The Brave New World of Consumer Product Safety
June 6, 2011
By David Eaton, QC, at McInnes Cooper
Any individual or company engaged in the manufacture, importation, advertisement or sale of a consumer product is advised to become familiar with their new responsibilities under the new Canada Consumer Product Safety Act (CCPSA or “the Act”).
On June 20, 2011, the Act will come into effect. It has been designed to protect the public by addressing or preventing danger to human health from consumer products either made in, or imported into, Canada. Consumer products include complete products, and all the individual components, parts or accessories to that product that can reasonably be expected to be obtained by individuals for non-commercial use.
Some products are exempt from the new Act. These have been excluded because they have already been regulated under other legislation. Examples include:
• Drugs or food as defined under the Food and Drugs Act; and,
• Pest control products.
The CCPSA creates an outright prohibition on some listed products, for example: baby walkers; other baby products; UFFI; and, baby bottles containing bisphenol A.
• The manufacture, importation, sale or advertisement of products that are a danger to human health, or otherwise not in compliance with regulations;
• Products for which there has been a recall order or for which required safety measures have not been taken; and,
• False or misleading labelling on a product that creates the impression in consumers’ minds that the product is not a danger to health or safety when it is. This prohibition extends to the selling or advertising of a product so packaged or labelled.
On the regulatory side the CCPSA gives the Minister of Health (“the Minister”) broad powers. The Minister may demand that manufacturers or importers conduct tests or studies on products and provide information to the department, or compile information or provide documents related to product safety.
In addition, manufacturers, importers, advertisers, sellers and testers are required to prepare informational documents and retain them for six years.
The CCPSA also authorizes Health Canada to disclose personal information to individuals where necessary to identify or address health or safety issues and confidential business information may be disclosed without consent when there is imminent and serious danger to human health or safety.
The Act requires manufacturers, importers and sellers to report any incidents with respect to a consumer product. “Incidents” is broadly defined and includes:
(1) any event in which a person suffers serious adverse effects (including injury or death)
(ii) any defect in the product,
(iii) any deficiency or inaccuracy in product labelling or instruction or
(iv) any recall steps taken anywhere else in the world.
The Act provides for inspectors who are granted broad powers to enter into premises (not including a home), without a search warrant, to conduct inspections or tests and to seize products. Owners are required to provide all reasonable assistance to the inspector and may be required to pay the costs of the removal or storage of seized products.
The Minister may designate individuals with the power to order product recalls or to take corrective measures in order to deal with safety issues, including orders that manufacturing or importation cease. Such orders can be reviewed by other designated officials.
The CCPSA creates new serious legal offences, the most serious is punishable by up to five years in prison and/or a fine completely in the discretion of the Court (i.e. unlimited).
More interestingly, the Act provides for a new scheme of administrative monetary penalties. Designated officials will be authorized to impose a penalty where there are reasonable grounds to believe that a violation of the Act has occurred. There is no trial available for such administrative penalties, however, there are provisions for the waiving of the penalty upon entering into a compliance agreement. It should be noted that due diligence is not a defence to an administrative penalty as it would be if charged with a criminal offence.
The Act does have broad vicarious liability provisions making directors, officers or agents who directed, authorized, assented to, acquiesced or participated in any act found to be a violation, guilty of that violation.
Compliance with the new requirements of the CCPSA will be a new area of concern in commercial transactions involving the sale of a business or secured financing.
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