After two unsuccessful attempts to pass similar legislation, Bill C–36, the Consumer Product Safety Act (the “Act”) was passed by Parliament on December 14, 2010 and introduces a new regulatory regime governing consumer products in Canada. At this stage, the Act is not yet in force as Health Canada is still working towards developing its regulatory framework. However, Health Canada plans to do this on an accelerated basis and the Act is expected to come into force in the next few months.

The Act will replace Part I and Schedule I of the Hazardous Products Act and was introduced in order to bring Canada’s product safety regime up to standard with those of other jurisdictions (such as the U.S.) and in line with Canada’s existing legislation regulating certain classes of consumer products.

A more thorough analysis of the legislation must await the clarifying regulations, but the following provides an overview of the Act.

The Scope of the Act

Subject to certain exceptions, the Act applies to all “consumer products” which are defined as products (including its components, parts, accessories and packaging) that may reasonably be expected to be obtained by an individual for non–commercial purposes.

The products that are exempt from the Act are listed in Schedule 1, and include certain consumer products that are already regulated under federal legislation, such as food, drugs, cosmetics, motor vehicles, medical devices, plants, seeds, explosives, firearms, and controlled substances. Section 4(3) of the Act also provides that the Act does not apply to natural health products as defined in subsection 1(1) of the Natural Health Products Regulations made under the Food and Drugs Act. These exempt products will continue to be regulated under pre–existing federal legislation.

Restrictions & Obligations under the Act

1. General Prohibition: the Act makes it an offence to manufacture, import, advertise, or sell any consumer product that:
   1. is a “danger to human health or safety” which is defined in the Act as any unreasonable hazard – existing or potential – that is posed by a consumer product during or as a result of its normal or foreseeable use and that may reasonably be expected to cause the death of an individual exposed to it or have an adverse effect on that individual’s health;
   2. is subject to a recall (including voluntary recalls if the recall is due to the fact that the product is a danger to human health or safety) or other corrective measure ordered under the Act;
   3. does not meet the requirements for that product which are set out in the regulations to the Act.
2. Mandatory incident reporting: The Act imposes incident–reporting obligations on manufacturers, importers, and sellers of consumer products, who will be required to notify the Minister and in some cases, the supplier of the product, within two days of becoming aware of an “incident” relating to the product. A manufacturer or importer must provide a more detailed report of the incident within ten days.The Act defines an “incident” as any of the following:
   4. an occurrence in Canada or elsewhere that resulted or may reasonably have been expected to result in an individual’s death or in serious adverse effects on their health, including a serious injury;
   5. a defect or characteristic that may reasonably be expected to result in an individual’s death or in serious adverse effects on their health, including a serious injury;
   6. incorrect or insufficient information on a label or in instructions — or the lack of a label or instructions — that may reasonably be expected to result in an individual’s death or in serious adverse effects on their health, including a serious injury; or
   7. recall or measure that is initiated for human health or safety reasons by (i) a foreign entity (ii) a provincial government (iii) a public body (iv) an aboriginal government.
3. Mandatory record–keeping: The Act requires documents and records to be maintained in order to facilitate product tracing through the supply chain of consumer products.Any person who manufactures, imports, advertises, sells or tests a consumer product for commercial purposes must keep records outlining the name and address of the person from whom they obtained the product, as well as information about who the product was sold to. Retailers must also keep records of the location where and the period during which the product was sold. These requirements do not apply to individual consumers who buy products for their own personal use.

   Records must be stored for a period of six years or any other period prescribed by the Act.

4. Restrictions on advertising: Many of the restrictions and obligations found in the Act and that are discussed above also extend to those who advertise a consumer product. The Act defines “advertisement” broadly to include “any representation by any means for the purpose of promoting directly or indirectly the sale of a consumer product”.In addition to these restrictions on advertisers, the Act also prohibits making false, misleading, or deceptive claims on a consumer product’s package or label, or when advertising products, in a manner that may reasonably lead to a wrong impression about the product’s safety; or that misrepresents its safety certification or compliance with safety standards or regulations.

   Many of these restrictions overlap with prohibitions found in other statutes, such as the Consumer Packaging and Labelling Act, and the Competition Act. It is unclear at this stage how any inconsistencies in the legislation will be handled.

Enforcement of the Act

The Act will be administered by Health Canada. The Minister will have a broad range of powers under the Act, with some powers delegated to inspectors who will be responsible for enforcing the Act. Some of the most notable powers of enforcement are discussed below.

1. Orders for product testing: the Minister will have the authority to order manufacturers and importers of consumer products to conduct tests or studies on a consumer product at their own expense in order to collect information and ensure compliance with the Act.
2. Inspection powers: Health Canada inspectors will also have the power to enter premises, without notice, where a consumer product is manufactured, imported, packaged, stored, advertised, sold, labelled, tested or transported in order to obtain information related to a product. Where the premises involved are a dwelling house, the inspector must have the consent of the occupant or a warrant.Once an inspector has entered the premises, they have broad powers, including the power to examine, test or sample anything, make copies of documents, and to seize or detain an article to which the Act or regulations apply.
3. Recalls, injunctions and other measures: If the Minister believes on reasonable grounds that a consumer product is a danger to human health or safety, the Minister may order a manufacturer, importer, or seller, to recall the product or take other steps to remedy the non–compliance with the Act. The recall order must be in writing and must state the reasons for the recall and the time and manner in which the recall is to be carried out.In certain circumstances, the Minister will also be able to order other measures including stopping the manufacturing, importation, packaging, storing, advertising, selling, labelling, testing or transportation of a consumer product, or any other measure necessary to address or prevent a danger to human health or safety that a product poses.

   A person can request a review of the Minister’s decision in writing within 30 days (which can be extended for a further 30 days in some situations). The review may confirm, amend, terminate, or cancel the order.

4. Disclosure of confidential business information: In some cases, the Minister will be able to disclose, without notice or consent, the confidential business information of those it regulates to a person or government that carries out functions relating to the protection of health and safety.For a multi–national corporation, this could involve the Minister disclosing information to a foreign government involved in the oversight of health and safety products.
5. Administrative monetary penalties: The administrative penalties for violations to the Act will be set out in the regulations.
6. Criminal charges: Not only companies, but also their directors, officers and agents may be found liable criminally for a contravention of the Act. The Act contemplates varying degrees of monetary fines depending on the severity of the offence, and can range from $250,000 to $5 million. Penalties can also involve possible imprisonment sentences.

The Act does not specifically deal with civil remedies available to consumers but the increased standards imposed by the Act and the potential for greater product recalls may lead to more product liability litigation.

Implications for Clients

Since the Act is expected to come into force in the upcoming months, companies potentially impacted by the Act may want to take this opportunity to evaluate their current business practices and prepare for the new obligations imposed by the Act. Companies that manufacture, supply, sell, or market consumer products should consider designating someone within their organization who will be responsible for ensuring compliance with the Act. Depending on the type and size of business, internal policies and procedures may need to be implemented to ensure that throughout the organization – required records and documents are being collected and maintained and that incidents are properly identified and reported.