Thematic studies for Review of REACH
Functioning of the European chemical market after the introduction of REACH
A comprehensive assessment on how the REACH Regulation changed the dynamics on the chemicals market. The assessment takes a look into the perspective of all categories of market players and review what has changed from their perspective. The study addresses issues such as reputation improvement, barriers for entering market, competition rules, common market rules, costs for compliance, administrative burden, workability, consumer choice, relocation of production, etc.
Summary of Findings
- The REACH Regulation is relevant in enhancing the competitiveness of the EU chemical industry and for the development of a harmonised market for chemicals. However, an important part of the potential benefits still remains to materialise while there is scope for reducing costs without a detrimental effect on achieving the objectives of the Regulation.
- REACH is clearly relevant to the development of a level playing field and a harmonised market. However, differences among Member States in market surveillance and enforcement of the Regulation and in the interpretation of the Regulations - including the notification requirements for SVHCs in articles - do not serve this objective.
Costs of compliance with REACH regulation
- The costs of compliance with REACH are sizeable and, in the short term, they appear to have some impact on the profitability of firms and the competitiveness of certain sectors in relation to their access to non-EU markets. The negative impacts are expected to be reduced in the future as experience builds up and as third countries also introduce certain registration requirements for chemicals.
- Based on the data collected the total cost for all firms involved in registration to the end of the first registration period is estimated at around €2.1billion. The typical cost of registration cost per substance by one firm has been about €70,000. ECHA fees, costs for required data through testing, studies or letters of access and human resources were the three key cost drivers. The costs represent about 1% of firms’ total annual turnover.
- Additional costs arise from the information exchange requirements and the handling of Safety Data Sheets and affect all firms in the chemicals supply chain. The main problem at this stage is the absence of a standardised format of SDSs that makes development and extraction of information problematic. In addition, limited awareness of the requirements among many downstream users makes information exchange a difficult process for all actors involved.
Impacts on chemicals market and industry
- It is still too early to identify long term impacts of REACH on the firms’ financial position. The general rule that applies is that firms active in basic chemicals and metals that are treated as commodities absorb the costs. In the specialty chemicals markets firms have greater capacity to pass costs down the supply chain.
- REACH costs and the introduction of substances in the candidate list has led to the withdrawal of some chemical substances. While this differs in certain sectors, the general picture is that this is not a widespread phenomenon and that there are only limited cases where this has become problematic for the access of firms to critical raw materials. On the other hand, there are indications that REACH leads to a reduction in the number of suppliers of certain substances increasing concentration in some chemicals markets. The scale of this effect is so far rather limited.
- On the basis of the limited information available, the overall conclusion is that REACH has not had a sizeable impact on the prices of final consumer products.
- There is no supportive evidence as to the effect of REACH on consumer confidence or the development of new substances and creation new business opportunities at this stage. It is probably too early for a proper assessment. However, there is some evidence that REACH contributes to the strengthening of communication along the chemicals supply chain even though this has yet to materialise.
- The Substance Information Exchange Fora (SIEFs) are generally seen as a relevant mechanism for reducing testing and registration costs. However there have been important communication and coordination problems that introduced additional costs and reduced their effectiveness. The operation of consortia appears to be much more effective and in many respects addresses the problems related to SIEFs.
- There is no evidence that REACH mechanisms have led to the loss of confidential information or, despite certain concerns, due to the abuse of dominant market position. However, the participation in SIEFs provides information on the substance a firm is intending to use and its volume that can present important business intelligence.
- There is generally a positive view on the role of ECHA and national helpdesks and the respective tools developed. Still, firms also need the assistance of Trade Associations and private consultants for more practical and tailored guidance.
- Despite concerns about the quality of some Only Representatives, overall they appear to have a positive role in supporting non-EU firms and facilitating their access to the EU chemicals market.
Final report and Annexes
Final report [2 MB]
Annex – Case studies [972 KB]
Enterprise and Industry
Centre for Strategy and Evaluation Services L.p.p.