EUR-Lex Access to European Union law

Back to EUR-Lex homepage

This document is an excerpt from the EUR-Lex website

Document 52021SC0168

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on general product safety, amending Regulation (EU) No 1025/2012 of the European Parliament and of the Council, and repealing Council Directive 87/357/EEC and Directive 2001/95/EC of the European Parliament and of the Council

SWD/2021/168 final

Brussels, 30.6.2021

SWD(2021) 168 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

on general product safety, amending Regulation (EU) No 1025/2012 of the European Parliament and of the Council, and repealing Council Directive 87/357/EEC and Directive 2001/95/EC of the European Parliament and of the Council


{COM(2021) 346 final} - {SEC(2021) 280 final} - {SWD(2021) 169 final}


Table of contents

1.Introduction: Political and legal context

2.Problem definition

2.1.What are the problems?

2.1.1.    Product safety challenges linked to new technologies    

2.1.2.    Product safety challenges in the online sales channels    

2.1.3.    Ineffective product recalls    

2.1.4.    Market surveillance rules are complex and not fully effective    

2.1.5.    Inconsistent application of product safety rules for food-imitating products    

2.1.6.    Problems related to the legal form    

2.1.7.    Regulatory burden and costs of the GPSD (REFIT problem)    

2.2.What are the problem drivers?

2.3.How will the problem evolve?

3.Why should the EU act?

3.1.Legal basis

3.2.Subsidiarity: Necessity of EU action

3.3.Subsidiarity: Added value of EU action

4.Objectives: What is to be achieved?

4.1.General objectives

4.2.Specific objectives

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

5.2.Description of the policy options

5.3.Options discarded at an early stage

6.What are the impacts of the policy options?

6.1.Impacts of Option 1

6.2.Impacts of Option 2

6.3.Impacts of Option 3

6.4.Impacts of Option 4

7.How do the options compare?

8.Preferred option

8.1.Preferred option – Option 3

8.2.REFIT (simplification and improved efficiency)

9.How will actual impacts be monitored and evaluated?

Annex 1: Procedural information    

Annex 2: Stakeholder consultation    

Annex 3: Who is affected and how?    

Annex 4: Analytical methods    

Annex 5: Evaluation report    

Annex 6: Effects of the COVID-19 crisis in the context of the policy options and their expected impacts    

Annex 7: SMEs Test    

Annex 8: Effectiveness of recalls of consumer products    

Annex 9: Cooperation activities under GPSD    

Annex 10: Standardisation procedure    

Annex 11: Summary of replies to the open public consultation    

Annex 12: Stakeholders opinions on the benefits of the different options    

Annex 13: Minutes from the EU workshops addressing the sale of illegal goods online    

Annex 14: Minutes from the EU Workshop on strategies to maximise the effectiveness of product recalls    

Glossary

Term or acronym

Meaning or definition

AI

Artificial Intelligence

Charter

Charter of Fundamental Rights of the European Union

CSN    

Consumer Safety Network

DSA

Digital Services Act

EEA

European Economic Area

EU

European Union

FIPD

Council Directive 87/357/EEC concerning the safety of food-imitating products

GPSD

Directive 2001/95/EC on the general safety of products (General Product Safety Directive)

ICT

Information and Communication Technology

IA    

Impact Assessment

IoT

Internet of things

MSA

Market surveillance authority

OPC    

Open Public Consultation

Pledge

Product Safety Pledge

REFIT

Regulatory fitness and performance check

Safety Gate/RAPEX

EU Rapid Alert System on dangerous consumer products

SME    

Small and Medium Enterprise

Subgroup

Sub-group on AI, connected devices and other challenges for new technologies to the Consumer Safety Network

GPSD Study

The study commissioned by the Commission to support the evaluation and impact assessment of the GPSD revision and conducted by CIVIC consulting

TFEU

Treaty on the Functioning of the European Union



1.Introduction: Political and legal context

This report aims at assessing the impacts of a revision of the Directive 2001/95/EC on general product safety 1 (GPSD). It analyses also the impacts of a possible integration of the Directive 87/357/EEC 2 concerning the safety of food-imitating products (FIPD) into the GPSD. 

The objective of the GPSD is to ensure EU consumers are protected from dangerous products and to ensure the proper functioning of the Single Market. The GPSD provides the general EU legal framework for the safety of non-food consumer products and requires that all products placed on the market be safe. The non-food consumer products include all products (including in the context of providing a service), which are not food stuff and are intended for consumers or are likely to be used by consumers, and are supplied or made available to them in the course of a commercial activity, be they new, used or reconditioned 3 .

As illustrated in the Table 1, the non-food product safety framework is mainly made up of two sets of legislative instruments:

·Union Harmonisation (hereinafter harmonised) legislation: Regulation (EU) 2019/1020 on market surveillance and compliance of products together with the product-specific safety legislation, such as the toys or the machinery directive form ‘harmonised legislation’ (legislation setting common rules across the EU for specific sectors)

·The GPSD: As lex generalis, it applies to non-food consumer products to the extent that there are no specific provisions with the same objective in rules of Union law governing the safety of the products concerned, such as EU harmonised legislation for specific categories of products. Therefore it fully applies to non-harmonised consumer products and also partially to the consumer harmonised products for aspects not covered by the harmonised legislation. As such, it provides a “safety net” for consumers and aims to ensure that EU consumers are protected against any safety risks of consumer products, including future ones.

Table 1: General overview of the Product Safety Framework

Product Safety Framework

Products

Areas

Non-food

Food

Non- Harmonised

Harmonised

General Food Law Regulation Regulation (EC) No 178/2002

and 

Regulation (EC) 1935/2004 on food contact materials

Non-consumer

Consumer

Non-consumer

Obligations of economic operators

National Law under the mutual recognition Regulation

GPSD

Sector specific Union harmonisation legislation

+ GPSD as safety net

Sector specific Union harmonisation legislation

Market surveillance on the internal market

Regulation (EU) 2019/1020

+Ability for market surveillance authorities to take “more specific measures” provided for in GPSD

Regulation (EU) 2019/1020

Safety Gate (RAPEX)

Regulation (EU) 2019/1020 and GPSD

Regulation (EU) 2019/1020 and GPSD

Customs control for products imported to the EU

Regulation (EU) 2019/1020

Regulation (EU) 2017/625

The GPSD, as a safety net, is complementary to harmonised legislation in two ways. First, it applies in its entirety to consumer products falling outside the scope of harmonised legislation (e.g. furniture, childcare articles, clothes). Secondly, it applies partially to consumer products covered by harmonised legislation (e.g. toys or cars) as long as aspects of product safety covered by the GPSD are not covered in the harmonised legislation (for example, until very recently EU legislation for cars did not include provisions on product recalls, that were subject to the GPSD).

The concept of safety under the GPSD always covers levels of protection for the safety and health of persons, i.e. the dangerous product under the GPSD poses a risk to the health and safety of consumers. These risks can materialise in different ways but to be covered under the GPSD the risks always have to relate to health and safety of consumers. Other types of safety such as material damages are not covered unless they are linked to the safety and health of consumers.

Regarding market surveillance, there are also two different systems in place: one for harmonised products (Regulation (EU) 2019/1020) and another under the GPSD for non-harmonised products and risks falling under the scope of the GPSD.

The GPSD does not cover pharmaceuticals, medical devices and food products. The safety of food products is regulated separately under the General Food Law Regulation (EC) No 178/2002. The food products have their own regime, including an alert system (RASFF). However, the Regulation (EC) No 1935/2004 on food contact materials can interact with the GPSD when it comes to products containing such materials (e.g. reusable lunch boxes). Unsafe products containing food-contact materials products might be subject to safety alerts in both alert systems, RASFF for food and Safety Gate/RAPEX for non-food products.

The GPSD provides for the obligations of economic operators in the product safety field, in particular the general obligation for producers to place only safe products on the market. It contains rules on the power and obligations of Member States and on market surveillance. The GPSD establishes provisions on the application of the general safety requirement and on the adoption of European safety standards supporting the legislation, which provide presumption of safety and therefore facilitate the compliance with the safety requirement under the GPSD. The GPSD includes obligations for Member States and the Commission to inform consumers about dangerous products and contains the legal basis for the EU Rapid Alert System (Safety Gate/RAPEX), which enables quick exchange of information between EU/EEA countries and the Commission on measures taken on unsafe non-food products posing a risk to consumers 4 . Finally, the GPSD also establishes cooperation on product safety between the Commission and Member States authorities competent for product safety in the context of the Consumer Product Safety Network ‘CSN’.

Directive 87/357/EEC 5 (Food-Imitating Products Directive, ‘FIPD’) sets out rules for the safety of food-imitating products, i.e. products which can be confused with foodstuffs, while not being food-stuffs. The FIPD has been originally adopted to address divergence in national provisions on products which, appearing to be other than they are, endanger the safety or health of consumers 6 . The measures taken against unsafe food-imitating products by Member States are also notified in the Safety Gate/RAPEX. 

The scope of this initiative covers therefore all non-harmonised consumer products, food-imitating products and also partially also harmonised products for aspects not covered by the harmonised legislation. However for some aspects the analysis also includes harmonised products, where data could not be dissociated between the harmonised and non-harmonised products.

The Commission has adopted guidance to clarify some of the aspects of the GPSD. The Commission Notice on the market surveillance of products sold online (2017/C 250/01) 7 provides guidance for the enforcement of EU legislation on the safety and compliance of non-food products sold online. The Notice also sets out good practices for the market surveillance of products sold online and for communication with businesses and consumers. On 9 November 2018, the Commission also revised the guidelines for the functioning of Safety Gate/RAPEX 8 (originally adopted in 2004 and revised for the first time in 2010).

ECJ Jurisprudence does not bring particular element helping interpreting the provisions of the GPSD, most of it being linked either to access to documents or to non-applicability in the presence of harmonised legislation.

At international level, very different approaches to product safety can be distinguished: Few jurisdictions, such as Canada and more recently Brazil (in 2019), have adopted a safety regulatory framework which includes a general safety requirement, similar to the EU “safety net”. This approach is usually considered in international fora as the best way to ensure that regulators have an appropriate legal basis to order corrective measures against all types of dangerous products, notably when facing emerging safety issues that are not subject to any regulation yet 9 .

In some jurisdictions such as the United States (US) or New Zealand, liability rules play a major role to complement product safety provisions and private enforcement is a key aspect of such systems. The US system also relies on a sophisticated injury data collection scheme and deterrent penalties incentivising businesses to inform as soon as possible the consumer product safety agency about dangerous products they are responsible for. In China, governmental approvals (be it certification, license, registration or individual approval) are required for many products and groups of products before they can be placed on the market.

Fora for multilateral product safety cooperation, such as the OECD and UNCTAD, provide opportunities to learn about and get inspiration from other jurisdictions’ best practices and new regulatory developments.

Political context

The Commission announced the revision of the GPSD in its Work Programme 2020 and confirmed it in the Adjusted Commission Work Programme 2020 published on 27 May 2020, as one of its REFIT (Regulatory Fitness and Performance Programme) 10 initiatives under the headline objective “A New Push for European Democracy”. This revision is also one of the legislative proposals mentioned in the Communication of the Commission on New Consumer Agenda 11 , published on 13 November 2020.

In the field of new technologies (including artificial intelligence ‘AI’), the Commission published a Report on safety and liability implications of AI, the Internet of Things and Robotics 12 accompanying the White Paper on AI 13 in February 2020. The report highlights the need to include clear provisions in the EU product safety legislation, including the GPSD, to explicitly address safety risks linked to products incorporating new technologies (connected products and AI).

The other EU institutions have also highlighted the importance of product safety policy. The European Parliament adopted a resolution on addressing product safety in the Single Market on 25 November 2020 14 which also emphasised the need to revise the GPSD.

In its Presidency conclusions on The Charter of Fundamental Rights in the context of Artificial Intelligence and Digital Change 15 , the Council stated that while these technologies may enhance the market surveillance of product safety on the EU market, they may also pose new challenges to consumer protection in the product safety area. The  Council Conclusions on Shaping Europe's Digital Future 16 of 9 June 2020 mention that digital economy is to be characterised by a high degree of trust, security, safety and choice for consumers 17 .

Finally, the review builds on the results of the Evaluation of the GPSD and the FIPD, conducted back-to-back to this Impact Assessment (‘IA’) in order to assess the performance of GPSD in line with the Commission’s Better Regulation rules (see Annex 5). The Evaluation showed the necessity to adapt the GPSD to address product challenges related to e-commerce as well as the rapid development of new technologies, and to ensure better enforcement and more efficient market surveillance for consumer products, including by aligning the systems for harmonised and non-harmonised products. Furthermore, the Evaluation also showed the necessity to modify some of the provisions of the GPSD to improve its effectiveness. For example, legislative changes are needed to improve the effectiveness of product recalls, as well as the treatment of food-imitating products.

The Commission already proposed to revise the GPSD with the 2013 Product Safety and Market Surveillance Package. This 2013 Package - made up of two proposed Regulations, one on product safety (COM(2013)078), the other on market surveillance (COM(2013)075), aimed at enhancing product safety rules and creating a single set of market surveillance rules for harmonised and non-harmonised products. The 2013 Package was blocked in the inter-institutional process as the Council did not agree on a common position because of a proposed provision on the mandatory marking of the origin of industrial products (the “Made in” provision). The proposals were finally withdrawn by the Commission in September 2020.

Legal context

The legal framework relevant for the safety of consumer products has evolved with the adoption of several legal acts:

With the adoption of Regulation (EU) 2019/1020 18 on market surveillance and compliance of products, the legal framework for market surveillance of harmonised products has changed and has been adapted in particular to the challenges linked to the online sales. The market surveillance of non-harmonised products, also initially included in the 2013 Product Safety and Market Surveillance Package, remained unchanged. The differences between the two market surveillance frameworks have been therefore perpetuated with the adoption of Regulation (EU) 2019/1020, except for the provisions on products entering the EU market, which apply to all products covered by Union harmonisation law under Regulation (EU) 2019/1020. This Regulation widened the difference between the regime applicable to harmonised and non-harmonised products, in particular by envisaging new powers and cooperation instruments for market surveillance authorities (‘MSAs’) and introducing some new features such as the “responsible person”, according to which any economic operators that wants to sell its products into the EU market has to be represented by an economic operator in the EU (applicable not to all harmonised products but only to some of them).

In the standardisation area, the Commission adopted Regulation (EU) 1025/2012 19 on European standardisation, which provides the general framework  for the adoption of European standards for products and services (to help assessing conformity with Union legislation), identifies Information and Communication Technology (‘ICT’) technical specifications, and allow financing for the European standardisation process. It also sets an obligation for European Standardisation Organisations (CEN, CENELEC, ETSI) and National Standardisation Bodies on transparency and participation.

The adoption of the new Regulation (EU) 2019/515 20 facilitates the application of the principle of mutual recognition according to which, where no harmonised rules exist at European level, products lawfully marketed in one Member State can be sold in other Member States regardless of complying or not with the national technical rules of these Member States.

Links with other legal initiatives

The GPSD initiative has the following links with other recent and ongoing proposals:

Digital Services Act (DSA) 21 : The DSA presented by the Commission on 15 December 2020 includes a new set of horizontal rules to regulate the responsibility of online intermediaries, including online marketplaces 22 . The DSA proposal aims to establish new obligations for online intermediaries inter alia in relation with how they handle all types of illegal content hosted on their websites (e.g. unsafe products, counterfeit products, hate speech, etc). The DSA establishes the general horizontal obligations for online intermediaries and leaves room for legislation in relation with specific types of illegal content (such as product safety) to be more specific. For example, the DSA provides the general framework for the notice-and-action system, but without providing the details on the timeframe or the procedure, which could then be set up in the revised GPSD (GPSD would provide a specific timeline and detailed procedure for such notices of unsafe products). The GPSD may also regulate other product safety aspects of online sales beyond the role of online intermediaries, such as the role of sellers and the powers of market surveillance authorities.

Artificial Intelligence (AI) horizontal framework: The new legislative proposal for AI horizontal framework lays down harmonised rules for the placing on the market, the putting into service and the use of artificial intelligence systems (‘AI systems’) in the Union, consistent with a high level of protection of the public interests, in particular health and safety, and fundamental rights and freedoms of persons. It lays down specific requirements with which high-risk AI systems must comply and imposes obligations on providers and users of such systems (for example, regulating inter alia safety aspects of AI applications in products such as machinery or lifts). Consequently, and with respect to product safety, it will establish specific requirements for certain AI applications, and the GPSD would apply as a safety net for products and safety aspects not covered by the AI horizontal legislation, and therefore complement it. The scope of the initiative is such that it is likely that some AI applications would remain not covered (e.g. some consumer products such as vacuum cleaners). The revised GPSD would therefore need to provide a legal basis for withdrawing such products from the market to ensure an effective protection of consumers.

Delegated acts under the Radio Equipment Directive (RED): the RED establishes the possibility for the Commission of adopting delegated acts in relation with several aspects, including protection of personal data and fraud for specific categories of radio devices. The Commission is working on several delegated acts that might partially address the issue of products presenting cybersecurity risks. However, it will not be possible to cover all possible consumer products via delegated acts, for instance, devices connected by cable. Such gaps might be covered by a revised GPSD in its role of safety net.

Directive on Security of Network and Information Systems (NIS): The recent proposal for a NIS 2 Directive , presented by the Commission on 16 December 2020, lays down obligations for all Member States to adopt a national strategy on the security of network and information systems. However, it does not include minimum cybersecurity requirements for consumer products, so it does not provide any legal basis for authorities to take action against products presenting such risks. The Cybersecurity Act (Regulation (EU) 2019/881) introduces an EU-wide cybersecurity certification framework for ICT products, services and processes. However, it does not include minimum cybersecurity legal requirements for ICT products. The GPSD is therefore complementary to these initiatives to fill these gaps.

Circular Economy: According to the new Circular Economy Action Plan , products placed on the EU market should be more sustainable and designed therefore to last longer, to be easier to repair and upgrade, recycle and reuse. It is essential that repaired, upgraded, recycled or reused products continue to meet product safety requirements. According to the Eco-design directive (Directive 2009/125/EC), safety and health have to be taken into account in the choice of a specific design solution; however safety issues related to the end products are not specifically addressed. The Sustainable Product Policy Initiative (which intends to replace the Eco-design directive and extend its scope) will notably aim at correcting the fact that many products cannot be easily and safely reused, repaired or recycled. In case some safety aspects related to products in the circular economy (such as refurbished appliances or clothing made from recycled plastics) are not specifically addressed by initiatives from the Circular Economy Action Plan and do not fall under harmonised legislation, the safety net function of the GPSD comes into play.

2.Problem definition

2.1.What are the problems?

The Evaluation and the stakeholder views show that the GPSD appears overall to have met its objectives of ensuring a high level of safety of consumers, while ensuring an effectively operating internal market for goods; however, still too many unsafe products reach or remain in the hands of consumers.

On the EU Single Market there should not be obstacles and barriers to the free movement of goods, which enables unsafe goods to circulate within the EU. Concerning the trend in the safety of products, the evaluation showed that the notifications of dangerous products by market surveillance authorities (‘MSAs’) in the Safety Gate/RAPEX increased, from 2005 to 2010, from around 540 to 2000 notifications/year and then fluctuated between 1 550 to 2 100 notifications/year (30% of which concerned non-harmonised products). Also the number of follow-up measures 23 reported in Safety Gate/RAPEX has steadily increased since data started to be gathered in this respect by the European Commission in 2011. Some encouraging signs, such as improvements in product safety perceived by consumers and a plurality of stakeholders 24 can be observed; however, available data show that unsafe products are still available on the EU market. The share of dangerous products found by MSAs in inspections represents between 2% and 16% of total consumer products inspected, with a median value of 4% 25 . Unsafe products on the EU market affects consumers as well as economic operators that play by the rules as they suffer from lack of level playing field with “rogue operators” from inside and outside the EU not observing EU product safety rules.

Unsafe products represent an important cost for consumers and society. The GPSD Study supporting the GPSD Evaluation and IA (hereinafter ‘GPSD Study’) 26 estimates the consumer detriment due to unsafe products today in the following way:

-Consumer detriment linked to product-related injuries and premature death:

The total detriment to EU consumers and society from product-related injuries and premature death to be EUR 76.6 billion per year. This is the sum of detriment caused by non-fatal product-related injuries and the cost of premature death where a consumer product is involved (e.g. accident with tools, strangulation, electrocution, or fire) occurring outside of work-related locations 27 . This figure includes health care utilisation costs, productivity losses, loss of quality of life, cost of premature death linked to injuries due to consumer products (both harmonised and non-harmonised) in the EU.

The analysis based on previous research and interviews with product safety experts concluded that 15% is a reasonable and cautious estimate for the proportion of this total detriment that was caused by unsafe consumer products, or could have been prevented through better design, instruction or a safety device. These 15% of accidents could have been prevented if the products were safe. On this basis, the preventable detriment suffered by EU consumers and society due to product-related accidents can be estimated at EUR 11.5 billion per year 28 .

-Consumer detriment linked to the loss of value of unsafe products

In addition to the above injury related detriment, the GPSD Study estimates that the consumers also suffered financial costs of a total value of EUR 19.3 billion in 2019 arising from the fact they have purchased unsafe products that they would not have purchased if they knew these products were unsafe (hereinafter ‘consumer detriment linked to the value of unsafe products’). The estimation is based on the fact that the value of unsafe non-harmonised products per year is estimated at EUR 3.9 billion for online sales channels, and EUR 15.4 billion for brick-and-mortar shops and other offline sales channels, for a total of EUR 19.3 billion. This detriment is reduced due to recalls (under current low recall effectiveness scenario) by approximately EUR 0.4 billion per year, assuming that consumers are compensated fully for all non-harmonised products they returned to producers in response to a product recall. This detriment relates to non-harmonised products covered by the GPSD and is based on the assumption that the loss in consumer welfare is at least the price to which the product was purchased. 29

The presence of unsafe products on the EU market affects therefore both EU consumers (final users of products) who bear the risk of accidents, injury or death caused by dangerous products and related costs and Member States who bear increased health expenditure costs resulting from health treatment of injuries caused by dangerous products.

The circulation of unsafe products on the EU market also creates a problem for the Single Market: it does not only contravene the principle of free circulation of goods (only safe goods are allowed to circulate in the Single Market), but it also risks to create distortions of competition on the EU Single Market. Economic operators compliant with EU product safety rules face compliance costs in comparison with non-complaint operators. At the same time, the presence of unsafe products on the EU market puts in danger the health and safety of EU consumers, which also undermines consumer’s trust and confidence in the EU Single Market. Trust is an essential engine of consumers’ consumption and therefore the growth of the EU economy 30 . The Eurobarometer data indicate a decrease between 2016 and 2018 in confidence of consumers in the safety of products sold in the EU 31 .

Also, in the open public consultation (‘OPC’) a large majority of respondents (71%) expressed that current EU safety rules for non-food consumer products covered by the GPSD could be improved in specific areas to be more adequate to protect consumers 32 .

2.1.1.Product safety challenges linked to new technologies 

At the time of the adoption of the Directive the number of consumer products incorporating new technologies was scarce. This is not the case anymore. The scenario is likely to evolve with the increasing use of AI, impacting the whole EU market. Moreover, there were 14.2 billion connected devices in 2019 worldwide, a figure that is estimated to go up to 25 billion by 2025, of which 4.9 billion estimated to be in Europe 33 .

The application of the GPSD to new technology products, such as connected devices or AI-powered products, is not crystal-clear and the safety of these products is not fully covered by other EU legislation. The GPSD does not explicitly address the fact that new technologies, in particular AI and goods with digital elements 34 , can impact product safety. In the OPC almost half the respondents considered the safety of products involving new technologies not to be adequately regulated (47%) 35 . The Evaluation showed that this can be problematic, as the development of new technologies mean that some of the provisions of the GPSD are not well adapted to respond to its objective of ensuring that all products (including those incorporating new technologies) must be safe for consumers.

As such, new technologies pose challenges to the concepts and definitions used under the GPSD. New technology-based products also bring new risks to consumers’ health and safety or change the way the existing risks could materialise. These new risks, such as cybersecurity threats, might be possibly present in consumer products and this remains not explicitly covered in EU legislation for the moment. Besides, the applicability of software updates for product safety is still not regulated under EU legislation either (lack of clarify of the responsibilities of economic operators when for example an application is downloaded into a product modifying its safety features).

A typical example is when a product becomes dangerous by not possessing a minimum level of cybersecurity, leaving it open to hacking by a malicious party; that was the case of a passenger car notified in the Safety Gate/RAPEX 36 . The radio in the vehicle might have had certain software security gaps allowing unauthorised third party access to the interconnected control systems in the vehicle. If these software security gaps were exploited by a third party for malicious purposes, a road accident could have occurred. The Sub-group on AI, connected devices and other challenges for new technologies to the Consumer Safety Network (‘the Subgroup’) highlighted that the lack of explicit mention in the GPSD of cybersecurity risks affecting safety (‘cybersafety’) posed a challenge for the protection of consumers and legal certainty for businesses.

Another example relates to consumer’s personal security that can be endangered by third party accessing their information, as illustrated in another notification in Safety Gate RAPEX of a smartwatch for children 37 . The Icelandic authority argued that this product would not cause a direct harm to the child wearing it, but lacking a minimum level of security, it can be easily used as a tool to have access to the location of the child. As one of the product’s intended function is to keep children safe through localisation, a consumer would expect that it would not pose security threats to children that may affect their safety by them potentially being tracked and/or contacted by anyone. As measures regarding this product were notified to Safety Gate/RAPEX, authorities in the Member States took follow-up actions. However, the Evaluation showed that many of those authorities were unsure whether the GPSD 38 was applicable to such risks due to the lack of explicit provisions in this respect. The Sub-group also raised the fact that it is unclear under which legal or policy instrument such personal security risks should be tackled so that consumers are effectively protected against such threats.

In addition, the Subgroup stated that there is evidence that new technologies can have an impact on the mental health of consumers; e.g. connected products as a cause of depression, loss of sleep, altered brain function and myopia or early blindness in students 39 and children 40 . It was also noted however that some mental health challenges linked to products do not originate from new technologies, they were prevalent before digitalisation. The subgroup also expressed that it was unclear if mental health risks are covered under the current definition of safety of the Directive, and that mental health harm intrinsically caused by a product itself should be covered.

Moreover, it is not clearly stated to what extent the definition of “product” includes software, whether it is sold with the product or associated with the product later on. This might impact the safety assessment of the given product. New technologies also pose challenges related to the notion of placing a product on the market 41 . For example, products including new technologies can evolve and their safety features may change via software updates or machine learning after they have been placed on the market.

Many of the problems linked to new technologies are crosscutting, so the Commission has adopted or is working on a number of proposals in relation to those issues. In some cases specific risks linked to new technologies can be tackled by EU harmonised legislation. While such proposals may partially address the gaps identified, there are some aspects that remain or will remain not covered and for which action is still needed in the context of this initiative.

The Commission is currently developing a delegated act under the Radio Equipment Directive and assessing whether the provisions of that Directive referring to the combination of radio equipment and software should apply to certain categories of products covered by that Directive, as well as to standalone software uploaded onto connected products that communicate via certain radio modules. The Commission is also reviewing the Machinery Directive to address those types of risk having an impact on safety, for example protecting the machinery against malicious third parties or lack of connectivity. However, despite this, there are still some gaps in addressing safety risks of consumer products containing new technologies not already covered by other EU legislation. Home appliances connected to the Internet by cable e.g. will not be covered under the delegated acts of the Radio Equipment Directive, so cybersecurity risks of such products will not be covered by such delegated acts. In addition, in view of the highly innovative potential of the new technology sector, it is difficult to foresee the safety features and risks of these new technology products.

Finally, the Subgroup also mentioned that one of the common characteristics of AI and Internet of things (‘IoT’) products is the presence of software that can change/evolve over time. This challenges the traditional meaning of the concept of placing on the market of the GPSD. Therefore, the Subgroup recommended that a possible GPSD revision should clarify that products should be safe over their whole expected lifespan, and should explore the introduction of the concept of ‘substantial modification’ affecting the safety of the product after a product was once placed on the market.

This problem affects all consumers purchasing new technology products and causes particular difficulties to vulnerable consumers that are not familiar with new technologies, in particular small children and the elderly.

The lack of legal certainty regarding the application of consumer product safety rules to new technologies may create regulatory costs to businesses (especially SMEs) developing and producing new technology products and undermines their efforts to design innovative and cyber-safe products.

2.1.2.Product safety challenges in the online sales channels 

While the GPSD applies to consumer products regardless if they are sold offline or online, the increasing use of e-commerce has negatively influenced the relevance and effectiveness of the GPSD, creating new challenges for the safety of consumers. Online sales increased steadily since the GPSD’s adoption: in 2002 only 9% of Europeans purchased online, while over 70% of them shop online today 42 . Furthermore, one out of five companies in the EU nowadays sells online 43 .This trend has been amplified by the COVID 19 crisis and related lockdowns: in the EU-27, retail sales via mail order houses or the Internet in April 2020 increased by 30% compared to April 2019, while total retail sales decreased by 17.9% 44 (see Evaluation Annex 5). In addition, many of dangerous COVID-19 related products (e.g. dangerous masks, hand sanitisers) have been found online (by 22 October 2020 they represented 16% of all COVID-19 notifications in Safety Gate/RAPEX from the beginning of the COVID-19 crisis). Furthermore, 39% of respondents in the OPC expressed that safety rules for products covered by the GPSD were not adapted to online trade and among respondents who experienced a product safety incident within the last 5 years, 70% bought this product online 45 .

First, the GPSD does not provide for sufficiently effective instruments for online market surveillance by MSAs. They lack e.g. powers to acquire product samples under covert identity or block websites proposing dangerous products 46 . This creates inefficiencies in the market surveillance of non-harmonised products sold online, and therefore insufficient action against such products. This affects the consumer trust in online sales. While such instruments exist for the harmonised products covered by Regulation (EU) 2019/1020 on market surveillance, the fact that the latter is not applicable to non-harmonised products will create an uneven level-playing field between these two categories of consumer products in the Single Market once this Regulation will apply 47 . This means that an authority could be entitled to take more effective actions online against a toy bed (a toy being a harmonised product) as opposed to a baby’s crib, which falls under the GPSD.

Second, new online business models and actors, such as online marketplaces hosting third party sellers, have become prominent and product safety rules for these economic operators are unclear under the current GPSD. Among European businesses selling goods online, 40% have been using online marketplaces to reach their customers in 2019 48 .The GPSD does not establish clear legal obligations for product safety for business models that do not fall under the existing categories of producer, importer or distributor. The online marketplace does not fit to these categories. This affects both consumer protection and safety of products sold online and the related consumer’s trust, creates inefficiencies in online market surveillance and creates an uneven level-playing field between the economic operators selling offline and those selling online in the EU.

This has been addressed partially through voluntary action: in 2018 several online marketplaces signed voluntary commitments to improve the safety of products sold online: the Product Safety Pledge (hereinafter ’the Pledge’). The current eleven signatories 49 committed, among others, to react within two days when a government informs them about an unsafe product offered on the platform, to cooperate with national authorities and to fight against repeat offenders. As the Evaluation has highlighted, while these voluntary commitments reflect some progress related to the cooperation between the signatories and authorities, it is challenging to analyse the effectiveness of the Pledge due to a suboptimal reporting system from the signatories. The Pledge has positive impacts, as it has set the grounds for an increased cooperation framework between online marketplaces and market surveillance authorities. However, authorities and stakeholders have signalled in the GPSD Study that as long as the Pledge remains voluntary, the infringement of those commitments cannot be penalised by authorities. It is also challenging to analyse how effective the Pledge is in appropriately ensuring the safety of products sold online, since the Key Performance Indicators (KPIs) are calculated only on certain commitments. From this aspect, the Pledge did not help to get information on specific issues such as on emerging risks of new technologies or improved recalls. The monitoring reports also showed that there has been a divergence in the way online marketplaces calculated the KPIs, making it difficult to extract conclusions from those numbers and properly monitor the effectiveness of the commitments of the Pledge. Finally, there are also many players on the market that have not decided to adhere to the voluntary commitments, creating an uneven level-playing field between online marketplaces targeting EU consumers. Therefore, while the Pledge sets out a very useful mean of cooperation between online marketplaces and national authorities, its effectiveness is limited by the limited range of signatories and by its voluntary nature, limiting enforcement.

Finally, via online sales, EU consumers also purchase more frequently products offered directly by operators established outside the EU: the proportion of purchases from sellers outside the EU increased from 17% in 2014 to 27% in 2019 50 . Around 150 million small consignments are imported free of VAT into the EU each year 51 . In 2017 there were 150.000 private consignments coming from China to individual EU consumers per day 52 . This is problematic: first, direct imports make it more complicated to control the safety of the product before it enters the EU market since it is directly delivered in individual packages to the consumer without possibly being handled by any economic operator in the EU subject to products safety obligations under the GPSD 53 . Second, national authorities have difficulties to engage with the trader in case of safety concerns, if the trader is not represented in the EU but is based in a third country. Article 4 of Regulation (EU) 2019/1020 on market surveillance creates an obligation, in case a product is sold in the EU, to have an economic operator in the EU for certain tasks linked to market surveillance of products’ safety and compliance, but its applicability is limited to certain categories of harmonised products. If the product safety is not evenly enforced between EU and non-EU operators, this creates an uneven level-playing field between these operators. A study provided by Eurocommerce indicates that the cost difference between products produced in accordance with EU rules and standards, and produced without taking account of the EU rules may be important for some products 54 . While these conclusions cannot be extrapolated to the overall market or to all products, they give an indication of the possible detriment due to the presence of rogue traders from third countries.

The Evaluation has also compiled evidence pointing to the fact that the control of the safety of products sold online is more problematic than the one for unsafe products found in brick-and-mortar shops. For example, data coming from the Safety Gate/RAPEX for the period 2018-2019 show that the share of notifications of unsafe products in which one of the four traceability information items 55 was missing was between 29,2% and 57,3% (depending on the item) for products 'sold online' and considerably lower (between 12,6% and 35,7%) for products sold offline. None of the traceability information was found in 12,8% notifications of products sold online, while it was only 0,5% for the unsafe products sold offline.

These problems affect also economic operators. EU producers face an uneven playing field between them and non-EU producers if those do not comply with EU safety rules and therefore do not bear the compliance costs of the EU product safety legislation. Online marketplaces targeting EU consumers also do not have a level-playing field since the signatories of the Pledge bear additional costs and administrative burden compared to non-signatories that do not take the steps outlined in the Pledge.

In the area of online sales, the product safety obligations of online market places are not spelled out in any EU legislation and current market surveillance provisions relating to products imported from outside the EU are tackled only for certain harmonised products under Regulation (EU) 2019/1020.

Besides, there are also traceability problems with products offered online (the traceability of the online chain is often deficient and there is a gap between the product information available to the consumer for a product sold online and offline). The DSA aims to partly tackle these issues by introducing the “Know-Your-Business-Customer” principle (KYBC) and traceability provisions when it comes to the online sales via certain online marketplaces, leaving scope to the revised GPSD to tackle traceability issues for all online sales.

2.1.3.Ineffective product recalls 

Article 5 of the GPSD requires that when a product already sold to consumers turns out to be dangerous, it needs to be recalled (as a measure of last resort) to protect EU consumers. But the GPSD does not set any specific rules regarding the modalities of recalling unsafe products and evidence suggests that the proportion of products successfully recovered from consumers remains generally low, as recognised by a recent OECD report 56 (even though it varies considerably depending on factors such as channel of sale 57 and product type 58 ). For instance, one Member State indicated that the return rate rarely exceeds 10%, except when products have been purchased online 59 . Another national authority estimated that around 80% of products that have relatively low value and short lifespan remain in consumers’ hands 60 .

The EU-wide societal cost of recalled products remaining in consumers’ hands have been estimated at approximately €378 million in 2019 due to healthcare costs, productivity losses and losses of quality of life 61 . The GPSD Study also estimated that the value of recalled products that remain with consumers is today EUR 1.3 billion.

The consequences of delayed and ineffective recalls are also exemplified by the deaths and injuries caused by recent examples of recalled products such as faulty airbags (estimated to have caused 35 deaths and 300 injuries worldwide 62 ) and baby sleepers (associated with 59 baby deaths in the US 63 ).

The recall procedure is not fully harmonised in the EU, which leads to different practices, depending on national provisions and economic operators involved. As an example, fewer than half of EU/EEA countries have established codes of good practice or guidelines on recalls, and only few of these documents set out requirements as to the content and channels of recall information or remedies for consumers. The evaluation has identified this as a significant shortcoming, suggesting that existing requirements are in themselves currently not sufficient to ensure effective recalls, leading to two problem areas.

