The EU Market Surveillance Regulation

Safety first!

On June 25, 2019, the Regulation (EU) 2019/1020 on market surveillance and compliance of products (“the Regulation”) was published in the Official Journal of the European Union (“EU”).

The provisions of the Regulation apply from July 16, 2021, with the exception of a few ones, applying from January 1, 2021.

Through a stronger and more effective market surveillance and clearer rules, a more rigorous control of compliance and a closer cross border cooperation of the authorities, the Regulation aims at stepping up the efforts to keep uncompliant products out of the EU single market.

The previous regulation still contained in fact glaring gaps, due to which a number of products on the EU internal market did not meet the legal requirements, particularly with regard to safety. This entailed, on the one hand, unacceptable risks for users and, on the other hand, competitive disadvantages for companies operating in compliance with the law. With the Regulation, the EU aims at eliminating market distortions and promoting product safety altogether for a better functioning common market.

The innovations introduced by the Regulation concern all products placed on the EU market, unless there are more specific provisions pursuing the same objectives. In addition to the products subject to EU harmonization rules, all other products which are imported into the EU from a third country and which are to be freely disposed of in the EU are also included. Examples include toys, electrical and electronic equipment, batteries, machinery, footwear, textile products, cosmetics, chemicals, packaging, personal protective equipment, medical devices and products covered by the Ecodesign Directive.

Significant changes in connection with these product categories relate in particular to the fast-growing areas of e-commerce and global supply chains.

As regards the e-commerce, the Regulation broadens the definition of “placing on the market”: a product shall now be deemed to be made available on the market if the offer is targeted at end users in the EU, online or through other means of distance selling. This must be assessed on a case-by-case basis, depending on whether the offer of the product is actually aimed at the EU internal market, which can be derived e.g. from the possible supply regions, the available languages or the payment methods.

Furthermore, the Regulation also extends the links in the supply chain: they now include the so-called “fulfilment service provider”, defined by the Regulation as "any natural or legal person offering, in the course of commercial activity, at least two of the following services: warehousing, packaging, addressing and dispatching, without having ownership of the products involved". Like manufacturers, authorized representatives, importers and distributors, fulfilment service providers are now considered as obligated economic operators in all respects and are subject to the supervision of the market surveillance authorities. If the obligations provided for by the Regulation are not already fulfilled by another economic operator, it is the responsibility of the fulfilment service provider to comply with them.

The obligations applicable to all economic operators include in particular the following tasks: verifying that the EU declaration of conformity/performance has been drawn up, keeping it at the disposal of and making it available to the market surveillance authorities, notifying high-risk products, communicating to the authorities all information and documentation necessary to demonstrate the conformity of the product and cooperating to eliminate any risks. In addition, all economic operators are obligated to indicate their name or registered trade name or trademark and contact details, including the postal address, on the product, packaging, parcel or in an enclosed document.

In lack of a responsible economic operator established in the EU, products may not be placed on the single market.

Pursuant to the Regulation, Member States are responsible for enforcing market surveillance and designating the competent national authorities in their territory. These are authorized, among other things, to carry out documentary checks and on-site inspections in order to ensure the conformity of the products. Where a market surveillance authority finds that a product may affect the health or safety of users or does not comply with the relevant EU harmonization rules, it may require the economic operator to take appropriate and proportionate corrective measures. This includes bringing the product into conformity, preventing it from being made available on the market, withdrawing or recalling the product from the market and issuing public warnings about the risk posed by the product, as well as destroying the product.

The Regulation also supports controls by customs authorities, to prevent unsafe products from being sold to EU end users. Market surveillance authorities will provide the competent customs office with information on product categories or economic operators identified as bearing a higher risk of non-compliance. In addition, the Regulation stipulates that Member States and the Commission will exchange information more efficiently by using tools such as the Rapid Information Exchange System (RAPEX) and the Information and Communication System on Market Surveillance (ICSMS). These instruments further promote coordination between market surveillance authorities in the EU, allowing both authorities and customs offices to communicate with each other on dangerous goods.

In the light of the numerous product categories concerned, the Regulation represents the new legal framework for market surveillance with regard to seventy EU regulations and directives. After the previous Regulation (EC) no. 765/2008, it is probably one of the most fundamental legal developments in the non-food sector in the last 20 years. It introduces not only new rules and obligations to observe when selling products, but also new stakeholders.

Appropriate structures should be provided at an early stage to ensure that these requirements are properly met when the new rules enter into force, to avoid liability risks, fines and costly warnings from competitors, and to gain an advantage over non-compliant competitors.