When chemicals law can also be enforced through unfair competition claims
The German Environmental Action Association (DUH) has brought a civil action against Shein over alleged breaches of REACH substance restrictions. The case concerns PFAS in clothing and DEHP in footwear. Shein has removed the products from sale, but DUH is still seeking an injunction.
An established route to enforcement
DUH is not suing under REACH itself. It relies on Section 3a of the German Unfair Competition Act (UWG), which allows breaches of statutory rules governing market conduct to be pursued as unfair commercial practices. Where the requirements are met, competitors and qualified associations may seek injunctive relief.
There is nothing new about this route. In its 2016 “Mercury-containing fluorescent lamps” judgment, the German Federal Court of Justice held that product-related substance restrictions may qualify as rules governing market conduct where they also protect human health and consumers.
DUH is now seeking to extend that reasoning to restrictions under Annex XVII to REACH. Whether it can do so will depend on the purpose of the provisions in question. A breach of chemicals or environmental law does not automatically amount to an unfair commercial practice.
How broad can the injunction be?
DUH’s primary application is not limited to the four products it had tested. It covers clothing and footwear exceeding the specified substance limits, using the tested products as examples of the alleged infringement. DUH has also filed an alternative application limited to those products.
There is an obvious reason for seeking broader relief: an injunction tied to individual product numbers may quickly become ineffective where ranges change at speed. For businesses, however, the wider formulation creates a different risk. Other products may use different materials or components and may be subject to different exemptions.
Any injunction must therefore be clear in scope and capable of being implemented in practice. It should not impose a blanket guarantee that every product in a changing range will comply at all times.
What businesses should take from the case
Chemicals compliance may be challenged not only by market surveillance authorities, but also by competitors and qualified associations. They can commission product testing, issue cease-and-desist letters and bring claims for injunctive relief. Being an environmental NGO is not enough in itself: the claimant must have standing under Section 8 UWG.
Companies should therefore consider whether:
- the relevant substance restrictions have been identified at product and material level;
- supplier documentation is clearly linked to the products and materials it covers;
- risk-based laboratory testing criteria are in place; and
- procedures exist for stop-sale decisions, impact assessments and supplier escalation.
Cease-and-desist undertakings require particular care. Their scope should be tied to the alleged infringement and remain workable in practice.
Conclusion
The case may clarify when REACH restrictions can support unfair competition claims and how far any resulting injunction may extend.
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