Proposal EU Product Safety Regulation: Content & evaluation

by Dr. Roland Hartmannsberger

Product Compliance

Proposal for an EU Product Safety Regulation: Main contents and evaluation

Shortly before the EU Market Surveillance Regulation (Regulation (EU) 2019/1020) comes into force, the EU Commission's proposal for a replacement of Directive 2001/95/EC (Product Safety Directive, "PSD") was published on 30 June 2021 (COM(2021) 346 final). Fundamental changes and innovations are planned. Some core provisions are presented and evaluated below.

Main contents:

  • As was already the case with the amendment of the market surveillance law, the provisions on general product safety are to take the form of a regulation. The leeway of the member states is thus significantly more limited compared to the current PSD.
  • The scope of application continues to include non-food consumer products (including relevant migration products (from b2b to b2c) and now also food-like products under Directive 87/357/EEC). With regard to the obvious overlaps or competing provisions with/of the EU Market Surveillance Regulation, the draft provides for a differentiated and layered approach, in particular by declaring individual sections inapplicable. The extent to which this is consistent and works without friction still needs to be examined in more detail.
  • Products offered for sale online or through other means of distance sales shall be deemed to be made available on the market if the offer is targeted at consumers in the Union. For the latter, the use of an official language or currency of the Member States, a domain name registered in one of the Member States or the offer to dispatch to a Member State may be sufficient. This approach is also found in the EU Market Surveillance Regulation, but is now underlined with specific criteria.
  • The EU Commission is to adopt implementing acts which, for products in conformity with harmonised standards (for which the presumption of conformity is to continue to apply), lay down "specific safety requirements necessary to ensure that products which conform to the European standards satisfy the general safety requirement laid down in Article 5 [of the draft; corresponds to Art. 3(1) of the PSD]”. It is not immediately clear how far-reaching the EU Commission's competence in this regard is intended to be. However, on the basis of previous approaches to similar issues, this authority likely should be understood in a broad sense.
  • For the assessment of compliance with the safety requirements outside the presumption of conformity on the basis of technical standards, the proposal contains a comprehensive catalogue of criteria. In addition to well-known aspects, cybersecurity and artificial intelligence are listed. Furthermore, voluntary certification schemes, Commission recommendations and guidelines, technical standards and good practice factors can be included in the assessment.
  • There are numerous extensions to the obligations of manufacturers, importers and distributors, which are partly based on the model provisions of Decision No 768/2008/EC. For example, there is to be an obligation for manufacturers to continuously keep distributors, importers and online marketplaces informed of any safety issue that they have identified. If there are indications that a product is not safe, there will also be an obligation (in contrast to the current situation) to take corrective measures immediately. The existing obligation to notify authorities will be supplemented by a corresponding obligation towards consumers (via the Safety Business Gateway).
  • However, the two most significant changes for manufacturers are likely to be that they must (i) inform market surveillance authorities of accidents caused by a product they have supplied within two working days after becoming aware of them and (ii) offer a free repair, replacement or refund in the event of a recall.
  • For products that are "susceptible to bear a serious risk to health and safety of consumers", the EU Commission should be able to impose a specific traceability system.
  • In future, online marketplaces, i.e. classic online trading platforms such as eBay or Amazon Marketplace (also with regard to c2c), are to be held comprehensively responsible. Market surveillance authorities shall be given the power to order the removal of dangerous products from online interfaces, for example. Furthermore, online marketplaces must create the technical conditions for traders to be able to provide information that is (in future) legally required. In addition, they must cooperate comprehensively with market surveillance authorities and other economic operators with regard to necessary corrective measures.
  • In the event of divergent conclusions between market surveillance authorities of different Member States on risk assessments or risk levels (e.g. on whether a serious risk exists on the basis of the RAPEX guidelines), a voluntary arbitration procedure can be carried out at the EU Commission.
  • There are numerous innovations regarding the implementation of corrective measures (recalls and warnings). Economic operators should use existing personal data of their customers. In existing systems for product registration or loyalty programmes, they must give customers the possibility to provide separate contact details only for safety measures . Furthermore, specifications are made for the concrete channels for recalls and warnings. Another new feature is that certain content requirements must be met in the case of written recalls; the Commission is to set out a template for this.
  • Finally, comprehensive obligations and specifications are to be imposed on the Member States with regard to the sanctioning of infringements of the Regulation. The maximum amount of penalties should be at least 4% of the economic operator's annual turnover in the Member State concerned.

Evaluation:

From the point of view of economic operators, the continuation of efforts to limit or prevent the distribution of unsafe products via modern distribution channels is certainly welcome. In addition to fulfilment service providers, marketplace operators would now also be involved. Another positive aspect is the effort to find solutions to inconsistent assessments of product risks by market surveillance authorities. Up to now, economic operators have been largely at the mercy of the authorities' good will in this regard. However, it is doubtful whether a merely voluntary arbitration procedure should be the means of choice here.  

The tightening of obligations for economic operators will meet with limited acceptance. In this respect, the Commission's proposals - as with product regulation in general - are characterised by a clear shift away from the principle of individual responsibility of the economic operators towards excessive state control and guidance, combined with elements of centralised control by the EU Commission (whereby the latter are significantly more limited compared to previous drafts). This becomes particularly virulent with regard to conformity violations and product crises. Here, the requirement of transparency is taken to the extreme by obliging manufacturers in particular to provide comprehensive and, above all, early information to authorities, other economic operators and the public. It will be possible to assume a certain de minimis limit with regard to the obligation to report "accidents" within two days. In the end, however, this approach will not lead to more consumer safety, but only to legally prescribed actionism on the part of economic operators and authorities. A large number of potential or alleged incidents with products turn out to be uncritical or not safety-relevant on closer inspection. However, even with the best of efforts, the corresponding clarification regularly requires time, especially since in the future an increased number of cases can be expected due to the likewise newly introduced obligation to provide consumers with technical complaint options. In this respect, two days are certainly completely unreasonable. Irrespective of this, it has proven successful in practice to pursue a product-related and not a case-related approach, i.e. to clarify potential safety risks in a generalised manner and not in relation to an individual case, and to derive consequences for action from this if necessary. This requires a (RAPEX) risk assessment in particular, which also takes time.

The planned right to free repair, replacement or refund of the purchase price will certainly not be well received. The current legal situation does not provide for such an obligation to bear the costs. Instead, the standards of product liability law (especially producer liability law) should be applied, which leads to appropriate results. This should be upheld. It is therefore to be hoped that this attempt to introduce a type of "European product safety warranty law" will fail in the further process.

The draft offers much material for discussion. One can be curious about the further progress of the procedure.

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