Why Product Compliance is the Difference Between Fines and Exoneration
Regulatory requirements for companies in product law are increasing significantly: in the areas of product safety and product liability, but particularly regarding risks related to administrative offences. In federal law alone, there are around 1,800 acts and 2,900 statutory instruments encompassing approximately 96,000 individual provisions; 17,000 of these provisions impose an administrative burden on businesses. Among these are well over 1,000 administrative offence provisions. Not least, the European Union’s harmonisation legislation obliges Member States to enact sanctioning provisions.
Current practice demonstrates: administrative (regulatory) fine proceedings often begin with a labelling or product defect, but their outcome is frequently decided by the organisation of product compliance structures.
The OWiG as the Central Enforcement Mechanism in Product Law
Product law is based on an interplay of:
- product compliance (public law),
- product liability (civil law), and
- sanction regimes (especially the OWiG [Act on Regulatory Offences] and criminal law).
The OWiG contains two specific features for companies:
Section 130 OWiG – Breach of Supervisory Duties
Companies are required to organise their operations in such a way that legal violations are prevented. This includes, among other things:
- clear allocation of responsibilities,
- effective control mechanisms (e.g. random checks),
- appropriate technical systems, and
- regular employee training.
Section 30 OWiG – Corporate Fines
Particularly relevant in practice is Section 30 OWiG: If a person in a managerial position commits a criminal or regulatory offence, a fine can be imposed on the company itself. This combination regularly leads to double liability: personal (management) and institutional (the company).
Typical Risks of Fines in Product Law
The relevant fine provisions arise from a multitude of product law regulations. Particularly common are:
- Product safety law (ProdSG / GPSR)
- delayed or omitted market measures,
- insufficient reporting to authorities,
- inadequate consumer information.
- Substance and chemicals law (e.g. REACH, RoHS)
- breaches of documentation or cooperation duties,
- placing non-compliant products on the market.
Practical examples demonstrate that such breaches can quickly trigger an escalation chain: recall obligations, official measures, OWiG proceedings against the management, and additional liability and insurance-related risks.
The OWiG as Part of a Wider Risk System
The administrative offence sanction is rarely to be viewed in isolation. Rather, it regularly occurs alongside civil product liability, official measures (e.g. recalls, sales bans), and economic consequences (costs, reputational damage, insurance gaps).
The actual risk therefore lies less in the fine itself than in the systemic impact along the entire value chain.
Compliance Systems as a Decisive Exonerating Factor
Central to avoiding fines under Section 30 OWiG is an effective Product Compliance Management System (PCMS). On 26 May 2026, the Federal Government published a draft bill to amend Section 30 OWiG. Fines are to be assessed, among other things, according to the economic circumstances of the company as well as whether precautions were taken before or after the offence to prevent and detect criminal or administrative offences.
In practice, the following aspects play a particularly important role:
- a transparent organisational structure,
- clear responsibilities, and
- documented control and monitoring mechanisms.
A functioning compliance system can, in individual cases, preclude a breach of supervisory duties or at least significantly reduce the level of a fine.
Administrative offence law is no longer a “sideshow” in product law. Product compliance is not purely a regulatory duty, but a core component of risk management; what matters is not only compliance with individual regulations, but the organisation of compliance as a whole.
In practice, it consistently becomes clear: it is not the product defect that is decisive, but whether the company could have prevented it through its organisational structure.
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