WEEE Regulations: will open scope lead to electrical and electronic product price rises?

WEEE Regulations: will open scope lead to electrical and electronic product price rises?

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Matt Farnsworth, Associate Director for Transaction Advisory / Due Diligence Services, discusses the DEFRA proposed changes to the WEEE Regulations, and what this could mean for manufacturers and brand owners in the electronics sector.

The speed at which the electronics sector is growing is undeniable. Our everyday lives are surrounded by and often function through electronic products and the appetite for these goods shows no signs of slowing. In an ever expanding market therefore, it can be tough for manufacturers to respond to increasing consumer demands alongside the technical demands and regulations placed upon them.

In 2006, primarily aimed at tackling the estimated 2m tonnes of waste that arises from electrical and electronic equipment, the UK’s Waste Electrical and Electronic Equipment (WEEE) Regulations came into force. The legislation focused on categorising the varying types of goods and then requiring obligated producers to account for final recovery, reuse, recycling and treatment of the EEE that they placed on the market.

The regulations (more recently recast in 2013) have affected many companies; from manufacturers of small electronic devices to largescale industrial tools, through to brand owners and distributors. Manufacturers remain obligated to provide schemes (or join one that meets the obligations on their behalf) to recover WEEE on the grounds of producer responsibility and environmental benefit. However, just as the UK market has become accustomed to this, it could all be set for change from 2019.

DEFRA has announced that from 1st January 2019, the UK WEEE Regulations could introduce ‘Open Scope’ to the management of WEEE. As it sounds, it means all EEE placed on the market will now be captured (unless exempt) and a key component of the proposed changes is the potential move from 14 EEE categories to just 6.

As the scope will be increased and as recovery and recycling costs are based on market share, there could be a redistribution of compliance costs amongst manufacturers, where existing large volume manufacturers subsidise new entrants or those with lower market share.

Clearly, this will have implications for those developing new products as well as those managing own brand product lines. Could we see increased price rises of consumer items as a result? Quite possibly. Consider also the potential knock on effect for the photovoltaics renewables sector or the implications for the waste processing and recovery sector. The implications of the changes could be wider reaching than initially thought.

At present, DEFRA has announced the proposals for wider consultation with four possible options on the table for implementing Open Scope. These include keeping the status quo; secondly to let the regulations take effect as written; thirdly to amend the existing categories and yet continue reporting to the EU and fourthly to reduce the categories to 6, with three sub-categories.

Having recently supported a number of manufacturers and brand owners on EEE producer responsibility issues, RPS understands that this will be a key issue one that demands close attention for the wider market and during company acquisitions and disposals.