A New Era of Consumer Product Safety Regulation in Europe

Editor’s note: Authored by Rod Freeman and Tracey Bischofberger, this article was originally published in Law360.

The final text of the new European General Product Safety Regulation is now available.[1]

This is the text of the provisional agreement reached between the European Commission, Parliament and European Council during the last round of trilogue discussions.

While there are still a few hurdles to clear before this becomes law, and it is possible there could still be some changes to the text, this is largely expected to represent what the final legislation should look like.

Further detail is set out below, however in short, this matters because we now know it will introduce:

A new reporting obligation across the EU to report "without delay" "accidents caused by a product" where the incident has resulted in "death or "serious adverse effects on health or safety";

The creation of an independent obligation on online marketplaces to report any accident caused by a product "resulting in serious risk to or actual damage of the health or safety of a consumer." This obligation, which appears to be broader than reporting the obligation on manufacturers, will give rise to significant challenges and concerns for product manufacturers;

• New requirements for product recalls;
• New obligations to undertake risk assessments prior to placing products in the market;
• New requirements for online offers;
• New documentation and labeling requirements for non-harmonized products, i.e. non-CE-marked products; and
• The possibility of class actions being brought for breaches of the General Product Safety Regulation.

It provides for an 18-month transition period. On current timings, it could be fully in force by the fourth quarter of 2024.

Here we discuss some of the highlights.

What is it?

The proposed General Product Safety Regulation was published by the European Commission in June 2021 to repeal and replace the existing General Product Safety Directive 2001/95/EC. The legislative proposal has been working its way through the European ordinary legislative procedure.

Provisional agreement on the text was reached during interinstitutional trilogue negotiations between the commission, Parliament and council during the final round that took place Nov. 28-29, 2022. We have been waiting for the text to be published, and it has just landed.

These reforms are the culmination of a long period of consideration and debate about this in Europe. The existing General Product Safety Directive is around 20 years old, and reform has been under consideration for some 10 years after a failed attempt in 2013.

Why does it matter?

The General Product Safety Regulation represents a substantial update from the current rules. Some of the key changes under the General Product Safety Regulation include the following:

Introduction of a New Accident Reporting Obligation in the EU

The new rules, if passed, would introduce a mandatory obligation on a manufacturer to notify the authorities via the safety gate system if there is an accident caused by a product.

The safety gate is the European Commission's online portal for the communication of information about dangerous products. A threshold to trigger the reporting obligation has been added into the provisional agreement by the co-legislators as

Occurrences associated with the use of a product that resulted in an individual's death or in serious adverse effects on their health and safety, permanent or temporary, including injuries, other damages to the body, illnesses and chronic health effects.

The commission's original legislative proposal did not include a threshold — so this is a welcome outcome.

The time limit to file a report would be "without undue delay from the moment [the manufacturer] knows about the accident." This has changed from "two working days" under the commission's original proposal.

Where the manufacturer is not established in the EU, the responsible person in the EU who has knowledge of the accident must ensure a report is made.

A separate obligation on online marketplaces to report without undue delay any accident they have been informed of "resulting in serious risk to or actual damage of the health or safety of a consumer caused by a product made available on their marketplace" has been added into the provisional agreement.

Introduction of Additional Factors to Consider in a Product Safety Assessment

Examples are the different impact on health and safety of different genders, risks to the most vulnerable consumers, e.g., children, connectivity or interconnection with other products, the effect of software updates or software subsequently downloaded, cybersecurity, and the evolving, learning and predicative functionalities of a product.

In relation to mental health risks, wording contained in the commission's original legislative proposal that risks to health would include psychological risk, development risks — in particular for children — mental risks, depression, loss of sleep or altered brain function has been removed and is not contained in the provisional agreement.

However, new wording proposed by the EU Parliament has been included to expressly note that an assessment of safety should take into account the "health risk posed by digital connected products, including on mental health, especially on vulnerable consumers, in particular children" and "when assessing the safety of digital connected products likely to have an impact on children, manufacturers should ensure that the products they make available on the market meet the highest standards of safety, security and privacy by design in the best interests of children."

The requirement to consider foreseeable misuse contained in the commission's proposal has been removed in the provisional agreement.

