Due diligence and chemical regulations
Ignoring the REACH status of acquired substances can be very costly . Alan Ritchie of WSP shares a case study
In recent years , WSP became aware of some challenges that arose following a substantial acquisition that took place in the chemicals industry . The selling company , which will be referred to here as ‘ Company A ’, had a business that was similar to the purchasing company ‘ Company B ’, which had a market share of about 50 % in a specific type of product , but lacked critical mass for some substances . The due diligence process that took place between them had two key questions to address . First , are all the substances that are part of this acquisition REACH-registered ? And second , will all these registrations be transferred to ‘ Company B ’. The answer to both of those questions came back as ‘ yes ’. Company B therefore concluded that all of the REACH questions were sorted out . It also concluded that , because many of the substances that it was acquiring was already part of its portfolio , that the level of REACH work needed would decline for them after the acquisition was completed .
What actually happened ?
For most of the acquired substances , Company B would now be taking over as lead registrant . In some cases , it already was the lead registrant ; for others , Company A , was the lead registrant . This meant extra work , especially for those substances that had not been registered . Many of the dossiers had been reviewed by ECHA and most of these required updates . Many of them required additional testing to comply with ECHA decisions . Just to add to the general confusion , there was also some uncertainty for a few substances about who the lead registrant actually was . This may sound strange but back in the early days of REACH , when the one substance , one registration requirement was not being strictly enforced , several substances had multiple lead registrants . This created what can only described as a real mess and , after six years of working with Company B , WSP and they are still trying to unpick some of the details .
The sting in the tail was that a large number of the substances that Company B had acquired were candidate substances of very high concern ( SVHCs ), were already SVHCs , or had some or many chemical and / or toxicological properties that were likely to attract ECHA ’ s attention as a possible SVHC . Many required additional testing . In one example , ECHA required an extended one-generation reproductive toxicity study ( EOGRTS ), an emerging study that has replaced two others that are no longer the preferred route of toxicological
46 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981