In the REACH era chemical manufacturers, importers and downstream users are required to provide and exchange far more information about chemical use and safety than in the past. With the increasing complexity of global inter-corporate networks, holding on to confidential business information also requires particular attention.
Emphasis should be placed on data security and dependable communications, as data ending up in the wrong hands could have far-reaching consequences for a company and its ability to compete. Of equal or perhaps even greater seriousness are the consequences for a company involved in these activities falling foul of EU competition legislation.
Mere fulfilment of statutory obligations will not, therefore, be enough for success with REACH. An essential part of the new era in the chemical business will be preparation for taking care of confidential business information, intellectual property rights and EU competition legislation.
Their significance will be highlighted by the fact that REACH legislation introduces noticeably more extensive obligations with regard to communications between companies. Dependable, traceable and controllable communications both in supply chains and in information exchange forums is the essential factor in management of the REACH concept.

REACH communication and competition law

While preparing REACH Data Sharing guidelines (RIP 3.4) particular attention was drawn to the relationship between competition law and REACH regulation. The question is not merely one of minor details in a convoluted REACH colossus, but of a matter which will decide the future of many companies.
Perhaps for this reason the compilers of the Data Sharing guidelines concluded by placing separate emphasis on the fact that ”REACH actors should always ensure that their activities comply with EC Competition law irrespective of the form of co-operation they choose.” Although the guidelines contain a list of examples of those items which at least should not be handled with regard to information exchange, experience of RIP 3.4 is not in itself sufficient for fulfilling the requirements of competition law in a changing chemical market. Top experts in jurisprudence familiar with the case have also urged for particular attention be accorded to this fact.
“SIEF communications are exchanges of information among competitors. As such, the SIEF participants must ensure that these exchanges do not create any issues from a competition law perspective, and in particular that they do not serve as means to coordinate prices or market behaviour,” states Ruxandra Cana, a REACH lawyer familiar with competition law, from Attorneys-at-Law Field Fisher Waterhouse.
The same applies to communications in the supply chain if participating companies are in competition with each other.
“Companies should keep in mind that often their suppliers or customers may also be competitors. In these cases, communications that would for example disclose specific quantities, territories or market strategies are very sensitive from a competition law perspective and should be avoided.”
In those cases communication, according to Ms Cana, should be reduced to a minimum, made anonymous and in aggregate form as far as possible.

How to keep CBI?

While REACH obliges chemical manufacturers, importers and downstream users to increase mutual communication, it is also in every company’s interest to glean information on their competitors’ operations. Particular attention should be paid to maintaining the confidentiality of business information in connection with communications within the supply chain and information exchange forums, as it may be difficult to avoid its transfer into the wrong hands without the appropriate preventative measures. Serious difficulties will result if game rules for information exchange forums or within a consortium are not laid down with precision, and any discussions held cannot subsequently be traced with accuracy.
Communication in information exchange forums or the supply chain is extremely problematic without tailor-made instruments, and without dependable data storage it may subsequently reveal itself as fruitless, or entirely contrary to law and, furthermore, expensive.
“The importance of safe and secure information exchange instruments cannot be overstated: the penalties imposed for non-compliance with competition law may reach 10% of a company's worldwide turnover. In addition, companies may be exposed to damage claims made by parties who suffer losses caused by anti-competitive behaviour, and any such action would damage companies' reputation and brand name,” Ruxandra Cana points out.
The significance of the traceability and infallibility of communication is also emphasized in separate provision on data storage contained in the regulation. Here it is required that “each manufacturer, importer, downstream user and distributor shall assemble and keep available all the information he requires to carry out his duties under this Regulation for a period of at least 10 years after he last manufactured, imported, supplied or used the substance or preparation.”

Communication – the key to success

With the approach of pre-registration many questions about REACH remain to be answered. It is nevertheless clear that the regulation will stir the chemical supply chain in one way or another. Of the companies interviewed in the PricewaterhouseCooper survey in the spring of this year, 45% believed they would need to renegotiate or alter their supplier contracts. However it should be clear that REACH will influence the supply chains of every company to some extent.
The key to success in the REACH era is efficient and appropriate communication with suppliers and customers. It is evident that companies should begin preparation for registration and the permit procedure in good time, exploit all possible sources of information and act in fluent cooperation with each other. With less than 200 days before the end of pre-registration, emphasis should be placed without delay on efforts to ensure at least the availability of all critical raw materials.

Authors:
Eeva Punta
REACHWAY OY
Helsinki/Joensuu, Finland
Tel: +358 10 8364 200
Fax: +358 13 263 7202
eeva.punta@reachway.eu
www.reachway.eu

Joonas Alaranta
REACHWAY OY
Joensuu, Finland
Tel: +358 10 8364 214
Fax: +358 13 263 7202
joonas.alaranta@reachway.eu
www.reachway.eu