First, many EU consumers are not aware of ongoing recalls of products they own. It is often difficult to reach the owners of the recalled product. Apart from motor vehicles (whose registration with public authorities is mandatory), registration schemes are only available for few higher-value product categories like domestic electric appliances and communication devices, and even there no link is typically made between registration and safety 64 . In addition, economic operators are hesitant about using customers’ information collected for other purposes (e.g. in the context of online sales or loyalty programmes) in the event of a recall because of legal uncertainty about the compliance with the General Data Protection Regulation . 65 Also, there are no comprehensive public sources of recall information for consumers. For instance, in most EU/EEA countries, the recalling company has no obligation to put the recall notice on their website or social media and not all Member States’ authorities publish recall information on their websites, in addition to reporting recalls to the Safety Gate/RAPEX 66 .

Second, consumers may not return a recalled product even if they are aware of the recall. According to recent surveys, more than a third of EU consumers continue using a recalled product despite seeing a recall notice 67 . This may be caused by recall notices being unclear and/or minimising consumers’ perception of risk. For instance, the analysis of existing recall announcements showed that over half of them used terms and expressions, which could downplay risk, such as ‘voluntary/precautionary recall’, ‘potential concern/problem’, ‘in rare cases/in specific conditions’ or highlighting that there have been no reported injuries. Also the procedure for consumers to return the recalled product may be complex and burdensome and the remedies offered may not be sufficiently attractive and timely. In a recent consumer survey, recall process taking too much time and effort was the second-top reason for not responding to a recall (after the product being cheap) 68 .

The stakeholders especially affected by insufficient recall effectiveness are socially disadvantaged, younger and less safety-conscious consumers (who have shown to be less responsive to product recalls and less likely to register their products 69 ) as well as consumers living in remote areas (for whom returning the recalled product can be costly). Diverging national requirements (e.g. on recall communication and remedies) also result in an uneven level-playing field for companies.

2.1.4.Market surveillance rules are complex and not fully effective

Following the adoption of Regulation (EU) 2019/1020, the market surveillance rules differ for harmonised and non-harmonised products. This Regulation is applicable to the non-harmonised area under GPSD only regarding the provisions for customs controls. The market surveillance rules under this Regulation apply only to harmonised products and differ from those for non-harmonised products in several aspects: responsible operator in the EU for products entering the EU market, online market surveillance tools (mystery shopping, blocking websites), strengthened market surveillance rules (e.g. Single Liaison Office, cross-border mutual assistance).

The Evaluation has also identified coherence problems resulting from the fact that there are two different sets of market surveillance rules, for harmonised and non-harmonised products. One good example is toys (e.g. doll’s bed) and childcare articles (e.g. baby’s bed), that might be conceptually very close and targeting the same consumers, but are however regulated differently: a toy is a harmonised product regulated by Directive 2009/48/EC, a baby’s bed is a childcare article, which is a non-harmonised product, falling under the scope of application of the GPSD. Therefore, market surveillance authorities have different powers for these two products: for example they can carry out online investigations under covered identity for a doll’s bed, but not for a baby’s bed, as explained above. 70  

This has also clear implications for the effectiveness and efficiency of the GPSD 71 as it may lead to market surveillance inefficiencies and thus higher presence of unsafe products on the EU market in the non-harmonised area. Ensuring coherence between these rules is important both for market surveillance authorities (they have difficulties to apply different rules according to the products, e.g. since they do not have the same market surveillance tools for harmonised and non-harmonised products in online sales) and for economic operator who might deal, at the same time, with both types of products: different rules complicate and make more expensive the business activity.

The Evaluation identified also several additional problems for market surveillance of product safety:

-Market surveillance and customs authorities lack appropriate instruments to enforce product safety rules for non-harmonised products, in particular in online sales, such as blocking websites, mystery shopping.

-Products are difficult to trace throughout the supply chain. In particular, products such as laser pointers, lighters, jewellery, or decorative articles, that fall within the scope of GPSD and are not subject to sector-specific harmonisation rules, are more likely to lack relevant information items that are essential to trace them in case they are notified to Safety Gate/RAPEX.

-The process for adopting voluntary safety standards for the GPSD products is complex and not sufficiently efficient. It requires a three step process involving comitology. This could be simplified and streamlined.

-There are differences in the GPSD implementation across Member States. (e.g. the traceability requirements differ between Member States).

-There is a lack of a mechanism at EU level to solve divergent positions of Member States regarding the risk assessment of a specific product, which causes a difference in the treatment of some consumer products inside the Single Market. The number of notifications to the Safety Gate/RAPEX that were subject to disputes between Member States has been on average 30 per year.

-The deterrent effect of the GPSD might not be effective enough. A plausible explanation for this suggested by several stakeholders might be that the sanctions and penalties for product safety infringements, that are not harmonised across Member States, remain low. This creates a problem in the context where all products cannot be controlled by the national authorities, in view of their huge volumes and need to facilitate trade and free movement of goods.

-The market surveillance system under the GPSD appears to be operating under considerable resource constraints 72 . Market surveillance authorities have indicated limited staff/financial resources for market surveillance and enforcement most frequently as a key factor influencing negatively the level of achievement of their tasks.

- The difficulty of taking enforcement actions against economic operators outside the EU. This is particularly relevant as the growth of online sales 73 have resulted in an increase of direct imports; around 150 million small consignments are imported free of VAT into the EU each year 74 .

Uneven and, in some cases, insufficient enforcement actions can harm EU consumers, since they are exposed to more dangerous products, but also risk to distort competition for EU businesses and create obstacles to free movement of goods. National market surveillance authorities suffer from higher administrative costs as a consequence of cross-border inefficiencies and investigation costs if the relevant operator or the product to be traced are difficult to find. Discrepancies in the GPSD implementation create an uneven playing field between Member States and additional regulatory burden for businesses active across the EU.

The fragmentation of the market surveillance rules between harmonised and non-harmonised products may also create regulatory burden both for national administrations and EU businesses. The complexity of the market surveillance legislation creates higher costs for economic operators (additional costs of complying with different national market surveillance and product safety rules for businesses operating in more than one Member State). The current standardisation process for non-harmonised products also creates unnecessary administrative burden at EU level and undermines the efficiency of the standardisation process under the GPSD.

2.1.5.Inconsistent application of product safety rules for food-imitating products

The legal framework providing rules on safety issues linked to food imitating products is set out in Directive 87/357/EEC (FIPD). This Directive was adopted before the GPSD was created the horizontal legal framework for safety of all non-harmonised products, and it aimed at harmonising the divergent pre-existing national rules on food imitating products 75 . Such separation of rules according to a specific aspect of a product creates regulatory complexity for national administrations and economic operators.

As reflected in the Evaluation, the number of Safety Gate/RAPEX notifications of food imitating products is a small percentage of the total. Between 2005 and 2015, a total of 258 notifications (around 17 per year on average) relate to food imitating products. Moreover, it seems that the product category “Food-imitating products” was only used up to 2015; afterwards, the products have been categorised according to their use (cosmetics, clothing, etc.): since 2015, 71 notifications mentioning products not complying with the FIPD have been submitted under other categories such as cosmetics, kitchen/cooking accessories, stationery, or decorative articles. Despite that, the number of notification for food-imitating products remain low. The aspects related to the imitating nature of the product were incorporated in the risk assessment of the product itself, but not in a systematic manner by all Member States.

Indeed, the safety provisions of the FIPD are applied differently between Member States, which have diverging positions on substantial issues, in particular whether all food-imitating products should be banned per se or measures against these products should be based on a risk assessment under this Directive. Indeed, the FIPD was adopted before the GPSD, which sets out the principle of the necessity of risk assessment before taking appropriate measures against dangerous products and some Member States started to apply to food-imitating products the GPSD logic while others maintained the primary interpretation of the FIPD as a ban of these products.

Such different application of this Directive leads to an uneven treatment of these products across the EU and risks to create distortions of competition in the Single Market. The stakeholders impacted by this problem are businesses producing such products, due to the lack of clarity of rules, and also European consumers, who are differently protected against these products. National market surveillance authorities also suffer from higher administrative costs due to complexity of the rules. The low number of notifications related to food-imitating products in the Safety Gate/RAPEX also raises a question whether a separate legal regime for these products remains justified.

2.1.6.Problems related to the legal form 

The current legal form, a Directive, creates several problems linked especially to the implementation and national differences regarding the date and/or manner of transposition. Several problems have been encountered in the application of the GPSD, such as the application of provision on the corrective measures to be adopted in case of a dangerous product found on the market (Article 8 of the GPSD): the measures to be adopted and the type can vary consistently among Member States national transposition legislation entailing different treatments in different Member States, bringing eventually to fragmentation in the internal market. Even more relevant, in practice, is the different transposition of the provision on traceability (Article 5 of the GPSD): the requirements contained in this article are transposed differently, for example as far as the indication of the batch of a product or the way and location of the identity and details of the producer are concerned.

2.1.7.Regulatory burden and costs of the GPSD (REFIT problem)

To summarise, several of the aspects of the current GPSD developed above create unnecessary regulatory burden for MSAs and companies: discrepancies between market surveillance procedures for harmonised products and non-harmonised products, market surveillance inefficiencies between Member States due to diverging assessments and actions taken against products, lack of clarity inter alia about the scope of GPSD, sub-efficient standardisation procedures, different implementation of safety rules for food-imitating products, differences in GPSD implementation, and lack of resources for MSAs to implement the rules.

2.2.What are the problem drivers?

The figure below summarises the main drivers for the general problem and the five specific problems identified above:

Figure 1: GPSD General problem tree

The underlying drivers (causes) for the identified problems are multifaceted:

Table 2: Nature of problem drivers

Problem area

Drivers nature

Drivers’ action

General problem of unsafe products occurring on the market

Market failure

Under classical economic rationale, the producer’s objective is profit maximisation and therefore to produce the given product at the best price; in the absence of any safety regulation, it may tend to sacrifice the product quality and safety by choosing cheaper components and undergoing less safety verifications. The market price of a dangerous product does not reflect the real cost for the consumer and for the society, in particular the costs of injuries linked to a dangerous product. Therefore, the market does not take into account the negative externalities of dangerous products in terms of reduced public health and increased public health expenses and such market outcome is therefore not optimal for the society. However it also has to be taken into account that it is important for some companies to produce products that are safe for consumers, as their reputation is at stake and they may lose the consumers’ trust in their brand.

Asymmetry of information

Information is needed for markets to operate efficiently. Buyers need to know about the quality and safety of the product to assess its value. The consumer does not know exactly in which way the product has been produced and its exact components, while the safety of a product can be verified including by undergoing a proper laboratory test, which is of course impossible for an individual consumer to do in advance. Consequently, most of the times consumers cannot verify the product safety when buying a product and take this into consideration in their choice; therefore they may make the wrong choice and buy unsafe products, which leads to sub-optimal societal outcomes.

Split markets

In the markets where actors have different and not aligned objectives and the information is imperfect (as explained above), socially desirable actions are not undertaken and regulation can then redefine the characteristics of products to be placed on the market, as it is the case for product safety legislation.

New technologies

Regulatory failures

The GPSD does not provide enough legal certainty about the coverage of the specific features of new technology products, such as software updates or the evolving nature of some products. Some new types of risks linked to new technologies (such as cybersecurity risks affecting safety) are not explicitly covered, which leads to legal uncertainty. Consequently, the current GPSD does not efficiently play its role of safety net for new technology products.

Online sales

Regulatory failures

When the GPSD was developed, online sales were still at an early stage and therefore the GPSD’s provisions do not properly address the challenges of the current online environment. The GPSD does not set out specific obligations related to product safety for the online marketplaces, while these play today an important role in the online sales. Also, the GPSD does not provide for effective investigation tools for online sales. Finally, E-commerce allows for an important increase of direct imports from economic operators located outside the EU. While the GPSD creates product safety obligations for any products being placed on the EU market, regardless of their place of origin, it is very difficult to enforce against traders established outside the Union and offering their products to EU consumers. There are therefore enforcement difficulties allowing the entering of non-harmonised consumer products on the EU market without having an economic operator responsible for these products in the EU.

Recalls

Regulatory failures

Recall procedure as such is not defined under the GPSD. In particular, there are no minimum requirements on the content and channels or recall communication or remedies that consumers are entitled to. In some countries, requirements are more prescriptive than in others, leading to varying levels of consumer protection. One major deficiency is the lack of legal basis for using existing customers’ data for recall purposes.

Market failures

(companies fail to act effectively)

Companies may fear the negative reputational impact and other costs created by a recall and thus avoid communicating clearly about possible safety issues and delay recall measures and/or underplay the risk when the product turns out to be dangerous 76 . Almost half (47%) of industry respondents to a European Commission’s survey indicated that they did not have a written procedure in place in case the product needs to be recalled (even though safety-conscious companies were likely overrepresented in the survey) 77 . Also marketing literature suggests that most companies engage in a passive recall strategy rather than a proactive one 78 .

Behavioural biases

(consumer inertia)

Consumers do not always act in a rational way in response to recalls. Biases such as information overload and framing effects mean that if recall notices are lengthy and unclear, consumers may ignore them, especially if they are time poor. Over-optimism may result in consumers underweighting the risk posed by a recalled product, while inertia and endowment effect 79 relate to the fact that consumers have an inherent preference for status-quo, which in the case of recalls means keeping the product.

Market surveillance

Regulatory failures

At EU level, the market surveillance rules for harmonised and non-harmonised products are not only set up in two different legal texts, but also the applicable rules differ in several aspects for these two categories of products, which creates regulatory complexity for national administrations and businesses. Furthermore, implementation issues stem from the fact that the GPSD is a Directive and as such is not directly applicable in the EU and, as the Evaluation shows, is transposed differently across EU Member States. The GPSD also does not sufficiently harmonise the provisions on the product traceability, which are therefore defined at national level and prove to be insufficient. The GPSD does not tackle the disputes on the risk assessment between Member States, and the standardisation procedure under the GPSD is not efficient enough.

At national level, the main driver for enforcement problems is lack of resources dedicated to market surveillance by Member States. Also, the current level of penalties and sanctions does not create a sufficient deterrent effect for economic operators to prevent the placing of unsafe products on the market.

Food-imitating products

Regulatory failures

The uneven application of product safety rules for food-imitating products stems from the fact that the rules are formulated in such a way that it allows a very different application across EU Member States, some categorically banning all food imitating products, some others performing a risk assessment before deciding on the measure. The fact that these rules are set out in another piece of legislation than the rest of the product safety rules creates unnecessary regulatory complexity for national administrations and businesses and leads to incoherent measures on the Single Market.

2.3.How will the problem evolve?

Some of the identified problems will remain and even likely get worse: in particular those linked to online sales and new technologies. There is a clear increasing trend in online sales in the EU. The COVID-19 crisis and the repetitive lockdowns are accelerating e-commerce, as well as imports of consumer products from outside the EU. There is also an increase of new technology consumer products being available on the EU market. Therefore, the magnitude of problems linked to these new digital challenges is likely to increase.

At the same time, digital developments offer also opportunities for more efficient market surveillance by using new technology tools, for example to identify already recalled products online. Online sales may ease the identification of customers, which is particularly important in recalls. Also, connected products may be easier to recall and fix or switch off remotely.

The new Regulation (EU) 2019/1020 will only have a limited effect on the market surveillance for products and risks covered by GPSD since only its provisions on customs (Chapter VII of this Regulation) apply to these products.

Some other problems will also continue to exist and are likely to remain the same or of the same magnitude in the absence of EU action, in particular the fragmentation, complexity and ineffectiveness identified in the market surveillance rules. These problems are mainly linked to regulatory failures of the legal framework itself and would get worse only if there is an increased trend of non-harmonised consumer products circulating on the EU market. Problems linked to lack of resources mostly relates to the political priorities and resources of the Member States.

3.Why should the EU act?

3.1.Legal basis

The legal basis for this initiative is Article 114, with due regard to Article 169 80 , of the TFEU . The GPSD has for object ensuring product safety and improving the functioning of the internal market. GPSD aims at ensuring a high level of consumer protection, by contributing to protect the health, safety of European consumers and promoting their right to information 81 .

The EU has no exclusive competence on product safety, which is a shared competence. Therefore, the subsidiarity principle does apply.

3.2.Subsidiarity: Necessity of EU action

The GPSD harmonises the general product safety requirement in the EU. Ensuring safety of products in the Single Market cannot be achieved sufficiently by Member States acting alone for the following reasons:

-Data show unsafe products are spread across the EU: unsafe products can be found in all Member States 82 .

-Products circulate freely across the Single Market, including the dangerous ones. When a dangerous product is identified in a certain country it is very likely that the same product could be found in other Member States too, not least following the exponential growth of online selling. This is demonstrated by the number of follow-up actions taken by Member States in their country after the notification of a dangerous product in the RAPEX/Safety Gate; while in 2011 there were 2100 follow-up measures, in 2019 more than 4400 of such measures were notified to Safety Gate/RAPEX.

-Different rules on product safety at national level can create uneven costs for businesses to comply with product safety legislation and therefore can cause distortions of the internal market when /if companies want to operate across borders.

-According to Article 169 of TFEU, in order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health and safety of consumers. If there are different rules concerning product safety and its market surveillance, EU consumers will not be protected against dangerous products in the same way across the Member States.

-The identified problem drivers mostly do not have any national or sub-national specificities (problems linked to digital challenges, recalls and food-imitating products). Problem drivers for market surveillance have partly a national dimension concerning the lack of resources, level of penalties and availability of market surveillance tools, which can differ from one Member State to another.

The objective of products safety cannot be sufficiently achieved by the Member States acting alone, given the need for a very high degree of cooperation, interaction and coherent action of all the competent authorities in all Member States across the Single Market to ensure the same high level of protection of consumers and enable effective action on the Single Market where products circulate freely. Member States cannot ensure cooperation and coordination by acting independently.

The GPSD establishes the cooperation and coordination between Member States: via the EU Safety Gate/RAPEX, Member States inform each other about measures taken against dangerous products. They also take follow-up actions in their territory if the product alerted is present there. Moreover, authorities consider the implementation of EU coordinated market surveillance activities on product safety extremely useful, as economies of scale and the funding provided by the Commission have allowed them to carry out inspections for some priority categories of products.

The measures under this initiative would not affect the Member States' competences in market surveillance or assessment of risks, neither would they interfere with national enforcement or judicial systems, nor would they affect the internal division of competences among authorities at national level. In the product safety field, Member States can act first independently to notify the corrective measures taken against dangerous products, but then follow-up actions are required from all other Member States.

3.3.Subsidiarity: Added value of EU action

EU level action in product safety for non-harmonised products has clear benefits demonstrated by the GPSD evaluation:

-Common Union rules allow economy of scale in market surveillance, in particular nowadays with the exponential development of online selling which intensifies sales across the EU and direct imports from outside the EU. Sharing costs of market surveillance occurs also by performing joint market surveillance actions among EU countries and exchange information.

-EU action allows faster and more efficient circulation of information, in particular via the Safety Gate/Rapex, thus ensuring fast actions against dangerous products across the EU and also level playing field.

-Common rules for product safety at EU level have benefits in term of costs savings and lower administrative burden and complexities for businesses by avoiding them having to comply with heterogeneous sets of national rules. This enables also free circulation of goods in the EU and allows for closer cooperation between Member States.

-Common Union rules enable developing EU product safety standards, which by giving EU-wide presumption of safety facilitate product safety compliance for businesses (and potentially decrease the related costs).

- At international level the common set of provisions established by the GPSD has also allowed the EU to be stronger in promoting high level of safety with international actors, thus tackling the increasingly high circulation of goods from third countries via online selling.

The functioning of the internal market will be improved by EU level action since common product safety and market surveillance rules across the EU will ensure a more even treatment of businesses and therefore less likely distort competition on the EU Single Market. Better market surveillance and enhanced coordination between Member States will lead to higher detection of unsafe products, and thus to higher consumer protection and trust.

The food-imitating product directive is currently subject to very different interpretations between Member States, ranging from a ban of such products to the inclusion of the food-imitating aspect in the elements taken into account in the risk assessment. This leads to a fragmentation of the internal market regarding such products, a more unified approach of food-imitating products is therefore needed at the EU level, requiring Union action.

4.Objectives: What is to be achieved?

Figure 2: Schematic overview of problems and objectives

4.1.General objectives

The general objective of the GPSD is to ensure EU consumers are protected from dangerous products and to ensure the proper functioning of the Single Market. These two main objectives of the GPSD are interlinked: if the same high level of safety requirements applies to all economic operators, it ensures the health and protection of EU consumers and also level-playing field for all businesses operating on the EU market.

4.2.Specific objectives

This initiative has five specific objectives linked to the five problems identified; it also seeks to simplify legislation and reduce the administrative burden of the current acts under consideration (REFIT objective):

Table 3: Specific objectives

Specific objectives

Description

Ensure that the EU legal framework provides for a safety net for all consumer products and risks, including products and risks linked to new technologies

This initiative aims to make sure that the GPSD ensures the safety of all non-harmonised products and addresses relevant risks. In view of the development of new technologies, there is a need to ensure legal certainty regarding the legal coverage of new technology products such as connected products and AI, and to be able to address new products safety risks for health and safety of consumers related to these new technologies, when not already covered by sectoral legislation. The aim is to preserve the role of the GPSD as a safety net for consumers.

The initiative does not aim to regulate all risks related to new technologies in general but only when they create risks to health and safety of consumers (e.g. cybersecurity can entail risks for privacy or data protection, which are not covered by the GPSD; the GPSD would only cover the risks related to health and safety (e.g. physical incident) created by e.g. lack of sufficient cybersecurity features)

Address product safety challenges in the online sales channels

There is also a need to adapt the GPSD to the new challenges of e-commerce. Product safety must be ensured irrespectively of the modalities of the supply chain: rules for new online business models need to be clarified and provisions for market surveillance of imported products improved to enable appropriate consumer protection and level-playing field for businesses. Also national market surveillance authorities need to have efficient tools to perform market surveillance of online sales and the product traceability in the online sales needs to be improved.

Make product recalls more effective and efficient to keep unsafe products away from consumers

Product recalls play an important role to ensure the safety of EU consumers, since they are the last resort to keep dangerous products away from them. This initiative aims to increase the effectiveness and efficiency of recalls by improving the channels and content of recall information, making recall procedure less burdensome for EU consumers and ensuring their right to an effective remedy. The initiative takes into account the identified behavioural biases to increase consumer response. The initiative also aims to ensure effective monitoring of recall actions.

Enhance market surveillance and ensure better alignment of rules for harmonised and non-harmonised consumer products

This initiative aims to ensure better enforcement of product safety rules by contributing to more efficient market surveillance. The objective is to improve product traceability so that dangerous product can be effectively eliminated, the deterrent effect of the legislation for economic operators not complying with the rules, and to tackle possible discrepancies about risk assessment between Member States. The aim is also to simplify the procedures leading up to referencing standards in the Official Journal of the EU for non-harmonised products.

Following the recent adoption of Regulation (EU) 2019/1020, there is a need to align the market surveillance legislative framework for non-harmonised products with the one for harmonised products, the definitions of the GPSD with product harmonisation legislation and ensure equal treatment for all products and businesses.

The objective is also to ensure more efficient and coherent enforcement and implementation of the product safety rules across the EU and to monitor that sufficient resources are dedicated to market surveillance at national level.

Address safety issues related to food-imitating products

This initiative aims to ensure a consistent application of product safety rules for food-imitating products by simplifying and clarifying those rules.

REFIT Simplification and improving the efficiency of the existing legislation

This initiative aims also to simplify and reduce the regulatory burden of the current GPSD.

Figure 3 presents the intervention logic for this initiative:

Figure 3: Intervention logic

Source: GPSD Study

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

In the baseline scenario, no new legislative or non-legislative actions specifically targeting the safety of consumer products will be developed at EU or national level. This scenario includes several EU-level and national policies and measures which are assumed to continue being in force or will enter into force in the future:

At EU level, the Commission has recently adopted a proposal for a Digital Services Act which, if adopted by the co-legislators and once entered into force, should set up new responsibilities for online intermediaries, including online marketplaces. Also, the Commission has recently announced its intention to propose new legislative initiatives linked to new technologies and artificial intelligence, namely the proposal for a horizontal instrument on AI and the proposal for the revision of the Machinery Directive, which will clarify certain sectorial safety aspects of new technologies. The new customs provisions applicable for GPSD products under the new Regulation (EU) 2019/1020 will start to apply in 2021. The Commission will continue, in the frame of the allocated EU budget, to finance coordinated market surveillance activities on product safety (see Annex 9). The Commission is expected to continue its advocacy policy on product safety, in the form of information campaigns and other promotion initiatives such as the Product Safety Award 83 . The Commission will also continue its coordination role in product safety as Chair of the Consumer Safety Network (‘CSN’) 84 . In the area of product safety in the online sales, the baseline scenario takes into account that the Commission will continue the cooperation with and steering the commitments of the online market places in the context of the Product Safety Pledge. Finally, the Commission will continue adopting safety standards giving presumption of safety for non-harmonised products under the current procedure, and also its international cooperation activities.

At national level, it is assumed that Member States will also continue their measures supporting product safety policy, such as information and promotion campaigns, under the constraints of the national budgets, and their current market surveillance activities.

Several expected socio-economic developments are also relevant for the product safety area. Important technological developments bring an increasing number of AI-driven consumer products and connected products on the EU market. Also the increasing digitalisation of online sales, dramatically accelerated during the current COVID-19 crisis, will increase the number of products sold online and also those imported directly from outside the EU. Demographic changes can also have an impact on the safety of consumers, as for example older people have specific consumption-related needs 85 .

The time horizon for this baseline scenario, which will be used for the assessment of impacts of the different options is a 10 years’ horizon. This takes into account the likely lifetime of any individual option and on the need to allow for impacts to be realised.

The GPSD Study estimated the costs associated with this baseline scenario for businesses and Member States as following:

Table 4: Estimated annual cost for businesses to comply with the GPSD, by company size class, in million EUR

Cost by company size

Total costs

Company size (employees)

From 0 to 49

50 – 249

250 or more

All size categories

Total of manufacturing

79

101

163

343

Total of wholesale

118

81

122

321

Total of retail

232

44

163

439

Total

428

226

448

1 102

Source: The survey conducted in the context of the GPSD Study

The estimated costs for businesses to comply with the GPSD in its current form amount to EUR 1.1 billion per year 86 . 

Consumer detriment linked to the unsafe products is expected to grow in the mid-term in the baseline scenario, due to increasing consumption and a continuing shift to e-commerce: the GPSD Study evaluates that consumers suffer financial costs of EUR 19.3 billion in 2019 arising from the fact that they have purchased unsafe products that they would not have purchased if they knew these products are unsafe. This consumer detriment in the EU due to unsafe non-harmonised products is estimated on the basis that the product value is EUR 3.9 billion for the online sales channels, and EUR 15.4 billion for brick-and-mortar shops and other offline sales channels, for a total of EUR 19.3 billion per year. This estimated baseline consumer detriment in the EU related to unsafe non-harmonised products is currently reduced due to recalls by approximately EUR 0.4 billion per year 87 . This consumer detriment due to the loss of value of unsafe products is expected to reach EUR 20.8 billion by 2025 and almost EUR 22 billion by 2034 in the baseline scenario 88 . 

The cost estimation for Member States takes into account the different organisational approaches of Member States to market surveillance and is based on staff data for surveillance of non-harmonised consumer products at national level. The GPSD Study concluded that the total EU27 staff-related costs for market surveillance of non-harmonised consumer product amount to approximately EUR 122.4 million per year 89 . Also, four in ten MSAs reported incurring costs other than staff costs (e.g. testing of products), estimated at most at 0.34% of total staff costs. 

The GPSD Study identified that (minor to significant) additional costs due to differences in the safety requirements in Member States, caused by differences in the national implementation of the GPSD (e.g. regarding traceability requirements) or legislative fragmentation between harmonised and non-harmonised products, currently affect 42% of surveyed companies and 16% of MSAs. These costs are estimated for MSAs to amount to EUR 0.7 million annually (total for the EU27) and to EUR 119 million annually for businesses.

On the benefits side of the baseline, the interviews carried out in the context of the GPSD Study identified that authorities and businesses see moderate to significant benefits resulting from the GPSD across the board, and in particular through better information on unsafe products and measures taken by authorities provided through the Safety Gate/RAPEX, a better functioning internal market and increased consumer trust. 90% respondents that expressed an opinion considered the costs due to the product safety requirements of the GPSD to be at least “moderately proportionate” to the resulting benefits. Close to 60% of respondents that had an opinion even found these costs to be “largely proportionate” or “very proportionate”, including respondents from companies and business associations.

For SMEs, the estimated annual costs to comply with the GPSD (after subtraction of business-as-usual costs) are EUR 428 million per year (companies < 50 employees) and EUR 226 million per year (companies 50 to 249 employees). The median value for consumer product safety-related costs in proportion of the total annual turnover appears to decrease with the company’s size/turnover. This is likely due to scale effects. This general pattern is confirmed by SMEs’ replies to the business stakeholder survey. Accordingly, SMEs account for 59% of the total of GPSD-related compliance costs in the EU, in line with their overall share in the market.

The GPSD Study also analysed the impacts of the COVID 19 crisis on the baseline scenario. It shows that while the confinement measures have serious expected impacts on GDP, total retail quickly recovered after the first crisis wave, but new measures in the current second wave are likely to again lead to substantial impacts on retail and therefore sales of products. The decline in overall retail sales has been accompanied by a rise of e-commerce sales that are expected to increase by 16.9% in 2020 in Western Europe 90 . The boost in new spending is expected to leave e-commerce permanently ahead of its previous pace.

In general terms, product safety processes at companies including with respect to related supply chain management appear to remain largely unchanged in the COVID-19 context, except with the increasing reliance on electronic communication instead of physical meetings (this may pose issues to product assessments). Companies also confirmed the switch to online sales channels to offer products.

Moreover this crisis required increased market surveillance of COVID-19-related products, in particular face-covering products (other than the medical or personal protective equipment devices).Until 1 December 2020, 16 Member States notified in the Safety Gate/RAPEX 174 alerts (mainly safety masks, some disinfecting gels and UV lamps).

Finally, there is a strong political commitment for a strong product safety policy at EU level. This has been recognised by the recently adopted Consumer Agenda 91 and several Council conclusions as explained above. The GPSD evaluation confirms the validity of the GPSD, but at the same time considers the need for its revision. The European Parliament has also highlighted the need to revise the GPSD in its resolution on addressing product safety in the Single Market 92 . This also has been largely recognised by the stakeholders in the consultation process.

5.2.Description of the policy options 

To address the objectives developed above, the initiative will intervene on the following areas:

Figure 4: Interventions to improve the GPSD’s effectiveness

Beyond the baseline scenario (‘Status quo’) not involving any new actions, the identified policy options to address the different specific objectives are:

Option 1. Improved implementation and enforcement of the existing legal framework, without legal revision of the GPSD (only FIPD revised);

Option 2. Targeted revision of the GPSD (Directive or Regulation);

Option 3. Full revision of the GPSD and recasting as Regulation;

Option 4. Integration of more legal instruments

The range of options includes non-legislative (Option 1) and legislative actions (Options 2, 3 and 4) to address the different specific objectives. All the options defined in the report propose specific actions to address all five problems identified, but differ in the level of ambition.

The substantive provisions of the Food-imitating Product Directive were considered to be revised under all options 1 to 4 with two possible sub-options: (a) a full ban of food-imitating products per se and (b) application of a product safety risk-assessment on a case by case basis to this category of products.

Table 5: Overview of the policy options and addressees of the measures

Option 0 Baseline

Option 1

Enhanced enforcement

Option 2

Targeted legal revision

Option 3

Full legal revision

Option 4

Integration of rules

Most relevant stakeholders

New technologies

No change

Guidance for economic operators

Use of standards for new risks

Coverage of new risks

No clarifications on software related rules

Coverage of new risks

Clarify software related rules 

Option 3

+

Integration of the legal instruments on market surveillance (GPSD market surveillance provisions and Regulation 2019/1020)

Businesses (for consumer products incorporating new technologies) and MSAs

Online sales

No change

Reform, promotion and expansion of the Product Safety Pledge

Making most provisions inspired by the Product Safety Pledge legally binding

Obligations for economic operators going beyond the Product Safety Pledge (e.g. display same information online as it is with the product offline, duty of care as for distributors)

Online marketplaces, online retailers, and MSAs

Recall effectiveness

No change

Guidance on product recalls

Mandatory requirements on product recalls

Legal basis to use customers’ data for recalls

Mandatory elements of recall notice

Option 2

+ Some additional mandatory requirements 

(e.g. on product registration, template for recall notice, right to remedy and monitoring)

Businesses (harmonised and non-harmonised consumer products), MSAs

Market surveillance

No change

Increased funding of joint market surveillance activities

Alignment with market surveillance and traceability rules of harmonised products 

Simplifying standardisation procedures

Option 2

+ stronger enforcement powers to Member States (penalties) , arbitration mechanism and increased traceability (delegated acts)

MSAs and businesses (in particular businesses of non-harmonised consumer products)

Food-Imitating Products

No change

Separate revision of the FIPD to ensure its even interpretation

2 sub-options for treatment of food-imitating products:

(a) full ban per se.

(b) risk-assessment approach

Integration of the FIP provisions into the GPSD

2 sub-options for treatment of food-imitating products:

(a)  Maintaining dedicated provision on FIP (recast and integration) with a full ban per se 

(b)  Abandoning any dedicated provision (repeal) and reliance on general provisions for risk-assessment approach

Idem Option 2

Producers of food imitating products and MSAs

Instrument

Directive

Directive

Directive or Regulation

Regulation

Regulation

Businesses and MSAs are the most affected stakeholders by the measures as detailed in the Table 5. The SMEs and micro-SMEs are not exempted from any of the obligations foreseen under the different options. EU product safety legislation does not allow for "lighter" regimes for SMEs since a consumer product must be safe whatever the characteristics of its supply chain to meet the general objective of product safety and consumer protection. However provisions are foreseen in the EU legislation e.g. to facilitate access for SMEs to EU safety standards including those adopted under the GPSD (see Article 6 of Regulation (EU) 1025/2012 ).

The detailed description of the actions under the different options, as well as their time horizon, potential for simplification and reduction of regulatory burden and digital solutions envisaged to increase efficiency, are developed in the Table 6.

Table 6: Option packages

Objectives

Option 0 Baseline

Option 1

Enhanced enforcement

Option 2

Targeted legal revision

Option 3

Full legal revision

Option 4

Integration of market surveillance rules

Ensure the EU legal framework provides for general safety rules for all consumer products and risks, including products and risks linked to new technologies

No change

Guidance for businesses that cyber-security threats and other risks of new technologies affecting physical or mental health.

Exploring use of European Standards for new risks

New risks (cyber-security and other risks of new technologies affecting physical or mental health) explicitly covered through legal revision of product safety definition

Option 2

+ Clarify software related rules: Explain how software can impact the safety of product and clarify responsibilities to ensure consumer safety

Option 3

+

Integration of the legal instruments on market surveillance (GPSD market surveillance provisions merged with Regulation 2019/1020 into one Regulation on market surveillance

Address product safety challenges in the online sales channels

No change

Review, promotion and expansion of the Product Safety Pledge

Making most provisions of the Product Safety Pledge legally binding for all online marketplaces, such as:

to consult information on recalled/dangerous products available on Safety Gate/RAPEX and from other sources and react quickly;

to take appropriate action in respect to recalled/dangerous products, when they can be identified

to provide single contact points for EU MSAs and to cooperate with them

to have an internal mechanism for notice and action procedure with specific provisions for unsafe products (e.g. timeframes for action) and other requirements

Option 2 + additional requirements for online operators:

to display of all safety information online that is also required to be provided offline; online marketplaces required to make sure that sellers on their platform provide this information together with the product offer

a duty of care to help ensure compliance with the safety requirements for online marketplaces (in the same vein as the classical distributors have today: stop supplying unsafe products, participate in market monitoring, keeping traceability information, cooperation in corrective actions, cooperate with MSAs, making efforts to identify dangerous product offers already removed from their websites but that keep reappearing. That duty of care would be different than for distributors as they do not have physical contact with the product, so their role will focus on doing their most to ensure that their websites do not offer dangerous products, and if they do, they cooperate with authorities for corrective actions. This duty of care would be complementary to the obligations of actual sellers on the online marketplaces)

Make product recalls more effective and efficient to keep unsafe products away from consumers

No change

Guidance on product recalls

 Mandatory requirements on product recalls:

Legal basis to use available customer contact details for recalls

Operators need to disseminate recall announcements on their website, social media, newsletters, retail outlets and other appropriate channels to ensure the widest possible reach.

