The Canada Consumer Product Safety Act (CCPSA), which came into force on June 20, 2011, significantly changes Canada's approach to consumer product regulation and recalls. The CCPSA was introduced to respond to concerns that Canada's product safety regime was inadequate to protect the health of Canadian consumers.
The CCPSA places new restrictions and obligations on manufacturers, importers and sellers of consumer products. Specifically, the CCPSA:
- Prohibits the manufacture, importation, sale or advertisement of any consumer product posing a potential hazard to the health or safety of consumers;
- Prohibits false, misleading, or deceptive advertising in connection with claims relating to the safety of consumer products;
- Places new reporting and record keeping obligations on manufacturers, importers and sellers of consumer products;
- Increases enforcement mechanisms available, including expansive inspection powers, mandatory product recalls, and orders for product testing; and
- Provides for monetary penalties and criminal prosecution.
CCPSA compliance strategies will need to consider:
- Implementation of testing procedures and performance standards;
- Awareness of liability and/or responsibility in the supply chain for foreign and domestic manufacturers/suppliers;
- Policies, processes and procedures to ensure reporting obligations can be satisfied; and
- Management resources for the maintenance of detailed records on product sources and consumers.
Health Canada's guidelines on record keeping and mandatory incident reporting are now available. Health Canada has not published guidelines on the prohibitions relating to unsafe products and misleading advertising or on the application of the administrative monetary penalty system and enforcement powers. Canadian businesses should keep informed of any guidelines and regulations enacted by Health Canada, which will provide clarification on the obligations and how government authorities will administer the CCPSA.
The key requirements in the CCPSA that impact Canadian manufacturers, importers, and sellers are:
Prohibitions and Restrictions
The CCPSA prohibits the manufacture, importation, advertisement, or sale of any consumer products posing an unreasonable danger to human health or safety. This means consumer products posing potential safety hazards (i.e., could cause death, injury, or adverse effects on consumer health) are prohibited from sale or importation into Canada.
Prohibitions and regulations that already applied to specific types of products continue under the authority of the CCPSA. For example, there are prohibitions on products containing asbestos, restrictions on the lead content in children's toys, and minimum flammability requirements in respect of textile articles.
The CCPSA also prohibits false, misleading, or deceptive advertising in connection with claims relating to the safety of consumer products. The false and misleading advertising provisions in the CCPSA overlap with the prohibitions on false or misleading representations in the Consumer Packaging and Labelling Act, the Textile Labelling Act, the Precious Metals Marking Act, and the Competition Act. It has not yet been determined how this jurisdictional overlap will work in practice, i.e., whether one or another legislative authority will take precedence or whether they will all apply independently.
Canadian businesses may be able to obtain an exemption from compliance with these prohibitions and restrictions in certain circumstances. Exemptions will be available in circumstances where the product will not be sold to the general public. The availability of an exemption in circumstances where products will not be sold in Canada will be of particular benefit to businesses who intend to:
- Import products for exhibition and participation in trade shows;
- Import products and bring them into compliance after entry into Canada (where, for example, it is more cost-effective to complete performance testing or revise product packaging/labelling in Canada as opposed to another jurisdiction); or
- Manufacture products in Canada for export to another country.
New Reporting and Record Keeping Obligations
The CCPSA places new reporting and record keeping obligations on manufacturers, importers and sellers of consumer products. The purpose of these obligations is to facilitate product recalls in the case of products posing a danger to health and safety. The obligations will ensure incidents and complaints relating to the safety of consumer products will be brought to the attention of Health Canada authorities and unsafe products can be traced back to the manufacturer and/or supplier. Companies should familiarize themselves with these new obligations and work with legal counsel to establish internal policies, processes and procedures to ensure their obligations can be satisfied.
The record keeping obligations under the CCPSA requires manufacturers, importers and sellers of consumer products in Canada to maintain accurate records of their product sources and consumers. The record keeping guidelines, “Guidance on Preparing and Maintaining Documents under the Canada Consumer Product Safety Act (CCPSA) - Section 13", were published by Health Canada in mid-June 2011.1
Specific information that must be maintained includes: (i) the name and address of the source from which products were obtained and (ii) the name and address of the person or business to whom the products were sold (or, in the case of retailers, where the products were sold). Retailers are also obligated to maintain records on the time period during which the products were sold.
The required documents must be kept at a company's place of business in Canada for at least six years after the year to which they relate.
