The General Product Safety Directive (“GPSD” or “Directive” hereafter) provides the EU legal framework for safety of goods to the extent that there are no specific EU provisions with the same safety objective (such as EU harmonized legislation for specific products). However, this Directive was adopted 20 years ago and therefore does not account for developments in products and markets, such as risks specific to AI and e-commerce.
To fill in this gap and improve the effectiveness of market surveillance, on June 30, 2021, the EU Commission published a new draft regulation proposal (the “Draft Regulation” hereafter) that, once adopted, will repeal the existing Directive and be directly applicable in all 27 EU Member States.
The Draft Regulation continues to act as a safety net for all consumer products, thus creating a homogeneous standard of security across the internal market, leading to greater consistency between harmonized and non-harmonized products. It also adapts product safety to the digital economy and imposes strict measures to protect consumers from dangerous and deceptive products. These measures impact not only product manufacturers but also supply chain participants and online marketplaces.
Indeed, the Draft Regulation strengthens the obligations of manufacturers, importers, and distributors, thus increasing their responsibility to ensure the safety of goods and improving product traceability along the supply chain. In fact, all economic operators must ensure that subjects in the various supply chain levels have complied with the obligations of this Regulation before placing the resulting products on the market.
Getting down to specifics, manufacturers will bear the main responsibility and liability for protecting consumer health and safety and must draft product “technical documentation” containing information such as a product description and an analysis of potential product safety risks. Such documentation shall be stored for a period of ten years after the product has been placed on the market and must be made available to market surveillance authorities upon request. In addition, as in other highly regulated sectors, such as the cosmetics sector, a manufacturer established outside the European Union must appoint a “responsible person” in the European Union to be responsible for any legal or compliance matters regarding products sold on the EU market. To foster increased commitment, the Draft Regulation introduces penalties of up to 4% of annual turnover for noncompliance. Member States may also impose periodic penalty payments for economic operators or online market players.
The product safety issue information flow between consumers, economic operators, national authorities, and the Commission has been smoothed through the Safety Gate system, the Safety Business Gateway (a web portal enabling economic operators to provide market surveillance authorities and consumers with risk alerts for specific products), and the Safety Gate web portal (which will have a new section where consumers can report dangerous products). Furthermore, Member States must offer consumers the opportunity to submit complaints to the appropriate national authorities.
An entire chapter is dedicated to Online Marketplaces, which are now directly involved in ensuring transparency and effectiveness when it comes to product safety for goods sold on their platform. The Regulation introduces the obligation to establish a “single contact point” for direct communication with Member States’ market surveillance authorities. In addition, online marketplaces must design their online interfaces to enable merchants to provide all the information required by the Regulation, such as data on the manufacturer or on the responsible person, data necessary for the identification of the product, and any warnings or safety information. They must also ensure that such information is accessible to consumers on the product listings.
The Regulation has renamed the European network of product safety authorities as the Consumer Safety Network. Market surveillance authorities, among others, have the power to order an online marketplace to remove specific illegal content referencing a dangerous product from its online interface, to disable access to it, or to display an explicit warning.
The framework for product recalls has also been improved. The Regulation sets out specific requirements for recall notices, including their form and content. Specifically, this means any recall notice must clearly describe the hazard associated with the product, the actions consumers should take, remedies available to them, and communication channels to access for further information. Any element that could decrease consumers’ perception of risk must be avoided.
The Regulation introduces the right to remedy: the economic operator responsible for a recall shall offer an effective, cost-free, and timely remedy to consumers, such as the repair or replacement of the product, or a refund. In any case, no burden shall be placed on the consumer.
A list of criteria that Member States shall take into account when imposing penalties is provided. Examples are the duration of the infringement, the number of dangerous products made available, the actions taken to mitigate the damage, the existence of previous infringement, and the size of the undertaking.
Stakeholders are invited to provide feedback on the proposed Regulation by September 9, 2021. Once the feedback period ends, the legislative processes in both the European Parliament and the Council will begin and a definitive version of the rules will be established.