The EU’s new Regulation on market surveillance and compliance of products^[1] (the Regulation) seeks to improve market surveillance of specific products covered by EU harmonisation legislation. Harmonisation rules aim to create a common set of standards across the EU. ^[2] If specific market surveillance rules are currently in force in respect of a particular product that the Regulation also deals with, then these rules will still apply.

In addition to the products subject to EU harmonisation rules, products imported into the EU from a third country will also be governed by the Regulation. Examples of products and chemicals covered include: medical devices, machinery, batteries, toys, fertilisers, detergents and cosmetics amongst many others.

The role of the economic operator

One of the most significant elements of the Regulation is the role attributed to ‘economic operators’. The Regulation prohibits a number of specific products to be placed on the market unless an economic operator established in the EU is identified.

The economic operator will be the person responsible for ensuring the availability of the product’s technical and conformity documentation. They are also responsible for cooperating with market surveillance authorities in cases of non-compliance and informing authorities when they believe that a product presents a risk. For the purposes of the Regulation, an economic operator can be:

• The manufacturer

• The importer, in instances where the manufacturer is not established in the EU

• An authorised representative who has a written mandate from the manufacturer, or

• A fulfilment service provider, when none of the above are established in the EU. A fulfilment service provider is a person or company offering at least two of the following services: warehousing, packaging, addressing and dispatching, without having ownership of the products involved; postal and parcel deliver companies are specifically excluded.

Know your obligations

The Regulation sets out a specific obligation for all economic operators of cooperation with market surveillance authorities. Companies placing relevant products on the EU market, who have not yet identified a responsible person established in the EU or who have an economic operator in the United Kingdom, should therefore consider their obligations and take steps now to ensure compliance with the Regulation.

This requirement will also impact e-commerce businesses in particular as it requires non-EU suppliers who ship directly to end users in the EU to establish a representative in the EU, and makes the fulfilment service provider responsible when there is no such representative.

Enhanced powers for market surveillance authorities

The Regulation obliges Member States to designate one or more market surveillance authority in its territory and enhances the authorities’ powers so as to ensure an effective level of market surveillance for products sold offline and online. Market surveillance authorities are obliged to ensure that economic operators take corrective action when instructed and act when they fail to do so. Following a risk based approach, they must also conduct appropriate checks of products including physical and laboratory checks, where appropriate.

Their powers under the Regulation include the following, amongst others:

• The power to require economic operators to provide relevant documents, technical specifications, data or information on compliance (including access to embedded software, information on their supply chain and information needed to ascertain ownership of websites)

• The power to carry out unannounced on-site inspections and physical checks of products

• The power to enter any premises that the economic operator uses

• The power to require economic operators to take the appropriate corrective action in the event of non-compliance or where the risk persists, including the power to prohibit or restrict the making available of a product on the market and the power to order that the product be withdrawn or recalled

• The power to impose penalties

• The power to acquire samples

• The power to remove content from or restrict access to an online interface

Manufacturers should be aware that products deemed non-compliant by a market surveillance authority in one Member State will be presumed to be non-compliant in other Member States unless a relevant market surveillance authority in another Member State concluded the contrary on the basis of its own investigation.

Specific rules for imported products

The Regulation also introduces specific and stringent rules which apply to imported products. EU countries must designate authorities with the necessary powers to check imports and market surveillance authorities must provide them with information on products and economic operators where a high risk of non-compliance has been identified.

Conclusion

The implications of the Regulation will not become fully clear until July 2021. Economic operators placing products and chemicals subject to the Regulation on the EU market, including distance sellers, should take action now to understand and prepare for the impact of this Regulation on their operations and how they will be impacted by the authorities’ increased surveillance powers. In particular, an EU-based economic operator should be lined up now to take responsibility.

In terms of the impact of Brexit, UK companies will need to consider the appointment of an economic operator in the EU once the agreed transition period comes to an end. Following the entry into force of the Withdrawal Agreement, the transition period started on 1 February 2020 and will end on 31 December 2020 with scope for this period to be extended.

For more information on the impact of the Market Surveillance Regulation, contact a member of our Product Liability team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.