Goods Package: EC Redrafts Enforcement Legislation

In late 2018, the European Council published a paper outlining its position on a draft regulation produced by the European Parliament designed to enhance the enforcement of EU rules for non-compliant products. The regulation, which forms part of the Goods Package, is intended to enhance market surveillance and compliance of products.

As we outlined last January (PSL, 1/1/18), the main focus of the regulation is on addressing the lack of strict enforcement of existing rules. Indeed, the regulation's stated objective is to "improve the functioning of the internal market by strengthening market surveillance of products… and thus to ensure that non-compliant products are kept from being placed on the Union market." Product safety is seen as a "pillar" of the European Single Market; however, although European product safety regulation has been recognised as one of the strictest in the world, there has not generally been strict enforcement of the requirements by the authorities.

The Council, via the Working Party on Technical Harmonisation, has considered the commission's draft of the regulation published in January 2018, and, during a series of formal and bilateral meetings, produced a significantly re-drafted version of the regulation. A comparison against the original text of the regulation is included as Annex 1 of the paper. This comparison forms the mandate for the council to begin talks with parliament and commission, with the intention to move towards rapid adoption in 2019.

Position Paper: Although the original proposal was met with much criticism, a substantial re-draft published by the council in September found general acceptance. It resolved at working party level a number of issues, including:

• Consolidating the existing framework for market surveillance activities.
• Encouraging joint market surveillance actions by authorities from several member states.
• Introducing a fully digital workflow for improving the exchange of information between Member State authorities and the commission.
• Strengthening the framework for controls on products entering the EU market and improving cooperation between market surveillance and customs authorities.

Despite this cooperation, the council and commission could not agree on Article 4, which introduced the concept of a "person responsible for compliance information," i.e. a product may be made available on the market only if there is a "person responsible for compliance information" established in the Union. This Article affects e-commerce sellers originating from countries outside the EU and would require a "third country" manufacturer to instruct a person within the Union to be responsible for the product's compliance (whereas before the seller could dispatch products directly or via a fulfilment service provider to an end-user within the Union). This person would be responsible for providing information to market surveillance authorities, alongside co-operating with them on any safety measure.

The council has proposed a redrafted Article 4 but, recognises that a number of concerns with the redraft remain:

• Who should be responsible for compliance, and whether fulfilment service providers responsible for any two of warehousing, picking, packaging or shipping service should have tasks relating to the compliance of products (as they do in the council's new draft).

 

• The tasks of those responsible for compliance, and whether this should include corrective actions necessary to remedy any case of non-compliance (as it does in the council's draft). If the person is responsible for corrective actions, certain delegations flagged that this would be understood as "liability for non-compliance." In its paper, the council clarified that liability is not part of the provision and adapted the wording of the Article such that it referred to obligations and tasks, rather than responsibilities, to avoid further confusion.

 

• The scope of Article 4, and whether it should apply to products presenting an elevated risk when non-compliant or to all Union harmonization legislation (as proposed by the commission). The council broke with the commission on this point and its redrafted proposal applies only to products that, when non-compliant, would cause an elevated level of risk to the public.

Next Steps: The council states that the compromise text "strikes a delicate balance between the need to further address issues raised by some delegations at Working Party level and the need to address the problem of an increasing number of non-compliant products in the EU and a loophole in the current legislation on market surveillance (relating to recent developments in the area of ecommerce)."

It is clear that the council recognises that its proposed draft does not solve all delegations' concerns, particularly in relation to e-commerce and Article 4. This acts as a real-world example of the potential difficulties of trying to find solutions to all parties' concerns – especially in relation to cross-border, digital economy transactions. This text will now be debated in trilogue (i.e. three way talks between parliament, council and commission) with a view to adopting the Market Surveillance regulation, and we are sure that there will be further debate on Article 4 and the terms of the draft more generally.

The full text and drafting history of the council's paper can be found at bit.ly/2LNg7hW.

Dispatch from the EU is a monthly feature provided exclusively for PSL subscribers by Cooley LLP, www.cooley.com. For further information about the above, contact Rod Freeman at rfreeman@cooley.com.