Mandatory key elements for recall notices (product description + photo, description of hazard, instructions on what to do, description of remedy, contact details for queries)

Prohibition to use terms decreasing the perception of risk in recall notices

Option 2 + Further measures to enhance recall effectiveness, for example:

Obligation for economic operators to notify consumers directly whenever possible

Economic operators who already offer product registration systems or loyalty programmes should offer consumers the possibility to register their contact details specifically to receive safety notifications

Possibility to set further requirements for registration of specific categories of products through delegated act

Mandatory template for recall notices to be set through implementing act

Consumers’ right to an effective, cost-free and timely remedy for the recalled product (repair, replacement or refund)

Less burdensome recall procedure for consumers (returning a product should not incur any financial costs, non-portable items to be collected by the operator)Obligation for businesses to register voluntary recalls in an EU public database and to monitor recall effectiveness. Power for authorities to request monitoring data from operators and decide if the case can be closed.

Enhance market surveillance and ensure better alignment of rules for harmonised and non-harmonised consumer products

No change

Increased funding of EU joint market surveillance activities among EU Member States

Legal revision of the GPSD to align with market surveillance and traceability rules for harmonised products:

The market surveillance rules aligned with Regulation (EU) 2019/1020

Additional requirements for businesses in line with Regulation (EU) 2019/1020 (notably regarding the requirement of an EU representative) and other harmonisation legislation, in particular traceability requirements from Decision No 768/2008/EC

+ Simplifying standardisation procedures (streamlining the EU process for elaborating safety requirements and the standardisation request, e.g. by combining them in one Commission Decision)

Option 2

+

More stringent rules on penalties to strengthen their deterrent effect beyond Regulation (EU) 2019/1020

 Arbitration mechanism in case Member States have diverging product safety risk assessments (either a group of Member States or the Commission are called to arbitrate)

Possibility to set further requirements for traceability systems through delegated acts, for example regarding chemicals in childcare articles.

Address safety issues related to food-imitating products

No change

Separate revision of the FIPD,

 2 sub-options for treatment of food-imitating products:

(a) full ban per se 

(b) risk-assessment approach

Integration of the FIP the provisions into the GPSD.

2 sub-options for treatment of food-imitating products:

(a) Maintaining dedicated provision on FIP (recast and integration) with a full ban per se 

(b) Abandoning any dedicated provision (repeal) and reliance on general provisions risk-assessment approach

Idem Option 2

Instrument

Directive

Directive

Directive or Regulation

Regulation

Regulation

Digital solutions in respect of implementation and reduction of administrative burdens

None

Development of digital solutions, such as an IT system (web-crawler) to identify dangerous products sold online and already notified via Safety Gate/RAPEX. It would allow MSAs to carry out online market surveillance tasks more efficiently

Beyond the digital IT systems of Option 1, other digital solutions can reduce the burden linked to the additional obligations on recalls (use of internet and social media to increase recall communication). Aligning to the Regulation (EU) 2019/1020 will also allow to explore digital interlinks between existing market surveillance systems at EU and national level and will therefore make the market surveillance more efficient.

Idem Option 2 + possible digital solutions in the field of product traceability

Idem Option 3

Time horizon

Immediate

Rather short for setting guidance documents. The revision of FIPD) requires adoption of a new legislative act ( minimum 1 year)

The obligations under this option would become effective by the revision and entry into force of the revised GPSD.

The obligations under this option would need to be completed by the revision and entry into force of the revised GPSD.

The obligations under this option would need to be completed by the revision and entry into force of the revised GPSD and the new market surveillance Regulation.

Option 1. Enhanced enforcement: Improved implementation and enforcement of the existing legal framework, without revision of the GPSD

This option does not require a legal revision of the GPSD, and would include:

a)Development of guidance on the safety of new technologies and exploring the use of European standards to address new risks. The general safety requirement of the GPSD already encompasses protection against all kinds of risks arising from the product to the safety and health of persons. The guidance would clarify how this includes not only mechanical, chemical, electrical risks etc. but also cybersecurity and personal security threats that affect the safety of persons 93 , and other risks related to new technologies that potentially affect physical or mental health 94 . The standardisation procedure could be used to elaborate European standards addressing safety requirements for consumer products concerning certain new risks such as cybersecurity risks of new technologies.

b)More support and promotion of the Product Safety Pledge. To tackle the safety issues related to online sales (including from third countries), the Pledge would be updated and promoted through awareness campaigns, and other online marketplaces would be encouraged to sign the Pledge. No legal requirements will be introduced for online market places and no person responsible for products in the EU will be available for non-harmonised products sold online.

c)Development of guidance on product recalls. The guidance would address current deficiencies concerning the effectiveness and efficiency of recall procedures by economic operators and market surveillance authorities, relying on the current legislation. The guidance would concern e.g. the provision of more transparent recall information to consumers, the use of customer data for direct notifications and cooperation between different actors in the recall process.

d)Increased funding for joint market surveillance activities among Member States, so that more coordinated actions of authorities across EU Member States could be conducted, including the joint testing of consumer products. No legal changes in the market surveillance rules, including on penalties, where a light approach, with general provisions on penalties, as it is currently the case in the GPSD, would continue. In this case, the deterrent effect of sanctions depends on the provisions adopted by Member States.

e)Revision of the Food-imitating Products Directive to clarify its scope. The provisions on the Food-imitating products would be kept in the FIPD with two possible sub-options: (a) food-imitating products could be banned throughout the Union per se per se and (b) application of a product safety risk-assessment on a case by case basis to this category of products. 

Option 2. Targeted revision of the GPSD (Directive or Regulation)

Option 2 would require a legal revision of the GPSD, which would remain a Directive or become a Regulation. In case the new instrument is also a Directive, changes to the GPSD would need to be transposed by Member States into national legislation. The changes to the legal framework would include:

a)Making explicit how the scope of the legal framework and its definitions apply to risks posed by new technologies but without applying it to standalone software. The definition of safety in the GPSD would be revised to clarify that the covered risks arising from the product to the safety and physical/mental health of persons include not only mechanical, chemical, electrical risks etc. but also cybersecurity and personal security threats that affect the safety of persons, and other risks related to new technologies that potentially affect health (similar to the guidance that would be provided under Option 1). The definition of product in the GPSD would not be changed, so that safety risks stemming from software are only covered if the software is integrated in a product at the time of its placing on the market (as is currently the case). There will be not specific provisions on or references to software updates.

b)Adding requirements for online marketplaces by making most provisions of the voluntary Product Safety Pledge legally binding. The Pledges’ commitments e.g. to consult information on recalled/dangerous products available on RAPEX and also from other sources; to take appropriate action in respect to recalled/dangerous products, when they can be identified; to provide single contact points for EU Member State authorities and to cooperate with them; to have an internal mechanism for notice and take-down procedure for dangerous products and other requirements would become legally binding for all online marketplaces targeting EU consumers 95 .

c)Adding requirements for enhancing the effectiveness of product recalls. Create legal basis for economic operators to use any available customer contact details at their disposal (e.g. obtained through loyalty schemes or online sales) to directly notify the owners of recalled products (without the need of consumer consent). Mandatory key elements would be defined that are to be included in every recall notice (product description with a photograph, description of hazard, instructions on what to do, description of remedy, contact details for queries). Prohibition to use terms decreasing the perception of risk in recall notices (e.g. ‘voluntary/precautionary recall’ or "overheating" instead of fire). In case not all affected consumers can be contacted directly, businesses would need to disseminate recall announcements on their website, social media, newsletters, retail outlets and other appropriate channels to ensure the widest possible reach.

d)Ensuring alignment with harmonised market surveillance rules while keeping different legal instruments and simplifying standardisation procedures. The market surveillance rules provided in the GPSD would be aligned with the provisions in Regulation (EU) 2019/1020. Requirements for businesses would reflect the current obligations under the GPSD, and include complementary requirements in Regulation (EU) 2019/1020 (notably regarding the requirement of an EU responsible economic operator to address the specific issue of direct online imports from third countries by consumers) and other harmonisation legislation 96 . Traceability requirements would include the requirement to keep supply chain records (to allow for one-up one-down traceability, i.e. the identification of suppliers and clients, except final consumers). As a result, general requirements for businesses and responsibilities and powers of market surveillance authorities would be largely uniform for harmonised and non-harmonised consumer products, including on penalties. Also, standardisation procedures at the Commission level under the GPSD would be simplified. 97  

e)Integrating the provisions of the Food-imitating Products Directive into the GPSD. The provisions of the FIPD would be integrated in the GPSD with the same two substantive sub-options as in the Option 1.

Option 3. Full revision of the GPSD (Regulation)

Option 3 would repeal the Directive and ensure even application of its implementation through the choice of a Regulation (i.e. it will be directly applicable in Member States). This option would include all elements of Option 2 and, in addition:

a)Software related rules would be clarified. The GPSD would explain how software can impact the safety of product and clarify responsibilities to ensure consumer safety in such cases. Under this option the definition of product under the GPSD could be adapted to cover the software updates. Specific provisions and conditions could be elaborated for cases of software updates that affect the safety of the product after a product is placed on the market, e.g. when the software operates a substantial modification of the product impacting the risk it poses to health and safety of consumers. It should be noted that under this option, the revised GPSD would not regulate cybersecurity aspects in general, as that entails different issues such as privacy or data protection; however, it would cover cases when a lack of cybersecurity features can lead to a physical incident and hurt the consumer, therefore not going beyond the area of consumer protection.

b)Making legally binding most provisions of the voluntary Product Safety Pledge for online marketplaces (as in Option 2) and include new provisions for actors across the online supply chain. These new provisions for actors across the online supply chain would require them to provide all safety information online that is also required to be provided with a product in 'brick-and-mortar' stores. Online marketplaces would have a duty of care and they will be required to make sure that third party sellers on their platform provide this information together with the product offer (without being required to check the accuracy of the safety information provided). This duty of care obligations would target online market places and will be complementary to the obligations of sellers on the online marketplaces (where the obligations of manufacturer, importer or distributor would apply depending on the specific case), which would be particularly useful in cases where the sellers are located outside the EU.

c)Establish further mandatory requirements to enhance recall effectiveness. In addition to all the elements of Option 2, the following would be introduced:

-Economic operators who offer product registration systems and loyalty programmes for other purposes (e.g. marketing or technical support) should offer consumers the possibility to register their contact details specifically to receive possible safety notifications (personal information collected for the purpose of product safety should be limited to the necessary minimum and must not be used for marketing purposes);

-Possibility to set out further requirements for registration of specific categories of products through delegated act;

-Binding template for recall notices to be set out through implementing act;

-Consumers’ right to an effective, cost-free and timely remedy(repair, replacement or refund);

-Less burdensome recall procedure for consumers (returning a product should not incur any financial costs, non-portable items to be collected by the operator); Binding requirements for businesses to register voluntary recalls in an EU public database and to monitor recall effectiveness; MSAs would have the possibility to request monitoring data from economic operators and decide if the case can be closed.

d)Give stronger enforcement powers to Member State authorities (for example on penalties) and establish arbitration mechanism in case Member States have diverging product safety risk assessments. Building on Option 2, general requirements for businesses and responsibilities of market surveillance authorities would be largely uniform for harmonised and non-harmonised consumer products. However, under Option 3 stronger enforcement rules would be incorporated:

- Penalties: The provisions on penalties would be more clearly defined in a way to ensure a sufficient deterrent effect, while increasing the sanctioning powers of Member States.

- Arbitration mechanism: In case Member States have diverging assessments of the risk posed by a notified product, a mechanism could be triggered where either a group of Member States or the Commission are called to arbitrate.

-Traceability: This option would also create a possibility to set further requirements for traceability systems through delegated acts, for example regarding chemicals in childcare articles.

-Finally, some further improvements to the market surveillance could be envisaged based on the feedback from the stakeholders and study results.

e)Integrating the provisions of the Food-imitating Products Directive into the GPSD with the same two substantive sub-options as in the Option 2.

Option 4. New Regulation merging market surveillance provisions of GPSD and Regulation (EU) 2019/1020

This option would provide for a new legal instrument including all elements described under Option 3 and also merging the market surveillance provisions of the GPSD and Regulation (EU) 2019/1020 on the market surveillance and compliance of products into one new Regulation on market surveillance, so that one single set of rules would apply to harmonised and non-harmonised products. 

5.3.Options discarded at an early stage

Even if options 0 and 1 have received little support by stakeholders they have not been disregarded and the impacts of all options are assessed.

Initial policy options presented in the Roadmap/Inception Impact Assessment took into account the results of the GPSD implementation study, which – based on a broad consultation process – had elaborated key shortcomings of the current legal framework and stakeholder suggestions for improvements. In the course of the GPSD study, the completeness of the current set of policy options was validated and no further policy options for consideration were identified. Also the stakeholders did not raise any other new real alternatives during the consultation process.

A potential further policy option, discarded at an early stage, is the complete repeal of the current GPSD. The Evaluation of the GPSD (see Annex 5) concludes that, although there is a need for specific improvements and simplification, the GPSD is generally relevant, effective, efficient and coherent, and has EU added value.

This report builds also on the conclusions of the Impact assessment report prepared for the previous proposal to revise the GPSD tabled in 2013. In particular, some of the disregarded or eliminated options after analysis of impacts in 2013 were disregarded also in the current report, e.g. centralisation of market surveillance at EU level, direct applicability of ad-hoc safety requirements, abolition of the general product safety requirement.

Also, the introduction of the “Made in” clause, mandatory country of origin labelling for products (as it was proposed in the 2013 Package),  has been disregarded at an early stage following the technical study the Commission conducted in September 2014, 98 assessing the costs and benefits of the proposed mandatory country of origin labelling for a number of product categories. The study concluded that there is little evidence of possible positive impacts of this clause on product traceability and safety for any of the product groups. Further reinforced traceability requirements will however be analysed in Option 2 and 3 beyond the “Made in” clause.

Some alternatives were considered to certain substantive measures presented in the intervention logic and have been disregarded:

Concerning new technologies, it was considered whether the sectorial legislation could cover those new challenges, such as for example the product safety risks linked to cybersecurity. While particular actions at sectorial level might still be needed, it appeared that gaps would remain unless a full safety net is ensured, as it is provided under GPSD in its function of lex generalis.

Regarding setting the requirements for online marketplaces in the product safety area, an alternative option would have been to define the precise obligations in the proposal for the DSA. The adopted proposal for the DSA has retained nevertheless a more horizontal approach proposing the general obligations for all types of illegal content, leaving the definition of specific product safety obligations of online marketplaces to the product safety legislation.

When it comes to the traceability requirements, an alternative option could have been to impose higher traceability requirements for all products. This option has been considered and disregarded because of lack of proportionality.

An important objective of this initiative is also to create a sufficient deterrent effect to incentivise the economic operators to comply with the product safety requirements, which is particularly important in a context where all the products cannot be controlled in view of their huge volumes. The options 3 and 4 propose to increase the deterrent effect of the GPSD by reinforcing the provisions on penalties by setting some harmonised criteria and a minimum threshold for the maximum amount of penalties. A stronger approach on penalties could have been to set up a precise list of infringements and corresponding minimum and maximum amounts for penalties. This option has been disregarded since interfering with Member States’ competences.

6.What are the impacts of the policy options?

The relevant stakeholder affected by the initiative are the economic operators (manufacturers, importers, distributors and online market places), market surveillance authorities (MSAs) and EU consumers. The main costs entailed by complying with the Directive can be classified by stakeholder group as follows:

-Substantive compliance costs for economic operators: costs arising for manufacturers to ensure compliance with the product safety requirement (setting up product safety processes, testing, recalls, etc.) and other economic operators’ obligations under GPSD (e.g. for distributors), and possible purchasing of standards.

-Administrative costs for economic operators to comply with obligations to provide safety information to national authorities on request.

-Enforcement costs for MSAs: costs arising from market surveillance activities (implementation, enforcement and monitoring), withdrawal of unsafe products from the market and coordination - internally between MSAs within one country and externally within the Consumer Safety Network and via the Safety Gate/RAPEX. Enforcement and coordination costs for the Commission.

-Direct regulatory costs for EU consumers via possible increase of prices or lower choice of non-harmonised products.

-Direct regulatory benefits: improved health and safety of EU consumers and the improved environment (decrease of products with both safety and environmental risks, e.g. due to presence of dangerous chemicals) leads to improved well-being. Market efficiency improvements in the form of better quality of non-harmonised products and better information about product safety (e.g. about recalled products) increase trust of consumers in the market and increased purchasing. Alignment of market surveillance rules for harmonised and non-harmonised products create a more level playing field and have therefore positive effect on competition.

-Indirect benefits: the decreased costs of injuries has positive impact on national health and consumers’ budgets; positive effects on fundamental rights by improving consumer protection, including the protection of vulnerable consumers (children, the elderly) and on innovation via increased legal certainty regarding the application of consumer product safety rules to new technologies.

-Cost savings linked to the simplification of procedures (e.g. standardisation), reduction of regulatory costs for businesses and administrative burdens for MSAs by alignment of market surveillance rules for harmonised and non-harmonised products, integration of safety rules for food-imitating products with the rules for non-harmonised products and choice of a directly applicable legal instrument (Regulation).

6.1.Impacts of Option 1

Effectiveness in achieving the specific objectives

Table 7: Assessment of Option 1 related to the specific objectives 99

Objectives

Areas

Assessment

Impacts

New technologies

Certainty regarding coverage of new risks

Option will to some extent contribute to certainty regarding coverage of new risks, without being legally binding. Implementation differences in Member States may remain.

neutral / +

Certainty regarding coverage of software

Option will not providing clarity of GPSD’s application to software.

Online sales

Safety of products sold on online platforms

It is unlikely that safety risks for EU consumers due to products sold on online platforms will be significantly reduced.

neutral

Information of consumers on essential safety aspects

No change to the current situation.

Recall effectiveness

Reaching out to consumers affected by recalls

Option will to some extent contribute to certainty regarding recall procedures, without, however further regulating and therefore addressing the underlying reasons for limited recall effectiveness.

neutral

Information provided in recall notices

Monitoring of recall effectiveness

Remedies for consumers affected by recalls

No change to the current situation.

Market surveillance

Alignment of market surveillance framework for harmonised and non-harmonised consumer products

Limited increase of EU funding 100 may enhance enforcement, but no change to the current fragmentation of legal framework for market surveillance.

neutral

Deterrence effect

No change to the current situation.

Diverging risk assessments by MSAs

Simplification of standardisation procedures

Food-imitating products

Addressing risks of food-imitating products

Clarify the regime for the food-imitating products : (a) full ban or (b) risk-assessment approach

+

The GPSD Study showed that the overall average assessment of the effectiveness of Option 1 in addressing the five challenges mirroring the five specific policy objectives across all respondents and stakeholder groups was 2.9 on a scale of 1 to 5.

Administrative simplification

Guidance provided under Option 1 could to some extent reduce regulatory complexity and uncertainty regarding the coverage by the GPSD of risks posed by new technologies, as well as regarding applicable procedures for recalls. Also, complementary measures in the standardisation field to address safety requirements for consumer products concerning certain new risks posed by new technologies could have a similar effect. However, as these guidelines and standards would not be legally binding, this reduction can be expected to be minor. In addition, legal uncertainty regarding the application of the GPSD to software will remain. Therefore Option 1 will not significantly reduce the regulatory complexity and burdens for businesses. The simplification potential is therefore very limited, stemming mainly from the clarifications provided under the non-legally binding guidance documents and the revised FIPD.

Responsibilities and powers of market surveillance authorities will remain different for harmonised and non-harmonised consumer products, and related administrative burdens for some authorities will continue. In the survey conducted in the GPSD Study, 16% of authorities reported they currently experience additional costs due to these differences. Also, administrative burdens on Member States in the field of standardisation would not be reduced.

Option 1 does not include any additional administrative requirements for specific types of operators. Only very low burdens are expected for businesses from getting familiar with new guidance documents.

Economic impacts

The GPSD Study showed that all stakeholders estimate the benefits of Option 1 on a low level (see Annex 12): companies/business associations estimated benefits ‘moderate’ (3 in a scale of 5 ) and MSAs (2.6 in a scale of 5), and other stakeholders highlight even lower (‘minor’ benefits, 2 in a scale of 5). Businesses assessed the benefits to be ‘minor’ when it comes to increased business revenue. The assessment of other stakeholders is particularly low with respect to the reduction of legal complexity and improved supply chain management due to improved traceability of products (values of 1.8 and 1.9 respectively in a scale of 5).

Concerning the costs incurred under Option 1, the GPSD Study indicates that implementing this option would not increase companies’ recurrent regulatory compliance costs (staff costs) or other additional recurrent costs, neither for manufacturers or distributors. Several business respondents indicated that nothing substantial would change with the implementation of Option 1 compared to the status quo, even if better guidance documents could potentially improve clarity and legal certainty and, as a result, create some cost savings.

Option 1 should create minor additional one-off costs for businesses related to getting familiar with new guidance provided at EU level. However, the quantitative estimates provided by company respondents in the GPSD Study confirm that no significant additional one-off cost are expected at the EU aggregate level. In conclusion, the GPSD Study indicates that the implementation of Option 1 should not change one-off and recurrent costs of EU businesses.

No significant firm-level impacts are to be expected due to the implementation of Option 1 for specific types of operators, be it SMEs or specific operators such as online traders.

An exception are businesses that are manufacturing or distributing food-imitating products. Currently, as explained in the Evaluation, the FIPD is applied differently across EU countries, as some MSAs interpret the FIPD as a per se prohibition of food-imitating products while others do a case-by-case risk assessment of the safety of product. To analyse the impact of the provisions on the food-imitating products, two different sub-options have been considered: (a) a full ban of food-imitating products; or (b) provisions that would include the food-imitating aspect (and possibly child-appealing in general) as an element for the assessment of the risk of products and require a case-by-case risk assessment, as for other consumer products. We can expect that a targeted revision to better clarify the specific requirements of the FIPD would give manufacturers and distributors more legal certainty in both sub-options. As both manufacturers and distributors already have to comply with the current FIPD, we do not expect additional costs from a revision that merely aims at providing greater clarity and legal certainty respectively. A greater level-playing field regarding the implementation and enforcement of the FIPD in the EU could lead to minor cost savings on the side of manufacturers and distributors of food-imitating products. The GPSD Study concluded that the negative economic impact of a full ban of food-imitating products would likely be minor in a broader economic perspective, since the number of these products is limited 101 . At the same time the alternative option (b) is more coherent with the current risk assessment approach in the GPSD which has already been applied to food-imitating products by a number of MSAs: restriction of the free circulation of a given food-imitating product would be based on the assessment of the particular product’s risks and action would be taken according to this assessment. Applying a risk assessment would enable a proportionate corrective measure to be taken.

No macroeconomic effects with significant impacts of the implementation of Option 1 on the internal market or trade are expected, since measures under Option 1 are voluntary in nature and are largely cost neutral. Implementation differences in Member States are likely to remain at least partially since the additional guidance provided under Option 1 would not be legally binding. The results of the consultation conducted for the GPSD Study show that stakeholders evaluate the benefits on the internal market and trade minor to moderate 102 . Significant impacts on competition and innovation are also unlikely, as the benefits of guidance in this respect are limited and all measures are quasi cost-neutral for businesses (except in the area of food-imitating products, where a slight benefit is possible due to increased legal clarity). Some benefits are expected due to slightly increased funding of joint market surveillance activities among Member States.

In terms of impact on consumers, the GPSD Study shows that the benefits for consumers are judged by stakeholders generally minor to moderate in terms of reduced occurrence of unsafe products, reduced number of accidents and injuries caused by unsafe products and increased consumer trust. Also since Option 1 would, overall, not result in increasing product safety-related costs for economic operators, it is not expected to create any impact on the prices for consumer products in the EU. Due to the voluntary character of measures under Option 1, there should not be any impact on consumer choice.

Concerning the impact on consumers of the sub-options for the food-imitating products, both sub-options would lead to the same level of consumer protection against unsafe products. In particular, lifting the ban in those Member States applying it nowadays, would not lower the consumer protection if the risk-assessment is applied. Indeed, by analogy with the risk assessment methodology under the GPSD, the evaluation of the risk of the product would take into account its food-imitating aspect so the risk for the consumer would be properly assessed and if the product is found to be unsafe, its placing on the market would be prohibited.

The guidance provided under Option 1 and the additional funding of coordinated market surveillance activities could slightly improve the enforcement of the GPSD, with related benefits for consumers. However, since online market surveillance will not be substantially improved, consumers would continue to incur detriment, even if the voluntary safety Pledge would be further promoted. With an increasing role of online platforms in the EU retail sector in the future, amplified by the COVID 19 crisis, costs for society due to unsafe products entering the market through online channels from third countries could increase, although this will also depend whether other measures are taken at EU level, including in the framework of the new DSA. Option 1 is therefore not expected to increase the level of consumer protection, including vulnerable consumer groups such as children and the elderly.

Impacts on Member States

Option 1 is not expected to provide significant benefits for MSAs, except a reduction in uncertainty about GPSD interpretation thanks to the provision of guidance and the possible additional funding for joint market surveillance activities. However, it needs to be considered that the increase of this funding will be limited, as the budget foreseen for these activities in the Multiannual Financial Framework and the Single Market Programme will only be around EUR 21 million, which amounts to a very small increase of yearly average budget for these coordinated activities (from EUR 2.4 million in 2009-2020 to EUR 2.8 million per year in 2021-2027).

Based on the MSAs’ survey, the GPSD Study found that recurrent costs for MSAs should remain the same under Option 1, compared to the baseline situation, and one-off costs would be very low (costs resulting from the development of new guidance documents, and, potentially, the set-up of technical capacities for carrying out market surveillance activities related to new risks).

The proposed measures would not be expected to have other effects on Member States since no modifications of market surveillance mechanisms are proposed.

In case the risk-assessment sub-option were chosen for the treatment of food-imitating products, potential effects could be observed on Member States which have been applying full ban of these products until now. These Member States would need to make a risk-assessment of these products, but this change should not represent specifically higher costs for these countries since the number of food-imitating products is very low and they already apply the risk-assessment approach for all other products 103 .

Social impacts, impacts on fundamental rights, environmental impacts

Due to their limited scope and voluntary character, the measures implemented under Option 1 would not have significant social or environmental impacts, or impacts on fundamental rights. However, the GPSD Study concludes that if retained, a ban on food-imitating products from the EU market would have a negative impact on the freedom to conduct a business as defined under Article 52 of the Charter of Fundamental Rights of the European Union (‘Charter’), while the GPSD Study, based on the feedback from Member States, could not identify evidence to prove the intended benefits (better protection of children) to confirm its proportionality.

Indeed, food-imitating products are not intrinsically dangerous. They can be if they are so similar to foodstuff that they can be confused with food, and if such confusion could pose a risk (notably the risk to choke or to be chemically poisoned) if consumers would ingest such products. Banning all food-imitating products would mean banning also those food-imitating products that are not dangerous (for instance, those that imitate but cannot be confused with foodstuff, or those that do not present any risk, notably because they are not a small part or no small part could be detached from it). Article 52 of the Charter sets out that limitations on the exercise of the rights and freedoms recognised by the Charter may be made only if they respect the principle of proportionality, are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. A general ban of food-imitating products would result in banning some non-dangerous products, which would be an unjustified and non-proportional restriction of the freedom to conduct a business.

6.2.Impacts of Option 2

Effectiveness in achieving the specific objectives

Table 8: Summary assessment of Option 2, compared to baseline situation

Objectives

Areas

Assessment

Impact

New technologies

Certainty regarding coverage of new risks

Legally binding clarifications will avoid uncertainty. Depending on the choice of instrument, implementation differences in Member States may remain

+

Certainty regarding coverage of software

No change to the current situation

Online sales

Safety of products sold on online platforms

Safety risks for EU consumers due to products sold on online platforms partly reduced, with the effectiveness also depending on other factors

neutral / +

Information to consumers on essential safety aspects

No change to the current situation

Recall effectiveness

Reaching out to consumers affected by recalls

Change can be expected to facilitate the use of available customer data, and avoid data protection concerns

+

Information provided in recall notices

Improvement in the information provided to consumers is expected to be achieved

Monitoring of recall effectiveness

No change to the current situation

Remedies for consumers affected by recalls

No change to the current situation

Market surveillance

Alignment of market surveillance framework for harmonised/ non-harmonised consumer products

Largely uniform general requirements for businesses and responsibilities and powers of market surveillance authorities for harmonised and non-harmonised consumer products expected to be achieved

++

Deterrence effect

Largely unchanged situation in terms of deterrence of placing unsafe products on the market

Diverging risk assessments by MSAs

No change to the current situation

Simplification of standardisation procedures

Simplification of standardisation procedures is expected to be achieved

Food-imitating products

Addressing risks of food-imitating products

Clarify the regime for the food-imitating products: (a) full ban or (b) risk-assessment approach

+

In the GPSD Study’s survey, all stakeholder groups considered that Option 2 addressed all challenges at least moderately well. Overall, the average assessment across all respondents and stakeholder groups was 3.4 out of 5.

Administrative simplification

Option 2 is expected to reduce regulatory complexity and uncertainty, and thereby to reduce administrative burdens for businesses. Key clarifications regarding the coverage of new risks posed by new technologies will be provided in the new legal instrument. As these will be legally binding, the regulatory complexity reduction can be expected to be more significant than under Option 1. Also, general requirements for businesses and responsibilities and powers of market surveillance authorities would be largely uniform for harmonised and non-harmonised consumer products, which is likely to contribute to reduce regulatory complexity and thereby to reduce administrative burdens for businesses.

However, depending on the choice of instrument, implementation and interpretation differences between Member States may remain (if a directive were chosen). The legal form chosen under this option 2 matters for a certain number of issues and in particular simplification aspects. Contrary to a directive, a regulation is directly applicable across the Union; there is therefore no need for Member States to transpose EU legislation into national law, which can lead to some implementation differences as analysed in the problem definition. With a regulation, national differences regarding the date and/or manner of transposition would be eliminated, which would facilitate consistent enforcement and level-playing field in the internal market. A regulation ensures better that legal requirements are implemented at the same time throughout the Union; it also better achieves streamlining of terminology, important for defining the scope of the legislation, thereby reducing administrative burdens and legal ambiguities. The choice of Regulation also allows to better deliver on the objective to ensure coherence with the market surveillance legislative framework for harmonised products, where the applicable legal instrument is also a Regulation (Regulation (EU) 2019/1020).

In addition, as lack of clarity regarding the application to software will remain, uncertainty in this respect will likely not be reduced. At the same time, Option 2 would provide limited additional requirements for specific operators, such as requirements for online marketplaces resulting from making mandatory many provisions of the Pledge, and requirements regarding mandatory key elements that are to be included in recall notices.

Finally, ensuring alignment with harmonised market surveillance rules will reduce administrative burdens on MSAs. Similarly, simplified standardisation procedures at the Commission’s level should lead to savings for MSAs and the Commission.

Consequently, simplifications would be achieved under this option by aligning market surveillance procedures for harmonised and non-harmonised products, by simplifying the standardisation procedure and by merging the rules on food imitating-products with the ones for non-harmonised products into one single legal instrument and repealing the FIPD. Also the increase of legal certainty regarding the application of consumer product safety rules to new technologies will likely reduce the regulatory costs for businesses producing new technology products. If the new act will be a Regulation the regulatory burden will decrease even more.

Economic impacts

According to the GPSD Study survey, businesses expect that implementing Option 2 would increase companies’ recurrent regulatory compliance costs to some extent, as well as the additional one-off cost linked to the implementation of measures (see Table 9). Total costs for businesses in the EU27 in the first year of implementation are estimated at EUR 36.9 million, equivalent to 0.004% of turnover of EU companies for manufacturing, wholesale and retail of non-harmonised consumer products. They would fall in subsequent years down to EUR 29.6 million.

Table 9: Changes in EU companies’ costs within and after the first year of implementation of Option 2, in million EUR

From 0 to 49 employees

50 – 249 employees

250 or more employees

Total

First year of implementation (total of one-off and recurrent costs)

Total manufacturing sectors

4.8

6.1

9.9

20.7

Total wholesale sectors

2.5

1.7

2.6

6.9

Total retail sectors

5.0

0.9

3.5

9.4

Total additional costs

12.2

8.8

15.9

36.9

Subsequent years (recurrent costs only)

Total manufacturing sectors

4.3

5.5

8.9

18.6

Total wholesale sectors

1.7

1.2

1.8

4.7

Total retail sectors

3.4

0.6

2.4

6.4

Total additional costs

9.3

7.3

13.0

29.6

Source: The survey conducted in the context of the GPSD Study

Estimated benefits for businesses linked to cost savings, that are currently caused by differences in the national implementation of the GPSD and would be partly solved if the new instrument is a Regulation under the Option 2, would amount to EUR 59 million annually 104 , of which EUR 34 million would be saved by EU SMEs and 26 million EUR saved by EU large businesses respectively, compared to the baseline.

The GPSD Study’s survey showed that MSAs expect considerably more benefits for businesses from the implementation of Option 2 (average assessment of 3.3 out of 5, above moderate; see Annex 12) than businesses/business associations themselves (2.6) and other stakeholders (2.7) 105 , both below moderate. All respondent groups in the survey assigned similar values to the benefits resulting from better information on unsafe products/measures taken by authorities provided through Safety Gate/RAPEX.

Concerning impact on SMEs, they generally estimate that a revision of the product safety requirements of the GPSD according to Option 2 would bring a variety of at least ‘minor’ to ‘moderate’ benefits 106 . At the same time Option 2 would impose additional adjustment (e.g. familiarisation cost) as well as compliance costs on SMEs 107 , in particular for manufacturers. Table 9 shows that SMEs would likely face relative higher compliance costs than large companies from the implementation of the proposed policy measures.

Even though the relative cost increases are generally higher for SMEs, the net impact on SMEs overall costs depends on the benefits that can result from a revised GPSD aligned to the market surveillance rules and traceability requirements in Regulation (EU) 2019/1020. We expect the SMEs would save EUR 34 million of the costs that currently arise from inconsistencies in the implementation and enforcement of the GPSD across the EU. Taking into consideration these benefits and the fact that the changes in SMEs’ costs from Option 2 are very small, we expect that the overall net effect from Option 2 on SMEs’ costs is rather low and therefore unlikely to affect SMEs’ operations.

As regards the impact on online marketplaces, the additional costs from Option 2 making most of the Product Safety Pledge obligations binding, would be minor for those companies that already signed the Pledge. By contrast, non-signatory marketplaces would likely face additional compliance costs 108 . In particular, some stakeholders were concerned that these compliance costs might specifically affect small companies and create a deterrent effect on new market entrants, with potential negative effects on competition between marketplaces. Such costs should however be low, as many obligations under the Pledge that would be implemented relate to a ‘notice and action’ procedure specifically tailored for product safety (i.e. a reactive approach, where marketplaces only monitor the information provided by the MSAs about unsafe products but do not need to monitor the safety of products they list by themselves).

Concerning the impact on producers of food-imitating products, the impacts are the same as in Option 1. Concerning the macroeconomic effects, the interviewed stakeholders find that the implementation of Option 2 would have a minor to moderately positive impact on the functioning of the EU’s internal market and international trade 109 : measures to clarify the coverage of new risks by new technologies in a revised legal instrument, as foreseen under Option 2, can address a part of the uncertainties linked to the implementation of some of the key concepts in the GPSD and new technology products, whereby uncertainties would remain with respect to the actual effectiveness of such measures, but also with respect to the coverage of software. It is possible that Member States could resort to national measures in this respect, which would create an obstacle to the free movement of goods or services and lead to an uneven level playing field for businesses in the future. Still, benefits can be expected from the clarification of safety risks stemming from new technologies, recall procedures and more coordinated actions by MSAs. Reduced legal complexity and uncertainty could reduce companies’ administrative burdens to some extent, which could have a moderate positive impact on the functioning of the EU’s internal market and international trade.

Similar to Option 1, the impacts from Option 2 on EU companies’ competitiveness are expected to be relatively small as companies’ additional costs incurred by Option 2 in the first year of implementation would represent only 0,004% of their annual turnover, we do not expect significant impacts on competition for EU businesses, neither for competition within the Single Market nor with regard to non-EU competitors.

As concerns innovation, due to the limited impact on companies’ compliance costs no significant impacts on EU companies’ overall innovative capacities are expected, i.e. higher budgets resulting from savings in compliance costs that translate to expanded research and business development activities. On the other hand, new regulatory requirements for online platforms might result in less innovation in some online platform business models over time, depending on the extent to which new requirements lead to additional costs, which appear, however, to be limited under Option 2.

