Find out here what manufacturers can expect.
The EU Council has partially toned down the Commission’s proposal, but has also added further obligations.
As early as June 2021, the EU Commission published its proposal to revise Product Safety Directive 2001/95/EC. The Directive pursues the goal of updating the legal framework for the safety of non-food products for consumers and adapting the legal framework to the specific challenges of new technologies and business models. However, this desire for Europe-wide standardisation, irrespective of any national peculiarities, leads to dubious developments for product safety law.
The Council’s draft did defuse the Commission’s draft in some respects:
For example, the definition of “secure product” was modified, which originally stipulated that products had to be designed securely even for the case of abusive user behavior. This definition has been deleted in line with the previous understanding that to attain the safety of its product, a manufacturer need “only” anticipate intended use and reasonably foreseeable use, not misuse, and take this into account in design and construction. This deletion is to be welcomed, as it could have led to a liability risk for companies that could hardly be contained.
In addition, the minimum maximum penalty of four percent of annual turnover for infringements was also deleted by the Council, with the result that the level of sanctions remains at the discretion of the member state authorities and is subject to the principle of proportionality.
In addition, the following changes, which are worth noting from our point of view, made requirements more stringent:
New obligations of economic operators in the event of accidents
The obligation to report an accident caused by a product has been given a new and welcome threshold by the proposal of the EU Council. Now, there is an obligation to notify the market surveillance authorities only if there are “incidents related to the use of a product that have resulted in the death of a person or serious, permanent or temporary impairment of his or her health and safety, including injuries, other bodily harm, diseases or chronic damage to health.” There was no such limitation in the Commission’s proposal.
The deadline for submitting a report has also been eased. The notification requirement of two working days (!) from the date knowledge has been obtained, as envisaged in the EU Commission’s proposal completely independent of any ongoing root cause analyses, has now been softened to the effect that such notification must be made “without undue delay”, i.e. without a specific time limit.
However, the EU Commission’s proposal contains a separate obligation for operators of online marketplaces. They must immediately report any accident of which they become aware that “results in a serious hazard or actual harm to the health or safety of a consumer caused by a product offered in their marketplace.” Thus, unlike the scope of Market Surveillance Regulation (EU) 2019/1020, online trade will be equipped with its own monitoring and notification requirements with the aim of further curbing trade in non-compliant products on the EU market.
Uniform requirements for product recalls
European legislators have set themselves the further goal of making participation in recall measures more attractive for consumers as well, and will be relying on a standardised approach in the future.
In our view, legislators fail to recognise here that best practice procedures for recalls have already been established for the respective product types. However, standardising hazard prevention measures for each type of product and each type of risk is not likely to make measures more effective, but rather, in cases of doubt, to lead to overkill and go far beyond what can also be required under administrative law in accordance with the principle of proportionality.
In addition, manufacturers should be able to access stored customer data in the event of a recall and also notify consumers via these channels in the course of a recall, also without undue delay. In addition, manufacturers are required to use other channels to issue a warning or communicate a recall – such as the company’s own website or social media. In addition, manufacturers are to be prohibited from using trivialising terms such as “voluntary”, “precautionary”, or even “in rare/specific cases”, as these terms are likely to mislead consumers about the urgency of a measure. This logic is not new, but was already found in a 2021 EU Commission guide to effective recall design.
Further, manufacturers must offer affected consumers at least two effective, free, and timely remedies. The type of remedy this must be is also specified by European legislators: repair, replacement of the recalled product, and/or reimbursement of the value of the recalled product. In this regard, the Regulation specifies that the amount to be refunded should be at least equal to the price paid by the consumer. However, these requirements, which are intended to create an incentive for consumers to participate in a recall and contribute to its effectiveness, blatantly compete with nationally applicable warranty law and cannot be reconciled with it, at least from the perspective of German national legislation and legal rulings.
Conclusion
The EU Council’s December 2022 proposal for the new EU Product Safety Regulation solidifies the direction that new European product safety law is taking. It is now time for companies to become aware of the new requirements that are likely to come and to prepare accordingly. In contrast to the Product Safety Directive (Directive 2001/95/EC), which is currently still in force and as such required a transformation act into national law, all economic operators must apply the provisions of the future Product Safety Regulation directly as applicable law. A final version adopted by the EU Parliament and again by the EU Council can probably be expected as early as the second quarter of 2023 with an implementation period for economic operators of 18 months.
In our view, there is currently still considerable need for adjustment. We will report on further developments.
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