EU Market Surveillance Regulation (MSR): These new rules will apply from July 16, 2021
European case law has not kept pace with the complex supply chains of international online retail so far. As a result, non-compliant products that are harmful to humans and the environment often find their way onto the European market. The EU responded with the EU Market Surveillance Regulation (MSR). This is the commonly used name for Regulation (EU) 2019/1020, which was published in the EU Official Journal on June 29, 2019. Almost all non-food products are affected by this statute.
The EU Market Surveillance Regulation will become fully effective on July 16, 2021, with some provisions, especially those related to European and international cooperation, already in force from January 1, 2021. With expanded definitions of “economic operator” and “placing on the market” as well as significantly enhanced powers and prerogatives granted to the authorities, the MSR has a suitable toolbox at its disposal to counteract the aforementioned unfair competitive practices while attempting to minimize the risks faced by the European population. Economic agents who play by the rules are naturally supported and can stand out positively. At the same time, these market participants should continue focusing even more on the fulfilment of product compliance provision in order to rest assured.
It can also be assumed that the EU Market Surveillance Regulation is not only intended to regulate questions of product safety, such as those in the REACH Regulation, RoHS Directive and CE marking. The obligations of extended producer responsibility are also likely to become important for more actors. So far, these only applied to manufacturers and distributors. However, the MSR is likely to expand the group of those responsible to include service providers, fulfilment providers and online shops.
The EU market surveillance regulation will come into force on July 16, 2021 and was created to better monitor products offered on the European market and thus to prevent consumers from being endangered by non-compliant products. For this reason, fulfilment service providers in particular are being called to account, the requirements placed on economic actors are increasing and, last but not least, the powers of the authorities are being greatly bolstered.
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The definition of “placing on the market” is expanded in the EU market surveillance regulation
The fact that the EU Market Surveillance Regulation has e-commerce in its sights is particularly clear from the expanded definition of “placing on the market”: When a product is offered online or via another form of distance selling and counts an end user in the EU as part of its intended target audience, then according to the MSR said good is considered as already placed on the market. Here, of course, the question arises as to how this can be detected and confirmed in each specific case. However, aspects such as the available languages of an online shop as well as delivery and payment options provide concrete indications.
MSR’s notion of economic actors has been expanded to include fulfilment service providers
The EU Market Surveillance Regulation mentions fulfilment service providers as actors who have benefited from previous loopholes in the legislation. Therefore, the new supply chains and complex operations of the global e-commerce market are given better consideration from now on: the EU market surveillance regulation lists among the economic actors it deems relevant the following: manufacturers, authorized representatives, importers and retailers, but now fulfilment service providers and operators of online marketplaces are also part of this group. Anyone who carries out at least two of the following tasks or activities for products to which he/she has no ownership rights will be considered a fulfilment service provider
- Warehousing
- packaging
- addressing
- shipping
Postal service providers are excluded from this legal obligation. If another economic operator does not already comply with the obligations of the EU market surveillance regulation, the fulfilment service provider is obliged to do so. Let’s take the following example: A Chinese manufacturer exports its products to the EU through a fulfilment service provider. However, the manufacturer does not have an authorized representative and has not meet the conformity requirements for its products. Then the fulfilment service provider will be held as fully accountable for complying with these regulations.
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What obligations does an economic operator have under the EU market surveillance regulation?
According to the EU Market Surveillance Regulation, an economic operator who resides in the EU must assume the legal responsibility for all products offered in the EU. This economic operator is obliged to check whether an EU conformity check or declaration of performance as well as technical documents are available and must be able to submit said credentials to the authorities.
If the market surveillance authority so requires, the economic operator must therefore submit all information and documents that prove and certify the conformity of the respective product. As soon as there are reasons to believe that a product may pose a risk, the market surveillance authorities must be notified.
If a product is found to be non-compliant, the relevant economic operator shall do the following:
- In general: Cooperate with the market surveillance authorities
- If requested: Ensure corrective action is taken immediately
- If the latter is not possible: Mitigate the risks, either …
- a) at the request of the authorities
- b) on your own initiative, if you have determined that the product poses a risk
In addition, the economic operator must indicate his/her name, the registered trade name or trade mark and additional contact details including postal address – on the product itself or else on the packaging and accompanying documents.
These duties can be delegated to an authorized representative.
What happens if a product is classified as a risk?
If a product endangers the health or safety of users, the market surveillance authorities have numerous options. First, the economic operator is asked to deal with and solve this situation within a certain period of time. If the product cannot be corrected accordingly, the authorities are not solely empowered to prevent the product from being shipped. Furthermore, the product may be withdrawn or recalled, especially in combination with issuing a warning to the public. After all, according to the EU Market Surveillance Regulation, it can be made unusable or even destroyed if no other means are deemed effective or feasible.
European Market Surveillance Regulation: Authorities’ powers are increasing sharply
Overall, the market surveillance authorities have been granted significantly extended competences than before thanks to the EU market surveillance regulation. This includes, among other things, powers to do any of the following activities if deemed conducive to the assessment of product conformity:
- Access the business software and supply chain information related to the responsible economic operator(s)
- Unannounced on-site inspections or reviews of products
- Enter premises and properties and secure evidence
- Buying and purchasing product samples under a false identity and analysing the design or function of the product through reverse engineering.
- Order the removal of a non-compliant product from a website or demand that warning notices be added to the product description of such goods
It is therefore evident that numerous drastic measures could be issued if cooperation with the authorities is neglected or refrained from. All economic operators should therefore stay abreast of their legal obligations.
Strengthening European cooperation through the EU market surveillance regulation
In order to ensure coordinated market surveillance and to strengthen European cooperation, a “Union network for product conformity” is being set up. In addition, a common information and communication system is being established (Information and Communication System on Market Surveillance or ICSMS) that will be linked to the respective national market surveillance systems. Thus, for example, crucial information about non-conforming products shall be disclosed, released and shared in a timely fashion and hence delays and communication breakdowns will be prevented.
What does the EU Market Surveillance Regulation mean in terms of environmental compliance?
It is obvious that the EU market surveillance regulation also takes environmental compliance considerations into account. Then the specifications of the extended producer responsibility, i.e., the regulated financing of the disposal of electrical devices, packaging and batteries by manufacturers and distributors, shall apply to and will be demanded from service providers, fulfilment providers and online shops. These agents must then check the compliance of their vendors and products with said waste management requirements.
Online shops in particular should pay attention to this. Because if the EU market surveillance regulation is actively implemented, they are exposed to the risk of being dropped by service providers – should the review reveal that they have not complied with the essential rules of extended producer responsibility.
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