Consumer Trends 2023: The rise of regulation

Consumer Trends 2023: The rise of regulation

While the headlines have talked about the importance of reducing regulatory burdens, we have become increasingly acclimatised to constant regulatory change and ‘permacrisis’. From EU Green Deal and Product Safety change, to class action and the EU legislation revocation bill in the UK, the pace of regulatory change is about to hit a new gear altogether – are you ready?

Since Brexit and then Covid, business in the UK has become used to a tidal wave of legislation and it’s no surprise when the Collins dictionary word of the year for 2022 was ‘permacrisis’. Unsurprisingly, most General Counsel we have spoken to over the last couple of years have had horizon scanning near the top of their list of concerns. No one was ready for a global pandemic, lockdowns, government support schemes, rent issues, various supply chain challenges and war in Europe, but it certainly put the importance of planning and knowing what is coming next at front of mind.

From a UK perspective, when we cast our mind back to the days of the Tony Blair government and beyond, there were frequent attempts to remove regulatory burdens. From a ‘one out one in’ principle of regulation to two and then at one stage three out principles, the idea was reducing the regulatory burden on business. The reality was always slightly different, but that was the plan. From there we saw the Business Impact Target become a central part of law marking as Ministers were required to consider the economic impact on business activities of qualifying regulatory provisions which come into force or cease to be in force during the relevant period.

Now, even this is set to be abolished in the Retained EU Law (Revocation and Reform) Bill. But, of course, the abolition of this Target is a mere drop in the ocean compared to the havoc that the Retained EU Law (Revocation and Reform) Bill could wreak on our system. As we all know, any EU retained law or any law made under section 2(2) ECA will be revoked at the end of 2023, unless it is expressly saved. In words that are more usually heard in closing down sales than as a regulatory policy, ‘everything must go’, unless it is saved. While many have called for express confirmations that key safety or environmental laws will not be revoked, no such confirmation has come, despite very many loud voices on the topic.

So, as we enter 2023, a huge percentage of UK regulation hangs in the balance for pretty much all food law, most product safety regulation, certain health and safety laws, the list goes on – and as of December 2022 there was no clear accurate official list of the laws affected. While the Bill is currently in the Commons and has the Lords to go after that, on the current timetable it seems likely that it will be the late summer/early autumn of 2023, at best, that we will have any idea what the regulatory regime in the UK will look like. Not ideal for those planning ahead… and something really that was not necessary.

Beyond the Bill

Beyond the chaos of the Bill, there is also a lot of other regulation happening, and the pace of change even in Christmas week did not slow down. On 22 December alone we saw the Levelling-up and Regeneration Bill set out reforms to national planning policy, and Fisheries management plans announced which aim to create a more vibrant, profitable, and sustainable fishing industry.

Beyond this, 2023 will bring us more regulation to continue Brexit and proposals for significant reform on product safety in the UK – one that really must be followed closely. In addition we have the implementation of the Deposit Return Scheme in Scotland and perhaps advancement of the Welsh and English plans, as well as other extended producer responsibly rules and more regulation on single use plastic in at least Wales, also the potential for HFSS advertising rules to be shunted back once more. More or less every part of the sector will be impacted, though some will have to wait until 2024 for their regulatory change such as the new Medical Device Regulations and HFSS advertising.

This is leading many, including the Scottish British Retail Consortium on 28 December 2022 to call for the UK Government to reduce retail regulatory red-tape.

What about the EU?

At EU level, the pace of regulatory change is no slower. It is slightly ahead of the UK on product safety and its proposals will have significant impacts to those placing products on the market, particularly those selling them and those allowing others to sell them on their site. The EU proposals to put a duty on distributors of goods (i.e. those who retail them) to verify that those goods are safe is a very significant jump forward and will mean that business will need to massively increase resourcing in the Quality Assurance functions to deal with this.

In parallel, the intention to place duties on the operators of marketplaces also gives those allowing others to sell duties they would never have faced before as it is the legal equivalent of placing a duty on a shopping centre for those products sold within its walls. In both cases, this will create significant legal hurdles and challenges to work through. If that were not enough, there are significant shifts in the scope for civil liability for product safety which are also being progressed and separate rules proposed to create product liability duties for AI. 2023 will be a big year for EU product liability!

But it is not just product liability. The EU has a lot of other very significant workstreams, one of the biggest being in relation to the green deal. December 2022 saw the release of proposed packaging and extended producer responsibility regulations. While the timeframe for compliance on these regulations coming into force is relatively long, the impact of these regulations cannot be underestimated. Coming soon are rules mandating the increased use of recycled plastics and other recycled content, reducing packaging waste usage by 15% across the EU, mandatory Deposit Return Schemes across the EU amongst a myriad of other measures.

Given the lack of harmonisation on recycling of products and goods, many member states have legislated on green labels for instance, and at present anyone wanting to sell their products that are not regulated at EU level will have to navigate Triman in France, similar but different rules in Italy and 20 other variants. The pace at which, particularly, green regulation is appearing is adding complexity and cost that is difficult to manage.

The rise of regulation is rampant and showing no sign of stopping. Horizon scanning is at the top of the agenda and given the vast amount of change, it has never been more important to ensure that you have your voice heard and these changes actually work.

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