Advancing at what is a furious pace by European standards, the Commission, Council and Parliament agreed on a compromise text for the new General Product Safety Regulation (GPSR) In just one and a half years; adopted on 21 December, the legislation passed the European Parliament on 30 March 2023. The way is now clear towards a general reform of European product safety law. What this means for European economic operators, particularly product manufacturers, is explained in the article below.
The current legislative process was kicked off by a Proposal for a Regulation (COM/2021/346 final), published by the European Commission in June 2021, which is slated to replace the current Product Safety Directive (2001/95/EC). The stated goal of this new Regulation was to update the statutory framework for general product safety in non-food consumer products, strengthen consumer protection and revise the legal framework so as to adapt to the specific challenges posed by new technologies and business models, including e‑commerce. On 21 December 2022, the European Council, the European Parliament and the EU Commission agreed on a compromise text for a new General Product Safety Regulation (GPSR), which passed its first reading before the European Parliament on 30 March 2023. Assuming that the bill is adopted by the Council, which is highly likely, the way is now clear towards publication in the Official Journal of the European Union, after which the new Regulation should enter into effect in the second quarter of 2023.
Once the Regulation enters into effect, it will take direct and immediate effect in all EU member states. This will ensure a maximum degree of harmonization within the EU, as well as providing more legal certainty for companies, since it eliminates the need to translate the Regulation into national law, as well as the risk that the various countries will formulate the new rules in different ways. As was the case before, however, the new Regulation will be supplemented by provisions of national law imposing fines and penalties, which will be necessary for enforcement of the new Regulation. In Germany, these provisions will likely be contained, as before, in the Act on Making Products Available on the Market (the Product Safety Act).
New and Safe Products
First of all, it is good to hear that the compromise text definitively abandons the definition of “safe product” which found in the initial proposal, under which manufacturers would have had to anticipate misuse of their products by users in the design and manufacture of their products, as this would have led to an irreconcilable conflict in terms of legal interpretation. Under the prevailing principles of product safety law, manufacturers are only responsible for safety within certain bounds; specifically, the manufacturer’s responsibility is limited to cases of intended and reasonably foreseeable use. But the compromise text identifies not “intended” but “normal” use as the starting point for consideration in terms of product safety law. If this word choice is retained, we will likely not have long to wait before the Commission issues guidelines on the interpretation of this term, and possibly others as well.
The Regulation also clarifies the definition of “placing on the market” for online selling. It states that a product is considered to have been made available on the market if an offer for sale is targeted to consumers in the EU and can be accepted at any time, i.e. if the economic operator directs its activities to one or more member states. This is the case e.g. if the offer is available in EU languages or if payment can be made in Euros. These criteria were first legally defined in the new Market Surveillance Regulation (EU) 2019/1020, but have long since been implemented in product safety law (cf. Blue Guide 2022, No. 2.4).
New “Old” Players
The Regulation also introduces the concept of “substantial modifications,” under which anyone who makes such a modification to a product qualifies as the manufacturer of a new product and is therefore subject to all the duties of a manufacturer. Under the Regulation, a modification is deemed “substantial” if it creates a change which is not covered by the initial risk assessment, if it creates a new risk or if it magnifies a known risk. This understanding of “substantial modifications” has been the prevailing view in Germany for many years now, based in no small part on an Interpretation Paper issued in 2015 by Germany’s Federal Ministry of Labor and Social Affairs, which was drafted for the mechanical and plant engineering sector. However, the GPSR now provides, as a corrective, that this only applies if the modification was not made by consumers themselves or at their behest, since consumers themselves should in no case be treated as manufacturers.
Also added to the list of those with product safety obligations are some new economic operators, albeit ones which have become very familiar since the Market Surveillance Regulation took effect: namely, “fulfillment service providers,” online marketplaces and online interfaces. Moreover, consistent with the provisions of the Market Surveillance Regulation, the new Regulation implements a duty under which a product can only be provided on the market if a “responsible person” has been established in the EU.
Additional Requirements for Economic Operators
In view of the progressive digitization and interconnection of products in the Internet of Things (IOT), manufacturers undergoing conformity assessment procedures in the future will have to consider not only the physical safety of their products but cybersecurity as well, and the resilience of their products in the face of external and possibly malicious influences. In the case of AI applications, manufacturers will also need to keep in mind the evolving, learning and predictive functionalities of their products. Whether the new rules will include standards which will create legal certainty for manufacturers in this regard is unclear, but currently unlikely.
In case of doubt, this duty may also apply to the “responsible person” for the product. Under the GPSR, the responsible person is now also required to verify the substantive conformity of the products it supplies, as well as their labeling and accompanying documents. These duties go far beyond the comparable duties of authorized representatives under the Market Surveillance Regulation, which largely consist of providing an EU Declaration of Conformity and cooperating with the market surveillance authorities.
