The role of the Product Compliance Management System in managing regulatory complexity.
The relevance of product compliance management systems (PCMS) for the procedural mapping of regulatory product requirements is continuously increasing. Many new EU regulations contain obligations for addressed parties to implement processes for the legally compliant implementation of legal requirements. This requirement may also be relevant when assessing fines.
List of obligations for companies grows
With the new sustainability regulations, particularly those implementing the Green Deal, the number of regulations and the complexity of product regulation continue to increase. Despite the EU’s efforts to reduce bureaucracy and thereby make companies more competitive, the list of obligations for companies is growing ever longer. As a result, companies are also exposed to increasingly comprehensive liability risks. To avoid sanctions, numerous legal obligations must be complied with. The selection and implementation of relevant requirements can be controlled via a PCMS and mapped in a legally compliant manner at the operational level.
PCMS as a legal requirement
Furthermore, the implementation of a PCMS is also required by law. Article 11(2) EUDR standardizes the implementation of a PCMS as an appropriate and proportionate measure for risk minimization. Article 14 GPSR also requires “internal procedures to ensure product safety” throughout the entire life cycle. The specific measures and procedures that manufacturers must implement are not specified by law. At the product level, however, only a PCMS can map the increasingly complex product specifications and provide the necessary organizational, communication, and escalation rules that are subject to full regulatory access.
Sanction-relevant effects
Last but not least, the implementation of a PCMS also has implications in terms of sanctions. For example, in order to avoid allegations of unlawful breach of supervisory duties pursuant to Sections 130 and 9 of the German Act on Regulatory Offences (OWiG) against managers and fines pursuant to Section 30 OWiG against companies, appropriate measures to prevent criminal offenses or administrative offenses in companies are legally required. In its ruling of May 9, 2017, the Federal Court of Justice (BGH) clarified, in line with the view of German authorities, that an effective PCMS can be taken into account both preventively and retrospectively as a mitigating factor in the assessment of fines imposed on associations pursuant to Section 30 OWiG. If such measures are lacking or if there are significant deficiencies, this can have the effect of increasing the severity of sanctions.
Product compliance management is more than just administrative formalism; it is a forward-looking corporate strategy and a process-based means of ensuring corporate success. Every company that takes product compliance seriously implements a PCMS as a non-negotiable part of its corporate culture.
The first step toward implementing a PCMS is to systematically analyse the maturity level of the company’s own process landscape in the sense of a GAP analysis and identify critical gaps in the system. Based on the current state, goals, roles and responsibilities, communication and escalation processes, as well as interfaces and steering processes should be defined in the implementation phase in order to ensure safety and product compliance throughout the entire expected life cycle of a product at the operational level.
Do you have any questions? Get in touch with us.
back