Article 2(f) of Commission Delegated Regulation C(2026) 659 permits the destruction of unsold fashion and footwear products that have been damaged, deteriorated, or contaminated — whether through consumer returns, handling, storage, or transport — where repair or refurbishment is not technically feasible or not cost-effective.
For the majority of fashion brands processing returned inventory, this is the derogation ground that applies most frequently. The cost-effectiveness test defined in Article 1(2) determines whether a brand can legally destroy a product rather than repair it.
The Statutory Definition
Article 1(2) defines “cost-effective” with precision. The cost of repairing or refurbishing a product is cost-effective when it does not outweigh the total cost of destroying that product plus the cost of replacing it — specifically: materials, manufacturing, packaging, transport, stocking, and any other administrative or logistical expenses.
The Calculation
Repair cost compared against destruction cost + materials + manufacturing + packaging + transport + stocking + administrative/logistical expenses
If repair cost exceeds this total, destruction is permitted under Article 2(f). If repair cost is equal to or less than this total, the economic operator is required to repair.
Why the Benchmark Is Higher Than Most Brands Assume
Many brands intuitively compare repair costs against the wholesale value or cost of goods sold. The regulation requires comparison against the full replacement cost stack — every cost the business would incur to place a new equivalent unit on the market. For a garment with a retail price of EUR 120, this is not the factory gate cost of EUR 19. It includes manufacturing, international freight, duties, warehousing, packaging, and the administrative cost of procurement and inventory management.
The practical effect is that the bar for claiming cost-effectiveness is materially higher than most compliance teams expect. For mid-to-premium fashion with average unit values above EUR 60, the full replacement cost frequently exceeds EUR 40–70 per unit — meaning repair costs must exceed that figure before destruction is permitted.
For lower-value items — basic t-shirts, commodity footwear — the economics may still favour destruction. The calculation is product-specific, not sector-wide.
What Counts as Damage Under Article 2(f)
Article 2(f) covers products that can reasonably be considered unacceptable for consumer use due to physical damage, deterioration, or contamination, including hygiene issues. The regulation explicitly includes damage from four sources:
Consumer returns
Products returned under the right of withdrawal provided by Directive 2011/83/EU, or during a longer voluntary return period offered by the retailer.
Supply chain handling
Damage during logistics, warehousing, or transport operations.
Retail operations
In-store damage, display wear, or contamination during the retail period.
Storage
Deterioration during storage — moisture, pest damage, discolouration from prolonged holding.
The common thread is that the product was fit for purpose when manufactured but has become unacceptable for consumer use through subsequent events. This distinguishes ground (f) from ground (g), which covers products that were never fit for purpose due to original manufacturing or design defects.
The Documentation Requirement
Article 3(f) provides two documentation routes for ground (f) products:
Route 1: Quality assessment procedures
Evidence that the product has been subject to quality assessment procedures including visual inspection and sorting that prioritises restocking and repairs. This route requires a description of the assessment procedure, standardised remediation plans for specific damage types, and a description of cases where repair is not possible for technical or cost-effectiveness reasons.
Route 2: Individual inspection records
An inspection record in the form of a technical test, practical evaluation, or expert judgement that documents the type and severity of damage and the unfeasibility of corrective measures due to technical or cost-effectiveness considerations.
Route 1 is the batch-level approach — suitable for brands processing returns at volume through a structured grading operation. Route 2 is the individual assessment — suitable for high-value items or unusual damage cases. Most fashion brands will operate primarily under Route 1, with Route 2 reserved for exceptions.
What This Means for Returns Operations
The cost-effectiveness test transforms how brands need to assess returned inventory. A product cannot be destroyed simply because it is returned, or because it has been opened, or because its packaging is damaged. The assessment must determine whether repair is technically feasible, and if so, whether repair costs exceed the full replacement cost benchmark.
This creates a genuine analytical problem at scale. A brand processing 100,000 returned units annually needs a systematic way to determine, at item or batch level, whether repair is cost-effective against a replacement cost that includes the full supply chain stack. That calculation requires data most brands do not currently collect: reconditioning costs by damage type, grade-specific recovery values, and replacement cost breakdowns by SKU category.