Manufacturers and importers alike will also be facing stricter labeling requirements. In addition to a mailing address, it will now be necessary for products to indicate an electronic (e‑mail) address at which the manufacturer or importer can be contacted. Moreover, as part of their complaint management procedures, manufacturers will also be required to allow consumers to lodge complaints electronically.
All economic operators will also be facing stricter requirements when it comes to notifying and cooperating with market surveillance authorities, which must be informed whenever an unsafe product is found by means of the European Commission’s Product Safety Alert Business Gateway tool, regardless of the degree of risk. These extensive notification requirements were already established in the “RAPEX Guidelines” in accordance with Implementing Decision (EU) 2019/417, but will now apply to companies in statutory form. Evidently, this principle does not apply in cases where use of a product results in a (fatal) accident, in which case the notification requirement applies primarily to the manufacturer of the relevant product, and only the relevant authority of the member state in whose sovereign territory the accident occurred is to be informed.
In addition, all economic operators without exception must be in a position to ensure the safety and conformity of the products which they make available on the market through suitable processes and to document these processes as well.
Enhanced Protection in Online Selling
The Regulation’s enhanced consumer protections in the area of online selling will be of particular relevance in practice. The GPSR requires manufacturers to provide concrete information about products which are sold online, consisting nor only of a photograph of the relevant product, but the name of the product and the manufacturer and all information necessary for safe use of the product. In addition, online marketplaces will be required to allow consumers to contact them and the market surveillance authorities directly by electronic means. Unlike the case within the scope of the Market Surveillance Regulation, which requires them only to cooperate with the market surveillance authorities, online marketplaces will have surveillance requirements of their own under the new Regulation, and will be required to quickly remove hazardous products from the marketplace or affix a suitable warning.
Standardized Rules for Product Recalls
The new Regulation also introduces standardized rules for the conduct of consumer recalls and creates incentives which make it more attractive for consumers to take part in recall campaigns. In the future, recalls will have to be initiated by a notice which is designated as such, and which must be drafted in the language of each of the member states in which the relevant product has been placed on the market. Manufacturers will be required to use all available channels, including social media, in order to notify consumers of the product recall. In doing so, they will not be allowed to use terms which make the problem appear harmless, such as “voluntary,” precautionary” or “in rare/specific situations,” so as to avoid misleading consumers about the urgency of taking action. This logic is not new, and can already be found in Guidelines issued by the EU Commission in 2021 on the effective design of product recalls.
Furthermore, manufacturers will have to offer the affected consumers at least two effective, cost-free and timely remedies, such as repair, replacement of the recalled product or a refund for the value of the recalled product. In the latter case, the amount of the refund must be at least as high as the price which the consumer paid. These rules are intended to create an incentive for consumers to take part in the recall campaign. But at the moment, the proposed rules conflict blatantly with national warranty laws, and with existing case law in Germany.
It remains to be seen whether the standardization of measures for each product and each type of risk can effectively reduce the existing risk in each individual case while at the same time satisfying the principle of proportionality. However, conflicts appear to be inevitable.
Higher Transparency and Interconnection
In addition to updating and extending the Safety Gate Rapid Alert System (RAPEX), which allows anyone to freely view information about hazardous products currently in circulation, the EU Commission is planning to create a “Traceability Register” in which manufacturers of products which are typically associated with a serious product risk will be required to store product data and information about product components and the supply chain. This data will be accessible to consumers, e.g. through a data carrier placed on the product, but also to other economic operators and market surveillance authorities. While the Regulation does not require manufacturers to create a “digital product passport” such as is provided in the new Eco-Design Regulation (as we reported), this new register represents a big step towards the EU’s goal of centralizing product information. This is in addition to the notification and communication system which has already been created within the scope of the Market Surveillance Regulation for the structured collection, processing and storage of information concerning market surveillance, and which is connected to RAPEX via interfaces.
With the agreement on a new Product Safety Regulation, the new direction in European product safety law is taking shape. When they take effect, the implemented mechanisms will greatly enhance consumer protection and produce a noticeable intensification in market surveillance activities. With a relatively short 18-month transitional period, beginning when the legislation enters into effect in the 2nd quarter of 2023, the GPSR is expected to come into force at the end of 2024. This leaves economic operators relatively little time in order to adapt their processes to conform to the new rules. It also remains to be seen how quickly the market surveillance authorities will act when it comes to streamlining mechanisms in market surveillance law. But one conclusion is inescapable: the EU is serious about product safety!back