EU: Trilogue negotiations to start on the controversial right to repair initiative

The EU Parliament and the Council each adopted their negotiating positions on the right to repair initiative this week. Both institutions call for changes to the Commission's proposal, but in different ways. Although the upcoming trilogue negotiations thus promise to be complicated, the new provisions are likely to be adopted during this legislative period. Irrespective of their final version and their transposition into national law, the new rules will impose new obligations on companies involved in the production, sale or repair of goods.

The Commission’s proposal

With its proposal for a directive on common rules promoting the repair of goods, the Commission intends to boost the sustainable consumption of goods, thereby avoiding premature disposal and developing a circular economy to protect the environment. For this purpose, the Commission inter alia suggested to amend the legal warranty rules laid down in the Sale of Goods Directive and to introduce new rights and obligations for the time after the legal warranty period has elapsed (read more in our previous blog post).

The Parliament’s report

On 21 November 2023, the Parliament adopted its report with a large majority of 590 votes in favour, 15 against and 15 abstentions. It generally supports the Commission's plans but believes that amendments are needed to create additional incentives for consumers to repair products instead of replacing them.

Most controversially, the Parliament considers substantially more changes of the Sale of Goods Directive necessary. The Parliament’s proposal includes the following:

• In line with the Commission’s proposal, sellers shall be required to prioritise repair within the legal warranty period if it is cheaper or equal in cost to replacing a good. However, according to the Parliament, exceptions shall apply if the repair is not feasible or inconvenient for the consumer.
• Consumers opting for repair as the remedy shall be allowed to choose between the seller and the producer to have the goods being brought into conformity, thereby establishing a direct producer liability for warranty claims.
• The Parliament also proposes to extend the legal warranty period by one additional year if a product has been repaired, starting from the moment the good is returned to the consumer. This extension of the legal warranty period shall only apply to the first repair.
• The Parliament wants sellers or producers to offer replacement devices (including a refurbished good) on loan for the duration of the repair without costs if the repair cannot be carried out within a reasonable period of time. 

As proposed by the Commission, consumers shall have a right to request repair from producers of some products listed in an annex for the time after the legal warranty period has elapsed. Those products include washing machines, vacuum cleaners, smartphones, and bicycles, and the list will be extended over time. The Parliament proposes to clarify and extend the relevant provisions. For instance, producers may lend a replacement good to the consumer free of charge or against a reasonable fee for the duration of the repair and, where the repair is factually or legally impossible, offer to provide the consumer with a refurbished product. The Parliament also proposes new obligations for producers of goods listed in the annex to ensure that independent repairers, remanufacturers, refurbishers and end-users have access to spare parts as well as repair-related information and tools.

The Commission suggested that repairers (including producers and sellers as well as independent repairers) must provide the consumer, upon request, with a Repair Information Form as set out in an annex to the directive on a durable medium. Interestingly from the point of view of the affected companies, this form shall no longer be mandatory according to the Parliament’s plans. However, the Parliament wants to introduce other information obligations (e.g., for the goods listed in the annex, an obligation of producers to provide all repair-related information such as repair prices and prices of spare parts on their websites).

The Parliament agrees with the Commission's proposal to leave the enforcement of the new rules to the Member States. However, the Parliament proposes additional criteria that should be considered when imposing penalties and guidelines for the imposition of fines (including maximum amounts) in certain cases.

Finally, the Parliament suggests obliging the Member States to introduce measures promoting repair. According to the Parliament, such measures may, for example, take the form of repair vouchers, national repair funds or other measures and incentives.

The Council’s position

Yesterday, the Council also adopted its negotiating mandate. Its position is significantly less far-reaching than the Parliament's report and even falls short of the Commission's proposal in certain respects.

Most importantly, the Council does not agree with the Commission's proposal that, under the legal warranty, repair takes precedence over replacement if it is cheaper. Instead, the Council wants to incentivize consumers to choose repair through information about their right to choose between repair and replacement as well as an extension of the warranty period by 6 months if the consumer opts for repair. Even though the Council has not yet expressed an opinion on this question, it is to be expected that it will also reject the Parliament's proposal to extend the legal warranty to producers.

On the other hand, the Council generally agrees with the Commission and the Parliament to introduce an obligation of producers to repair certain products after the legal warranty period has elapsed. However, unlike the Parliament, the Council wants to restrict rather than extend the obligations that the Commission proposed. For instance, the information obligations of manufacturers shall be reduced (e.g. with regard to spare parts and repair-related information). 

Elsewhere, the Council deviates from the Parliament's proposals to the detriment of companies. For instance, the Council wants to keep the Repair Information Form mandatory for companies that have an obligation to repair, while only other repairers may offer the form on a voluntary basis.

Naturally, the Council would like to see changes to the Commission’s proposal that benefit the Member States. For instance, the Council suggests introducing a central European Online Platform with national sections to allow consumers looking for repair instead of leaving online platforms to the Member States as proposed by the Commission. The Council will also most likely oppose the Parliament’s proposal to oblige the Member States to introduce measures to promote repair as this obligation would involve financial commitment by the Member States.

Outlook

The institutions seem to be determined to close the file before the EU elections. The trilogue negotiations are thus set to start on 7 December 2023 with a view to reach an agreement early in 2024. Given the differences in their position, however, the negotiations promise to be difficult. Most interestingly from the point of view of in-scope companies, the institutions disagree completely with regard to the scope of amendments to the legal warranty under the Sale of Goods Directive. It remains to be seen whether the Parliament will push through the more substantial amendments and, in particular, the proposed extension of legal warranty obligations to producers, or whether the Council will prevail with its more moderate position. Giving up the traditional parallelism of contractual warranty rights against the seller on the one hand and voluntary manufacturer guarantees on the other hand would be a far-reaching change for some jurisdictions, including Germany, where legal warranty rights follow the supply and distribution chain and depend on a direct contractual relationship. 

At the current stage, it is expected that the institutions will find a compromise in time before the elections so that the directive can enter into force next year. Thereafter, the Member States will have to transpose the directive into their national laws. The deadline for the transposition will depend on the outcome of the trilogue negotiations – 24 months according to the Commission, 18 months according to the Parliament and 30 months according to the Council. Similarly, the institutions disagree on the transitional provisions that shall apply to ensure that affected economic operators can adapt to the new rules.

Yet, despite the implementation period and transitional provisions, it is already clear that irrespective of the outcome of the trilogue discussions, additional and burdensome obligations for companies active in the production, sale or repair of goods are on the horizon. They will also need to take into account that the new rules shall be subject to the Collective Redress Directive, i.e. they can be enforced through collective actions. In-scope companies should thus closely monitor the further progress of the legislative process, which will gather pace in the coming weeks, as well as the subsequent transposition into national laws to prepare for their future obligations. To prepare for the new era, the focus should be both on the development of efficient repair logistics and contractual provisions in the supply and distribution chain allocating responsibilities and ensuring compliance.