for the European Commission.
DISPARATE FINES: UK, Poland, Ireland, Germany, and Belgium show very high penalties
The fine can go up to 55,000,000 Euro in Belgium, when the fine is imposed at the federal level; in the United Kingdom, the fine is unlimited on conviction or indictment.
Types of REACH fines and penalties
- Three types of fines were identified:
- lump sum fines (in all countries using the administrative fine): determined according to the minimum and/or maximum limits set forth by the law
- daily fine (Cyprus, France): amount to be paid per day during a period set in the penalty assessment
- conditional fine: the wrongdoer pays a fine each time an offense is observed, or for every period an illegal situation continues
Interesting perspective indeed! Managing the EU REACH regulation is like handling a monster. But it's being done. And managing REACH will continue to get easier as industry grows more comfortable with the REACH paradigm (chemical-substances are guilty until proven innocent) and as software and processes are more widely adopted.
The European Commission says it will continue to closely monitor the enforcement of REACH in Member State.
For more on enforcement and EU REACH regulation
Try the European Chemicals Agency, or ECHA resource center.
Start with this page from the European Commission: http://ec.europa.eu/environment/chemicals/reach/enforcement_en.htm.
Software can help mitigate the risks of REACH compliance, fines, and penalties: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=10332258