Repairing the supply chain – the proposed EU Directive on a right to repair

What’s the issue?

According to findings of the EU Commission, ongoing manufacture of new goods consumes valuable resources and critical materials.  It emits greenhouse gases.  Disposal of defective goods, even though they could be repaired, creates avoidable waste.  This results in 35 million tons of waste, 30 million tons of wasted resources and 261 million tons of greenhouse gas emissions in the EU each year.

At the same time the EU Commission concludes that it would be difficult for consumers to have their goods repaired.  Especially "outside the legal guarantee", i.e. if they are not (longer) covered by statutory warranty rights.  The availability of repair services would be insufficient.  Consumers would often not know who to contact in case their good is defective.  The result would be limited demand for repair services, which would hinder the growth of the repair services sector.  The loss from consumer decisions to replacing instead of repairing goods is estimated at nearly 12 billion EUR per year.  As a result of the premature disposal of goods, the use of refurbished goods would also be limited.

Some Member States have already adopted or are considering regulations on a right to repair.  This leads to different rights for consumers in the Member States, making the implementation of such a right to repair more difficult for producers and consumers alike.

What’s on the horizon?

The EU Green Deal aims to tackle the climate crisis on a large scale with a variety of measures.  The EU is also continuously introducing new consumer rights, such as the strict requirements for the guarantor with regard to commercial guarantees (regulated in the Directive (EU) 2019/771).

Now the EU Commission is also addressing more sustainable (consumer) consumption behaviour in the European society.  On 22 March 2023 it presented a proposal for a Directive on common rules promoting the repair of goods ("Repair of Goods Directive") and explained the background to its proposal in an explanatory memorandum.  This shall grant consumers the right to repair certain goods "within and outside the scope of the legal guarantee".

The proposal, if enacted, will substantially impact on the way warranty systems are set up in the EU.  It may lead to a new industry of repair services in the EU.

The proposal comes together with the EU Commission's Ecodesign for Sustainable Products Regulation proposal, which sets the framework for reparability in the production phase.  In addition the EU Commission proposes a Directive on empowering consumers for the green transition, which aims to regulate the demand side and provides for better information on the durability and reparability of goods at the point of sale.  Generally speaking, the EU has recently taken numerous initiatives in the field of climate protection.

What’s proposed in concrete terms?

"Within the legal guarantee"

Art. 12 of the Repair of Goods Directive shall amend Article 13(2) of Directive (EU) 2019/771.  This Article principally gives the consumer the right to choose between repair and replacement, in the event of a lack of conformity of the good.  However, in future the seller shall always be obliged to repair, if the costs for replacement are equal to or greater than the costs for repair.  In turn, the consumer may now only demand replacement, if the replacement is cheaper than the repair.

From a legal perspective this is a game changer in a way and, if enacted, will fundamentally impact on the way companies need to set up their warranty system.  Practically, the extent of the impact of this new rule will certainly depend on the questions, if repair is actually cheaper than replacement, and if repair is possible or not.

"Outside the legal guarantee"

The Repair of Goods Directive will also bring fundamental changes where a defect is not covered by the legal guarantee or warranty rights.  For example where the defect did not exist at the time that the goods were delivered to the consumer or where the lack of conformity becomes apparent only after the legal guarantee period.

The Repair of Goods Directive will introduce new provisions governing the relationship between consumers on the one side and producers and repairers on the other side.  Producers are (in accordance with the proposed Regulation on the Ecodesign for Sustainable Products) natural or legal persons who manufacture a product, develop it or have it manufactured and market it under their name or trademark or, if there is no such person and no importer, natural or legal persons who place a product on the market or put it into service.  Repairers are natural or legal persons who, related to their trade, business, craft or profession, provide a repair service.

In concrete terms:

• European Repair Information Form (Art. 4): repairers are required to provide standardized key information about the repair service at the consumer’s request, using a form included as Annex I to the Repair of Goods Directive.  The consumer should thus be able to get a better overview of the repair service and compare it with other offers.  For the provision of information in the form, the repairer may charge the consumer for the costs incurred.  If a repairer is not obliged to provide a repair service and does not intend to provide one, no form needs to be submitted.