In term of impact on consumers, the alignment with the provisions of Regulation (EU) 2019/1020 on market surveillance and clarifications provided in the new legal instrument could improve the enforcement of the GPSD, with related benefits for consumers. Also concerning online sales, making relevant provisions of the Pledge binding should lead to better monitoring of unsafe products by marketplaces, as there would be a regular exchange with market surveillance authorities. Option 2 would therefore be expected to increase the level of protection of EU consumers to some extent, by reducing the incidence of unsafe products in online sales channel. The GPSD Study estimated that consumers would therefore benefit in terms of reduced consumer detriment based on the value of unsafe products 110 . This detriment reduction is expected to amount to approximately EUR 333 million in the first year of implementation, increasing to approximately EUR 1.03 billion over the next decade. As regards improving the recall effectiveness and therefore reducing number of unsafe products remaining in hands of consumers would also bring benefits: the GPSD Study estimates under a scenario of somewhat improved recall effectiveness as expected under Option 2, the consumer detriment in the EU to be reduced by EUR 205 million in Option 2 compared to the baseline. This impact on consumers could be also relevant for specific vulnerable consumer groups such as children, and the elderly, as they are often more affected by unsafe products.

The survey of the GPSD Study shows that the benefits for consumers are judged by companies/business associations and MSAs as ‘moderate’ (average values of 3.1 for companies/business associations and 3.4 for MSAs in a scale of 5). Benefits include a reduced occurrence of unsafe products and a reduced number of injuries caused by them, as well as a resulting increase in consumer trust. Other stakeholders are less positive (below ‘moderate’, average value of 2.6 out of 5). As the implementation of Option 2 would only result in minor increases of consumer product safety-related costs for EU companies, the impacts from Option 2 on prices of consumer products in the EU are expected to be negligible. None of the measures considered under Option 2 would be expected to have a significant impact on consumer choice in the EU.

Concerning the impact on consumers of the sub-options for the food-imitating products, we consider that both sub-options lead to the same level of consumer protection against unsafe products, as analysed under Option 1.

Impacts on Member States

The GPSD Study reports that MSAs stated that Option 2 is expected to be more suitable than Option 1 to improve the current legal framework managing the risk of unsafe products being placed in the EU market, but the exact benefits would depend on its actual implementation. Generally, a more uniform framework for harmonised and non-harmonised consumer products, a simplification of standardisation procedures and a clarification of rules regarding product recalls foreseen under Option 2 would, over time, lead to a reduction of administrative burdens for MSAs. The GPSD Study estimates that, if a Regulation is chosen as legal instrument, benefits for MSAs arising from the alignment of the provisions for market surveillance of harmonised and non-harmonised products would lead to improvements in efficiency of market surveillance, and related cost savings, which are estimated at EUR 0.7 million per year across the EU 111 .

Under Option 2, MSAs could be impacted by a broadening of market surveillance responsibilities (e.g. from modified definitions as regards risks posed by new technologies). New responsibilities are generally reflected by a greater need for internal and external resources respectively.

The GPSD Study estimates the total additional recurrent costs for MSAs in EU27 of approx. EUR 6.7 million annually 112 . Concerning one-off costs, the few cost estimates that were provided by MSA respondents indicate that the one-off adaptation and implementation costs are considered to be moderate. 

Option 2 would align the enforcement powers of MSAs regarding non-harmonised products with their powers for harmonised products. Thereby, specific gaps such as legal difficulties to conduct mystery shopping for authorities in some Member States would be addressed. However, the deterrence effect on rogue traders would not be increased, as enforcement powers would not be further strengthened through penalties and sanctions. Likewise, no arbitration mechanism would be created for cases of divergences in the product safety risk assessment between MSAs, and there would be a continued reliance on informal approaches in case risk assessments of MSAs diverge to harmonise the treatment of products on the Single Market.

Social impacts

The implementation of Option 2 is expected to potentially have some positive social impacts with regard to public health and safety and health systems. The clarification of covered risks, mandatory obligations for online platforms (in line with the Pledge) and the alignment with the provisions of Regulation (EU) 2019/1020 will, to some extent, improve market surveillance and enforcement. To the extent that the number of unsafe products on the market is somewhat reduced by these measures in the mid- to long term, this could potentially lead to a lower number of injury cases caused by consumer products in need of medical attention or hospitalisation, hence decreasing public health expenditure for the treatment of product related injuries. However, due to the limited amount of measures taken under Option 2 that could effectively reduce consumer injury-related detriment in the EU, any impact on health systems would be expected to be considerably more uncertain and smaller in size than under Option 3.The current cost of health care utilisation for product-related injuries in the EU are estimated by the GPSD Study to approximately EUR 6.7 billion per year, with hospitalisation accounting for the larger part of the total health care costs at about EUR 6.1 billion. A revised GPSD may contribute thereby to lowering these health care costs for the society.

Environmental impacts

The GPSD Study showed that, while authorities see ‘moderate’ benefits regarding improved lifecycle/quality of products and a higher level of the protection of the environment due to the reduction of unsafe products that also have environmental impacts, companies/business associations and other stakeholders only see between ‘minor’ and ‘moderate’ benefits. The implementation of Option 2 is likely to have positive environmental impacts, to the extent that it clarifies the application of the general safety requirement to products containing environmentally harmful substances that also pose a risk to human health and safety. Already today around 25% of the products notified in Safety Gate/RAPEX presented a chemical substance risk with adverse health effects to consumers. The relevant chemicals were often also harmful to the environment (e.g. lead and mercury).

Impacts on fundamental rights

Option 2 is expected to improve consumer safety to some extent and also to reduce product-related environmental risks (see above). The implementation of a revised GPSD according to Option 2 shall hence have a positive impact and ensure a somewhat higher level of consumer protection and a higher level of environmental protection in line with the Charter. However, there would be no right to effective, cost-free remedies for consumers that own a recalled product, which would limit the positive impact of this option.

At the same time Option 2 imposes additional requirements for businesses, but these do not affect the fundamental freedom to conduct a business as the former are necessary to pursue the general European Union interest of increasing consumer protection and are proportional to the aim pursued, given that the resulting compliance costs are estimated to be very limited compared to the businesses’ turnover. The negative effect of a potential ban of food-imitating products would be the same as developed under Option 1.

6.3. Impacts of Option 3

Effectiveness in achieving the specific objectives

Table 10: Summary assessment of Option 3, compared to baseline situation

Objectives

Areas

Assessment

Impact

New technologies

Certainty regarding coverage of new risks

Legally binding clarifications will avoid uncertainty. The choice of a Regulation will avoid implementation differences in Member States

++

Certainty regarding coverage of software

Coverage of software by GPSD clarified

Online sales

Safety of products sold on online platforms

Safety risks for EU consumers due to products sold on online platforms would be partly reduced (and more so than under Option 2)

+ / ++

Information of consumers on essential safety aspects

Achievement of objectives can be expected

Recall effectiveness

Reaching out to consumers affected by recalls

The option can be expected to increase the availability and facilitate the use of customer data for recall purposes

++

Information provided in recall notices

Improvement in the information provided to consumers achieved

Monitoring of recall effectiveness

Improvement in the monitoring of recalls is expected to be achieved, also depending on implementation

Remedies for consumers affected by recalls

Higher consumer participation in recalls expected

Market surveillance

Alignment of market surveillance framework for harmonised and non-harmonised consumer products

Largely uniform general requirements for businesses and responsibilities and powers of MSAs for harmonised and non-harmonised consumer products expected to be achieved

++

Deterrence effect

Deterrence effect likely to be achieved, depending on the maximum levels of penalties and sanctions foreseen

Diverging risk assessments by MSAs

Risk assessment are likely to become more harmonised, achieving the desired effect

Simplification of standardisation procedures

Simplification of standardisation procedures is expected to be achieved

Food-imitating products

Addressing risks of food-imitating products

 Clarify the regime for the food-imitating products: (a) full ban or (b) risk-assessment approach

+

The stakeholder survey in the GPSD Study confirmed that all stakeholder groups considered that Option 3 addressed all challenges at least moderately well with the overall average assessment across all respondents and stakeholder groups at 3.8 on the scale from 1 to 5.

Administrative simplification

Option 3 would provide several legally binding clarifications, reducing regulatory uncertainty in this respect. General requirements for businesses and responsibilities and powers of market surveillance authorities would be largely uniform for harmonised and non-harmonised consumer products, and implementation differences in Member States would be reduced, which is likely to contribute to reduced regulatory complexity and thereby to reduced administrative burdens for businesses.

On the other hand, Option 3 would include some additional administrative requirements for specific types of operators (e.g. the requirement to provide essential safety information online for online traders). The most comprehensive requirements would apply in the context of recalls, which will likely lead to increased administrative burdens. The GPSD Study concluded that as currently the effectiveness of recalls is considered to be limited, these additional measures and the related administrative burdens appear to be proportionate.

Finally, the simplification of the standardisation process has the potential to reduce administrative burdens on Member States and at EU level by streamlining the related EU process. There is also potential for decreasing the regulatory burden for companies thanks to the arbitration mechanism on the risk assessment.

Also, the choice of Regulation instead of Directive under this option will further reduce the regulatory burden through a consistent application of product safety rules across the EU.

Economic impacts

The survey conducted in the GPSD Study estimates 113 that the additional recurrent costs would increase under Option 3 as well as the additional one-off cost (see Table 11). Total costs for businesses in the EU27 in the first year of implementation are estimated at EUR 196.6 million, equivalent to 0.02% of turnover of EU companies for manufacturing, wholesale and retail of non-harmonised consumer products. They would fall in subsequent years to EUR 177.8 million. The rise in costs for businesses in Option 3 is due to the increased substantive provisions under this Option, requiring investments on the side of businesses, in particular regarding the online sales and recalls.

Table 11: Changes in EU companies’ costs within and after the first year of implementation of Option 3, in million EUR

From 0 to 49 employees

50 – 249 employees

250 or more employees

Total

First year of implementation (total of one-off and recurrent costs)

Total manufacturing sectors

26.9

34.4

55.7

17.0

Total wholesale sectors

12.3

8.5

12.7

33.6

Total retail sectors

24.3

4.6

17.1

46.0

Total additional costs

63.5

47.6

85.6

196.6

Subsequent years (recurrent costs only)

Total manufacturing sectors

25.7

32.9

53.2

111.7

Total wholesale sectors

10.2

7.1

10.6

27.9

Total retail sectors

20.2

3.8

14.2

38.2

Total additional costs

56.1

43.8

78.0

177.8

Source: The survey conducted in the context of the GPSD Study

Concerning the stakeholders views, the GPSD Study showed that companies expect the implementation of Option 3 to cause changes in their recurrent costs, e.g. costs related to additional staff and additional resources for due diligence measures including the establishment of IT systems and external services, in addition to one-off costs, such as familiarisation costs, adaptation costs to regulatory changes (e.g. for external advice).

Businesses expect that implementing Option 3 would increase companies’ recurrent regulatory compliance costs, generally more for manufacturers than wholesalers and retailers, as they might have to adjust different stages of the value-adding process to new regulatory requirements. 

Estimated benefits for businesses linked to cost savings, that are currently caused by differences in the national implementation of the GPSD are the same under Option 3 as in Option 2 due to the choice of Regulation, amounting to EUR 59 million annually (EUR 34 million saved by EU SMEs and 26 million EUR by EU large businesses). These costs savings can be deducted from the costs, i.e. net costs in the first year would be EUR 138 million in the first year.

The implementation of Option 3 would be expected to address current gaps in the product safety regime for non-harmonised products and thereby safeguard the continued free movement of goods in the Single Market. This would likely contribute to positive spill-over effects on consumer trust, demand, production and employment, compared to the baseline scenario, which is beneficial for all undertakings.

Companies and business associations saw less benefits (between ‘minor’ and ‘moderate’) than MSAs and other stakeholders, who assessed benefits to be mostly considerably more than ‘moderate’ and close to ‘significant’ (see Annex 12).

As concerns the benefits for SMEs, the GPSD Study shows that small companies generally estimate that Option 3 would bring a variety of at least ‘minor’ to ‘moderate’ benefits, especially due to its deterrent effect on rogue traders and better detection of unsafe products. However, Option 3 is considered by small companies as less beneficial when it comes to reducing legal complexity or making compliance with product safety requirements easier for SMEs. In the case of medium-sized companies, Option 3 is seen as a suitable contribution to an increased level-playing field among businesses and to have a significant benefit linked to reducing the occurrence of unsafe products and for contributing to a better functioning of the EU internal market. Finally, moderate benefits are expected regarding the potential to increase business revenue or consumer trust.

Even though the relative cost increases are generally higher for the SMEs, the impact on SMEs overall costs is still considered moderate when measured against the benefits that would result from a greater level of regulatory harmonisation and reduced regulatory complexity through the choice of a Regulation, savings being estimated at EUR 34 million for EU SMEs. The changes in SMEs costs are estimated to be limited and Option 3 would not be expected to affect operations considerably 114 .

Online marketplaces interviewed generally agree that the measures under Option 3 would bring several benefits 115 . In the GPSD Study, some businesses also stated that obligations for online marketplaces need to go beyond the Pledge’s provisions and be aligned with those obligations that need to be met by offline importers/distributors, including applying ex-ante and ex-post measures and meeting traceability requirements.

Marketplaces also indicated that Option 3 would increase in particular their recurrent costs. The additional costs would generally be relatively limited for signatories of the Pledge. By contrast, non-signatory platforms would likely face additional compliance costs. These compliance costs might specifically affect small platforms and create a deterrent effect on new market entrants, with potential negative effects on competition between platforms, depending on the size of the additional costs. Due diligence obligations in terms of product safety might require more efforts, but would likely imply less efforts than those of brick and mortar distributors for fulfilling their obligations under the current regime, thanks to the easier product and customer traceability on the online interface of a given platform.

Online marketplaces and other online sellers would also be affected by a requirement to ensure that all safety information is provided online in the same vein as it is required “offline”. We expect these costs to be very limited for both online platforms and online sellers, as this information is already available and does not go beyond what is indicated on the packaging.

Concerning the impact on producers of food-imitating products, the impacts are the same under Option 3 as in Option 1 and 2.

Concerning the macroeconomic impacts, the results of the consultation conducted for this study indicate that all stakeholder groups see important benefits of Option 3 in terms of a better functioning EU internal market and a better level-playing field among businesses, partly through the deterrent effect on rogue traders. All these potential benefits were assessed as being ‘moderate’ to ‘significant’ in the GPSD Study’s survey.

The alignment of the market surveillance rules for all products and a clearer legal framework under Option 3 should overall significantly reduce the businesses’ compliance costs and administrative burdens, which would level the playing field for companies from different countries within the EU and may help many European businesses to be more competitive internationally. At the same time, a more harmonised regulatory level-playing field within the EU will also induce non-EU companies to market their products in the EU, with positive impacts on intra-EU competition. The additional gains in EU companies’ competitiveness are expected to be very moderate as companies’ current compliance costs with consumer product safety legislation are already relatively low 116 , accounting for relatively small shares of total revenues. Moreover, additional regulatory requirements would level potential cost reductions.

Depending on the actual implementation, Option 3 should also create a higher deterrent effect on rogue traders and therefore ensure a better level-playing field for companies by ensuring that all bear the compliance costs with products safety: this was an important point raised in the different consultation activities.

Due to the relatively low additional costs for businesses, representing 0.02% of their annual turnover in the first year of implementation, that would result from Option 3, we expect neither significant distortions in competition and international trade for EU businesses, nor significant impacts on EU companies’ overall innovative capacities 117 . The GPSD Study nevertheless expects positive impacts on competition-driven innovation due to a greater degree of harmonisation and greater legal certainty (e.g. development of new innovative information and traceability systems).

Concerning the impact on consumers, the implementation of Option 3 would result in greater benefits for consumers due to broader coverage and greater effectiveness of the GPSD in protecting consumers from unsafe products, particularly with respect to the mitigation of risks from new technologies and the coverage of products sold via online channels. Option 3 could therefore be expected to increase consumer safety in the online environment and have positive effects on consumer trust, which might translate in higher demand for consumer goods that are sold via online channels. The GPSD Study estimated that consumers would therefore benefit in terms of reduced consumer detriment based on the value of unsafe products 118 . This is expected to amount to approximately EUR 1.0 billion in the first year of implementation, increasing to approximately EUR 5.5 billion over the next decade. Improving the recall effectiveness and therefore reducing the number of unsafe products remaining in hands of consumers would also bring benefits: the GPSD Study estimates under a scenario of significantly improved recall effectiveness (under the assumption that return rates of recalled products are doubled due to legislative measures and more deterrent sanctions and penalties as expected under Option 3), the consumer detriment due to ineffective recalls to be reduced by EUR 410 million in Option 3. 

The survey in the GPSD Study showed that stakeholders consider that Option 3 provides ‘moderate’ to ‘significant’ benefits for consumers. These include a reduced occurrence of unsafe products and a reduced number on injuries caused by them, as well as a resulting increase in consumer trust.

Some of the additional costs incurred to businesses by Option 3 would be passed on, both up- and downstream the product value chain, and thereby impact consumer prices. However, as most businesses report relatively low additional one-off and recurrent costs, the short and medium- to long-term impacts on consumer prices in the EU are expected to be negligible. Also, the GPSD Study does not expect a significant negative impact on consumer choice in the EU under Option 3 119 .

On the other hand, a limited effect pertaining to the affordability of products is also possible. While the increase in consumer prices is overall considered negligible under Option 3, purchase prices for some non-harmonised products might be affected (e.g. products that are most cheaply ordered through online platforms from non-EU/EEA traders), and low-income consumers with high price-elasticity may reduce their purchases.

Concerning the impact on consumers of the sub-options for the food-imitating products, we consider that both sub-options lead to the same level of consumer protection against unsafe products, as analysed under Option 1.

Impacts on Member States

Based on the results from the Study, efficiency gains by MSAs would mostly arise from the alignment of the provisions for market surveillance of harmonised and non-harmonised products. This would lead to improvements in efficiency of market surveillance, and related cost savings, estimated at EUR 0.7 million per year across the EU under Option 3, similarly to Option 2. Also, streamlined standardisation procedures and an arbitration mechanism that provides clarification regarding risk assessments in case of disputes between MSAs could lead to additional cost reductions for MSAs over time.

Concerning the costs, the Study estimates that Option 3 would lead to total additional recurrent costs of MSAs in EU27 of approx. EUR 6.7 million annually and only relatively moderate one-off adaptation and implementation costs.

Generally, the efficiency of market surveillance processes with implications across the EU would be increased under Option 3, mainly via an increased deterrent effect through provisions on penalties and arbitration mechanism.

Social impacts

The implementation of Option 3 is expected to potentially have positive social impacts with regards to public health and safety and health systems, higher than in Option 2. The introduction of additional requirements for traceability and product recalls are expected to improve the effectiveness of recalls of unsafe products from consumers. For instance, the cost savings from directly informing consumers affected by a recall rather than using indirect communication channels have been estimated at €73 million in 2019, i.e. a fifth of the overall estimated cost of recall ineffectiveness 120 . In addition, increased enforcement powers for Member States to impose penalties and sanctions are anticipated to significantly improve market surveillance and enforcement. Consequently, the current cost of health care utilisation for product-related injuries in the EU of approximately EUR 6.7 billion per year could be further reduced under Option 3.

Environmental impacts

On the benefits related to environment of Option 3, the Study reports that while authorities see ‘moderate’ to ‘significant’ benefits regarding improved lifecycle/quality of products and a higher level of environmental protection due to the reduction of unsafe products that also have environmental impacts, companies/business associations and other stakeholders only see benefits that are (close to) ‘moderate’. The same analysis concerning the hazardous chemicals applies here as under Option 2, but the positive impact of Option 3 is amplified by the expected better product safety enforcement.

Impacts on fundamental rights

Option 3 is expected to improve consumer safety whilst also reducing environmental risks (see below). It would thus have a positive impact and ensure a higher level of consumers’ life as well as consumer protection and environmental protection in line with the Charter. This positive impact should be amplified by better product safety enforcement.

The additional requirements imposed on economic operators do not affect the fundamental freedom to conduct a business, as they are necessary to pursue the general EU interest of increasing consumer protection and are proportional to the aim pursued, given that the resulting compliance costs are estimated to be comparatively low compared to the businesses’ turnover. The negative effect of a potential ban of food-imitating products would be the same as developed under Option 1.

6.4.Impacts of Option 4

The main significant difference between options 3 and 4 concerns the merger of legal instruments for the market surveillance rules for harmonised and non-harmonised products into one single Regulation. Therefore the assessment of impacts will concentrate only on this additional element (the rest of the analysis under Option 3 is also valid for Option 4, unless stated otherwise in this section).

Effectiveness in achieving the policy objectives

Creating a single set of rules that would apply to harmonised and non-harmonised consumer products will simplify the EU legal framework greatly. It can be expected that the objective to create uniform requirements for businesses and responsibilities and powers of market surveillance authorities for harmonised and non-harmonised consumer products will be fully achieved. All stakeholder groups considered that Option 4 addressed all challenges at least moderately well. The average assessment across all stakeholder groups was 3.8 out of 5 (similar to Option 3).

Administrative simplification

In addition to Option 3, a single set of rules for market surveillance of harmonised and non-harmonised consumer products in the EU could, overall, result in even less legal complexity. This could translate into simplifications for businesses and MSAs in countries where current national law implements the GPSD and harmonised product legislation through different legal instruments. However, where all product safety legislation is already transposed into a single national product safety law (which is the case in some countries), simplifications through a new EU legal instrument are likely to be very limited.

Economic impacts

The GPSD Study showed that businesses expected costs from Option to be significantly higher compared to Option 3 (see Table 12). Total costs for businesses in EU27 in the first year of implementation are estimated at EUR 331.1 million, equivalent to 0.03% of turnover of EU companies for manufacturing, wholesale and retail of non-harmonised consumer products. They would fall in subsequent years to EUR 296.3 million.

Table 12: Changes in EU companies’ costs within and after the first year of implementation of Option 4, in million EUR

From 0 to 49 employees

50 – 249 employees

250 or more employees

Total

First year of implementation (total of one-off and recurrent costs)

Total manufacturing sectors

45.0

57.7

93.4

196.0

Total wholesale sectors

21.0

14.5

21.6

57.0

Total retail sectors

41.2

7.8

29.0

78.0

Total additional costs

107.2

79.9

144.0

331.1

Subsequent years (recurrent costs only)

Total manufacturing sectors

42.7

54.8

88.7

186.2

Total wholesale sectors

17.1

11.8

17.6

46.5

Total retail sectors

33.6

6.4

23.7

63.6

Total additional costs

93.4

72.9

130.0

296.3

Source: The survey conducted in the context of the GPSD Study

Compared to Option 3, Option 4 comes therefore to substantial additional costs for businesses even if there is no substantive difference regarding the regulatory obligations for businesses and integration of legal instruments should overall reduce regulatory complexity.

A possible explanation for this is that businesses were generally uncertain about the precise implications of Option 4 and tended to provide cautious estimates with regard to additional costs from new regulatory obligations that might arise if one single set of rules would apply. The data on costs for businesses under different options provided by the support study are based on the cost estimations provided directly by the businesses during the survey. When analysing the reasons why businesses were reporting higher costs for Option 4, it appeared that for businesses the legal certainty, clarity of their obligations, even application across the EU and predictable legal environment are very important. This was also confirmed by the meetings with businesses associations. If the rules were set in one legal instrument, that would provide simplicity but proportionally more for Member Sates authorities (in particular in those Member States where market surveillance authorities handle both harmonised and non-harmonised products together) than for businesses. On the contrary, businesses perceived some regulatory risk in Option 4 linked to the possible reopening of Regulation (EU) 2019/1020 for which negotiations have been recently concluded. Businesses had already to invest into the compliance with this new market surveillance Regulation and perceived that merging the rules could lead to reopening of market surveillance provisions already agreed and would create uncertainty about their future legal environment. It should be noted, however, that these costs reported by businesses might be inflated since they are not based on any specific calculation grounds but simple assumptions. If the new market surveillance framework would integrate the provisions relevant for economic operators in Regulation (EU) 2019/1020, such a new legal instrument would not entail additional costs for businesses. Since Regulation (EU) 2019/1020 is setting up rules for market surveillance for harmonised products, any integration of market surveillance rules under one unique legal instrument would therefore mainly impact Member States rather than businesses, in particular by creating benefits for those Member States where the same authorities handle both categories of products, harmonised and non-harmonised.

This difference in viewpoints between businesses and national authorities has been also confirmed by the general assessment of the benefits of Option 4 in the external survey: Businesses have been more sceptical, and saw only slightly less than ‘moderate’ benefits on average (2.9 on a scale of 5), while market surveillance authorities assessed the Option 4 as bringing close to ‘significant’ benefits (value of 3.9).

Other economic impacts (both micro- and macroeconomic impacts) as well as impact on consumer and households are expected to be identical to the impacts under Option 3.

The survey of the GPSD Study shows that MSAs expect on average considerably more benefits that would result from an implementation of Option 4 than businesses/business associations and other stakeholders 121 . It is notable that the expected benefits of Option 4 are considered to be slightly higher by all stakeholders than the benefits of Option 3.

Impacts on Member States

MSAs responding to the Study’s survey stated that having the same rules for all harmonised and non-harmonised products would induce benefits beyond those already identified under Option 3.

The Study found that Option 4 would bring an increase in recurrent costs of MSAs of 5% of total annual staff-related costs: this would amount to total additional costs of MSAs in the EU27 of approx. EUR 3.3 million annually 122 . The few numbers that were provided by MSA respondents indicate that the one-off adaption and implementation costs are considered to be relatively minor (e.g. to prepare some national guidance, new communication strategy and to strengthen cooperation at the national level).

Social impacts, environmental impacts and impacts on fundamental rights

As the measures implemented under Option 4 are identical to the measures implemented under Option 3, the two options are expected to have identical impacts in a social or environmental perspective, as well as on fundamental rights.

7.How do the options compare?

In this section, we compare the results of the impact assessment of the four options, based on the elements developed in the section 6 and the results of the GPSD Study.

Expected achievement of objectives

Table 13: Comparative assessment of impact on objectives

Source: The survey conducted in the context of the GPSD Study

Option 1 would be expected to achieve only one of the five policy objectives, with some additional benefits due to reduction of uncertainty (provision of EC guidance). Option 2 appears more effective in reaching objectives, with some identified gaps being closed and uncertainty reduced by legal measures; however some other gaps remain (e.g. regarding software, product recalls and online sales channels). Options 3 and 4 would most likely achieve all the defined objectives of the initiative.

Administrative simplification

Area

Option 1

Option 2

Option 3

Option 4

Reduction of regulatory complexity and uncertainty

neutral / +

neutral / +

+

+ / ++

Table 14: Comparative assessment of impact on administrative simplification

Option 1 is expected to bring slight reduction of regulatory complexity and uncertainty (via guidance). There are no new administrative requirements, however: administrative burdens due to current fragmentation of legal regime continue (experienced by 16% of MSAs and 42% of companies responding to the survey in the GPSD Study as explained in the baseline section). Option 2 would bring some additional reduction of regulatory complexity and uncertainty, especially if a Regulation was chosen and involve only very limited additional administrative requirements for specific operators.

Under Options 3 and 4, the reduction of regulatory complexity and uncertainty is the most significant (all regulatory gaps closed), with related reduction in administrative burdens for businesses. Some additional administrative requirements concern specific types of operators, the most comprehensive ones concern recalls, which would be limited to companies that have brought unsafe products on the market. Option 4 will further reduce regulatory complexity and bring simplicity, as one single set of rules would apply to harmonised and non-harmonised products.

Economic impacts

Table 15: Comparative assessment of micro- and macroeconomic impacts

Area

Option 1

Option 2

Option 3

Option 4

Benefits for businesses

neutral / +

neutral / +

(Benefits of EUR 59 million/year, if Regulation)

+

Benefits of EUR 59 million/year

+

Benefits of EUR 59 million/year

Cost of businesses (EU27)

neutral

Increase by < EUR 37 million/year

Increase by < EUR 197 million/year

Increase by < EUR 332 million/year

Macroeconomic impacts (Internal market, trade, competition, innovation)

neutral

neutral / +

+

+

Estimated benefits for businesses linked to costs savings, that are currently caused by differences in the national implementation of the GPSD and would be partly solved if the new instrument is a Regulation (Options 2, 3 and 4), would amount to EUR 59 million annually 123 , of which EUR 34 million would be saved by EU SMEs and 26 million EUR saved by EU large businesses respectively, compared to the baseline.

Other additional economic benefits for businesses are expected to be minor under Options 1 and 2, mostly related to reduction of uncertainty due to guidance (Option 1) or the coverage of certain gaps in a recast GPSD (Option 2). Benefits are expected to increase with Options 3 and 4, as all legislative gaps identified in the problem analysis are closed and related uncertainty is avoided. The measures taken regarding online sales contribute to safeguarding a level-playing field for businesses and the deterrence of rogue traders, which are expected to have concrete benefits at firm level, especially in those areas where consumer trust and safety are affected by unsafe products entering the EU through direct online business to consumer transactions.

Table 16: Changes in EU companies’ costs within and after the first year of implementation of Options 1 to 4, EU27, in million EUR

Option 1

Option 2

Option 3

Option 4

First year of implementation (total of one-off and recurrent costs)

Manufacturing sectors

0

20.7

17.0

196.0

Wholesale sectors

0

6.9

33.6

57.0

Retail sectors

0

9.4

46.0

78.0

Total additional costs (EU27)

0

36.9

196.6

331.1

Subsequent years (recurrent costs only)

Manufacturing sectors

0

18.6

111.7

186.2

Wholesale sectors

0

4.7

27.9

46.5

Retail sectors

0

6.4

38.2

63.6

Total additional costs (EU27)

0

29.6

177.8

296.3

Equivalent to the share of turnover of EU companies for manufacturing, wholesale and retail of non-harmonised consumer products (first year of implementation):

Share in turnover

0%

0.004%

0.02%

0.03%

There are no changes in compliance costs for EU companies under Option 1, and only expected to a minor extent under Option 2. Compliance costs of businesses are expected to increase more significantly under Options 3 and 4, however still representing a small fraction of companies’ turnover, maximum 0.03% for Option 4.

Under options 2 to 4 (see Tables 9, 11, 12), the effects of additional compliance costs will have a larger relative cost impact on SMEs than on large companies. Even though the relative cost increases are higher for SMEs, the impact on SMEs overall costs is still considered moderate when measured against the benefits that would result from a greater level of regulatory harmonisation. The changes in SMEs costs are small and implementation of any of the options would not be expected to significantly affect SMEs.

Minor impacts on online platforms are expected under Option 2 for those that are not yet signatories of the Pledge. Under Options 3 and 4 impacts on online platforms are higher, due to due diligence obligations in terms of product safety. However this would likely imply less efforts than those the classical distributors have today under GPSD and therefore proportionate to the general objective.

With respect to macroeconomic impacts, the impacts are expected to be mostly limited, with most (positive) impacts to be expected under Options 3 and 4. Both options would be expected to lead to a more aligned and clearer EU legislative framework as well as reduced legal complexity, which could overall significantly reduce the part of companies’ compliance costs.

Impacts on consumers and households

The consumers will benefit from the reduction of the unsafe products on the EU market. The expected impact of the different options on the reduction of the consumer detriment linked to the value of unsafe products is presented in Table 17 124 .

Table 17: Expected reduction in consumer detriment due to unsafe products– EU27, in EUR million per year

Year

Option 1

Option 2

Option 3

Option 4

2025 (expected 1st implementation year)

0

333

1 038

As Option 3

2026

0

704

2 153

2029

0

821

3 924

2034

0

1 031

5 491

Options 3 and 4 are likely to be more effective than options 1 and 2 to address the challenges for product safety posed by online sales channels. The measures taken under Options 3 and 4 also contribute to aligning the level of product safety between the online and offline sales channels and increasing it, and thereby to reducing the incidence of unsafe products on the market overall. Measures taken under Options 3 and 4 are also expected to reduce consumer detriment estimated on the basis of the value of unsafe products by approximately EUR 1.0 billion in the first year of implementation, increasing to approximately EUR 5.5 billion over the next decade, much higher than in Option 2 and 1. This represents the decrease of financial costs for consumers since they would avoid buying unsafe products. The reason for this increase over time is that overall consumer detriment is expected to grow in the mid-term in the baseline scenario, due to increasing consumption and a continuing shift to e-commerce.

Also, enhancing recall effectiveness would reduce the consumer detriment since less unsafe products would remain in hands of consumers and they might get compensated for the recalled products. Guidance measures under Option 1 in the area of product recalls are not expected to lead to a significantly higher recall effectiveness, and therefore are not expected to reduce related detriment. In contrast, Options 3 and 4 could be expected to substantially reduce consumer detriment related to the value of unsafe products which were not effectively recalled by more than EUR 400 million per year (Option 2 by half of this amount). 125  

Table 18: Expected reduction in consumer detriment due to ineffective recalls – EU27, in EUR million per year

Year

Option 1

Option 2

Option 3

Option 4

Reduction of consumer detriment

0

205

410

410

The other impacts on consumers and households have been estimated as follows:

Table 19: Comparative assessment of other impacts on consumers and households

Area

Option 1

Option 2

Option 3

Option 4

Consumer prices

neutral

neutral

neutral

neutral

Consumer choice

neutral

neutral

neutral

neutral

Consumer safety and vulnerable consumers

neutral

+

++

++

No impacts on consumer prices and choice are expected, as estimated increases in compliance costs are small compared to baseline costs, and companies’ overall product safety-related costs, including regulatory compliance costs, account for only very limited shares of the companies’ turnover.

Regarding consumer safety and the protection of vulnerable consumer groups, the four options differ: Options 3 and 4 are expected to provide a higher level of protection in terms of consumer safety and the protection of vulnerable consumer groups, as existing regulatory gaps are closed and the related policy objectives are better achieved. 

Impacts on Member States

Table 20: Comparative assessment of impact on Member States

Area

Option 1

Option 2

Option 3

Option 4

Benefits for MSAs

neutral / +

+

Benefits of EUR 0.7 million/year

++

Benefits of EUR 0.7 million/year

++

Benefits of EUR 0.7 million/year

Costs for MSAs (EU27)

neutral

mostly neutral (<EUR 7 million/year)

mostly neutral
(<EUR 7 million/year)

mostly neutral
(<EUR 4 million/year)

Other effects on Member States

neutral

neutral / +

+

+

Benefits for MSAs would mostly arise from the alignment of the provisions for market surveillance of harmonised and non-harmonised products. This leads to improvements in efficiency of market surveillance, and related cost savings, which are estimated at EUR 0.7 million per year across the EU (for Option 2 if Regulation is chosen and Options 3 and 4) 126 . Also, streamlined standardisation procedures and an arbitration mechanism that provides clarification regarding risk assessments in case of disputes between MSAs could lead to additional cost reductions for MSAs over time.

Cost for MSAs are not expected to increase significantly under any of the options. With Option 1, no additional costs are to be expected. Under the other options, estimates of additional costs are between EUR 3.3 million/year (Option 4) and EUR 6.6. million/year (in Options 2 and 3 respectively), the difference being related to the expected degree of legislative alignment (the most far-reaching alignment of the legislative framework is under Option 4, which leads to most efficiency gains).

Social impacts, impacts on fundamental rights and environmental impacts

Table 21: Comparative assessment of other impacts

Area

Option 1

Option 2

Option 3

Option 4

Social impacts

neutral

neutral / +

neutral / +

neutral / +

Environmental impacts

neutral

neutral / +

+

+

Impacts on fundamental rights

neutral

neutral / +

+

+

Option 1 is not expected to have significant social impacts and Option 2 only to have some positive ones, to the extent that number of unsafe products and product-related environmental risks are reduced. Most positive social impacts are expected under Options 3 and 4, due to enhanced market surveillance which should reduce the number of unsafe products on the market in the mid- to long term, and consequently to a lower number of injury cases, hence lowering public health costs.

Also reduction of product-related environmental risks decreases in particular in Options 3 and 4, to the extent that the application of safety requirement in this respect is clarified and effectiveness of recalls of products posing environmental risks is improved. 

Options 1 and 2 are not likely to have significant impacts on fundamental rights (Option 2 possibly minor), while Options 3 or 4 are expected to have a positive impact and ensure a higher level of the consumer protection and environmental protection. Even if Options 3 and 4 impose additional requirements for businesses, these do not affect the fundamental freedom to conduct a business and appear to be proportional to the general objective pursued. However, a ban of food-imitating products from the EU market would have a negative impact on the freedom to conduct a business, and its proportionality regarding Art 52 of the Charter would need to be proven.

