The need for a standard contract was spelled out in the 1992 Regulation which established the EC eco-labelling scheme. Its objectives are to spell out how the eco-label may and may not be used, to protect consumers, and to prevent distortions of competition.
The European Commission Decision on the standard contract provides that national eco-labelling bodies may include contractual conditions in addition to those set out in the Decision, but if they do so they must submit the contracts to the Commission to allow it to check whether it is consistent with the terms of the 1992 Regulation.
The contract entitles the "holder" - the manufacturer or importer of a product which has qualified for an eco-label - to use it for the period specified in the contract. With this come several responsibilities on the holder:
The contract entitles national eco-labelling bodies to "undertake all or any necessary investigations to monitor the on-going compliance by the Holder with both the product group criteria and the terms" of the contract. They may request, and the holder most provide, any relevant documentation. They may also demand, and the holder must grant, access to his premises "at any reasonable time and without notice". The holder will be liable for any reasonable costs incurred by the eco-labelling body in the course of this compliance checking.
Eco-labelling bodies may also refer any complaints concerning a product to the holder, and may ask him to respond. The identity of the complainant may be kept confidential at the authorities' discretion.
Competent bodies are given broad discretion to suspend or withdraw a holder's authorisation to use the eco-label, and to terminate a contract, if its terms are breached. Where a contract is terminated for any reason, the holder may not continue to use the eco-label on the product concerned except on items placed on the market before the termination date, and then for a maximum of six months after that date.
It is likely that contracts will normally be signed for a maximum of three years because the Commission's intention is to review the eco-labelling criteria for specific product groups at three-year intervals. However, the Decision provides for termination of a contract at an "earlier" date than that specified if product criteria are amended or withdrawn.
Given the slow progress being made in agreeing product criteria, it appears more likely that they will be reviewed at intervals of considerably more than three years. The Decision also covers this eventuality. It provides for the eco-labelling body to notify a holder at least two months in advance of the termination date of the contract that it will be renewed automatically for as long as the product group criteria remain in force.