• Obligation to repair (Art. 5): the repair obligation is intended to ensure that consumers have someone to turn to whenever they decide to have their good repaired:

  • Producers may be obliged to repair.  This obligation only concerns certain goods, meaning only goods for which and to the extent requirements for reparability are provided for in legal acts of the EU (as listed in Annex II of the Repair of Goods Directive).  According to Annex II, which refers to various EU Regulations, the following goods will be affected: household washing machines and household washer-dryers, household dishwashers, refrigerating appliances, electronic displays (such as television sets), welding equipment, vacuum cleaners and servers and data storage products.

  • It is planned to extend the list of covered goods in the coming years, for which the EU Commission has reserved the right of amendment.  The inclusion of smartphones and tablets is already planned.

  • At the producer's choice, the repair can be provided for free or against a price or another kind of consideration.  For such a price, no limit is defined.

  • The period of time for the obligation to repair is determined by the EU Regulations, depending on the respective good (these EU Regulations are listed in Annex II).  The period of reparability of the respective good specified in the corresponding EU Regulation (see Annex II) is decisive for the right to repair.  Depending on the good, a period of five to ten years can be expected for the obligation to repair.

  • In case of impossibility of repair there is no obligation to repair.

  • The producer may engage third parties (such as repairers) to fulfil its obligation to repair.

  • In the case of producers established outside the EU, the authorised representative in the EU will be responsible for the repair.  In the absence of such an authorised representative, the importer or ultimately the distributor of the goods shall assume the obligation to repair the goods.

  • Producers must also provide spare parts, repair-related information and tools to the repairers.

• Information on obligation to repair (Art. 6): to secure the right to repair, the affected producer must inform the consumers of their obligation to repair and about the repair services.

• Online platform for repair and goods subject to refurbishment (Art. 7): online platforms are to be set up in the Member States to make it easier for consumers to assess and compare different repair offers.  The registration on the platform for repairers, as well as for sellers of goods subject to refurbishment and for purchasers of defective goods for refurbishment, is voluntary.  On the online platform, repairers should be able to use special labels to indicate that they comply with European or national quality standards when performing repairs.  The online platform should also facilitate access to refurbished goods, which is why the platform should also have a search function for sellers of such goods.

What’s next?

The EU Commission’s proposal of the Repair of Goods Directive must be adopted jointly by the European Parliament and the Council of Ministers.  Once adopted, the Member States must transform the Repair of Goods Directive through full harmonization within 24 months of its entry into force.  Full harmonization means that the Member States must adopt the provisions of the Repair of Goods Directive without diverging from it.

Why it Matters?

All these proposed reforms are intended to cover the entire life cycle of a good and should lead to a strengthening of the circular economy.  The proposal for a “right to repair” was already announced in the so-called New Consumer Agenda of the EU and the circular economy action plan and therefore expectable.

The proposal results in far-reaching changes for sellers and producers in and outside the EU, as well as importers and distributors:

• The "priority" of obligation to repair under the legal guarantee (if the costs for replacement are equal to or greater than the costs for repair) applies to all sellers, regardless of the type of goods.
• Sellers will increasingly be required to carry out repairs, for which they must be prepared. This may include using repairers who carry out the repairs for them.

• Producers of relevant goods will also either have to adapt their operations to allow for more repairs or find third parties who can carry out the repairs for them.
• For many sellers ("inside the legal guarantee") and producers of relevant goods ("outside the legal guarantee"), this may mean a fundamental change of how warranty systems are set up, as well as significant additional financial and organizational effort.
• The proposal may lead to a new industry of repair services in the EU.  The amendment may be an opportunity for new emerging companies offering repair services for a fee.
• Importers and distributors may also be affected by the proposal if they source goods from outside the EU.
• Even producers whose goods are not initially covered by the right to repair "outside the legal guarantee" should follow the legislative process.  The goods covered are constantly being adapted by the EU.

What questions remain?

Concerning the right to repair, including "outside the legal guarantee", the question remains whether sellers and producers can guarantee the provision of repairs as contemplated.  For example it is questionable if the necessary specialists for such repairs are available across the EU.  Moreover, many sellers and producers are already facing the current geopolitical challenges and are still struggling with the consequences of the COVID-19 pandemic, especially the disruption of supply chains.  It is doubtful whether the EU Commission took these already existing economic burdens adequately into account in its proposal and whether all addressees of the obligations will be able to bear this additional load.

Authored by Dr Florian Unseld and Josefa Hamann.