Impacts of sub-options for food-imitating products

A full ban of food-imitating products (sub-option (a)) and case by case risk-assessment of food-imitating products (sub-option (b)) appear to both deliver the same level of consumer protection since in both cases unsafe products would be subject to corrective measures. In both options there is a benefit linked to better clarification and harmonisation of the rules which would lead to higher legal certainty and level-playing field for economic operators in both sub-options. The broad economic negative impacts of a full ban of food-imitating products would likely be minor since the number of these products is limited. But a full ban on food-imitating products from the EU market without risk-assessment would have a negative impact on the freedom to conduct a business, while there is no evidence to prove that it protects better consumers, in particular children, to confirm its proportionality. At the same time, Option (b) is fully coherent with the current risk-based assessment approach in the GPSD and more proportionate to the possible economic impact of corrective measures on economic operators.

Impacts of the choice of the legal instrument

The analysis shows that a regulation is preferable to a directive in terms of choice of the legal form. A regulation is directly applicable in all Member States; there is therefore no need for Member States to transpose EU legislation into national law and no need to provide them with time to do so. Possible national differences regarding the date and/or manner of transposition would be eliminated with a regulation, which would facilitate consistent enforcement and level-playing field in the internal market. A regulation ensures better that legal requirements are implemented at the same time throughout the Union; it also better achieves streamlining of terminology, important for defining the scope of the legislation, thereby reducing administrative burdens and legal ambiguities; this is particularly true in light of the fact that one of the purposes of the revised GPSD is to make it as coherent as possible with Regulation (EU) 2019/1020, which is indeed a Regulation.

From a subsidiarity and proportionality perspective, the choice of the legal delivery instrument in the form of regulation or a directive does not differ in term of impact. In both cases, the subsidiarity principle is respected since the EU action is necessary to harmonise the general product safety requirement in the EU and ensure therefore safety of products, consumer protection and level-playing field in the Single Market. Both instruments are proportional since the requirements introduced are proportionate to achieve the level of product safety needed to ensure consumer protection and the level playing-field for businesses.

The choice of a Regulation instead of a Directive under the Options 3 and 4 (and possible Option 2) will further reduce the regulatory burden thanks to a more consistent application of product safety rules across the EU.

Table 22 below presents the overview of all the impacts analysed in this IA report. Concerning the methodology for the comparison of impacts, the report generally operates with the “+/-“ rating system for impacts that were qualitatively assessed. However, one composite indicator representing the “expected achievement of objectives” was computed based on 5 qualitative indicators measuring the degree the 5 specific objectives of the GPSD would be achieved. The scale “1-5” was chosen for it to allow for a more accurate overall score (2.9, 3.8 etc.) of the aggregate of the 5 impacts assessed with the “+/-“ rating (which has only 5 scales: --, -, neutral, +, ++).

Table 22: GPSD Overview of the impacts of policy options

Option 1

Enhanced enforcement

Option 2

Targeted legal revision

Option 3

Full legal revision

Option 4

Integration of rules

Expected achievement of objectives (scale 1-5)

2,9

3,4

3,8

3,8

Administrative simplification

neutral / +

neutral / +

+

+ / ++

Economic impacts

Benefits for businesses

Benefits if Regulation

neutral / +

NA

neutral / +

EUR 59 million/year

+

EUR 59 million/year

+

EUR 59 million/year

Cost for businesses (EU27) Increase by 

Share in turnover

neutral

0%

< EUR 37 million/year

0.004%

< EUR 197 million/year

0.02%

< EUR 332 million/year

0.03%

Macroeconomic impacts (Internal market, trade, competition, innovation)

neutral

neutral / +

+

+

Impacts on consumers

Expected reduction in consumer detriment due to unsafe products – EU27, in EUR million per year

1st year

0

333

1 038

1038

10th year

0

1 031

5 491

5491

Expected reduction in consumer detriment due to ineffective recalls – EU27, in EUR million per year

0

205

410

410

Consumer prices

neutral

neutral

neutral

neutral

Consumer choice

neutral

neutral

neutral

neutral

Consumer safety and vulnerable consumers

neutral

+

++

++

Impacts on Member States

Benefits for MSAs

Benefits if Regulation

neutral / +

NA

+

EUR 0.7 million/year

++

EUR 0.7 million/year

++

EUR 0.7 million/year

Costs for MSAs (EU27)

neutral

mostly neutral <EUR 7 million/year

mostly neutral
<EUR 7 million/year

mostly neutral
<EUR 4 million/year

Other effects on Member States

neutral

neutral / +

+

+

Social impacts

neutral

neutral / +

neutral / +

neutral / +

Environmental impacts

neutral

neutral / +

+

+

Impacts on fundamental rights

neutral

neutral / +

+

+

Coherence with other EU policy objectives

Options 3 and 4 deliver the most on the Digital priorities of the EU. These options have the highest impact on the online sales and, in line with the EU’s objectives to Shape EU’s digital future, these options contribute to make sure that online platforms treat their users fairly and take action to limit the spread of unsafe products online. Also these options provide higher safety and legal certainty for connected products and cybersecurity risks, in line with the EU’s actions in the AI and cybersecurity fields. Options 3 and 4 also deliver the most in term of positive environmental impacts and are therefore in line with the EU Green deal priority of the Commission.

Stakeholder views on the options

Figure 5: In your view, to what extent would Option [...] effectively address the following challenges for product safety? – Average across all challenges

Source: The survey conducted in the context of the GPSD Study 127

Authorities and other stakeholders assessed Options 3 and 4 as being most effective, and considered them to well address the five objectives of this initiative. In contrast, average assessments by companies/business associations do not show a considerable variation between the options. They consider all four options to address the challenges slightly better than ‘moderately well’.

Figure 6: Where do you see the greatest additional benefits that would result from the implementation of Option […]? – Average across all benefit categories

Source: The survey conducted in the context of the GPSD Study

Businesses find the benefits of Options 3 and 4 to be ‘moderate’ on average, but still clearly more beneficial than Options 1 and 2. All stakeholders provided the following ranking of benefits for Options 3 and 4, with average above ‘moderate’ in all three stakeholder groups: (1) Better functioning EU internal market, (2) Reduced occurrence of products with health and safety risks, (3) Greater legal certainty, (4) More level-playing field among businesses, (5) Reduced number of accidents/injuries caused by unsafe products, (6) Better information on unsafe products, (7) Deterrent effect on rogue traders.

In the OPC, the stakeholders showed a clear support to certain of the proposed provisions under Option 2, 3 and 4, e.g. to increase the role of online marketplaces as regards the safety of products offered on their website, along the principles stated in the Pledge 128 and to create an obligation to have a responsible economic operator in the EU (supported by 70% of stakeholders) 129 . Also, a large majority of respondents expressed that products which resemble foodstuff should be incorporated into the general product safety legal instrument (69%) 130 . Stakeholders expressed also their support for certain additional provisions foreseen under the Option 3 and 4, e.g. on new technologies: When asked whether the definition of a product in the GPSD should specifically encompass software incorporated into the product, the majority of respondents agreed, even in case the software is downloaded after the product has been sold (56%). A clear majority of respondents favoured safety obligations for manufacturers of products incorporating AI applications at the design stage and also during the lifecycle of the product (75%) 131 . Also, a large majority of respondents agreed that the system of product traceability should be reinforced in the GPSD (82%) 132 .

Ranking of options

All the options defined in the report propose specific actions to address all five problems identified. However, the analysis of impacts shows that some options deliver better on the defined objectives than others.

Option 1 has considered how to best respond to the specific objectives without revising the GPSD. Several non-legislative measures have been considered, in particular issuing guidance documents on the applicability of the GPSD to new technologies and on recalls and exploring extension of the voluntary measures under the Product Safety Pledge for online sales. However, the different consultations showed that such non-legally binding measures would not tackle the identified shortcomings. Also additional funding possibilities for market surveillance have been considered. But the agreement on the EU budget for next years showed that the EU funding of the joint market surveillance activities by the EU budget will remain stable; moreover, in view of the budget constraints in Member States, aggravated by the current Covid-19 crises, we do not expect any increase of resources dedicated to market surveillance activities by Member States themselves.

Under Option 2 and 3 several legislative actions have been considered to tackle the specific objectives: Option 3 being more ambitious, addresses also better the identified shortcomings as data shows. Option 4 has considered a full integration of market surveillance instruments, as it was proposed in 2013, to analyse whether this option would still be valid after the recent adoption of Regulation (EU) 2019/1020.

Regarding the food-imitating products, different options have been looked at, namely: 1) to maintain a separate Directive on food-imitating products; 2) to merge the provisions of the current FIPD into the new GPSD; 3) to abandon targeted provisions on food-imitating products and instead use the general provisions to ensure safety of such products. For the first two options, the possibility of developing guidance has been considered in order to overcome the different interpretation by Member States; however, the consultation of Member States showed that the divergences in interpretation of the Food-Imitating Products Directive were so important that a legal revision of the rules was necessary to ensure its even application. 

Furthermore, the assessment showed that a general ban of food-imitating products would result in banning some non-dangerous products, which would be an unjustified and non-proportional restriction of the freedom to conduct a business. It is therefore essential that food-imitating products follow the same risk-based approach that prevails for the other consumer products. Also keeping a separate regime for food-imitating products has been considered as not necessary in view of the low number of related notifications in the Safety Gate/RAPEX. To assess the safety of these products, their food-imitating aspect can be taken into account in the risk assessment under the GPSD, which appears then to be an appropriate legal instrument to cover the safety of these products. Therefore the third option consisting in abandoning targeted provisions on food-imitating products and instead using the general provisions and the risk-based approach contained in the GPSD to ensure safety of such products appears as the most appropriate.

Table 23: Ranking of the options

Assessment

Ranking

Option 1

While Option 1 is causing no costs for businesses and MSAs, it is unlikely to be adequate to address the problems identified. While uncertainty will be reduced due to Commission guidance, and coverage of online platforms is expected to increase through the promotion of the Product Safety Pledge, safety risks due to products sold on online platforms are expected to continue, as will the other gaps identified.

4

Option 2

Option 2 is causing extremely limited costs (<0.004% of turnover for business, mostly neutral for MSAs), and is likely to be partially adequate to address the identified problems. Gaps will remain regarding the coverage of software, and implementation differences in Member States will likely remain. Option 2 would only partly reduce the consumer detriment, in comparison to Options 3 and 4.

3

Option 3

Option 3 is linked to somewhat higher costs (<0.02% of turnover for business, mostly neutral for MSAs) and is mostly adequate to address the problems identified. Gaps will be closed, and implementation differences avoided. However, while safety risks for EU consumers due to products sold on online platforms could be partly reduced (and more than under Option 2, as online platforms would have a duty of care), their mitigation will also depend on continued surveillance of platforms and other factors (adoption of DSA). Option 3 would considerably reduce the consumer detriment (due to the loss of value of unsafe products) by 1 billion EUR in the first year of implementation and by EUR 5.5 billion over the next decade.

1

Option 4

Option 4 leads to higher costs for business (<0.03% of turnover) than Option 3 and is mostly neutral for MSAs. It is also considered to be mostly adequate to address problems, as measures under Options 3 & 4 are almost identical. Reduction of the consumer detriment would be the same as under Option 3.

2

As indicated in the Table 23, Option 3 seems to deliver the best results in terms of meeting the defined objectives while keeping the economic impact limited, and is therefore the preferred option. Option 4 could deliver broadly the same results in term of objectives but with higher costs for businesses and administrative burdens (mainly linked to uncertainties in revising the Regulation (EU) 2019/1020 on market surveillance which has not entered fully into force yet).

In this IA, the ranking of the options has been done on the basis of the general comparison of the impacts and not specifically on a Multi-criteria analysis (MCA) 133 . Indeed, the comparison table of the impacts of policy options clearly shows that Options 3 and 4 perform better overall. The evidence was gathered from multiple data sources and the results were triangulated to ensure the robustness of the methodology. Based on the analysis, policy Options 3 and 4 would perform equally well except under three dimensions: administrative simplification, the costs for businesses and the costs for Member States. Under Option 3, the costs for business would be lower by ~EUR 135 million/year, while under Option 4 the costs for Member States would be lower by ~EUR 3 million/year and could further reduce regulatory complexity and bring simplicity. Option 3 delivers the best results while keeping the economic impact limited, and is therefore the preferred option. For this reason, a Multi-criteria analysis (‘MCA’) was considered to bring more complexity compared to the added value it would have in determining the preferred option.

Nonetheless, the MCA was tested on the criteria (impacts) in the comparison table and the results are highly sensitive to the weights attributed: either Option 3 or Option 4 are obtaining the highest overall score, depending on the factors which are given slightly more importance. The main reason is that the two options have very similar scores (as explained above). Moreover, in the MCA, the monetary (absolute) values are standardised: the 40% difference in costs for business (from EUR 332 million/year to EUR 197 million/year) is considered the same as the 40% difference in costs for Member states (from EUR 7 million/year to EUR 4 million/year). This economic impact is significant and the MCA would not pick it up accordingly.

The actual effect of the different options will depend on the concrete implementation and enforcement of the initiative at national level and in particular on the level of resources attributed to the MSAs and the EU budgets allocated to market surveillance. The level of allocated resources would however not change the ranking of the options, in particular because some of the actions foreseen can deliver on the objectives without higher budgets, e.g. deterrent effect of penalties foreseen under Option 3 and 4.

The level of allocated resources would nevertheless impact the overall effectiveness of the enforcement of the options. Concerns related to the lack of adequate resources in the competent authorities of some Member States has been expressed by stakeholders during the consultation process. None of the options envisages to set any obligation on the amount to be invested on product safety tasks by Member States since it is set at national level for market surveillance, which remains within remit of national powers. The legislative options envisage rather mechanisms allowing economies of scale and better functioning of market surveillance, such as reinforced cooperation among MSAs including in enforcing measures adopted, more power for MSAs and more effective measures at their disposal, the possibility to reclaim from the relevant economic operator the totality of the costs of their activities in case of dangerous products, the introduction of Union testing facilities which can ease the testing activities for MSAs (some of these measures are foreseen already in Regulation (EU) 2019/1020 for harmonised products).

An effective enforcement of the different options will be ensured by monitoring of reported data on enforcement capacities of Member States (e.g. in the context of the Consumer Scoreboard or via possible reporting obligations) and raising awareness about market surveillance needs in term of resources and tools. Also under Options 3 and 4 the arbitration mechanism will allow more harmonised enforcement of product safety.

The efficiency of the different options can be also enhanced by improving the operation of Safety gate/RAPEX (e.g. by tackling the delays identified in the Evaluation between the detection of a dangerous product in a Member State and its notification to the Safety Gate/RAPEX) and facilitating international cooperation, in particular in the context of the exchanges of information on dangerous products between the Safety Gate/RAPEX and third countries. The Evaluation found that the procedure for setting up such arrangements to exchange non-public information from the Safety Gate/RAPEX could be clarified to cover the different levels of exchanges between the EU system and third countries (in particular via legal revision under options 2, 3 and 4). Such exchanges can enhance the efficiency of Member State’s market surveillance actions. Also, enhancing product safety worldwide will have a positive impact on protection of EU consumers by limiting the entry of dangerous products to the EU market. 

All the options, and in particular the legislative options 2 to 4, including the preferred Option 3, conform to the principles of subsidiarity, since the new legal provisions relate to areas where EU action brings added value to ensure level-playing field on the EU market and higher product safety, while fully respecting the national competences (these options harmonise the obligations on economic operators and respect powers for MSAs). All options also conform to the principle of proportionality given that the size of the identified problem is considerable (high presence of unsafe consumer products on the EU market and related high consumer detriment) and the costs associated with the different options are limited. Also the choice of Regulation as Union action is coherent with satisfactory achievement of the objective to ensure level-playing field and effective and even enforcement at national level.

8.Preferred option

8.1.Preferred option – Option 3

In view of the data and the analysis presented in the previous sections, the preferred policy option is Option 3. This policy option addresses all identified problems and objectives in the most effective, efficient and proportionate way, proposing a legal revision of the GPSD to make it not only fit for purpose now, but also in the future by improving its ‘safety net’ function.

Concerning the objective related to food-imitating products, the sub-option (b), risk-assessment approach, is preferred since it is more coherent and proportionate than sub-option (a), a full ban per se of these products.

The operational objectives under Option 3 are as follows: it would add legal clarity concerning the coverage of risks of new technologies (cyber-security and other risks of new technologies affecting consumer health) and the role of software for product safety. It would make most provisions inspired by the Product Safety Pledge legally binding for online marketplaces and add additional requirements to improve transparency and duty of care by online marketplaces. It would enhance recall effectiveness by introducing mandatory requirements on product recalls and customer traceability. It would also better align the GPSD with market surveillance rules for harmonised products, enhance traceability and integrate and clarify the rules for the food-imitating products. It would provide for increased enforcement powers for Member States, an arbitration mechanism to solve divergent risk assessments and the possibility to adopt delegated acts to improve traceability systems. It proposes a burden reduction measure by simplifying standardisation procedures.

In particular, the preferred option will revise the Directive to include inter alia the following provisions to tackle product safety challenges posed by online sales:

·New obligations for manufacturers and distributors to include in their online offers the same information like for the physical offers, namely information on the name and contact details of the manufacturer and of the responsible economic operator in the EU if applicable, safety information and instructions. The online market places should also ensure that this information is displayed with the online listings. This information allows better traceability of products needed for market surveillance and better safety information in the online sales.

·Establishment of the figure of a responsible economic operator in the EU, in line with Regulation (EU) 2019/1020 on market surveillance, to tackle the issue of direct imports from outside the EU. This Regulation applies this obligation only for certain categories of harmonised products and could be extended to all consumer products to make sure that consumers and national authorities can always address an operator based in the EU for any consumer product potential safety issue.

·New enforcement powers for market surveillance authorities to carry out online investigations, in line with Regulation 2019/1020 on market surveillance. For example, the possibility for authorities to carry out inspections using a covered identify or the power to shut down webpages;

·New product safety obligations for online marketplaces, in line with the general principles set in the DSA. While manufacturers will remain the main responsible economic operators for the safety of a product, online marketplaces could play an important role and exercise a duty of care in relation with their responsibilities, e.g. making efforts to identify dangerous product offers already removed from their websites but that keep reappearing. That duty of care would be different than for distributors as they do not have a physical contact with the product, so their role will focus on doing their most to ensure that their websites do not offer dangerous products, and if they do, they cooperate with authorities for corrective actions.

With regards to software updates, the preferred option aims to shift the responsibility for the safety of a product from the initial producer to the actor in charge of the update in case of ‘substantial modification’. If certain criteria are met, in the case of modifications such as software updates that alter the safety of the product, the responsibility for safety would shift to the actor in charge of such modification. For example, if an application aimed to improve the efficiency of a battery is downloaded into a device and consequently the hazards of the device increase, the software developer would become the responsible actor. That would ensure that actors in charge of substantial modifications take into account the impact of their changes on a specific product. In any case, this would not apply for most software updates, such as the download of games that do not interfere with the safety of a device.

Under Option 3, the revised GPSD would be complementary to the other ongoing policy initiatives mentioned in part 1. The advantage of clearly integrating aspects of substantive alternative policy areas into product safety legislation is therefore to ensure a real safety net for consumers, making possible that that all non-food consumer products on the EU market are safe. The revised GPSD under the preferred option will address the convergences between product safety and the other policy areas, but it will not go beyond those to avoid any overlaps.

Beyond the legal revision of the GPSD, the self-regulatory instruments such as the Product Safety Pledge could be strengthened to complement the legal framework. The Pledge could be further used to continue the operational cooperation between online marketplaces and MSAs and to include the commitments that would not become binding, as well as potential new commitments. This way the Pledge would continue to play a complementary role to the legal framework.

Other voluntary cooperation actions with online marketplaces could be explored, such as the actions taken in the beginning of the COVID-19 crisis where the online marketplaces, upon a call for cooperation from the Commission, acted against online scams and new dangerous products related to the pandemic.

8.2.REFIT (simplification and improved efficiency)

GPSD being part of REFIT, the report has analysed how the current legal framework could be simplified, improve the efficiency and decrease administrative burden. The following actions under Option 3 should lead to such higher efficiencies:

Table 24: REFIT Cost savings under the preferred option

REFIT Cost Savings – Preferred Option – Option 3

Description

Amount

Comments

Alignment to market surveillance procedures for harmonised products

would simplify the market surveillance rules

Cost savings for MSAs: around EUR 0.7 million per year across the EU.

Cost saving for businesses are included in the line below on cost savings linked to more uniform implementation of market surveillance rules.

Benefits are mainly for MSAs and businesses active in both harmonised and non-harmonised product areas.

Conversion to a Regulation

would ensure a common application of product safety rules and avoid inefficiencies and regulatory costs/burdens related to the inconsistent implementation of the GPSD across the EU

Lower regulatory burden and costs

Cost savings for businesses : around EUR 59 million annually (around EUR 34 million saved by EU SMEs and 26 million EUR saved by EU large businesses)

Benefits for all stakeholders (reduced burdens and costs for businesses and MSAs and better enforcement and product safety for consumers)

Simplifying the standardisation procedure under the GPSD would decrease the administrative burden

Simplify and reduce regulatory costs

Beneficial to all stakeholders since standards could be referenced faster

Clarification of scope and definitions regarding the application of consumer product safety rules to new technologies

would lead to higher legal certainty regarding the application of consumer product safety rules to new technologies, which will likely reduce the costs relating to businesses’ (especially SMEs’) efforts to design innovative, safe and cyber-secured products.

Reduced regulatory costs

Benefits for businesses producing new technology products and consumers of these products because of legal clarity and better safety.

Repealing Directive 87/357/EEC and integrating rules on food-imitating products into the revised GPSD would simplify the product safety legal framework and increase coherence in implementation by Member States

 Lower regulatory burden and costs

Benefits for producers of food-imitating products, for MSAs and consumers

Arbitration mechanism on diverging risk assessments

would lower the regulatory burden for MSAs by helping to resolve disputes on risk assessments

Reduced regulatory burden

Benefits for MSAs and consumers

Potential future introduction of improved digital solutions for product traceability through delegated acts

The Study identified e-labelling solutions for traceability information as potential complementary measure to increase efficiency of product safety market surveillance.

Reduced administrative burdens

Beneficial for MSAs, businesses and consumers

Digital interlinks between existing market surveillance systems at EU and national level (including customs) similarly to Regulation (EU) 2019/1020 will make the market surveillance more simple and efficient through connecting Safety Gate/RAPEX with the EU Customs database

Lower regulatory burdens

For MSAs, customs authorities

Beyond these simplifications and higher efficiencies, this initiative endeavours to keep regulatory burdens to the minimum necessary both for businesses and Member States to what is strictly needed to ensure consumer protection against unsafe products.

To avoid any legal uncertainties and related burdens, the revised GPSD would avoid any overlaps between lex generalis and lex specialis, by defining its scope. Also the ongoing work related to product safety under other initiatives has been and will be duly taken into account to avoid overlaps and overregulation.

9.How will actual impacts be monitored and evaluated?

The Commission will monitor the implementation of the revised GPSD, if adopted along the preferred option, with regards to the achievement of policy objectives identified in this Impact Assessment in order to be able to assess its effectiveness in the future evaluation. A commitment to evaluate the impacts of the new legislative act, if proposed, will be included in the draft proposal. The Commission will start monitoring the implementation of the revised GPSD after the entry into force of the initiative. The indicators proposed to monitor the achievement of policy objectives identified in this Impact Assessment are presented below.

The monitoring will be done mainly by the Commission, based on regular EU-wide consumer surveys and data provided by businesses and MSAs. The monitoring and evaluation will be done on the basis of existing data sources where possible to avoid additional burdens on the different stakeholders. The new legislative act, if proposed, will set out reporting obligations for Member States. This reporting will be done on the basis of enforcement indicators which will be further defined by a study. The Commission has already identified some gaps concerning enforcement indicators, and will launch a study to establish a new set of enforcement indicators 134 .

Tables 25 and 26 below provide an exhaustive list of monitoring indicators. A methodological study for the design of enforcement indicators is ongoing to identify which enforcement indicators are the most suitable to measure the achievement of the different objectives and on which Member States could report in practice so that the Commission can receive reliable and comparable data for the next evaluation of this initiative. Through this study the Commission could complement the list of the most suitable indicators for the monitoring system.

The Commission has already mapped existing sources of injury information and looked into the possibility of establishing a EU-level injury database to help the implementation of the product safety legislation 135 . It is currently assessing the costs and benefits or setting up such a EU wide injury database (via coordinated actions with Member States).

Table 25: Monitoring indicators for the main policy objectives

Policy objectives

Monitoring indicator

Data source

Data collected already?

Actors responsible for data collection

Product safety

Number of unsafe products on the market

Safety Gate/RAPEX gives a proxy

Yes

Commission

Consumer detriment

Future study (data for past available from the GPSD Study)

Not in a recurrent way

Commission via study

Consumer trust in product safety and experience of product-related injury

Consumer Conditions Scoreboard

Yes

Commission via regular surveys

Proper functioning of Single Market

Number of unsafe products on the market

Safety Gate/RAPEX gives a proxy

Yes

Commission

Safety net function, also new technologies

Number of unsafe new technology products

Safety Gate/RAPEX gives a proxy

Yes

Commission

Consumer concerns about safety of IoT products

Eurostat ICT survey, Consumer Markets Scoreboard

Commission via regular consumer surveys

Product safety in the online sales

Number of unsafe products found online

Safety Gate/RAPEX gives a proxy

Yes

Commission

Product recalls more effective and efficient

Number of recalls and recalled products

Safety Gate/RAPEX

Yes

Commission

Market practices regarding product recalls and product registration schemes/loyalty programmes

(Coordinated) market surveillance activities

Not in a recurrent way

Member States, Commission

Self-declared data on recall participation and product registration and on exposure to recall information

Consumer Conditions Scoreboard

Yes

Commission via regular surveys

Hard data on recall participation

Monitoring data to be collected by economic operators

No

Economic operators (Member States will be able to request this information)

Enhanced market surveillance and ensure better alignment with harmonised products

Enforcement indicators as defined by the study commissioned by the EC mentioned above

National sources, to be defined by the commissioned Study

No or only partially

Member States based on indicators defined by the study

Safety of food imitating products

Number of unsafe food-imitating products

Safety Gate/RAPEX gives a proxy

Yes

Commission

Number of disputes on risk assessment of these products between Member States

Safety Gate/RAPEX

Yes

Commission

Table 26: Monitoring indicators for the operational objectives – Option 3

Operational objectives

Monitoring indicator

Sources of data and/or data collection methods

Data collected already?

Actors responsible for data collection

Clarify coverage of risk and products linked to new technologies

Number of questions raised on the applicability of new technology products

RAPEX contact points Wiki

Yes

Commission

Clarify the application to software

Number of notifications related to safety issues raised by software

Safety Gate/RAPEX

Yes

Commission

Making most provisions of the Pledge legally binding for all online marketplaces

KPIs and qualitative data (idem Pledge)

Monitoring reports of the Pledge

Yes, to be reinforced

Online platforms -Pledge signatories

Providing all safety information online that is also required to be provided offline

Number of cases where diverging level of information offline/online found

Regular checks in the context of (coordinated) market surveillance activities

No

Member States, Commission

Introducing a duty of care for online marketplaces

Number of cases where duty of care not respected

Regular checks in the context of (coordinated) market surveillance activities

No

Member States, Commission

Introducing mandatory requirements for recalls

Number of cases where new recall provisions not fulfilled

Regular checks in the context of (coordinated) market surveillance activities

No

Member States, Commission

Introducing mandatory requirements for customer traceability

Number of cases where new recall provisions not fulfilled

Regular checks in the context of (coordinated) market surveillance activities

No

Member States, Commission

Align with market surveillance and traceability rules for harmonised products

-

Legal analysis

-

Commission

Requiring an economic operator in the EU

Number of cases where this economic operator is missing

Regular checks in the context of (coordinated) market surveillance activities

No, can be included in the Pledge monitoring

Member States, Commission, online marketplaces

Simplifying the standardization procedures

Average duration of the standardisation procedure

Observed durations

Yes

Commission

Strengthening the enforcement powers of MSAs

Number of enforcement measures adopted at national level

Implementation reports of Member States

Yes (for past)

Commission based on Member States input

Level of penalties foreseen at national level

Legal analysis

Yes (for past)

Commission based on Member States input

Introducing the arbitration mechanism

Number of disputes on risk assessment solved

Safety Gate/RAPEX

Yes

Commission

Incorporation of provisions on the food-imitating products in the new legal act

Number of disputes on risk assessment of these products between Member States

Safety Gate/RAPEX

Yes

Commission



Annex 1: Procedural information

10.Lead DG, Decide Planning/CWP references

This Staff Working Document was prepared by the Directorate-General for Justice and Consumers (DG JUST).

The Decide reference of this initiative is PLAN/2019/6283 Review of the general product safety directive -Proposal for a regulation on general product safety.

This includes the Impact Assessment report as well as the GPSD Evaluation Report, in annex to this Impact Assessment.

11.Organisation and timing

·An Inter Service Steering Group (ISSG) has been established to support the work of DG JUST on the evaluation and impact assessment of this initiative set up.

·DGs participating in this ISSG: SG, LS, CNECT, COMP, ENV, GROW, JRC OLAF, SANTE, TAXUD

·This GPSD ISSG held 5 meetings times (one informal meeting on 14/02/2020 and four formal meetings on 12/06/2020, 08/10/2020, 18/11/2020 and 07/12/2020). DG JUST consulted the ISSG on the different steps of this initiative: Roadmap/Inception Impact Assessment, Consultation strategy, Open Public Consultation questionnaire, the study underlying the evaluation and impact assessment (ISSG provided comments on all study steps and reports) and finally on the draft Impact Assessment report.

·Publication in EUROPA of the Roadmap on the evaluation/Inception Impact Assessment, 30 June 2020

·Launch of the Open Public Consultation on the combined Roadmap/Inception Impact Assessment, 30 June 2020 - 6 October 2020 (14 weeks).

12.Consultation of the RSB

The RS has been consulted on the Impact assessment report and issues a ‘positive opinion with reservations’ on it.

The two tables below present the elements of the RSB opinion and how the report has been updated to take them into account:

Main issues raised by the RSB in its opinion and related updates

(1) The report does not sufficiently explain how the horizontal and sectoral elements of the product safety framework interact with each other in a coherent manner. The fall-back function of the GPSD as safety net is not sufficiently elaborated. The links to recent safety related sectoral initiatives are not sufficiently clear.

Related updates:

·The report clarifies the overall structure of the EU Product safety framework in more detail by explaining the interlink between the GPSD and the other sectorial and harmonised legislation at EU level and the role of GPSD as safety complementing the other legislation to ensure the safety of EU consumers for any product now and in the future. The report includes more graphical presentation of the general products safety framework.

·The interlink with the recent and ongoing initiatives, in particular those on digital platforms, cybersecurity, circular economy and artificial intelligence, has been better explained.

(2) The available policy choices are not sufficiently clear. The report presents only a limited set of options and lacks detail on the content of the measures contained therein. It does not explain sufficiently why some options are discarded.

Related updates:

·The report better explains the structure of the options and how they address the objectives but in a different level of depth.

·The discarded options has been further developed in the revised IA report. In particular, the report explains why some options already analysed and disregarded in the IA in 2013 can still be disregarded now (e.g. to have different safety requirements for harmonised and non-harmonised products, extending the scope to services, abolition of the general product safety requirement). Also the report explains that some options have been considered and disregarded because of lack of proportionality, e.g. higher traceability requirements for all products.

·The report explains that other stakeholders did not have raised any other new real alternatives in the consultation process until now.

(3) The report does not explain in a convincing manner why the estimated costs for business under the integration option (option 4) are much higher than those of the full legal revision option, although in terms of substance the options seem very similar.

Related updates:

·Under Option 4 the businesses reported higher costs to our contractor. The report admits that these costs might be inflated and a clear disclaimer has been included at this respect in the revised report.

Specific improvements requested by the RSB

How the RSB comments have been addressed in the revised IA report

(1) The report should explain upfront how the horizontal and sectoral elements of the product safety policy framework fit together and how the GPSD general safety net fallback functions. It should better explain the coherence with Regulation 2019/1020 on market surveillance, and the relevance of the recent changes to that Regulation for the GPSD. It should better describe the links to recent initiatives, such as on digital platforms, cybersecurity, circular economy and artificial intelligence.

Cf main issue 1

Explained the interaction of the GPSD with other EU legislation and initiatives relating to product safety

(2) The report should better present the scope of the initiative, especially on which consumer products are covered. In this sense, it may help to include a diagram presenting the product safety regulatory framework. The safety concept needs elaboration. It is not clear what types of risks and damages it covers, ranging from health to cyber issues. The report should detail the specific mechanisms it will use to identify future product risks to function as a safety net.

Cf main issue 1

Included a diagram presenting the product safety legal framework

Better explained the scope of the GPSD and the proposal

Better explained the concept of risk in particular in the context of new technologies (cybersecurity risks) and how these risks could be assessed (e.g. when substantial modification of the product)

(3) The report should reinforce the problem analysis to better reflect the deficiencies and gaps the initiative wants to solve. It should clarify to what extent self-regulatory measures under the Product Safety Pledge have been effective and what lessons can be learned. It should explain to what extent the Pledge helped to get information on emerging risks of new technologies and improved recalls.

Gaps and deficiencies better explained in the problem definition.

Achievements and limitations of the Product safety Pledge better spelled out as well as lesson learnt.

(4) The range of options analysed should be better linked with the specific objectives and the problems the initiative aims to tackle. The report should provide more detail on the content and functioning of the proposed policy measures under the various options. It should explore whether there are alternative policy choices to the substantive measures presented for each problem area under the preferred option. It should expand on how the self-regulatory elements could be strengthened. It should provide more details about discarded options and the reasons for their exclusion from the analysis.

Cf main issue 2

The option packages presented in more detail, beyond the summary table.

The alternative options, which have been discarded have been included in the IA report. But no new policy options.

The further use of self-regulatory instruments such as the Product Safety Pledge after the adoption of the initiative has been explained.

Examples of other voluntary cooperation actions with platforms, e.g. during COVID crisis, have been introduced.

(5) The full integration option comes with substantial additional costs as regards market surveillance for business although there seem to be no real substantive differences on new regulatory obligations, compared to the full legal revision option. The report should review the robustness and reliability of the costs estimates provided in the support study given their importance for the overall comparison and ranking of options.

Cf main issue 3

The report reviewed the underlying cost data under Option 4 and provides the necessary disclaimers.

(6) The report should provide greater clarity on how this initiative will tackle safety issues related to consumers’ online purchase from third countries as well as software updates. It should explain how the sanction regime would work under the different options and clarify whether alternatives with different deterrence effects can be assessed. It should better describe how effective enforcement of the options will be ensured.

A detailed presentation of the measures under the different options (cf point (4)) includes now these clarifications. The report presents specific explanation of measures to tackle safety issues related to consumers’ online purchase from third countries as well as software updates. The sanction regimes have been explained under the different options and alternatives analysed.

The report now elaborates on ways how to ensure better enforcement: e.g. introduction of the arbitration mechanism, collecting data on enforcement capacities of Member States in the context of the Consumer Scoreboard to raise awareness.

(7) The REFIT aspect should be clarified, explaining how the initiative would endeavour to keep regulatory burdens to the minimum necessary. More information is needed on how overlaps between lex generalis and lex specialis would be prevented.

Some more technical comments have been sent directly to the author DG.

The report contains now a reinforced explanation on the simplifications, avoiding overlaps and overregulation and how the initiative would keep the minimum necessary regulatory burden while ensuring the objectives.

Other technical comments (e.g. providing summary table of the costs of different options) have be taken into account.

