Good things come in small packages - January 2011

There is legislation currently in force designed to restrict the amount of packaging used by companies, writes Elizabeth Hyde. But many businesses are unaware that they may still be caught by this legislation.

The Environment Agency (EA) has recently been prosecuting businesses that have failed to comply with the legislation. One retailer was prosecuted for being in breach of the Producer Responsibility Obligations (Packaging Waste) Regulations 2007.

The company imported clothes from abroad and sold them straight on to a range of shops. The company was not aware that it was caught by the legislation as it did not open or interfere with the packaging containing the clothes whilst it was in its control. The company was fined over £50,000.

More recently, in October 2010, Sainsbury’s avoided prosecution for excessive packaging in relation to an upmarket beef joint – the company had to agree to significant voluntary reductions.

UK packaging legislation
UK packaging legislation is driven by the current EU Packaging Directive 94/62/EC, which is concerned with minimising the creation of packaging waste material and promoting recovery, re-use and recycling of packaging.

These measures are implemented through the Packaging (Essential Requirements) Regulations 2003 and the Producer Responsibility Regulations.

The definition of ‘packaging’ is complex but it’s basically any material used for the containment, protection, handling, delivery and presentation of goods.

The definition applies to: (1) sales and primary packaging (for example packaging containing cereal); (2) grouped or secondary packaging (ie, the larger box used to contain a number of cereal boxes); and (3) transport packaging (ie, the material used to hold a number of the larger boxes together when shipped from the factory).

There are some exemptions from this definition but these generally relate to packaging manufactured before December 1994.

The Essential Requirements Regulations provide that the volume and weight of packaging must be limited to the minimum amount necessary to maintain levels of safety, hygiene and acceptance for the packed product and for the consumer.

Packaging must also be manufactured to permit its reuse or recovery and noxious or hazardous substances in packaging must be minimised.

Reducing packaging
The Essential Requirements Regulations apply to businesses who pack products or fill packaging; affix their name, trademark or other distinctive mark on packaging (even though they may not have directly packed the product); have reconditioned packaging for reuse (eg, where packaging has been remanufactured, repainted or altered for a different use it will be considered ‘new’ packaging); or have imported the packaging.

Each and every business involved in the retail chain (from the importer to retailer) may be caught. The companies that are most likely to be in the firing line are those who place their own brand or trademark on the packaging.

Businesses can face fines of up to £5,000 per offence in the Magistrates’ Court or an unlimited fine in the Crown Court for the most serious offences.

The Essential Requirements Regulations do currently contain some loopholes that mean that Trading Standards has not been able to enforce them with the vigour they would have liked. This has not gone unnoticed by a number of environmental pressure groups.

The loopholes are being addressed by a government campaign, which is encouraging consumers to only buy produce loose or products contained in minimal packaging.

Although there have only been a handful of successful prosecutions under the Essential Requirements Regulations, many businesses are now subject to an additional set of regulations - the Producer Responsibility Regulations.

The EA is actively prosecuting companies for failing to comply with these regulations and there has been an increasing trend for courts to impose higher fines.

Recovering and recycling
Businesses have been obliged since 1997 to recover and recycle certain levels of packaging and packaging waste. The Producer Responsibility Regulations require applicable businesses to register their recovery/recycling obligations directly with the EA or via a compliance scheme; to recover and recycle specified tonnages of packaging waste each year; and to furnish a Certificate of Compliance confirming that the recovery and recycling obligations have been achieved.

Businesses that handle in aggregate more than 50 tonnes of packaging or packaging waste per year and that have a turnover of more than £2m per year are obliged to comply, if they fall into one of the following categories: manufacturers; converters; packers/fillers; sellers; service providers; or importers.

For example, the manufacturer of the raw materials for packaging the cereal boxes will be caught. These packaging materials will then be sold to a converter in order that they may be converted into cereal boxes. He will be obliged to comply.

Once the converter has produced the appropriate packaging, this will be then sold to the company that packs the cereal into the boxes. That company must comply.
Finally, the retailers that then sell the cereal boxes to a consumer will also be caught.

The Producer Responsibility Regulations set a formula for how much packaging waste must be recovered or recycled. It is important to note that those caught under the regulations do not in fact have to recover and recycle their own packaging waste. They must merely demonstrate that they have recovered or recycled an equivalent amount of packaging waste that they handled or supplied in the previous year.

The EA has adopted a tough stance in respect of non-compliance. The agency recommends prosecution in all cases of non-compliance, even where those companies were unaware of their obligations.

Each breach of the Producer Responsibility Regulations carries with it a fine of up to £5,000 in the Magistrates' Court or an unlimited fine in the Crown Court for the most serious cases. Courts are increasingly looking to fine companies a sum of money that reflects the financial ‘savings’ made by such companies in failing to comply.

Although both sets of regulations have reduced the amount of packaging used and increased recycling and recovery of packaging, critics argue that more still needs to be done to reduce the amount of packaging used in the first place.

Given the EA’s hard line against those who fail to comply with regulations, retailers and manufacturers are advised to take immediate steps to comply to minimise their criminal exposure and foster their green credentials.