New Requirements for Non-CE-Marked Products to Align With Requirements for CE-Marked Products

• To carry out an "internal risk analysis," to draw up a technical file and keep it updated. The extent of what the file needs to contain will depend on the risks of the product.
• Stricter requirements for labeling and traceability information.
• To have a so-called responsible person established in the EU with certain obligations. There are associated labeling requirements to include certain information about the responsible person.

New Requirements for Online Offers

• Display any warnings or safety information required to be affixed to the product, its packaging or an accompanying document under EU product laws;
• Information allowing the identification of a product must be included (note the requirement to include batch or serial numbers that appeared in the commission's original legislative proposal was left out of the provisional agreement); and
• Name and contact details for manufacturer and the responsible person in the EU, where applicable, must be provided.

E-Labeling

The provisional agreement does not go so far as to allow e-labeling to replace physical markings, labeling and other information that must accompany products. Instead, it expressly allows certain information to be additionally provided in a digital form such as a QR code.

In our view, this is a lost opportunity, and does not change the status quo that still ignores the benefits of using electronic means to communicate to consumers and provide relevant information.

New Requirements for Advertising Recalls and Recall Notices

This includes requirements to directly inform consumers "without undue delay," who can be identified, making use of customer data, to disseminate the recall notice or safety warning through other appropriate channels such as the company's website, social media channels, retail outlets, etc., in a way that is accessible to consumers with disabilities.

Requirements for the content and form of recall notices, a prohibition on using certain terms such as "voluntary," "precautionary" and "in rare or specific situations," that there have been no reported accidents and to include a stop use instruction, among other requirements.

Rules for Recall Remedies

It will be necessary to offer the choice between at least two of a refund, repair or replacement, unless it would be impossible or disproportionate, in which case one remedy could be offered.

A refund needs to be at least equal to the purchase price, i.e., removing ability to deduct a sum for use or age of the product. Wording that appeared in the commission's original legislative proposal that the most sustainable remedy should be preferred has been removed in the provisional agreement.

Online Marketplaces

• There are new obligations imposed on online marketplaces, including:
• Establishing a single point of contact for market surveillance authorities and also consumers;
• Cooperating with authorities;
• Responding to notices from authorities within two working days and processing notices related to product safety issues issued under the notice and action mechanism under the Digital Services Act within three working days;
• Designing interfaces to enable traders to display the information required for online offers;
• Reporting dangerous products via the safety gate; and Reporting accidents via the safety gate, directly notify affected consumers about recalls and publish information about recalls, among others.

Expanded Role of the Safety Gate

It will become mandatory to use the safety gate to notify product recalls, and it will be the portal for the new accident reporting obligation. Consumers and other interested parties will be able to use the safety gate to report products that may present a risk.

Increased Enforcement

The commission will be expected to organize, on a regular basis, joint activities between market surveillance authorities to inspect products purchased covertly, obligations on authorities to carry out coordinated sweeps of particular products or product categories, along with provisions on international cooperation between the commission and international regulators.

Penalties

The minimum maximum penalties of 4% of annual turnover contained in the commission's original legislative proposal have been removed in the provisional agreement. Instead, thresholds for penalties would be left to the discretion of member states, but must be effective, proportionate and dissuasive.

Class Actions

The new EU Representative Actions Directive will be amended to allow group actions for any breaches of the proposed General Product Safety Regulation — under the current rules, only certain breaches of the General Product Safety Directive are included.

Transition Period

The period is 18 months, which is longer than the commission's original proposal of six months. The new legislation will be in the form of a regulation, meaning it will be directly applicable in all member states without the need for national legislation to implement it.

What's next?

The provisional agreement still needs to be formally approved by the European Parliament and European Council. Indications from the Parliament are that it is aiming to approve the text in March. The council is then expected to follow shortly after. The text of the legislation will then be signed, published in the Official Journal of the European Union and entered into force 20 days later to complete the lawmaking process. On timing, the legislation could be on the books around the second quarter of 2023 with an enforcement date of the fourth quarter of 2024.

[1] https://data.consilium.europa.eu/doc/document/ST-16312-2022-INIT/en/pdf

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