13.Evidence, sources and quality

Studies commissioned or supported by the European Commission

·Study to support the preparation of an evaluation of the General Product Safety Directive as well as of an impact assessment on its potential revision, Civic consulting, March 2021

·Study for the preparation of an Implementation Report of the General Product Safety Directive, Civic consulting, July 2020

·Study on the assessment of the opportunities for increasing the availability of EU data on consumer product-related injuries, European Commission’s Joint Research Centre’s, May 2020

·Behavioural Study on strategies to improve the effectiveness of product recalls, LE Europe, June 2021

·Survey on consumer behaviour and product recalls effectiveness, April 2019

·Implementation of the new Regulation on market surveillance: indication of origin, VVA Europe, May 2015

External Expertise

·Consumer Safety Network (CSN)

·Sub-Group on Artificial Intelligence, connected products and other new challenges in product safety to the Consumer Safety Network

Selective bibliography

·Bernstein A. (2013), ‘Voluntary Recalls’, University of Chicago Legal Forum, 1: 394 ff., available at: http://chicagounbound.uchicago.edu/uclf/vol2013/iss1/10 and Jacoby J. (1984), ‘Perspectives on Information Overload’, Journal of Consumer Research

·OECD (2020)- ‘E-commerce in the time of COVID-19’, available at http://www.oecd.org/coronavirus/policy-responses/e-commerce-in-the-time-of-covid-19-3a2b78e8/#biblio-d1e705

·OECD (2018), ‘Enhancing Product Recall Effectiveness Globally’, available at https://www.oecd-ilibrary.org/science-and-technology/enhancing-product-recall-effectiveness-globally_ef71935c-en  

Other Sources

·Eurostat

·European Injury Database (IDB)

·Safety Gate/RAPEX

·WHO CHOICE



Annex 2: Stakeholder consultation

1.Consultation strategy

The impact assessment (IA) for the revision of the General Product Safety Directive 2001/95/EC (GPSD) was supported by the following consultation activities:

-public consultation on the Inception IA and roadmap;

-an open public consultation (OPC);

-stakeholder workshops;

-ad-hoc contributions and targeted consultations with Member States (MS) and other stakeholders.

The objective of these consultations was to collect qualitative and quantitative evidence on all key elements of the IA, from relevant stakeholder groups and the general public.

The stakeholder groups identified as relevant are:

-Consumers and consumer organisations,

-Businesses and business organisations,

-Member States market surveillance authorities,

-Other product safety experts.

The consultations were publicised via social media posts, emails to existing networks (including in the Safety Gate- RAPEX weekly update newsletter on dangerous products), regular meetings of the expert groups and networks, as well as in speeches delivered by high-level Commission officials.

2.Overview of consultations

a)Consultation on the combined evaluation roadmap and inception impact assessment

The consultation on the combined evaluation roadmap and Inception IA took place between 23 June and 1st September 2020. 44 answers were received: 20 from business associations, 9 from company/business organisation, 5 from consumer organisations, 2 from non-governmental organisations (NGOs), 3 from citizens, 2 from public authorities, 1 from a trade union, 2 other, and additional 3 feedback were not relevant (because the questionnaire was empty or contained almost no information).

Most of the stakeholders supported the GPSD revision, almost half of them being in favour of the full revision (options 3+4).

Option 0 (status quo)

1 stakeholder

Option 1 (better implementation and enforcement)

7 stakeholders

Option 2 (targeted revision)

10 stakeholders (some willing only changes regarding the online dimensions)

Option 3 (full revision)

12 stakeholders

Option 4 (integration of legal instruments)

9 stakeholders (mainly consumer organisations)

The feedback on the IIA (summarised in the next section) has included the objectives as well as the set of options to be analysed in the IA.

b)Open public consultation on a new Consumer agenda

The open public consultation (OPC) ran between 30 June 2020 and 6 October 2020, in order to gather views of the public on the ‘New Consumer Agenda’ as well as on three legislative proposals in the area of EU consumer policy, including the review of the GPSD. The public questionnaire available in the 24 official EU-languages was targeting a wide range of stakeholders, both the general public and relevant organisations and institutions.

The section on the GPSD in the public consultation included questions related to both the evaluation of the GPSD and the IA for its revision. The number of respondents that answered at least one question in this section is 257. The majority of respondents were business associations and EU citizens (each 26%), followed by company/business organisations (15%). Other respondents included public authorities (11%), consumer organisations (8%), non-governmental organisations (7%), academic/research institutions (3%), non-EU citizens (1%) and other respondents (3%).

The full report on the results of this OPC has been published on the Have Your Say page. 136  

Annex 13 contains the summary of the replies of the OPC GPSD part.

c)EU Workshop on strategies to maximise the effectiveness of product recalls

The EC organised on 23 October 2019 a workshop on the effectiveness of recalls in order to take stock of existing market practices and regulatory approaches, and identify possible new avenues to maximise recall effectiveness. 68 participants took part in the workshop, including regulators from around the world, representatives of international organisations, consumer organisations, industry and academics. The workshop was divided into three thematic sessions, focusing on i) strategies to facilitate direct consumer contact, ii) strategies to increase consumer response to recalls and iii) roles and responsibilities in the recall process.

d)2020 International Product Safety Week (IPSW)

The EC organised the International Product Safety Week on 9-12 November 2020 137 . This event is the largest gathering of product safety experts from all around the world and it takes place every two years. More than 500 participants from 73 countries registered for the 2020 online edition, including regulators, businesses, or consumer organisations. Two sessions were organised on topics of interest for the revision of the GPSD, namely on traceability and recalls. Input on these two topics was collected both from a wide diversity of panellists and also from the audience via interactive online surveys.

e)European Consumer Summit 2020

The EC organised the European Consumer Summit on “Consumers in the Green and Digital Transition: Challenges and solutions for a new consumer policy”, which took place on 30-31 January 2020 138 . This event gathered over 500 stakeholders including policymakers, national enforcement authorities, academia, consumer and business organisations, and youth representatives, from all Member States. Sessions were notably organised on “safety and consumer protection in online trade” and “Artificial Intelligence –a consumer-centric approach”. Input was also gathered from the audience via interactive surveys.

f)Workshops on online marketplaces and product safety

The EC held a number of workshop sessions related to online marketplaces and product safety on 8, 10, 13 and 17 July 2020. The objective of the workshops was to gather up-to-date information on the state of play concerning the main challenges in addressing the sale of illegal goods online. It focused in particular on measures and good practices from marketplaces and the cooperation with authorities and relevant third parties. Input gathered through these sessions aimed at feeding into the revision of the e-commerce Directive and of the GPSD. The workshops gathered more than 60 participants each, covering a very wide range of stakeholders, such as online marketplaces, retailers, industry associations, consumer organisations and MS authorities. Annex 14 contains the minutes from these workshops.

g)Ad hoc contributions and consultations

Input from a variety of stakeholders (Member States authorities, consumer organisations, businesses, business organisations…) has been collected, notably via extensive consultations, in the framework of the dedicated study for the evaluation and impact assessment of the Directive as well as the study supporting the preparation of the implementation report of the Directive.

Input has also been received from the following stakeholders via ad hoc contributions and/or ad hoc consultations: consumer organisations, businesses, business organisations, national chamber of commerce, trademark association. Further bilateral discussions were also held with Member State authorities.

Stakeholders’ input was also collected through the expert group ‘Consumer Safety Network’ and the Sub-Group on Artificial Intelligence (AI), connected products and other new challenges in product safety.

A workshop of the Consumer Safety Network expert group was organised on 19 November 2020 to discuss the study results supporting the implementation report of the Directive, the evaluation and the impact assessment, as well as specific topics of interest (penalties, operator-based market surveillance and cooperation with customs authorities).

The consultations for the evaluation and impact assessment of the revision of the General Product Safety Directive, which forms part of the wider consultation strategy on the New Consumers Agenda, have also benefitted from the consultations on other ongoing initiatives of the European Commission, namely linked to the White Paper on Artificial Intelligence and the proposal for a Digital Services Act.

3.Summary of the results of the consultations

In the following summary, "consumer representatives" means national and EU-level consumer organisations, "business representatives" includes national and EU-level business organisations,

"MS authorities" includes national market surveillance authorities and government authorities in charge of product safety.

1)    Preserving the safety net role of the GPSD

The overall feedback among all stakeholder groups is that the GPSD is a useful legislation and its safety net principle should be preserved. Consumer representatives also emphasised the precautionary principle being a key pillar of the product safety legislation.

However, a large majority of respondents expressed that current EU safety rules for non-food consumer products covered by the GPSD could be improved in specific areas to be more adequate to protect consumers (71% in OPC).

2)    Tackling the challenges posed by new technologies

Stakeholders acknowledge that new technologies raise many challenges. Different stakeholders favoured different approaches to tackle these. In the OPC, almost half the respondents considered the safety of products involving new technologies not to be adequately regulated (47%). The majority of respondents agree that the definition of a product in the GPSD should specifically encompass software incorporated into the product, even in case the software is downloaded after the product has been sold (56%). About a quarter of respondents considered that only software already installed into the product when sold should be included.

Almost all respondents support the introduction of a requirement for products that could be modified via software updates/download or machine learning to remain safe throughout their lifetime (very important for 72%, rather important for 24%). A clear majority of respondents also favoured safety obligations for manufacturers of products incorporating AI applications at the design stage and also during the lifecycle of the product (75%), whereas only 9% of respondents expressed that the obligations should be limited to the design stage.

In the consultations, consumer representatives and several MS authorities expressed their support in extending the definition of ‘safety’ to include (cyber)security aspects that have an impact on safety. In the consultation on the Roadmap/Inception IA, technology-oriented businesses showed more reluctance regarding the inclusion in the GPSD of new technologies and new risks related to them as they point out the possible overlap with other pieces of legislation. Their preference is that the GPSD remains a technology-neutral tool, and that risks linked to new technologies are covered in other more specific pieces of legislation.

3)    Addressing safety issues associated with products sold online

The issue of products coming directly or via online platforms from outside the EU was a recurrent issue mentioned in the consultations. Businesses and business representatives stress the level-playing field angle and they point out that currently, many EU retailers suffer from unfair competition in relation to operators based in third countries. Consumer representatives call to close loopholes regarding international e-commerce. Consumer representatives and other stakeholders also mentioned the issue of dangerous products reappearing on online marketplaces. MS authorities stress the difficulty to control products coming from third countries and to take enforcement actions against economic operators outside the EU.

In the OPC, the majority of respondents expressed that they were aware of problems associated with online marketplaces having no direct legal obligations for the safety of products hosted on their platform by sellers (53%). When asked about the role that online marketplaces should play regarding the safety of products offered on their websites, the most commonly supported notions were that they should remove dangerous products listed on their website when notified (77%), that online marketplaces should prevent the appearance of dangerous products, including their reappearance once they have been removed (66%) and that they should inform sellers of their obligation to comply with EU rules on products (64%). A lower number of respondents thought that online marketplaces should do a cursory check on all products offered on their website to identify products that likely do not comply with safety rules (42%).

Views diverge between stakeholders when it comes to the obligations of online marketplaces:

-Consumer representatives are in favour of strengthening their responsibilities across the supply chain.

-Businesses’ views are heterogeneous, in particular:

oRetailers argue that online marketplaces play a key role in the supply chain, and therefore they should have a corresponding responsibility.

oOnline marketplaces responding to the OPC expressed that they would also accept some of the Product Safety Pledge’s provisions being binding, but not more.

According to the participants of the session on the safety of product sold online at the EU Consumer Summit 2020, voluntary commitments are not sufficient (89% of respondents),enhanced responsibility for online marketplaces are needed, as well as better enforcement (for instance regarding website blocking by authorities).

4)    Improving market surveillance rules and enforcement

Stakeholders from all categories are in favour of aligning market surveillance rules between harmonised and non-harmonised products. Some stakeholders insisted on the fact that the GPSD relies too much on ex post market surveillance, and more action on ex ante prevention should be done at different levels. Member States’ authorities lack of resources for market surveillance was also repeatedly mentioned in consultations. Other challenges mentioned in the OPC included the insufficient number of control checks carried out, including by customs (29%), insufficient cooperation between market surveillance authorities in the EU (27%), and divergences between authorities in the assessment of product risks (19%).

Regarding the introduction of a “responsible person” in the revised GPSD, a large majority of respondents in the OPC considered that products covered by the GPSD should only be placed on the EU market if there is an economic operator established in the EU responsible for product safety purposes (70% in favour). Consumer representatives support the introduction of such “responsible persons” in the EU, in line with Regulation 1020/2019, but stress that their responsibilities should be strengthened.

Consumer representatives also call for increased international cooperation on market surveillance, product safety, customs and enforcement.

5)    Revision of the standardisation process

Stakeholders are mostly in favour of simplifying the standardisation process to develop new standards. Consumer organisations suggested the Commission Decision on safety requirements to become legally binding.

6)    Including food-imitating products in the scope of the revised GPSD

Most stakeholders are in favour of incorporating the food-imitating legislation into the GPSD. In the OPC, a large majority of respondents expressed that products which resemble foodstuff should be incorporated into the general product safety legal instrument (69%). In the consultation on the inception IA, including this element in the product safety risk assessment was the favoured approach. No support was expressed to the full ban of food-imitating products. Consumer representatives also suggest including risk assessment criteria regarding the child-appealing aspect of products in the revised GPSD.

7)    Improving the framework for product recalls

Stakeholders’ opinions differ regarding the need to tackle recalls in the revised GPSD. In the consultation on the inception IA, some stakeholders stressed that this issue is mostly linked to consumers’ behaviours or to rogue traders. In the OPC, approximately a fifth of respondents regarded as problematic that there were no specific requirements for product recalls (22%). However, a consumer representative pointed out that this issue might not appear very important precisely because consumers are not sufficiently aware about recalls. Consumer representatives and many MS authorities are in favour of addressing them in the legislation or through guidance.

The crucial importance of using direct communication to consumers for recalls has been repeatedly stressed in the consultations, whenever it is possible, for instance because the product was registered, bought online, or bought with the use of loyalty card. Direct notification was also judged as being by far the most effective channel to spread recall information (according to 92% of respondents in the survey held during the IPSW session on product recalls).

There was also a general agreement among respondents that companies should be obliged to use customer data at their disposal to contact affected consumers directly in case of recalls (60% ‘strongly agreed’ and 32% ‘tended to agree’, IPSW survey). In this regard, businesses and authorities call for more clarity on data protection aspects and compliance with the General Data Protection Regulation. Several stakeholders mentioned that consumers should be able to choose to receive safety notifications only (when registering a product or subscribing to a loyalty scheme).

Consumer representatives and authorities also stressed that online marketplaces should play a facilitating role in recalls, taking advantage of the channels and systems they have already put in place to communicate with both consumers and sellers. In the OPC, more than half of the respondents agreed that online marketplaces should inform consumers when a dangerous product has been removed from the marketplace (55%). The potential benefits linked to connected products were also stressed: when a connected product itself is subject to a recall, this technology can be used to warn consumers or, if they fail to act, switch off the product or reduce its performance.

Participants in the workshop on recall effectiveness and IPSW session on recalls agreed that a recall notice should be easy to read, straight to the point and clearly describe the risk and action to take. Several stakeholders stressed that some key elements and ground rules, applicable to all recall notices, should be standardised and made compulsory.

8)    Improving traceability along the supply chain

A large majority of stakeholders agree that the system of product traceability should be reinforced in the GPSD (82% in favour in the OPC). The elements that most respondents in the IPSW online survey wanted to see as mandatory is the type, batch or serial number or other element allowing the identification of the product (85%). This was followed by the manufacturer’s name (81%), the importer’s name (63%) and the trademark (59%). Most respondents also favoured the possibility to have traceability information available in an electronic format only, for instance via a QR code (55%). However, the consumer representative noted that vulnerable consumers who do not necessarily have the capacity to read a QR code should not be left aside.

Stakeholders also appear to be in favour of the introduction of a “one up one down” traceability requirement in the revision of the GPSD, whereby economic operators have to keep information about the upstream and downstream economic operator in the supply chain (93% in favour in the slido survey conducted at the recall session of the IPSW). Consumer representative explained that a differentiation between durable and non-durable goods would be relevant when it comes to the number of years during which such information should be kept. Moreover, the role of online marketplaces in improving product traceability was also stressed, notably that they should check that traceability information is available before listing a product.

Stakeholders would also welcome the possibility to set up additional traceability requirements for the components of the product (74% in favour, IPSW survey). Consumer representative stressed that because of the growing importance of the circular economy, traceability is increasingly important not only for the product itself but also for its components.

9)    Better tackling of chemical risks

Consumer representatives consider that the revised GPSD should play the role of a real safety net for chemicals in all products, by setting detailed chemical safety criteria for non-harmonised consumer products through implementing measures.

10)    Addressing counterfeit products

Brand owner organisations stressed that the GPSD should be amended to tackle counterfeit unsafe products.

4.Use of the results of the consultations

The results from the consultation activities have been incorporated throughout the IA from the problem definition to possible options and their impacts. The consultations have confirmed the relevance of the five objectives identified in the inception impact assessment, as well as the elements and the options proposed to answer these objectives. The results have also been taken into account in the Evaluation (Annex 5) for the assessment of the GPSD against the five evaluation criteria, to reflect the different views of the stakeholders.

Moreover, some elements raised in the consultations will be included as accompanying implementation measures of this initiative, notably regarding international cooperation: consumer representatives have called for good examples of cooperation between regulators, such as the EU-Canada arrangement on product safety alerts, to be replicated with other countries. This will be included in the larger implementation strategy.

Regarding the inclusion of the fight against unsafe counterfeit products in the scope of the revision of the GPSD, this issue was duly taken into consideration, but was not included in the scope of the IA. Indeed, counterfeit products are already addressed by EU legislation, and unsafe products are covered including by the GPSD, regardless of their authenticity. Even though counterfeit products can pose safety risks, the safety of a given product has to be analysed based on a risk assessment.

Annex 3: Who is affected and how?

1.Practical implications of the initiative

In case the preferred option 3 is retained, the initiative will have practical implications on both the economic operators handling products covered by the GPSD (it can be producer, distributor, importer, online marketplaces or fulfilment house) and market surveillance authorities in the Member States.

Under Option 3, businesses will have additional requirements: manufacturers and importers will have additional traceability requirements and online traders (online retailers, distributors or marketplaces) will have the requirement to provide the same information online, which is available offline (traceability and other mandatory safety information). This would imply for businesses setting up internal mechanisms to ensure they comply with these traceability and transparency provisions. Comprehensive additional requirements would apply in the context of recalls for all businesses, but these additional requirements would have practical implications only to those companies that have actually brought unsafe products onto the market. Online marketplaces will also have to make sure they set up internal mechanisms to comply with most of the Product Safety Pledge’s provisions and the duty of care responsibility, which would also apply to them. In addition, companies selling in the Single Market from outside the EU will have to set up arrangements to ensure that the products sold in the EU have a responsible economic operator. Finally, enhanced penalties would have an impact on the non-complaint businesses.

A broadening of market surveillance responsibilities, new competences and a greater need for internal and external resources respectively to perform the market surveillance (e.g. the new tools for market surveillance online broaden the possibilities of MSAs and may require additional resources and skills), will impact market surveillance authorities in Member States. However, the provisions on MSAs’ powers are largely aligned to the existing market surveillance provisions applicable to harmonised products under Regulation (EU) 2019/1020. Therefore, these provisions are not new to MSs and in particular for those MSs where MSAs handle already both categories of products, harmonised and non-harmonised. The practical implications are therefore rather better synergies and use of existing structures and resources than new additional needs. The extended coverage of risks from new technologies (e.g. cyber-security risks that have an impact on safety) would be expected to increase the need for professional staff and external expertise on the side of MSAs to check the safety of new technology products.

The practical implications will start operating as soon as the revised GPSD has entered into force.

2.Summary of costs and benefits

I. Overview of Benefits (total for all provisions) – Preferred Option

Description

Amount

Comments

Direct benefits

Increased safety of non-harmonised products and reduced product safety risks covered by GPSD (and related reduction of number on injuries caused by unsafe products)

- Preventable detriment suffered by EU consumers and society due to product-related accidents estimated at EUR 11.5 billion per year.

- the current cost of health care utilisation for product-related injuries in the EU is approximately EUR 6.7 billion per year, with hospitalisation accounting for the larger part of the total health care costs at about EUR 6.1 billion.

These costs can be reduced under Option 3

Options 3 also expected to reduce consumer detriment estimated on the basis of the value of unsafe products by approximately EUR 1.04 billion in the first year of implementation, increasing to approximately EUR 5.5 billion over the next decade, This represents the decrease of financial costs for consumers since they would avoid buying unsafe products.

The GPSD Study also showed that stakeholder consider that Option 3 provides ‘moderate’ to ‘significant’ benefits for consumers.

Main impact on EU consumers via broader coverage and greater effectiveness of the GPSD in protecting consumers from unsafe products, in particular in online sales and for risks of new technologies.

Impact also on MS (positive impact on health care budget)

Higher return rates during recalls of unsafe products

Reduced number of deaths and injuries caused by products staying in hands of consumers due to delayed and badly managed recalls. Reduced amount of consumer detriment.

Reduced consumer detriment related to the value of unsafe products which were not effectively recalled by EUR 410 million per year.

Examples from ineffective recalls: faulty Takata airbags (estimated to have cause 35 deaths and 300 injuries worldwide) and Fisher-Price rock ‘n play baby sleepers (associated with 59 baby deaths in the US).

Main impact on EU consumers via lower exposure to unsafe products and on MS (positive impact on health care budget).

Level playing field and a better functioning EU internal market

These potential benefits were assessed as being ‘moderate’ to ‘significant’ in the Study’s survey

Mainly via alignment of the market surveillance rules for all products, a clearer legal framework and deterrent effect on rogue traders.

Main impact on EU businesses.

Reduced regulatory costs and burdens for businesses

Cost reductions for all businesses and in particular for the 42% of businesses who reported additional costs related to the diverging implementation of the GPSD.

Cost savings for businesses of around EUR 59 million annually (EUR 34 million saved by EU SMEs and 26 million EUR saved by EU large businesses respectively) through more harmonised implementation.

Study showed that companies and business associations estimate the benefits between ‘minor’ and ‘moderate’ and MSAs and other stakeholders to be mostly considerably more than ‘moderate’ and close to ‘significant’.

Main impact on businesses via:

-legally binding clarifications and choice of Regulation as instrument will reduce regulatory uncertainty and even implementation

-aligning the general market surveillance and safety requirements for harmonise and non-harmonised products will reduce implementation differences and improve the traceability of supply chain

Efficiency gains in market surveillance and enforcement

Cost reductions for all MSAs and in particular for the16% of MSAs who reported related additional costs to the diverging legal frameworks between harmonised and non-harmonised products. 

Cost savings for MSAs estimated at EUR 0.7 million per year across the EU.

Main impact on MSAs due to aligning market surveillance provisions between harmonised and non-harmonised products, more aligned enforcement powers, increased deterrent effect and arbitration mechanism.

Reduced administrative burden of the standardisation process

Not quantifiable

Via the simplification of the standardisation process will streamline the related EU process. As it would accelerate standardisation work, it would increase legal certainty for companies on the standards to comply with.

Main impact on MSs and EC

Indirect benefits

Positive spill-over effects on consumer trust, demand, production and employment

Not quantifiable

Via increased safety of products and free movement of goods in the Single Market. Beneficial for all undertakings

Improved companies’ competitiveness

Additional competitiveness gains expected to be very moderate as companies’ current compliance costs with consumer product safety legislation are already relatively low and additional regulatory requirements would level potential cost reductions.

Via a more harmonised regulatory level-playing field within the EU

Main impact on EU businesses

Positive impacts on competition-driven innovation

Not quantifiable

Via a greater degree of harmonisation and greater legal certainty (e.g. development of new innovative information and traceability systems).

II. Overview of costs – Preferred option

Citizens/Consumers

Businesses

Administrations

One-off

Recurrent

One-off

Recurrent

One-off

Recurrent

New general due diligence measures of economic operators for product safety

Direct costs

-

-

Familiarisation costs, adaptation costs to regulatory changes

Total costs of businesses in the EU27 in the first year of implementation are estimated at EUR 196.6 million (one-off + recurrent costs in the first year), equivalent to 0.02% of turnover of EU companies for manufacturing, wholesale and retail of non-harmonised consumer products.

Additional regulatory compliance costs, related to staff and additional resources (more for manufacturers to adjust different stages of the value-adding process to new regulatory requirements)

Recurrent costs amount to EUR 177.8 million

(0,02% of companies’ turnover)

Only relatively moderate one-off adaptation and implementation costs.

total additional recurrent costs of MSAs in EU27 of approx. EUR 6.7 million annually

Indirect costs

-

Potential impact on consumer prices in the EU, expected to be negligible (potentially for low-income consumers). No significant or negative impact on consumer choice in the EU expected

-

-

-

-

Duty of care obligations for online marketplaces

Direct costs

-

-

Costs estimation included in the total above

Additional regulatory compliance costs, for all online marketplaces and in particular for non-signatory of the Pledge, but likely less efforts than those of brick and mortar distributors for fulfilling their obligations today.

Costs estimation included in the total above

-

-

Indirect costs

-

-

-

-

-

-

All safety information is provided online in the same vein as it is required “offline”

Direct costs

-

-

-

Costs to be very limited for both online platforms and online sellers (information already available and does not go beyond what is indicated on the packaging)

-

-

Indirect costs

-

-

-

-

-

-

New requirements on recalls

Direct costs

Reduced cost of recall (improved remedy)

-

Higher administrative burden for recalls and registration systems. Costs mainly limited to situations when recall occurs (unsafe product placed on the market) and in any case operators should already carry out effective recalls.

-

Indirect costs

-

-

-

-

-

-

Integration of food-imitating products into GPSD

Direct costs

-

-

-

Minimal effect on producers of food-imitating products, and in any case not exceeding costs supported by other producers

-

Potentially some costs for MSAs which were applying a ban per se of these products and will have to do a risk assessment. Considered as minor in view of the limited amount of these products

Indirect costs

-

-

-

-

-

(1) Estimates to be provided with respect to the baseline; (2) costs are provided for each identifiable action/obligation of the preferred option otherwise for all retained options when no preferred option is specified; (3) If relevant and available, please present information on costs according to the standard typology of costs (compliance costs, regulatory charges, hassle costs, administrative costs, enforcement costs, indirect costs; see section 6 of the attached guidance).

Annex 4: Analytical methods

This Annex provides an overview of the following analytical methods and techniques as well as the related data sources used for the impact assessment:

·Estimation of the detriment due to product-related injuries and fatalities in the EU;

·Estimation of costs of compliance with the GPSD for EU businesses;

·Estimation of costs of compliance with the GPSD for Member states;

·Estimation of the costs of implementing specific policy options for the potential revision of the GPSD;

·Estimation of benefits of measures concerning online sales channels;

·Estimation of benefits of measures in the field of recalls; and

·Methods for other supporting estimations.

They are elaborated in the following sub-section.

1.Estimation of the detriment due to product-related injuries and fatalities in the EU

The cost of non-fatal product related injuries in the EU

For the calculation of the cost of non-fatal product related injuries in the EU 139 , we use the European Injury Database (IDB) as a source of data on product-related injuries. The data are voluntarily contributed by the Member States participating in the IDB, which were 15 out of 28 Member States in 2016 140 . Two levels of datasets exist in the IDB: the full dataset indicated as IDB-FDS and the minimum dataset referred to as IDB-MDS. The IDB-FDS provides more detailed information with regards to the circumstances of the injury and the products involved, in comparison to the IDB-MDS, which includes limited information pertaining to the injury, but provides data that can be used to extrapolate data to the EU level. For the analysis, both datasets have been used.

The analysis focused on accidental, non-intentional injuries and excluded transport injury events and work-related injuries. As IDB data has also been used as an indicator for the European Commission’s Consumer Market Scoreboard, we have selected the same product groups used by the Consumer Market Scoreboard to define consumer products as represented in the IDB 141 .

To estimate the number of injuries related to different product groups we have used the number of injuries recorded in the IDB-FDS between 2013-2017. On basis of the data provided in the IDB we estimated the total number of injuries in the EU27 on average per year between 2013-2017, using Eurostat population data to extrapolate the FDS data. The method for extrapolation is elaborated in detail in Annex IIc.

Health care utilization

Health care utilization costs include the costs of hospitalization/hospital admission, the costs of treatment in a hospital emergency department, as well as the costs of being treated in a non-hospital setting e.g. at a doctor’s office or as an outpatient. To calculate the cost of health care corresponding to the product-related injuries, it is necessary to retrieve data regarding the consequences of the injuries in terms of the required medical attention as well as the unit costs for each type of health care. The data contained in the IDB-FDS enabled us to identify between three different groups of product-related injuries in terms of the type of treatment required: Patients with product-related injuries that are sent home after treatment; Patients with product-related injuries that are either treated and referred to a general practitioner for further treatment or treated and referred for further treatment as an outpatient; Patients with product-related injuries that are treated and admitted to hospital or transferred to another hospital.

To arrive at the costs of health care utilization we used the approach as described in the following box:

Health care utilisation costs for a given injury type can be estimated by multiplying the average cost of treatment by the number of cases, as indicated below:

Where:

HealthCareUtilEU is the total cost of health care utilisation at the EU level;

NrInjuriesEU,Cat is the number of product-related injuries by treatment category;

AvgTreatmentCostEU,Cat is the average cost of treatment for the given injury in a
given MS, by treatment category.


For assessing average treatment costs, we used unit cost values for health service delivery from the WHO-CHOICE project, which are provided for different world regions in 2010 international dollars 142 . After converting the two types of costs into EUR 2010 using the OECD purchasing power parity (PPP) exchange rate 143 , we inflated them to EUR 2017 using Eurostat’s Labor Cost Index. Based on these conversions we calculated the average cost per inpatient bed hospital day and the average cost per outpatient visit. We used the calculated values to estimate respectively the cost of the three groups of treatment (as indicated above).

Productivity losses

The cost of productivity losses is considered for this assessment to correspond to the value of missed time from work. The cost of productivity losses was calculated first by estimating the number of work days lost as a consequence of the injury related to a product and then multiplying this number by the EU average gross daily earnings. Product related injuries for which the type of treatment is not indicated or recorded are not taken into account for the assessment of productivity losses. The detailed approach for determining productivity losses is provided in the following box:

The cost of productivity losses for a given treatment category are calculated as the cost of missed work. In order to account for the fact that a disproportionate number of injuries occur among children, we take into consideration the proportion of victims that are of working age. The calculation can be expressed as:

Where:

ProdLossEU is the total cost of productivity losses in the EU;

NrInjuriesEU, Cat is the number of product-related injuries in a given
treatment category;

WAPopEU is the proportion of the injured persons that are of working age;

LMPEU is the labour market participation rate in the EU for working age population;

WageEU is the average daily wage in the EU; and

DaysLostCat is the average number of days of work lost for a given treatment
category.

Loss of quality of life

To estimate the impact of the injury in terms of reduced life quality we use the Quality Adjusted Life Year (QALY), a measure that integrates evaluation of the quality and quantity of life 144 . For calculating the cost due to reduced quality of life, we have used the following approach 145 .

Loss of quality of life will be considered for serious injuries, which are considered to be those for which hospitalisation was required, according to the following equation.

Where:

LossQualityLifeEU is the monetised total loss of quality of life of patients
hospitalised due to product-related injuries in the EU;

NrInjuriesEU,Hosp, Inj is the number of hospitalised cases for each main type of injury
related to products in the EU;

LossQALYInj is the Quality Adjusted Life Year loss for each main type of injury;

ValueQALYEU is the monetary value assigned to a Quality Adjusted Life Year.



For each of the injuries we have identified on basis of IDB data, we used a corresponding QALY-weight that expresses the impact of the injury in terms of the quality of life of individuals, using relevant specific estimates. Another approach that has been used to estimate the WTP for a QALY involves taking advantage of the existing literature on the Value of Statistical Life (VSL). This approach, the validity of which was also confirmed by an expert of the European Chemicals Agency (ECHA), is also consistent with the VSL approach that is used below to calculate the cost of premature death. We followed this approach to derive the monetary value for one QALY, using the VSL range of estimates between €3.5 million (lower estimate) and €5 million (higher estimate) included in the Commission’s Better Regulation Toolbox 146 . After expressing them in EUR 2017 using the labour cost index we converted them to VSLY estimates by applying a discount factor of 4% 147 and a remaining life expectancy of 35 years, which is commonly considered as the remaining life expectancy of an adult at the time of injury 148 . Finally, considering that the resulting values based on the VSL are upper bound estimates that tend to overestimate the value per QALY by a factor of two on average, we divided the estimated amounts by two 149 . The resulting range of willingness to pay estimates per QALY used in this study are listed in the following table.

Source

WTP for a QALY estimate

Civic Consulting based on VSL estimates provided in EU Commission’s Better Regulation Toolbox

€101 706 (low estimate)

€123 500 (medium estimate)

€145 294 (high estimate) (in EUR 2017)

The cost of product related premature death in the EU

In order to arrive at the number of fatal injuries in Europe, we have used the WHO Mortality Database (WHO-MDB) which contains data for all countries participating in WHO 150 . To enable a selection of fatal injury incidents that are relevant for this analysis we have filtered existing data by selecting injury incidents based on specific ICD-10 codes. Based on the incidence figures extracted from the WHO dataset we calculated the cost of premature death related to the selected fatalities. Our approach is detailed in the box:

Cost of premature death is estimated for all non-intentional fatalities caused by mechanisms relevant for product safety (such as tools, strangulation, electric current, or fire) outside of work-related locations, on basis of the following equation:

Where:

LossFatalEU is the monetised total loss due to the relevant fatalities in the EU;

NrFatalEU is the number of relevant fatalities in the EU;

VSLEU is the monetary value of a statistical life in the EU.


The monetary value used to quantify the value of a statistical human life is derived from individuals’ willingness to pay (WTP) to eliminate a small risk of dying 151 . Numerous studies exist in which the VSL has been empirically estimated using the hedonic wage method, the stated preference method or other methods 152 . We have used the estimates provided by the European Chemicals Agency (ECHA) to calculate the cost of premature death, which are also referred to as reference values in the Better Regulation Toolbox of the European Commission 153 . More specifically we use the average value of the higher and lower estimate for the value of a statistical life provided by ECHA (EUR 4.25 million) as a standard assumption for the cost of a premature death, while retaining the low and high estimates for later sensitivity analysis. Expressed in 2017 values (again inflated by using the labour cost index), we arrived at a VSL estimate of EUR 4.6 million. We have used this estimate to arrive at the annual cost of premature death due to fatalities caused by mechanisms relevant for product safety.

2.Estimation of costs of compliance with the GPSD for EU businesses (baseline business costs)

We first focused on the estimation of the baseline market size, i.e. the total turnover of EU businesses from manufacturing and/or selling non-harmonised consumer products in the EU 154 , before analysing company level compliance cost data, and extrapolating it to EU level, based on the estimated baseline market size. The analysis is structured according to six steps:

Step 1: Estimation of EU companies’ total annual turnover from the production and/or sales of non-harmonised consumer products in the EU

Based on NACE industry codes and sector descriptions, we identified those manufacturing sectors (NACE Rev. 2, B-E), wholesale services sectors and retail sectors (NACE Rev. 2, G) in which consumer products are produced and/or sold, i.e. we excluded sectors that clearly focus on the production and sales of industrial products. Sectors related to motor vehicles have been excluded, in line with the focus on non-harmonised consumer products. While retail sale can be assumed to be largely related to consumer products (although retailers may also sell to professional users, and may sell services), the wholesale and manufacturing in the listed areas clearly also contain industrial/professional products, an issue considered in Step 3 below. To arrive at the share of non-harmonised products produced and/or sold in these sectors, we applied the estimate provided in the 2017 EU impact assessment for the new Market Surveillance Regulation, which estimated that about 54% of products circulating within the European Single Market are harmonised products and 46% are non-harmonised products 155 .

Step 2: Deduction of extra-EU export

To calculate the net turnover for non-harmonised consumer products that are only sold in the EU, we deducted the share of extra-EU exports from the total turnover of EU companies. The calculation is based on an approximation of sector-specific export shares. The extra-EU trade by enterprise characteristics data provided by Eurostat do not exactly match the sector classification of turnover data by enterprise size class 156 . We therefore approximated the extra-EU export shares of manufacturing, wholesale and retail sectors on the basis of those sectors for which we found full concordance in the two datasets 157 . The estimated extra-EU export shares of manufacturing, wholesale and retail sectors were subtracted from the annual turnover of EU companies with non-harmonised products in the selected sectors.

Step 3: Deduction of industrial and professional products

We corrected the EU turnover derived in Step 2 by the percentage shares of turnover that can be attributed to the production and/or sales of consumer products in manufacturing, wholesale and retail sectors. For this purpose, we drew on a different dataset, namely the final consumption expenditure of households by consumption purpose 158 . We again correct for the share of harmonised products, and arrived at an estimate for total household consumption of non-harmonised products. For the following analysis we assumed that this consumption of non-harmonised consumer products is equivalent to the total turnover from non-harmonised consumer products sold by EU retailers. The estimated retail turnover from non-harmonised products indicated before was adjusted accordingly, and the resulting amount was allocated between the three enterprise size classes. Due to data limitations, the same methodology could not be applied for manufacturing and wholesale sectors 159 . For manufacturing and wholesale sectors, we estimated the share of turnover that can be attributed to consumer products on the basis of the share of “consumer-oriented” wholesale services in total wholesale services. It is assumed that the same share reflects the portion of consumer products produced and/or sold by manufacturers. Based on this approach, we could calculate the total annual EU turnover of EU companies from non-harmonised consumer products.

