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Producers challenge authorities on WEEE directives

Posted: 10 Aug 2007 ?? ?Print Version ?Bookmark and Share

Keywords:WEEE directive? WEEE registration? WEEE compliance disputes?

Legal action for non-compliance to the Waste Electrical and Electronics Equipment (WEEE) directive has been quiet since the 2005 incident involving the Irish authorities fining retailer Boots Pharmacy for not displaying recycling costs added to the product price. But producers have been challenging authorities in the courts in at least two member states, Germany and the Netherlands.

Bettina Enderle, a lawyer at Allen & Overy LLP pointed out the importance of watching how the German courts handle certain WEEE issues. As Europe's largest market and economic growth engine, Germany in some instances could influence WEEE compliance disputes throughout the European Union (EU).

EAR court disputes
The most noteworthy German cases involve the German National Register, Elektro-Altgerate Register (EAR). Companies have taken EAR to court over what they see as restrictive views and have won.

A case resolved in March centered on the issue of whether high-tech sport shoes with an implanted chip were considered electronic equipment under WEEE. The chip measures weight distribution when running and makes adjustments in the shoe that the manufacturer promises will result in an improved running experience.

Twelve EU member states had already ruled that the shoes were not electronic equipment, but EAR claimed they were and wanted the producer to register the products, Enderle said. The producer challenged EAR in court and the final ruling said the shoes were not electronic equipment.

Producers have also brought EAR authorities to court over the limits of fee imposition. One producer inaccurately filled in a bank account number in a registration form. When the mistake was discovered, the producer corrected the account number. EAR charged the producer for making the change. "The court held that EAR couldn't levy a fee on the change," Enderle said.

In another case, a producer mistakenly wrote on a registration form "24,000 tons" of WEEE it would be responsible for collecting instead of "2,400 tons," which was the actual number. The producer attempted to correct the mistake by sending an e-mail to EAR. EAR authorities, however, did not accept an e-mail correction and sent out collection orders for waste based on the wrong number of tonnage. The court ruled against EAR.

EAR is also under fire for charging producers value added tax (VAT) for WEEE registration. VAT in Germany is 19 percent. The courts haven't issued a final judgment yet. But Enderle believes they will decide that EAR was not entitled to levy the VAT.

EAR is also in court over a rigid interpretation of large stationary industrial tools. The issue is highly technical but here's the simplified issue. A producer manufactures temperature regulation components attached to large stationary industrial tools, which are exempt. However, EAR said the temperature components didn't share the exemption of the industrial tool because they could be easily removed.

"EAR again took a narrow interpretation of this exemption," Enderle said.

The German Court of First Instance said that as long as components "share the same fate" of large scale industrial tools, they are exempt as well. A final ruling is expected later this year.

Not all German WEEE cases are public and presumably EAR has had decisions in its favor. But the number of cases is unknown. Enderle said the court in Bavaria, which handles all compliance-related cases, would not disclose how many times EAR has been challenged.

The lesson for producers is to challenge an EAR decision if they don't agree with the ruling. "Take all precedents as an invitation to challenge the decisions of EAR because they have to learn what their limits are," Enderle said.

Cases in The Netherlands
In the Netherlands, two public cases involve producers that have rebelled against WEEE compliance schemes. A December 2006 case involves an appeal by a group of producers, which apparently didn't want to be a part of the lighting equipment compliance scheme called LightRec, said Jochem Spaans, a lawyer at Allen & Overy LLP.

The producers argued that the scheme didn't include safety provisions for employees of retail shops who handle takeback of lighting equipment.

In a very brief decision the court stated that the argument by the group of producers was unfounded, said Spaans. The compliance scheme is not obligated to address employee safety issues, the court ruled.

Another case dates back to March 2005, when a Dutch distributor of telecom equipment was caught for non-registration. The distributor said it was unable to register individually and accept responsibility for its own takeback and recycling because the end markets for its products were unknown. The distributor also did not want to join the Dutch compliance scheme for IT equipment, ICT Milieu.

"The company refused to join the compliance scheme, arguing that it was being forced to do so and that this is a violation of various fundamental rights on freedom that are granted by the Dutch Constitution," Spaans said.

The court issued a brief decision that said both arguments were unfounded. If the distributor didn't want to join a compliance scheme, it was under statutory duty to register individually. Not knowing where the distributed equipment ends up is an issue the distributor must solve itself.

The court imposed a penalty of $2,700 (2,000 EUR) for every 14 days the company does not register, to a maximum of $270,000 (200,000 EUR). In the Dutch system, a company does not need to pay the penalty if it complies with the court order to register, Spaans explained.

Spaans believes many such cases may have occurred, but the Dutch system is set up so that cases only become public if previous efforts to resolve the dispute have failed. When the Dutch Ministry of Environment catches a free rider, they impose a penalty, Spaans explained.

The company can launch an objection to the penalty and the Ministry will consider it. If the company is still unsatisfied, it can go to court. Only then would the case become public.

"There may have been many more entities facing penalty payments that have either launched an objection and won that procedure or at the end of day agreed to register," Spaans said. "You only find out if litigation starts."

The message from this case is that the Dutch system for catching companies that don't register seems to be effective, he added.

- Drew Wilson
Electronics Supply & Manufacturing

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