Mandatory Incident Reporting
Mandatory incident reporting requires manufacturers, importers and sellers to report safety incidents involving products supplied to Canadian consumers. The mandatory incident reporting guidelines, “Mandatory Incident Reporting under the Canada Consumer Product Safety Act – Section 14 Duties in the Event of an Incident,”2 were published by Health Canada in mid-June 2011.
Types of Incidents Requiring Reporting
Section 14 of the CCPSA lists the types of reportable incidents. The four types of incidents that must be reported are:
- An occurrence that resulted in (or could have resulted in) death or serious adverse health effects on Canadian consumers;3
- A product defect or characteristic that could result in death or serious adverse health effects on Canadian consumers;
- Inadequate labelling or instructions that could lead to death or serious adverse health effects on Canadian consumers; and
- A recall order or other corrective measure initiated in another jurisdiction (including foreign jurisdictions) for human health or safety reasons.
How to Determine whether there is an Obligation to Report
Companies may receive notification of a product safety issue through various sources including consumers, government or standards bodies, non-government organizations, expert or testing reports, and/or scientific or epidemiological studies. The responsibility is on Canadian importers, manufacturers, and sellers to conduct investigations (upon receiving notice of a product safety issue) to determine whether an incident has occurred that must be reported. The investigation should respond to the following three questions:
- Does the incident relate to a consumer product (including its components, parts, accessories or packaging) that your company manufactures, imports, or sells in Canada for commercial purposes?
- Does the incident meet the criteria set out in section 14 of the CCPSA for being a reportable incident (as described in the above paragraph)?
- Does the incident indicate an unreasonable hazard posed by the normal or foreseeable use of the product or the foreseeable misuse of the product?
An affirmative answer to each of these questions will trigger mandatory incident reporting and reports on that incident must therefore be made to Health Canada and, if applicable, to suppliers within prescribed timelines.
The Two-Day Report
Manufacturers, importers, and sellers of consumer products must provide a report to Health Canada and the person from whom they received the consumer product within two days of becoming aware of an incident. The report must provide all information in the company's control regarding the incident.
The Ten-Day Report
Manufacturers and importers must, in addition to the two-day report, provide a detailed written report to Health Canada within ten days of becoming aware of an incident. The report must provide information about the incident, the consumer product involved in the incident, other consumer products that may be involved in a similar incident, and proposed corrective measures. The company may determine in some circumstances that no corrective measures are required or, alternatively, may recommend a range of measures to address the cause of the incident.
The two and ten day reporting timeframes are triggered when a company becomes aware of an incident. This means that the time period in which companies are required to report does not commence until notification of a potential incident is received, an investigation into the potential incident is conducted, and it is determined that the incident is one which must be reported. The timeframes for reporting are based on calendar days (excluding holidays and Sundays).
Incident report forms are available on Health Canada's website and can be submitted directly online.
Confidential Business Information
Companies must identify confidential business information at the time the information is provided to Health Canada. Business information will be recognized as confidential by Health Canada if: (i) it is not publicly available, (ii) the company has taken measures to ensure the information remains not publicly available, and (iii) the disclosure of the information would result in material financial loss to the company or a material financial gain to its competitors.
The CCPSA, however, gives Health Canada the authority to disclose confidential business information in some circumstances. Health Canada can disclose confidential business information to a persons or governments that carry out functions relating to the protection of human health or safety or the environment. Health Canada can also disclose confidential business information when necessary to address a serious and imminent danger to health and safety.
Impact on Civil Actions
While there are no specific provisions in the statute dealing with civil actions, certain features of the CCPSA and Orders made under the CCPSA have the potential to support plaintiffs in the prosecution of products liability class actions. The CCPSA will likely result in increased recalls and history has shown that product recalls are often precursors to class action filings. Plaintiffs' counsel often cite a recall as evidence of a widespread product defect that constitutes a “common issue” among the members of a proposed class to establish that a case is appropriate for class certification. The increased reporting and record keeping obligations will also provide plaintiffs' counsel with access to additional information to support their claims (through Access to Information Requests) and any findings of non-compliance with the CCPSA will feature prominently in class action pleadings.
- The guidelines are available at: http://www.hc-sc.gc.ca/cps-spc/legislation/pol/doc_13-eng.php.
- The guidelines are available at: http://18.104.22.168/cps-spc/pubs/indust/2011ccpsa_incident-lcspc/index-eng.php.
- Examples of serious adverse effects on health include: serious injuries or illness requiring medical treatment (e.g., lacerations, burns, fractures, internal bleeding, allergic reactions, sensory impairment, and convulsions), non-fatal threats to breathing such as choking, and fire or property damage that could have resulted in death or injury.