Step 4: Derivation of empirical estimates for companies’ product safety-related costs on the basis of survey responses

In our company cost survey and the complementary interviews conducted with selected companies, businesses were asked to indicate staff time used for managing product safety, testing for product safety, recalls and other consumer product safety related activities. We asked respondents to consider all costs for ensuring product safety of both harmonised and non-harmonised consumer products (excluding pharmaceuticals, medical devices or food), as the identification of costs for non-harmonised products only was not considered to be feasible. In addition to staff requirements, companies were asked to provide estimates for other costs to comply with safety requirements for consumer products (e.g. costs for external legal advice, costs for external safety testing, costs for certification of safety of products etc.) 160 . The cost estimates provided by the respondents also include business-as-usual costs, which would incur even in absence of product safety regulation (see Step 6). These estimates were used to estimate companies’ annual regulatory compliance costs in Euro terms. The calculation of Euro-denominated costs for staff was based on the EU’s (weighted) average wage for the business economy, which in 2019 was 27.50 Euro per hour 161 . To account for overhead costs, a 25% mark-up was added to staff-related costs. Subsequently, the costs for each company were related to the EU turnover for consumer products, i.e. we expressed companies’ annual cost resulting from activities to comply with safety requirements for (harmonised and non-harmonised) consumer products as a share of the related turnover.

Step 5: Extrapolation of EU companies’ annual costs related to the GPSD incl. business-as-usual costs that occur also in absence of regulation

For each enterprise size class, we multiplied the empirical median values for companies’ relative product safety-related costs, which were derived in Step 4, with the annual turnover of EU companies that can be attributed to the production and/or sales of non-harmonised consumer products in the EU (Step 3). The results of this calculation still include business-as-usual costs.

Step 6: Deduction of business-as-usual costs and extrapolation of EU companies’ annual compliance cost related to the GPSD

In our company survey and interviews, we asked businesses to indicate the share of the total product safety-related costs that they would incur anyway (i.e. even in absence of product safety legislation, e.g. because these costs relate to due diligence), hereafter referred to as business-as-usual costs, BAU. These estimates reflected the self-assessment of the companies that are part of the sample, and are therefore subjective in nature. However, as concerns differences between manufacturers, on the one hand, and wholesalers and retailers, on the other, we considered the estimates to be in line with expectations and a credible basis for the final step of the assessment. We applied the empirical median values of these shares to the product safety-related cost estimates derived in Step 5. Excluding business-as-usual costs, we obtained compliance costs of EU companies that can be attributed to non-harmonised consumer products, i.e. the costs for businesses to comply with the GPSD.

3.Estimation of costs of compliance with the GPSD for Member States (baseline costs for Member States)

The estimation of MSAs’ staff-related costs related to market surveillance activities for non-harmonised consumer products in the EU was based on the following three steps:

Step 1: Identification of MSAs annual FTEs for market surveillance activities related to non-harmonised consumer products

For our estimate we used the number of full time equivalent (FTE) staff for market surveillance of consumer products as provided in the country research. Where the available country estimates related to the market surveillance of non-harmonised consumer products, this figure was directly used in the calculation. Where estimates related to the total staff for market surveillance of both harmonised and non-harmonised consumer products, we allocated staff according to the 54%/46% ratio for harmonised/non-harmonised products circulating within the European Single Market to derive an estimate for related market surveillance activities 162 . It should be noted that a share of 46% in staff time for market surveillance of non-harmonised consumer products is 12 percentage points higher than the empirical median share indicated by MSAs for activities devoted to non-harmonised products in the stakeholder survey (34%), potentially causing an estimate at the higher end of MSAs’ actual costs that can be attributed to market surveillance activities for non-harmonised consumer products. For seven countries, no information on staff numbers was available at all.

Step 2: Approximation of annual FTEs for market surveillance activities related to non-harmonised consumer products for countries for which data was not available

For the seven countries, for which no staff data was available (Croatia, Germany, Hungary, Italy Slovenia, Slovakia, and Spain) we estimated the number of FTEs on the basis of the data for the remaining 20 Member States. To account for institutional differences with regard to the level of centralisation, we considered two clusters of countries, in line with the characteristics of the respective market surveillance systems as described above: Cluster 1: responsibility for market surveillance is centralised (no sub-national administrations involved); Cluster 2: responsibility for market surveillance is (partly) delegated to or competence of sub-national administrations, in line with the administrative structure of the country.

To derive estimates for the number of FTEs per million population for Slovenia and Slovakia (more centralised market surveillance), we applied the sample median of 3.5 FTEs per million population. To derive FTE estimates for the number of FTEs per million population for Croatia, Germany, Hungary, Italy and Spain (more decentralised market surveillance), we applied the sample median of 4.6 FTEs per million population.

Step 3: Calculation of annual staff costs for market surveillance activities related to non-harmonised consumer products

In the final step, we calculated the EUR equivalent of the estimated number of staff required for market surveillance of non-harmonised consumer products by multiplying the number of FTEs per million population by:

·The size of population for each country (in million);

·The number of person-hours per year (1 720)  163 ; and

·The average wage of 28.00 EUR, which corresponds to the EU27 average wage of “administrative and support service activities” (18.70 EUR) and “professional, scientific and technical activities” (37.30 EUR) for 2017 (latest figure available in Eurostat database).

4.Estimation of the costs of implementing specific policy options for the potential revision of the GPSD

Companies assessed in their responses to our cost survey the change that the implementation of each option would cause in their recurrent costs, e.g. costs related to additional staff and additional resources for due diligence measures such as IT systems and external services, in addition to one-off costs, such as familiarisation costs and costs from adapting to regulatory changes (e.g. for external advice). Both types of costs were analysed.

To estimate the impact of the implementation of each option on EU businesses’ recurrent costs, we applied the percentage change in recurrent (annual) costs as assessed by respondents to the estimated annual product safety-related costs of companies producing and/or selling consumer products in the EU (baseline estimates). Applying the sample median as best estimate for the extent to which recurrent costs would increase under each option, we calculated the change in the estimated annual consumer product safety-related costs of EU businesses in Euro terms for manufacturers, wholesalers and retailers.

Our estimation of EU businesses’ total one-off costs was based on individual respondents’ estimates for the total additional staff needed and the total additional non-staff costs that arise from familiarisation and implementation efforts under each option. Based on the respondents estimates, we calculated staff costs in Euro terms and added other (non-staff) one-off costs. The calculation of Euro-denominated costs for staff was based on the EU’s (weighted) average wage for the business economy, which in 2019 was 27.50 Euro per hour 164 . To account for overhead costs, a 25% mark-up was added to staff-related costs.

The total one-off costs for each company were divided by the EU turnover for consumer products, i.e. we expressed companies’ total additional one-off costs resulting from activities to comply with safety requirements for consumer products under Option3 as a share of the related turnover. Applying the sample median to the estimated annual turnover for manufacture, wholesale and retail of consumer products in the EU resulted in estimates for additional one-off cost for manufacturers, wholesalers and retailers.

The estimate of recurrent and one-off costs of MSAs was conducted using a similar approach, with estimates on how the implementation of each option would change their recurrent costs derived from the answers to our survey of authorities. Again, we multiplied the empirical median with baseline costs, to estimate recurrent costs, and separately assessed one-off costs.

5.Estimation of benefits of measures concerning online sales channels

No consistent data is available on the incidence of unsafe products on the EU market. In the analysis, we used stakeholder assessments as best available estimate to first analyse the potential detriment accruing currently to consumers due to unsafe products on the EU market, and then consider the impact that increasing e‑commerce and the implementation of different policy options could be expected to have on this baseline situation. A key challenge in this respect is the size of the detriment to consumers posed by unsafe products. An unsafe product could lead to injuries and fatalities, which cause substantial detriment in the EU every year. Due to data limitations, it is not possible to quantify the occurrence of product-related injuries and fatalities, or damage to other goods caused by unsafe products according to sales channel. We therefore in this analysis use as proxy for the detriment caused by an unsafe product its value (as expressed by its purchase price). This approach seems to rather underestimate than overestimate detriment, in light of the different situations analysed. In our baseline analysis, we have estimated the total EU27 household consumption of non-harmonised consumer products (excluding food and medical products) at EUR 428 664 million per year. Combining this data with the estimate of the incidence of unsafe consumer products, we derive the value of unsafe products per year (which is in our approach equivalent to the related consumer detriment) at EUR 3.9 billion for the online sales channels, and EUR 15.4 billion for brick-and-mortar shops and other offline sales channels, for a total of EUR 19.3 billion. This figure is by its nature an approximate estimate, as the data on which it is based has considerable limitations, and the result is affected by the underlying assumptions.

6.Estimation of benefits of measures in the field of recalls 

A fundamental obligation that derives from the GPSD is the obligation of producers and distributors to notify the authorities and take the necessary actions for consumer protection, once one of the products that they have placed on the market is identified as dangerous 165 . The limited effectiveness of recalls also leads to consumer detriment, the size of which is estimated in this annex.

For estimating consumer detriment due to ineffective recalls, we follow the approach explained above, namely to use the value of an unsafe product as a proxy for the detriment it causes to consumers that have bought it (a detailed justification of this approach is provided in the same Annex). When using the value of a recalled product to analyse consumer detriment, two situations can be differentiated:

1.An unsafe product is recalled and returned to a producer. The resulting consumer detriment can be approximated as being zero 166 ;

2.An unsafe product is recalled and not returned to a producer. In this case the consumer detriment is the value of the product, as discussed.

Under a scenario of improved recall effectiveness, consumer detriment in the EU can be expected to be reduced by more than EUR 400 million per year. As mentioned above, this estimate is based on a number of scenario assumptions, which have been chosen with the aim to provide a conservative estimate of consumer benefits due to improved recall effectiveness. A key assumption is that the detriment incurred by consumers in case of a recall of an unsafe product is equivalent to its purchase price. This is a very restrictive assumption, as it does not consider situations in which a recalled, unsafe product caused damage to persons, other goods or the environment. Also, the return rates underlying the improved effectiveness scenario are still relatively low and might be further increased through appropriate measures by producers and authorities, considering e.g., the increased availability of customer data in online transactions. If return rates were to be improved beyond our assumptions, consumer detriment would accordingly be further reduced, compared to the estimate provided.

7.Methods for other supporting estimations

Other supporting estimations include the analysis of costs of mandatory accident reporting and the extrapolation of the number of parcels imported to the EU. In both cases, baseline data was extrapolated using relevant data sources from international organisations or data from non-EU countries in which comparable measures were taken. For more details on the methodological approach taken in each case, see the relevant section of the report.

8.Validation and quality assurance of results of analyses conducted

Great care was taken to explore all possible data sources at EU level and from international databases to use the best available data, which is a key element of quality assurance. All analyses were validated internally by different members of the team, to safeguard internal consistency and accuracy. Finally, in major analyses external expertise was involved, either through advisory roles (e.g. an expert of EuroSafe supported the data extraction process related to the IDB), or through providing advice on specific methodological issues. These included the WHO, which was consulted on possible approaches to group ICD-10 codes, and ECHA, which provided advice on the most appropriate method to determine VSLY values.

Sensitivity analysis was used to assess robustness of estimates against different assumptions, where relevant. With respect to the estimation of detriment, we elaborated sensitivity scenarios concerning the cost of premature death and the loss of quality of life. The first scenario to be tested against the main scenario involved using the lower estimate of the VSL to recalculate the costs incurred as a result of premature death. The second scenario involves the opposite recalculation, namely using the high estimate of the VSL and the corresponding QALY value to recalculate the costs incurred as a result of premature death and of lost quality of life. The third and fourth scenarios take into account the fact that the type of the injury as such e.g. injury to muscle, burn etc. does not convey the severity of the injury which may significantly influence the magnitude of the loss. Therefore, to account for the possibility of a mild and severe occurrence of the same type of injury we estimated the loss of quality of life using both low and high QALY losses per each type of injury. The rest of the assumptions (monetary value of a VSL, a QALY) remained the same as in the main scenario. The fifth and final sensitivity scenario involved taking into account for the calculation of the cost of premature death only the fatalities caused by mechanisms relevant for product safety that occur at home keeping everything else constant.

Annex 5: Evaluation report

Table of contents

1.    Introduction    

Purpose and scope    

2.    Background to the intervention    

Description of the intervention and its objectives    

Baseline and points of comparison    

3.    Implementation / state of Play    

4.    Method    

Short description of methodology    

External studies    

Open public consultation (OPC) and stakeholders’ workshops    

Limitations and robustness of findings    

5.    Analysis and answers to the evaluation questions    

5.1 Relevance    

5.1.1.    General relevance of the Directive    

5.1.2.    Relevance of of the Directive vis-à-vis E-commerce and direct imports    

5.1.3.    Relevance of the Directive vis-à-vis new technologies    

5.1.4.    Relevance of definitions of the Directive    

5.1.5.    Relevance of environmental issues, including chemical risks    

5.1.6.    Conclusion on relevance    

5.2 Effectiveness    

5.2.1. Extent to which the Directive has been effective in contributing to consumer safety    

5.2.2. Extent to which the Directive has been effective in contributing to the functioning of the Single Market    

5.2.3 Effectiveness of the system of market surveillance under the Directive    

5.2.4 Effectiveness of Safety Gate/RAPEX    

5.2.5 Effectiveness of the standardisation procedure of the Directive    

5.2.6 Effectiveness of provisions on product recalls    

5.2.7 Impact of ecommerce in the effectiveness of the Directive    

5.2.8 Impact of new technologies in the effectiveness of the Directive    

5.2.9 Effectiveness of Food Imitating Products directive    

5.2.10 Conclusion of effectiveness    

5.3 Efficiency    

5.3.1. Analysis of costs    

5.3.1.1 Costs for businesses    

5.3.1.2 Costs for authorities    

5.3.2. Analysis of benefits    

5.3.3. Balance and distribution between costs and benefits    

5.3.4. Conclusion of efficiency    

5.4 Coherence    

5.4.1 Internal coherence of the Directive    

5.4.2 Coherence with product harmonisation legislation and market surveillance    

5.4.3 Coherence with standardisation policies    

5.4.4 Coherence with consumer protection and product liability legislation    

5.4.5 Coherence with E-commerce rules    

5.4.6 Coherence with wider EU policy    

5.4.7 Conclusion on coherence    

5.5. EU added value    

6.    Conclusions and lessons learnt    

Appendix 1: Procedural information    

Appendix 2: Methods and analytical models    

Appendix 3: Evaluation questions    

Appendix 4: Implementation of the Food Imitating Products Directive    

Glossary

Term or acronym

Meaning or definition

AI

Artificial Intelligence

BAU

Business as Usual

CETA

EU-Canada Comprehensive and Economic Trade Agreement

CSN

Consumer Safety Network

DGCCRF

Direction générale de la Concurrence, de la Consommation et de la Répression des fraudes, France

DSA

Digital Services Act

EEA

European Economic Area

EFTA

European Free Trade Association

EU

European Union

EQ

Evaluation Question

FIPD

Council Directive 87/357/EEC concerning the safety of food-imitating products

GPSD

Directive 2001/95/EC on the general safety of products

IA

Impact Assessment

IoT

Internet of Things

NLF

New Legislative Framework

OECD

Organisation for Economic Cooperation and Development

OPC

Open Public Consultation

Safety Gate/RAPEX

The rapid alert system for dangerous non-food products

Subgroup

The Subgroup on AI, connected devices and other new challenges in product safety to the Consumer Safety Network

SME

Small and Medium Enterprise

UCPD

Unfair Commercial Practices Directive

VAT

Value Added Tax

1.Introduction

1.1Purpose and scope

Over two decades, the Directive 2001/95/EC on the general safety of products (‘the Directive’) has established a product safety framework to ensure the safety of consumer products.

In February 2013 the Commission adopted the Product Safety and Market Surveillance Package 167 , whose aim was, among other things, to revise the Directive. The proposed rules however were not adopted by the Council and the Parliament, due to the lack of political consensus on the so called "made-in" clause. Consequently, the proposals were withdrawn in September 2020.

Since the adoption of the Directive in 2001, new developments in products and markets have occurred, in particular as concerns products incorporating new technologies and e-commerce. In addition, the adoption of new legal instruments, such as the recently updated Regulation on market surveillance and compliance of products 168 , has had as a consequence that the Directive’s provisions on market surveillance are not fully in line with market surveillance rules for harmonised products.

The Directive has never been evaluated since its entry into force 169 . In light of the above-mentioned developments, the Commission has carried out an Evaluation of the Directive to assess its performance. This evaluation has been prepared back-to-back with the Impact Assessment for a proposal to revise the Directive. This was justified as at the time of the launch of this initiative the Commission had already quite some evidence to support the evaluation and the impact assessment. An impact assessment was already carried out by the Commission in 2013, as well as for the recently adopted Regulation (EU) 2019/2010 on market surveillance and compliance of products. Moreover, both the Evaluation and the Impact assessment were supported by a number of studies and other data gathered through consultation. A report on the implementation of the Directive also accompanies the Impact Assessment and the Evaluation, as established in Article 19(2) of the Directive.

The geographical scope of the evaluation covers 31 countries (EU28, Iceland, Liechtenstein and Norway). It focuses on the period from 2004 (i.e. subsequent to the deadline for its transposition and application according to Article 22 of the Directive) to 2020, seeking to understand trends over this period wherever possible. This evaluation also covers Council Directive 87/357/EEC concerning the safety of food-imitating products (FIPD) 170 .

This evaluation assesses the following criteria: relevance (whether the tools of the Directive correspond to current needs), effectiveness (whether the original objectives have been achieved), efficiency (the functioning of the Directive from a simplification and burden reduction perspective), coherence (how the Directive works together with other legislation in the field of safety of consumer products), and the EU added value of the Directive. The evaluation's findings have fed into an Impact Assessment of the policy options, which addresses the problems identified, including those related to food-imitating products.

2.Background to the intervention

2.1Description of the intervention and its objectives

The Directive has a twofold objective. On the one hand, according to its recital (2), the Directive pursues the aim of improving the functioning of the internal market. As recital (3) confirms, it has introduced a common legislative framework in order to avoid disparities between Member States that could have emerged in the absence of Union law. At the same time, the Directive intends to achieve a high level of consumer protection by introducing a general product safety requirement and other measures (recital (4)). Both aims are interrelated, it is the safety requirement for consumer products envisaged by the Directive, which prevents disparities that would lead to creating barriers to trade and distortion of competition within the internal market.

The Directive establishes a general safety requirement for all consumer products, as it obliges the producers to only place safe products on the market.

The Directive applies to all sales channels, offline and online.

Safety of services falls outside the scope of the Directive, but in order to secure a high level of consumer protection, its provisions also apply to products that are supplied or made available to consumers in the context of a service used by them. The safety of equipment used by the service provider, in particular that on which the consumers ride or travel, is nevertheless excluded. However, products which are actively operated by the consumer at the premises of a service provider, such as hairdryers available to guests in hotels rooms, are subject to the provisions of the Directive.

One of the key characteristics of the Directive is its role as a “safety net”, as it applies insofar as there are no more specific provisions with the same objective in EU product harmonisation legislation. Therefore, it complements sectorial legislation, as it covers all aspects and risks not specifically addressed, thus ensuring a high level of protection of consumers.

Standards are very important for the implementation of the Directive. The general safety requirement can be difficult to apply for businesses and national authorities because of the lack of a common benchmark on what constitutes a “safe” product. Therefore, the Commission can make use of European standards to make this general safety requirement more operational. European standards are voluntary and market-driven 171 and their advantage is not only that they replace the corresponding national standards in all Member States, making the life of businesses, including SMEs, easier, but in particular that products are presumed safe if they conform to voluntary national standards transposing European standards, which are referenced in the EU Official Journal. Standards therefore serve a double purpose: facilitating market access and ensuring product safety. The first step in the standardisation process under the Directive is a Commission Decision to set the so-called "safety requirements" to be met by the standards 172 . The second step is the adoption of a Commission Decision 173 issuing the formal standardisation request ("mandate") to the European Standardisation Organisations to develop standards compliant with the EC-adopted safety requirements. The last step takes place after the European standardisation organisation has developed the standard in conformity with the safety requirements. At this stage, in case the Member States in the Committee established in Article 15 of the Directive vote favourably and the Commission consider that the standard complies with the requirements of the GPSD, the Commission adopts a Commission Decision to publish the reference to this standard in the EU's Official Journal. A more detailed explanation of the standardisation procedure is detailed in Annex 10.

The Directive provides for additional duties for economic operators, which can be differentiated between measures to be taken before or after the product is placed on the market:

·Pre-market obligations: Besides the general safety requirement, the Directive requires producers to inform consumers of any risks associated with the products they supply. The aim is to enable consumers to assess the risks inherent in a product throughout the normal or reasonably foreseeable period of its use, where such risks are not immediately obvious without adequate warnings, and to take precautions against those risks. This obligation must be fulfilled when the product is made available on the market. It not only relates to information on the proper use of the product (as described in user manuals), but also to risks that come, for example, with the age or the long-term use of the product. Producers should also make sure that any product present on the market can be traced to swiftly enable removal if necessary to avoid putting consumers at risk.

·Post-market obligations: Producers and distributors shall cooperate with the competent authorities on actions taken to avoid the risks posed by products which they supply or have supplied. Producers and distributors are also required to immediately notify the respective authorities in EU Member States in case they know or ought to know, on the basis of the information in their possession and as professionals, that a product that they have placed on the market poses risks to the consumer that are incompatible with the general safety requirement. Accordingly, producers shall withdraw unsafe products from the market, publish warnings of unsafe products or recall products from consumers on a voluntary basis or at the request of the competent authorities. Distributors are required to act with due care and within the limits of their respective activities, they need to participate in monitoring the safety of products placed on the market.

To complement this and in order to ensure appropriate enforcement of the EU product safety requirements, the Directive also sets out responsibilities for Member States to establish systematic approaches to perform effective market surveillance. Member States establish or nominate national authorities competent to monitor the compliance with the product safety requirements and give the necessary powers to these authorities to take appropriate measures under the Directive. National market surveillance authorities have a responsibility to:

·check whether products available on the market are safe;

·ensure product safety legislation and rules are applied by manufacturers and other actors in the supply chain;

·take appropriate action in case a unsafe product is detected on the market.

The Directive sets up the Rapid Alert System for non-food Consumer Products (hereinafter "Safety Gate/RAPEX"). This system establishes the circulation of information among the Commission and Member States' authorities on measures taken by Member States' authorities and economic operators in relation to products posing a serious risk to the health and safety of consumers. Information on non-serious risks can also be circulated under Safety Gate/RAPEX. The Commission publishes relevant information concerning all notifications on the EU Safety Gate website 174 . Member States are required to follow up the notifications of products posing a serious risk and inform the Commission of any measures adopted. The system has been expanded by Regulation 765/2008 175 to apply also to measures adopted in relation to professional products and to other public interests beyond safety, such as the protection of the environment and security.

In some exceptional circumstances, Article 13 of the Directive allows the Commission to adopt temporary measures (valid for 1 year), via a decision, to ensure the safety of certain products. It can be used in situations where at the same time Member States significantly differ on the approach how to deal with the safety risk; where the risk needs to be dealt with a high degree of urgency or where the risk can be eliminated only by adopting appropriate measures at EU level.

This evaluation also covers Council Directive 87/357/EEC (FIPD), that applies to products “which, although not foodstuffs, possess a form, odour, colour, appearance, packaging, volume or size, so that is likely that consumers, especially children, will confuse them with foodstuffs and in consequence place them in their mouths, or suck or ingest them, which might be unsafe and cause, for example, suffocation, poisoning, or the perforation or obstruction of the digestive tract.”

2.2Baseline and points of comparison

An intervention logic was developed for the purposes of this evaluation (see Figure 1). It shows the logical sequence and causal relationships between the Directive’s rationale, based on identified needs, its objectives, the activities undertaken, the intended results (outputs), outcomes and impacts. The figure also shows other external factors (beyond the Directive’s control) that may influence the impacts and outcomes.

Figure 1: Intervention logic

Source: GPSD Study

This evaluation takes also into account the accompanying Implementation Report 2019 as established in Article 19 of the Directive.

3.Implementation / state of Play

The first general product safety directive was adopted in 1992 176 . That directive was amended (resulting in Directive 2001/95/EC on the general safety of products, subject of this evaluation) in order to complete, reinforce or clarify some of its provisions in light of experience as well as relevant developments on consumer product safety, together with the changes made to the Treaty, especially in articles concerning public health and consumer protection, and in the light of the precautionary principle.

All EU Member States notified transposition measures of the Directive, and this evaluation showed that there have not been any problems in the transposition of the Directive into national legislation. There are no open infringements regarding the implementation of the Directive.

Member States are responsible for appointing competent authorities responsible for the implementation of the Directive at national level and for ensuring that the Directive is effectively enforced within their territories. In addition, Article 10 of the Directive sets up an informal network of the Member States' authorities aimed at further enhancing administrative cooperation (the "Consumer Safety Network"). Given that the Directive forms part of the EEA Agreement, the same rules and mechanisms are also in place in the EFTA countries applying the EEA Agreement, i.e. Norway, Iceland and Liechtenstein.

Most market surveillance authorities in the Member States work on the basis of annual inspection programmes which take into account, among others, previous experiences and findings, products that are frequently found unsafe and consumer complaints. If necessary, all Member States carry out controls and tests which are not necessarily foreseen in their programming, for example in emergency situations. To provide assistance to the European network of Member States' product safety authorities, the Commission has co-funded more than 50 joint actions on market surveillance among these authorities since 2007.

Regarding the implementation of the Safety Gate/RAPEX, the number of measures reported in the system has increased progressively over the years and since 2012 has stayed just above 2,000 alerts a year. In 2019, a total of 2,243 measures were circulated in the system 177 .

Figure 2: Number of alerts in Safety Gate/RAPEX for the period 2003-2019

Source: Safety Gate/RAPEX

According to Article 12.4 of the Directive, the Rapid Alert System remains open to applicant countries, third countries or international organisations, within the framework of agreements between the EU and those countries or international organisations, according to arrangements defined in these agreements. Based on this article, a specific module of the system has been created to allow for swift flagging of notifications to the Chinese authorities concerning unsafe products from China. The Chinese authorities investigate these cases in order to trace back the manufacturers, exporters and businesses concerned and take measures, which most often consist of making companies aware of product safety rules in Europe. In addition, an exchange of information on unsafe consumer products started with the Canadian authorities in 2019, enabled by the EU-Canada Comprehensive and Economic Trade Agreement (CETA) and an Administrative Arrangement between the European Commission’s Directorate-General Justice and Consumers and the Department of Health Canada. The exchanges aim to help EU Member States better target their enforcement efforts and identify emerging product safety risks.

Furthermore, according to Annex II, point 8 of the Directive, the Commission shall regularly update guidelines concerning the joint management of the Rapid Alert System by the Commission and the Member States. A first version of the guidelines was adopted in 2004 178 , followed by another version in 2010 179 . The most recent version dates from 2018 180 .

When it comes to standardisation work under the General Product Safety Directive, there are currently a total of 67 standards that have been referenced under the Directive by the European Commission. In 2019, all referenced standards were included in a new Decision 181 , to "create a complete list of references". These standards concern the following product types:

·Furniture

·Gymnastic equipment

·Stationary training equipment

·Child use and care articles

·Bicycles

·Paragliding equipment

·Internal blinds

·Diving accessories

·Lighters

·Roller sports equipment

·Decorative oil lamps

·Children's clothing

·Floating leisure articles

·Cigarettes (ignition propensity)

·Child protective products

·Audio, video and similar (safety requirements)

·Information technology equipment (safety - general requirements)

To date, the Commission applied the procedure provided for in Article 13 of the Directive on five occasions:

·Firstly, it was used to extend the ban on phthalates in toys 182 during the period up to the adoption of the permanent ban under Directive 2005/84/EC 183

·The next measure based on this Article was the Decision of 11 May 2006 184 requiring Member States to ensure that cigarette lighters placed on the EU market be child-resistant and to prohibit placing on the market lighters which resemble objects that are particularly attractive to children (so-called "novelty lighters"). In the absence of a suitable revised version of the European standard on child safety requirements for lighters which could be referenced in the Official Journal of the EU as providing a presumption of conformity with the safety requirement of the GPSD, it was necessary to extend the period of validity of this Decision ten times (extension which was valid until 11 May 2017 185 ). A new version of the above-mentioned European standard was referenced in the Official Journal of the EU in 2017.

·Another measure was taken by the Decision of 21 April 2008 186 requiring Member States to ensure that magnetic toys placed or made available on the market display a warning about the health and safety risks they pose. Magnets used in toys have become more powerful, but also detach more easily, thus presenting life-threatening risks if ingested (as they can perforate the stomach or intestines). The Commission adopted this temporary measure which was valid until 21 April 2009, until a relevant safety standard was adopted and referenced by the Commission in the Official Journal of the EU.

·Another measure was adopted on 19 March 2009 187 , requiring Member States to ensure that products containing the biocide dimethylfumarate are not placed or made available on the market.

·Finally, on 9 August 2011 a Decision was adopted regarding the compliance of standard EN 16156:2010 and the assessment of the ignition propensity of cigarettes 188 . 

The enforcement of the FIPD has been unequal across the EU as Member States have divergent opinions on its interpretation, in particular its relation with other pieces of sectorial legislation, such as the Toys Safety Directive and the Cosmetic, Detergents and CLP Regulations. The Commission proposed the withdrawal of the FIPD and the inclusion of its provisions within the General Product Safety Regulation in the 2013 Package on Product Safety and Market Surveillance. The Commission has since withdrawn this Package and therefore the FIPD remains in force. More information about the implementation of the FIPD is provided in Appendix 4.

4.Method

2.1.Short description of methodology

The evaluation was carried out according to the Commission’s evaluation techniques and triangulation methods to ensure robustness of the information obtained. The evaluation received input from consultation activities, official statistics and studies. The evaluation followed several steps to collect both qualitative and quantitative data from the relevant stakeholders and national authorities.

2.2.External studies

This Evaluation is based on two main building blocks:

1)An external study on the Directive aimed to assess its functioning and performance and to identify potential shortcomings and whether improvements should be envisaged.

2)Complementary studies and research. This includes the following:

a.A study on product recall effectiveness

b.A study to support the preparation of the Implementation report of the Directive, which ran from August 2019 to March 2020.

c.The European Commission’s Joint Research Centre’s study on the assessment of the opportunities for increasing the availability of EU data on consumer product- related injuries 189 .

Figure 3: External studies supporting the GPSD initiative

2.3.Open public consultation (OPC) and stakeholders’ workshops

The public consultation on the EU's New Consumer Agenda, that included a specific section on the Directive, ran between 30 June 2020 and 6 October 2020. The consultation was available in 24 official EU-languages and respondents could reply in any of these languages.

The objective of this consultation was to gather the views of the public on the new European consumer policy for the next period, the so-called ‘New Consumer Agenda', including a questionnaire on the Directive. These views provided input into the evaluation and impact assessment of the General Product Safety Directive. The questions on the review of the Directive were tailored to two main categories of stakeholders, respectively the general public and stakeholders who are familiar and have certain experience with market surveillance and product safety rules. There were 257 respondents that answered at least one question related to the General Product Safety Directive. The majority of respondents were business associations and EU citizens (each 26%), followed by company/business organisations (15%). Other respondents included public authorities (11%), consumer organisations (8%), non-governmental organisations (NGOs) (7%), academic/research institutions (3%), non-EU citizens (1%) and other respondents (3%).

Moreover, the Commission set up a Sub-group of the Consumer Safety Network on artificial intelligence, connected products and other new challenges on product safety. The Sub-group’s tasks were to assess whether and to what extent existing product safety frameworks are adapted to emerging market realities (connected products, AI, software, etc.) and, in particular, to assist the Commission in developing an EU-wide assessment on the need for the possible adaptations of the General Product Safety Directive in this regard. The Sub-group was established in November 2019.

The Commission also organised a series of workshops as part of a broader engagement with stakeholders and evidence-collection strategy, supporting the evaluation of the E-Commerce Directive and the impact assessment for the Digital Services Act as well as the revision of the General Product Safety Directive. The workshops aimed to gather information on the role online marketplaces are playing in the current online supply chain and views on their role for the future. The main findings of the workshops are detailed in Annex 13.

Finally, the Commission also engaged with different stakeholders from around the world in the frame of the International Product Safety Week in November 2020, for the discussion of different topics including products recalls and traceability.

2.4.Limitations and robustness of findings

One important limitation of this evaluation is the difficulty to differentiate data between harmonised and non-harmonised products. The Directive plays a complementary to the product harmonisation legislation, and consequently it is extremely complicated to isolate the effects and impacts of the Directive. Moreover, although market surveillance rules differ for harmonised and non-harmonised products, in practice Member States organise their investigations and enforcement actions in a comprehensive manner, without distinguishing its legal basis, rendering almost impossible to evaluate both frameworks separately. As a mitigating measure, these aspects were addressed in the consultations activities.

Moreover, it is worthwhile to mention that data coming from the Safety Gate/RAPEX should be interpreted cautiously. Measures reported in the system might be affected by multiple factors, in particular inspection priorities of authorities, perceived risks, etc. Besides, notifications only reflect injury events if these are communicated to the market surveillance authorities, which is not systematically the case and not based on the actual frequency of injuries. Notifications also refer to products, but not the exact number of articles or items affected by the measure. This does not in any way limit the value of the system, but shows that its data cannot be simply used as proxy for product safety trends or for analysing the preventive potential of enhanced product design or safety features. Consequently, the evaluation has considered data from Safety Gate/RAPEX as one indicator among several, and it is complemented by other datasets and sources.

During the consultations activities, considerable efforts were made to reach out SMEs. Otherwise explicitly mentioned, opinions of SMEs do not significantly differ from the opinion of other business stakeholders.

Information related to the product safety aspects of emerging digital technologies, i.e. Internet of Things (IoT) and Artificial Intelligence (AI), is scarce and often not sufficiently mature, since some of these technologies are still under evolution. The conclusions of the evaluation in this aspect are based on information collected from stakeholders, studies, media sources and forecasts.

Notwithstanding the specific limitations mentioned above, which could at least partially be compensated by the answers obtained during the consultation activities, the overall availability and reliability of data and the approach taken is generally considered satisfactory.

5.Analysis and answers to the evaluation questions

5.1 Relevance

5.2.1.General relevance of the Directive

The Directive was adopted in order to respond to the following needs:

·Consumer products placed on the EU market for consumers do not cause harm to the safety and health of people.

·Free movement of goods in the Single Market.

These original needs remain relevant and match the general objectives of the Directive. However, it is important to consider whether the specific tools and provisions provided by the Directive continue to be relevant and future-proof.

A large majority of respondents of the OPC expressed that the current EU safety rules for non-food consumer products covered by the Directive could be improved in specific areas to be more adequate to protect consumers (see figure 4). Nearly one in four respondents held that the current rules were fully adequate, whereas only a small minority considered them not to be adequate at all.

Figure 4: Replies to the OPC question: “In your view, to what extent are current EU safety rules for non-food consumer products covered by the GPSD adequate to protect consumers?”

Source: OPC. Total no. of respondents: 214, Single-choice question

When asked about problems related to the implementation of safety rules for products covered by the Directive, respondents of the OPC (see figure 5) most commonly expressed that rules were not adapted to online trade (39%) and that the rules were not appropriately enforced (39%). More than a third also considered the rules not to be adapted to new technologies (36%) and perceived legal definitions as not sufficiently clear or outdated (35%). Slightly less than a third of respondents (30%) reported that roles and obligations of different economic operators were not appropriately defined and that there were difficulties for consumers to report unsafe products. Lastly, approximately a fifth of respondents regarded as problematic that there were no specific requirements for product recalls (22%) or listed other issues (23%).

Figure 5: Replies to the OPC question: “Are you aware of any problems related to the implementation of EU safety rules for consumer products covered by the GPSD?”

Source: OPC. Total no. of respondents: 205, Multiple-choice question

Moreover, some stakeholders indicated in their comments that the COVID-19 crisis has led to emerging needs in relation to product safety. They expressed that consumer safety was a cardinal value, as the COVID-19 crisis has accelerated existing trends, such as the increased use by consumers of online retail for non-food purchases.

In the sub-sections below the relevance of specific aspects and tools provided by the Directive are analysed.

5.2.2.Relevance of of the Directive vis-à-vis E-commerce and direct imports

While the Directive does not establish specific provisions related to online sales, it clearly applies to all sales channels, offline and online. Case law 190 has clarified that EU product legislation also applies to cases where online sellers based outside the EU target consumers in the EU. The assessment to determine if an online offer targets EU consumers must be done on a case-by-case basis. The following aspects could be considered: the international nature of the activity, use of a language and currency (for example the euro) of the Member States, a domain name registered in one of the Member States, geographical areas to which dispatch is possible.

At the same time, the number of consumers buying products online has drastically increased since the adoption of the Directive. In 2007, less than half of Internet users bought or ordered goods or services for private use in the previous 12 months; in contrast, in 2019 that figured increase to 71%, with five countries (UK, Denmark, Netherlands, Sweden and Germany) exceeding 80% 191 . Furthermore, the COVID-19 crisis has accelerated this trend: in the EU-27, retail sales via mail order houses or the Internet in April 2020 increased by 30% compared to April 2019, while total retail sales diminished by 17.9% (Figure 6) 192 .

Figure 6 - Retail turnover, year-on-year change, EU-27 (July 2019- July 2020)

Source: OECD, E-commerce in the time of COVID-19

Evidence gathered in the context of the evaluation showed that online sales have led to problems in enforcing the Directive for mainly two reasons: difficulties for the enforcement of the control of products sold online and unavailability of responsible economic operators measures could be effectively addressed to in case products are directly imported from outside the EU.

In the frame of the preparation of the Notice on the market surveillance of products sold online 193 , as well as discussions held within the Coordinated Activities on Product Safety 2019 194 , the following challenges were identified for market surveillance authorities in relation with the safety of products sold online:

·Sampling: there is a lack of clear competences for authorities to engage in mystery shopping at the level of the Directive. There are also legal restrictions for authorities in some Member States that prevent them from hiding their identity when making online inspections, which can make online product safety checks ineffective.

·Testing: authorities face challenges in conducting risk assessments or safety tests due to the lack of physical access to products.

·Resources: the lack of financial resources, or even the lack of credit cards that authorities can use for online sampling, combined with the lack of competence to ask traders for reimbursement of the product price makes online market surveillance difficult. In contrast, during offline market surveillance activities, authorities can usually seize products free of charge.

·Identification of economic operators: authorities face difficulties finding and contacting the trader selling through online marketplaces.

·Product identification: there is often lack of sufficient data on products available online (no images of labels, bad quality pictures, and no technical data). The Directive does not establish obligations to economic operators on what specific information needs to be provided in an online offer.

·Reappearance of unsafe products and repeat infringers: it often happens that offers containing unsafe products that were already removed are re-uploaded on the same or a different online marketplace.

·Awareness: there is lack of awareness among consumers and businesses about buying and selling safe and compliant products online.

In addition, e-commerce allows consumers to purchase directly from operators located outside the EU. This makes it more difficult for authorities to check the safety of products entering the single market. These direct imports have increased in the latest years: around 150 million small consignments are imported free of VAT into the EU each year 195 and it has been reported that in 2017 there were 150.000 private consignments coming from China to individual consumers per day 196 . This is a challenge for product safety as, in the case of non-harmonised products 197 , there is often no economic operator within the EU available that market surveillance authorities could turn to for enforcement measures in the EU. As noted above, the Directive imposes obligations on the producer as well as on distributors. In practice this means:

·The manufacturer’s representative and the importer might be considered as producers according to Article 2(e) of the Directive.

·Where the producer is domiciled in a non-EU/EEA country, it is in most cases outside the reach of the market surveillance authorities of the Member States to impose measures on them. Market surveillance authorities may be able to cooperate with the authorities of the non-EU/EEA country where the producer is domiciled (which is the exception 198 ), but in principle they cannot take measures themselves.

·Moreover, if the producer sends non-harmonised products directly to the consumer, there is no (other) economic operator with product safety obligations involved in the EU.

The only supply chain actor that is often involved before the consumer gets the product is an online platform. However, it seems that online marketplaces do not fall under the definition of distributor under the Directive and therefore they are not subject to product safety enforcement measures in a way that is foreseen for producers and distributors. Moreover, even where Member States have taken measures to recall unsafe products, evidence from different investigations carried out by stakeholders show that recalled products often continue to be sold or to reappear on the market in online sales channels.

The European Commission already identified these challenges and took some non-legislative measures to try to tackle the issue. First, it adopted a Notice on the market surveillance of products sold online 199 to assist Member State authorities in the enforcement of EU legislation on the safety and compliance of non-food products and to contribute to a more uniform and coherent application of that legislation in the online environment. In addition, the European Commission facilitated the signature by nine online marketplaces of the Product Safety Pledge 200 . This initiative, originally signed in 2018 and the first of its kind in the product safety area, sets out specific voluntary actions in 12 different areas by online marketplaces to improve product safety going beyond what is already established in EU legislation. As part of the Pledge, signatory online marketplaces have committed to report to the European Commission every six months on the actions taken to implement the Product Safety Pledge, with the inclusion of key performance indicators.

However, stakeholders have pointed out that these measures, although positive, do not resolve the underlying problems related to online sales. The Notice on the market surveillance of products sold online has proven to be a useful guidance for authorities, but does not solve the issue that in many countries they have legal and practical barriers to carry out online investigations and take appropriate measures. The Product Safety Pledge has set the grounds for an increased cooperation framework between online marketplaces and market surveillance authorities. However, as pointed by authorities and stakeholders, it remains voluntary, so it cannot be enforced in case of infringements, and there are still many actors on the market that have not adhered to the initiative.

In conclusion, it can be noted that the Directive is not adapted to the specific challenges posed by online sales, including the increased level of direct B2C imports towards the EU, facilitated by online marketplaces and fulfilment service providers 201 . Many stakeholders have noted that it would be beneficial to adjust the Directive in relation to these additional economic operators, to address the newly emerged needs related to the online environment and to increase the safety of products sold online to EU consumers.

5.2.3.Relevance of the Directive vis-à-vis new technologies

At the time of the adoption of the Directive the number of consumer products incorporating new technologies was scarce. This is not the case anymore. There were 14.2 billion connected devices in 2019 worldwide, a figure that is estimated to go up to 25 billion by 2025, of which 4.9 billion will be in Europe 202 .

Almost half the respondents of the OPC considered the safety of products involving new technologies to be not adequately regulated (47%), with only 18 % stating the opposite. The other 35% did not know (see figure 7).

Figure 7: Replies to the OPC question: “Do you think that the safety of products involving new technologies is adequately regulated?”

Source: OPC. Total no. of respondents: 227, Single-choice question

The European Commission published in February 2020 a report on the safety and liability of new technologies 203 . The report identified uncertainties linked to the application of the product safety framework with respect to the specific risks posed by AI systems and other digital technologies. It concluded that the current product safety legislation, including the General Product Safety Directive and harmonised product legislation that follows the horizontal rules of the “New Legislative Framework” 204 , already supports an extended concept of safety protecting against all kind of risks arising from new technology products. However, there were a number of unclear areas according to the report:

·EU legislation does not comprehensively include explicit provisions regarding some categories or risks posed by new technologies, such as cybersecurity risks that affect safety. Such provisions would provide a better protection of users and more legal certainty for businesses.

·While the Union product safety legislation takes into account the safety risks stemming from software integrated in a product at the time of its placing on the market and, potentially, subsequent updates foreseen by the manufacturer, there is a lack of specific and/or explicit requirements on standalone software (e.g. an 'app' that would be downloaded). The product safety framework does not provide for additional obligations for manufacturers to ensure that they provide features to prevent the upload of software having an impact on safety during the lifetime of AI products 205 .

·Regarding the concept of “placing on the market”, as far as the future “behaviour” of AI products can be determined in advance by the risk assessment carried out by the manufacturer before the products are placed on the market, the Union product safety framework already sets out obligations for producers to take into account in the risk assessment the “use” of the products throughout their lifetime. However, there may be also situations in the future where the outcomes of the AI systems cannot be fully determined in advance. In such a situation, the risk assessment performed before placing the product on the market may no longer reflect the use, functioning or behaviour of the product.

Moreover, the Subgroup on AI, connected devices and other new challenges in product safety to the Consumer Safety Network reached the following conclusions regarding the relevance of the Directive vis-à-vis new technologies:

·The legal definition of safe product of the Directive can be understood as addressing many types of risks by which a product can, directly or indirectly, cause harm to consumers. However, it does not explicitly refer to some risks posed to new technologies, such as cybersecurity risks that affect safety (“cyber-safety”).

·New technologies can also pose risks not only because they can have a direct impact on the health and safety of the consumers, but also because through connectivity, they can be indirectly used as a tool to put at risk their personal security. Having said that, it is unclear under which legal or policy instrument such personal security risks should be tackled so that consumers are effectively protected against such threats.

·Regarding mental health, while they are not a new phemonenon, there is evidence that new technologies can have a psychological impact on users 206 . However, the Sub-group agreed that risks to mental health that are not intrinsic to the product, but come from the use of a product in particular ways, should not be considered part of the concept of “safety” in the Directive.

·Despite that the current version of the Directive is in theory broad enough to cover safety risks resulting from software interacting with the product, it does not explicitly mention it, creating legal uncertainty in this regard.

·One of the common characteristics of AI and IoT products is the presence of software that can change/evolve over time. This challenges the traditional meaning of the concept of placing on the market of the Directive. 

Finally, it was mentioned by one stakeholder of the OPC that 3D printing could also affect product safety. However, it appears that this technology does not seem to present new safety challenges. 3D printers are already covered by sectorial legislation (Machinery Directive). For the products created by the 3D printer, if they are placed on the market, they need to comply with product safety legislation, as 3D printing is just a new manufacturing technique. Furthermore, there is a similarity between products “printed” by consumers for their own use and traditional DIY products created by consumers.

5.2.4.Relevance of definitions of the Directive

In the context of the GPSD Study, stakeholders were asked whether or not they considered the key concepts of the Directive to be still relevant or whether they saw a need for it to be adapted to changed circumstances. Often, comparable numbers of stakeholders even of the same group – companies/business associations, authorities and other stakeholders – suggested that a concept should be changed or kept as it is. Figure 8 provides an overview of results, and indicates the number of respondents that considered that a specific concept needed to be clarified and updated:

Figure 8: Replies to the question of the GPSD Study “Considering the emergence of new technologies and new business models/actors: Is there a need to clarify and update [the following] terms and concepts as currently used in the GPSD? – Number of respondents indicating Yes”

Source: GPSD Study

It appears that most of stakeholders detected that the current definitions for some concepts do not appropriately reflect the needs of the Directive. The reasons highlighted related to divergences with other pieces of EU legislation (see coherence section), but also to the fact that some of the definitions are now outdated due to the development of new technologies and online sales.

5.2.5.Relevance of environmental issues, including chemical risks

The definition of safety in Art. 2(b) of the Directive covers all product-related risks that can affect the safety and health of persons. This definition therefore also includes risks related to environmental pollutants in products that can affect human health (e.g. heavy metals such as lead and cadmium, phthalates, etc.). A broader scope of risks to be considered in addition to those related to the health and safety of consumers, such as security and environmental risks, was only introduced with Regulation (EC) 765/2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products. Since then, the Safety Gate/RAPEX applies to measures which prevent, restrict or impose specific conditions on the marketing and use of products posing a serious risk to the health and safety of consumers or to measures which prevent, restrict or impose specific conditions on the marketing and use of products posing a serious risk to the health, safety or, for harmonised products, other relevant public interests, including environmental risks.

Data from the Safety Gate/RAPEX shows how the number of notifications indicating “Environmental” as the type risk was slowly increasing, and in 2019 the number of notifications suddenly more than tripled. This rapid rise can be explained by the revision of the guidelines of the Rapid Alert System adopted in 2018 that clarified the cases where risk assessments related to chemical risks do not need to be performed in order to consider a product as unsafe. The revised guidelines have indeed set out that if a chemical substance in a product is already banned or restricted by Union legislation, the product can be considered to pose a serious risk, without the need to perform a specific risk assessment. This has simplified the risk assessment process for chemicals, including environmental pollutants with health impact.

Another factor to take into consideration in the surge of notifications on environmental risks concerns the increased focus on motor vehicles’ emissions in the aftermath of the “Dieselgate”, and the subsequent number of alerts regarding vehicles not satisfying emission standards.

Figure 9: Number of notifications to Safety Gate/RAPEX mentioning “Environment” among the risk types

Source: Safety Gate/RAPEX.

A further analysis of the recent dataset of the system shows that there seems to be a general tendency to identify the risk as “chemical” if the substance in the product poses a direct health risk to the consumer, e.g. acute poisoning. For the years 2013 to 2019, the dataset contains 3 606 notifications (approximately 25% of all notifications in the period) of products presenting a “Chemical” risk, more than ten times the number of notifications that indicate "Environment" as risk type. However, substances presenting a chemical risk will often also have an adverse effect on the environment. In some cases, the products notified in the rapid alert system contain substances that can be dangerous for human health (e.g. cadmium, lead) but that are contained in parts of the product that the consumer will not be in direct contact with (e.g. solders). The risk will thus materialise during the “end of life” phase of the product, with a possible accumulation of these dangerous substances in the environment. While the definition of safety in the Directive is considered to cover risks related to environmental pollutants in products that can affect human health, this coverage is not explicitly stated. This leaves room for interpretation regarding products posing long-term risks stemming from the toxicity of environmental pollutants. The extent to which the Directive is well adapted to environmental issues with health impact therefore depends on the interpretation of the definition of safety in the Directive and could be clarified.

As regards emerging chemical hazards, the Directive has showed in a number of occasions its particular relevance in being a safety net and the role of the rapid alert system as a ”watchdog” for new chemical hazards. Examples are Dimethilfumarate and Bisphenol A, for which restrictions were triggered after measures against products containing these chemicals were reported in Safety Gate/RAPEX (see above section 3).

It can therefore be concluded that the Directive remains relevant in relation with environmental and chemical risks. However, legal changes might be needed to clarify that risks related to the indirect and long-term health effects of environmental pollution under the scope of the Directive.

5.2.6.Conclusion on relevance

Overall, the Directive, its objectives and the product safety framework that it establishes remain relevant for the needs of avoiding harm to consumers and building trust on consumer products as a prerequisite for the free movement of goods. However, the growth of online sales and the development of new technologies show that some of the provisions of the Directive are not well adapted to respond to its objectives. In addition, some of the definitions and provisions are now outdated and could be subject to fine-tuning.

5.2 Effectiveness

5.2.1. Extent to which the Directive has been effective in contributing to consumer safety

Several indicators and data sources can be used to assess the extent to which the GPSD and related market surveillance and notification procedures have been effective in achieving a high level of consumer protection through the reduction of unsafe products on the EU market. These include the following indicators/sources:

·Trends in the number of Safety Gate/RAPEX notifications;

·Share of unsafe products found during market surveillance inspections;

·Data on product-related injuries;

·Assessment of consumers and stakeholders concerning the level of product safety achieved.

None of these indicators is without limitations, and to obtain an overall picture they have to be considered together.

First, the number of alerts to Safety Gate/RAPEX show a progressive increase over the years; since 2012 the total number of notifications was just above 2,000 alerts a year. In 2019, a total of 2,243 alerts were circulated in the system. The three product categories with the largest number of notifications (toys, clothing and motor vehicles) account for between 1 050 and 1 350 annual notifications with an average of 1 230 notifications per year.

Notifications in the Safety Gate/RAPEX may include information concerning the number of items that are being affected by the measures taken, e.g. the number of items that were rejected at the EU border, or the number of items that were recalled from the market. This information is part of the notification that is only accessible for market surveillance authorities. Table 1 shows an extract of this data, covering a twelve month period from May 2019 to April 2020, and including information for a total of 536 notifications in which more than 1 000 items were affected.

Table 1: Number of notifications and number of items affected by measures taken per product category (May 2019 to April 2020)

Product category

Number of notifica-tions

Number of items affected, with data referring to ...

Total

National circulation

EU/EEA circulation

Worldwide circulation

Unknown circulation

Motor vehicles

272

27 240

1 049 811

9 424 961

17 462 909

27 964 921

Construction products

1

4 500 000

4 500 000

Protective equipment

11

4 800

4 290 000

16 545

4 311 345

Electrical appliances and equipment

30

638 177

63 278

1 146 608

210 719

2 058 782

Toys

126a)

183 800

539 534

483 901

1 207 235

Other

7

10 700

528 594

539 294

Cosmetics

12

56 560

208 063

264 623

Lighting equipment

11

12 969

231 657

244 626

Lighting chains

17

105 520

51 600

157 120

Childcare articles and children's equipment

9

8 111

131 817

139 928

Chemical products

4b)

2 160

75 073

77 233

Kitchen/cooking accessories

3

5 952

57 249

63 201

Hobby/sports equipment

6

13 197

45 734

58 931

Jewellery

5

1 200

51 394

52 594

Clothing, textiles and fashion items

7

5 031

22 073

24 985

52 089

Machinery

3

28 556

28 556

Decorative articles

4

11 000

5 052

16 052

Pyrotechnic articles

1

14 400

14 400

Measuring instruments

2

3 648

3 000

6 648

Gas appliances

3

6 140

6 140

Recreational crafts

1

2 953

2 953

Gadgets

1

1 008

1 008

Total

536

988 528

6 084 641

10 571 569

24 122 941

41 767 679

Source: Safety Gate/RAPEX. Bold = Non-harmonised product category.

As the table shows, the listed notifications in this twelve-month period affected some 41.8 million items in total or 79 900 items per notification on average. The largest category is “Motor vehicles” with the highest number of notifications (272) and the highest number of items affected (approximately 28 million items). Notifications that concern clearly non-harmonised product categories (marked in bold) account for a total of 169 548 items in this five-month period.

Regarding evidence from market surveillance activities of Member States authorities, table 2 presents data on the total number of consumer products inspected by market surveillance authorities in the EU/EEA member countries, as well as the total number of unsafe consumer products found 207 . The share of unsafe products found by market surveillance authorities in their inspections is frequently between 2% and 16% of total consumer products inspected (interquartile range), with the median value being 4% 208 . In some countries this share is much higher: from five countries it was reported that the share of unsafe products of total consumer products inspected is close to 20% or higher. However, the GPSD Study notes that the data has been reported from various sources according to different criteria, so that these figures have to be interpreted with care. As market surveillance authorities often sample according to risk-based criteria (i.e. focusing on risky products, conducting visual inspections to choose for testing products that can potentially be unsafe), this figure is not representative of the incidence of unsafe consumer products on the market 209 .  

Table 2: Share of inspected consumer products and share of unsafe products found (last available year, mostly 2018 or 2019)

Country

Total number of consumer products inspected

Total number of unsafe consumer products found

Share of unsafe products found (of total products inspected)

Austria

:

:

:

Belgiuma)

710

283

40%

Bulgariap)

4 624

120

3%

Croatiaq)

4 475

47

1%

Cyprusb)

7 105

301

4%

Czech Republicc)

17 088

156

1%

Denmarkd)

2 500

520

21%

Estoniae)

8 317

46

1%

Finlandr)

85

31

36%

Frances)

3 980

760

19%

Germanyf)

27 541

12 715

46%

Greeceg)

850

100

12%

Hungary

:

:

:

Irelandt)

492

:

 :

Italy

:

:

:

Latviah)

1 144

64

6%

Lithuaniai)

2 000

59

3%

Luxembourgj)

867

15

2%

Maltak)

1 313

22

2%

Netherlands

6 500

n.a.

n.a.

Poland l)

8 671

440

5%

Portugalu)

:

:

:

Romaniam)

15 245

41

0.3%

Slovenian)

605

9

1%

Slovakia

:

:

:

Spain

:

:

:

Sweden

:

:

:

UK

:

:

:

Source: GPSD Study, from data provided by market surveillance authorities

Furthermore, according to the analysis presented in Annex 4, it is estimated that consumer detriment linked to injuries and premature deaths from unsafe products is EUR 76.6 billion per year. This is the sum of detriment caused by non-fatal product-related injuries, and the cost of premature death due to fatalities caused by mechanisms relevant for product safety (such as tools, strangulation, electric current, or fire) occurring outside of work-related locations 210 . The analysis based on previous research and interviews with product safety experts concluded that 15% is a reasonable and cautious estimate for the proportion of the total detriment that was caused by consumer products, or could have been prevented through better design, instruction or a safety device. On this basis, the preventable detriment suffered by EU consumers and society due to product-related accidents can be estimated at EUR 11.5 billion per year.

In addition to this injury related detriment, the GPSD Study estimates that the consumers also suffer financial costs of a total value of EUR 19.3 billion for 2019 arising from the fact they have purchased unsafe products that they would not have purchased if they knew these products were unsafe 211 .

Consumer survey data can also provide supporting evidence regarding product safety, at least to the extent that consumers perceive product safety to be an issue relevant to them, based on their own experiences, the experiences of friends and media reports. EU data exists concerning the consumer perception of the level of product safety in the EU. The data derives from the Commission’s regular surveys on consumer attitudes toward cross-border trade and consumer protection since 2008 (the last relevant survey was conducted in 2018).

Figure 10: Percentage of consumers who agree that essentially all non-food products are safe or that a small number of non-food products are unsafe (EU average), 2008-2018

Source: Compilation of the GPSD Study based on data from the Commission’s 2016 and 2018 survey of consumers’ attitudes toward cross-border trade and consumer protection

Figure 10 indicates that consumer trust in product safety in the EU has shown a slight increase over time, with the proportion of consumers agreeing that essentially all non-food products in their country are safe (or that only a small number are unsafe) increasing from 65% in 2008 to 78% in 2016, before decreasing again to 70%; a possible explanation provided by stakeholders for this late drop is the increase of unsafe products found online. The largest increase (9 percentage points) occurred between the 2014 and 2016 surveys, before returning in 2018 to slightly above the 2014 level.

During the GPSD study, stakeholders were consulted on their views about to what extent the Directive has been effective in reaching its objective of protecting consumers from unsafe products. Their overall opinion was positive, while SME provided a slightly more negative opinion in this regard than other businesses.

The available data also confirms that large numbers of unsafe products that could affect the safety of EU consumers are rejected at the borders, withdrawn from the market or recalled. This implies that a reduction of unsafe products on the market is achieved in practice, in line with the objective of the Directive.

However, there is still a significant number of unsafe products in the EU market, which hint to the fact that the deterrent effect of the Directive might not be effective enough. A plausible explanation for this, suggested by several stakeholders, might be that the maximum amounts of sanctions and penalties for product safety infringements, that are not harmonised across Member States, remain significantly low. Sometimes companies organise product recalls and other measures in jurisdictions first where the level of penalties is higher than in some EU Member States. This damages the effectiveness of the Directive and the EU product safety framework as a whole.

5.2.2. Extent to which the Directive has been effective in contributing to the functioning of the Single Market

According to its recital (2), the Directive pursues the aim of improving the functioning of the internal market. As recital (3) confirms, it has introduced a common legislative framework in order to avoid disparities between Member States that could have emerged in the absence of Union law.

The Directive plays an essential role in the functioning of the Single Market, in line with the legal basis of the legislation, so that producers ensure safety and market surveillance authorities can take actions against products, risks and aspects not covered by sectorial legislation. There is no indication that Member States have tried to stop the income of products for from other EU Countries for which no harmonisation legislation exists and to which the Directive therefore applies fully (non-harmonised products) for other reasons than their insufficient level of safety.

However, stakeholders emphasise that market surveillance authorities of different Member States may come to different conclusions in relation to the risks posed and safety of a particular product, and that this in some cases affect their operations and increases administrative burdens, thus having a negative impact on the functioning of the Single Market and the level-playing field for economic operators. Disputes between Member States on risk assessments are discussed within the Safety Gate/RAPEX network. Over recent years, the number of such disputes to better align the risk assessments by different Member States' authorities has been relatively stable, as indicated in table 3. The number of notifications that were subject to disputes has been on average less than 30 per year 212 .

Table 3: Number of disputes on risk assessments that needed to be discussed within the RAPEX network

Year

Number of notifications that were subject to disputes

Number of follow up disputes

2013

19

21

2014

39

41

2015

33

39

2016

19

24

2017

24

28

2018

26

27

2019

30

30

Total

190

210

Source: Safety Gate/RAPEX.

In this regard, it is important to note that over the years, the European Commission has issued a number of guidance documents that support the uniform application of the Directive in the Member States, including the Commission Implementing Decision (EU) 2019/417 of 8 November 2018 laying down guidelines for the management of the European Union Rapid Information System ‘RAPEX’ according to Article 12 of Directive 2001/95/EC on general product safety. Moreover, there is evidence that the training programmes that the European Commission organised for the national market surveillance authorities and the EU financing of coordinated market surveillance activities of EU Member States have contributed to a more uniform application of the Directive in the Member States.

Nevertheless, the lack of a mechanism at EU level to solve divergent positions of Member States regarding the risk assessment of a specific product remains a challenge for the effectiveness of Directive.

During the GPSD stakeholders were consulted on their views about to what extent the Directive has been effective in reaching its objective of contributing to the functioning of the Single Market. Their overall opinion was positive, while SME provided a slightly more negative opinion in this regard than other businesses.

As conclusion, on a general level the Directive has been effective in contributing to the free movement of goods within the Single Market. The lack of a mechanism to arbitrate disputes on risk assessment contributes negatively to the effectiveness of the Directive.

5.2.3 Effectiveness of the system of market surveillance under the Directive

The Directive establishes the obligation for Member States to carry out market surveillance activities to enforce is provisions. This evaluation detected three key factors that have negatively influenced the effectiveness of the market surveillance provisions: traceability of unsafe products as a precondition for market surveillance; the lack of resources of authorities; and the coexistence of two different market surveillance systems for harmonised and non-harmonised products. The latter point is developed in the Coherence section; the other two here below.

The extent to which actions by market surveillance authorities against unsafe products are effective depends on how easily, quickly and precisely products can be identified and traced back to specific producers, importers, distributors, sellers and consumers. An adequate system of product traceability allows market surveillance authorities to determine if an unsafe product is on their market, to trace the economic operators who made the product available, and to enforce the appropriate corrective actions. From the perspective of the economic operator, traceability is fundamental for effectively and efficiently managing product risks; increased traceability enables more targeted and less costly corrective actions, e.g. by limiting the size of withdrawals or recalls. Finally, traceability is also important for consumers because if an unsafe product is already purchased, clear product identification is necessary for consumers to respond to a recall.

It appears that at present, the Directive’s provisions on traceability are not sufficiently explicit to guarantee that complete information on supply chains and distribution of the product is gathered. The Directive does not contain detailed traceability requirements. Article 5(1) contains a general obligation for producers to provide the necessary information for tracing a product, without asking for specific or minimum identification information. According to article 5(1), this information may for example include “an indication, by means of the product or its packaging, of the identity and details of the producer and the product reference or, where applicable, the batch of products to which it belongs, except where not to give such indication is justified”. Apart from producers, distributors are also required to keep and provide documentation necessary for tracing the origin of the products (article 5(2)). Furthermore, the emergence of online sales poses additional challenges to trace an unsafe product back to where and by whom it was produced and sold from.

The extent to which these requirements based on the Directive achieve adequate product traceability can be demonstrated through the data available in the Safety Gate/RAPEX. From 2013 to 2019 a significant share of the alerts that were submitted for unsafe consumer products involved products with unknown product information items. In 2019 for instance, 36% of alerts for unsafe products did not include information about the manufacturer; 20% concerned products of unknown brand or batch number/barcode; and a share of 12% regarded products with no type or model information. Figure 11 based on alerts registered in the EU Safety Gate shows that only an improvement over time on the availability of information on the manufacturer and batch number/barcode of the product (i.e. a decrease of the number of alerts that did not provide such information). There is no clear trend of improvement over time for the rest of the traceability information.

Figure 11: Share of Safety Gate/RAPEX alerts with unknown product information items (2013-2019)


Source: GPSD Study, from Safety Gate/RAPEX data

The same data also reveal that missing product information is more typical for specific types of products such as laser pointers, lighters, jewellery, decorative articles, etc. What these products have in common is that they all fall within the scope of Directive and are not subject to sector-specific harmonisation rules. It follows that product categories under the Directive are more likely to lack relevant information items that are essential to trace them.

Secondly, the market surveillance system under the Directive (consisting of market surveillance activities by authorities in the Member States, information exchange through Safety Gate/RAPEX and coordination and support measures) appears to be operating under considerable resource constraints. In a 2018 evaluation of the product safety-related actions funded under the EU Consumer Programmes 213 , authorities indicated limited staff/financial resources for market surveillance and enforcement most frequently as a factor influencing negatively the level of their achievement. A previous study concluded that the total budget available to authorities in 18 EU Member States for which data was available declined annually between 2010 and 2013 in nominal terms, and the total staff resources available to authorities (in full time equivalent units) also showed a negative trend 214 . In a recent survey, both authorities and other stakeholders agreed that two of the three top problems affecting the functioning of market surveillance relate to a lack of resources: limited staff resources of market surveillance authorities in general, and in addition, a specific lack of financial resources for product testing 215 . It is widely acknowledged by authorities and other stakeholders that the staff and financial resources of market surveillance authorities are often insufficient, with the fragmentation of responsibilities at national level leading to inefficiencies due to a lack of economies of scale in some cases, and contradictory measures and approaches for risk assessment between authorities in others. Also, the number of inspections can be considered as generally low, with a median of roughly 400 inspections of consumer products per year and million population, based on data from those Member States that provided such information.

Over the last 15 years, the European Commission has co-financed more than 50 coordinated market surveillance activities (the so-called Joint Actions or, since 2018, Coordinated Activities on the Safety of Products or CASP) carried out by Member State authorities, with a total budget around 27 million EUR since the start of the activities. These coordinated activities aim at promoting and coordinating administrative cooperation for the application of Directive and ultimately at ensuring a consistent approach towards the effective enforcement of product safety legislation across the internal market. Most coordinated actions have resulted in the identification of a significant number of unsafe products, with non-compliance rates around 20% 216 , leading to consequent notifications in the Safety Gate/RAPEX for 14 categories of products. The implementation of these actions have been considered by authorities extremely useful, as economies of scale allow and the funding provided by the Commission have helped them to carry out inspections for some categories of products that would have been less controlled otherwise.

Finally, it was mentioned by several authorities that some Member States complement product-based market surveillance with a market surveillance of internal processes set up by economic operators to ensure product safety. In those cases, authorities reported an increase of the effectiveness of product safety enforcement.

In conclusion, while the Directive sets an efficient system to ensure the safety of consumer products and contribute to better and more coordinated market surveillance, challenges related to traceability, institutional fragmentation (including regarding market surveillance of harmonised and non-harmonised consumer products) as well as resource constraints limit the effectiveness of the overall system. At the same time, coordinated surveillance activities have proven to be very efficient, contributing to a consistent enforcement of product safety legislation across the internal market.

5.2.4 Effectiveness of the Safety Gate/RAPEX

The Safety Gate/RAPEX ensures that information about unsafe products withdrawn from the market and/or recalled from consumers anywhere in Europe is circulated between Member States and the European Commission, so that appropriate action can be taken by market surveillance authorities in all EU Member States (and the EEA countries Iceland, Liechtenstein and Norway). During the period 2005 to 2019 a total of 25 560 notifications were submitted (close to 5 notifications on average per day), with all Member States participating in the system on a regular basis. The indispensable character of the system is emphasised by the diversity of institutional approaches for market surveillance and the high degree of fragmentation of market surveillance authorities according to sectoral and/or administrative considerations in many in Member States, which requires quick and effective information exchange and distribution, for which the system is a key channel.

The effectiveness of the Safety Gate/RAPEX is also illustrated by the analysis of the number of follow-up measures. Follow-ups can be defined as the feedback received from Member States participating in the Rapid Alert System on actions they have taken following up another country’s alerts. As Figure 12 shows, the number of follow-up measures have steadily increased since data started to be gathered in this respect by the European Commission in 2011.

Figure 12: Number to follow-up measures taken by Member States reported to Safety Gate/RAPEX for the period 2011-2019

Source: Safety Gate/RAPEX

The GPSD Study also showed that authorities to a large extent appreciated the functioning of RAPEX, with 65% considering the system to function at least 'moderately well' (48% considered it to be 'rather' or 'very well' functioning). Other stakeholders were even more positive, with 70% finding the system at least 'moderately well' functioning (46% considered it to be 'rather' or 'very well' functioning). Only a small minority provided a negative assessment ('rather not' or 'not at all' functioning).

Despite this general satisfaction with the rapid alert system, there are also issues that prevent its optimal operation. In the surveys of authorities and general stakeholders for the GPSD Study, respondents were asked whether they had encountered impediments when using the system. Moreover, the recent GPSD implementation study analysed the average duration between the detection of an unsafe product and its notification to Safety Gate/RAPEX in each Member State. The RAPEX system sets out guidelines setting indicative timeframes for notifications, but these are not compulsory for Member States. In most cases this duration is two weeks or more; in some cases, the duration might be up to 6 months.

Several authorities emphasised that the duration between detection of an unsafe product and its notification to the system depended on the type of product, the risk, the required testing and the behaviour of the economic operator (objections by the relevant economic operator are in some cases reported to lead to significant delays).

Regarding international cooperation, there is high interest both from third countries and from the EU in exchanging information on unsafe products between the Safety Gate/ RAPEX, and third countries. This exchange enables more efficient market surveillance in the EU and enhancing product safety worldwide which can also in turn result in a better protection of EU consumers. When it comes to the procedure to set up arrangements to exchange non-public information from the RAPEX system, the Directive does not provide absolute clarity. Indeed, article 12(4) only mentions “access to RAPEX”, which must be based on an international agreement. The Directive does not distinguish between the different levels of exchanges between the EU system and third countries. In practice, there is a major difference between:

·a third country becoming a full RAPEX member.

·a third country with which selected non-public RAPEX information is shared.

The current provisions of the Directive clearly cover the first type of cooperation, which consists in full access to Safety Gate/RAPEX and must be based on an international agreement. However, there is no clarity on the procedure for the second type of cooperation.

It can be concluded that the rapid alert system achieves its objective to provide a platform for exchange of information concerning unsafe products. Since its establishment in 2003 in accordance with Article 12 of the Directive, it has become a cornerstone of the EU market surveillance and product safety framework. Market surveillance authorities and other stakeholders therefore consider the Safety Gate/RAPEX mostly to be well functioning and effective. Still, certain issues currently prevent its optimal operation, such as delays between the detection of an unsafe product in a Member State and its notification to Safety Gate/RAPEX, as well as the procedure to set up arrangements for the exchange of information with third countries.

5.2.5 Effectiveness of the standardisation procedure of the Directive

The standardisation system established under the Directive has been effective in the sense that standardisation requests have been elaborated under the Directive and these led in most cases to standards which help producers to comply with the general products safety requirement under the Directive by providing presumption of safety of the product. The list of referenced standards shows the importance of the Directive in this respect, as most of the listed products have a high potential for consumer harm. The GPSD Study showed that referenced standards are widely used by manufacturers, as a conforming product shall be presumed safe. Even a brief Internet research on a major e-commerce website indicates that products falling under the Directive (such as gymnastic equipment, bicycles, carry cots and stands etc. ) are regularly advertised as conforming to the relevant standards, thereby providing evidence of their application in practice. Market surveillance authorities also make an extensive use of standards to assess the safety of products and take measures accordingly.

Replies from stakeholders to the GPSD Study have shown that the effectiveness of the standardisation process might be hampered by several procedural issues. In particular, stakeholders have stated that the process is considered to be long and complicated, and sometimes it reduces the possibilities for participation of authorities, SMEs, consumer organisations and other organisations, as well as universities. However, it should be mentioned that the standardisation process must strike a balance between speed and the quality of the outcome, thus, of the standard.

As detailed in Annex 10, the process under the Directive includes one step more than the procedure applied in relation to harmonised standards. The reason is that the harmonisation directives contain essential safety requirements on which standards can be based. In contrast, the wide coverage of the Directive requires specification of the safety requirements for a specific product, which then serves as a guideline for the work of the European standardisation bodies 217 . The addition of Step 1 of the process under the Directive therefore seems to be justified and unavoidable. As the European standardisation organisations attempt to achieve consensus, the duration for elaborating the standard by the ESO (Step 3) also seems to be justified by the nature of the process; while this takes time, the consensus-principle has always been regarded to be an essential element of standard setting procedures. Step 4, the Commission decision to reference standards, has been recently adapted following developments in case law. However, a possible merger of steps 1 and 2 would offer a potential area of improvement (in particular to enhance its efficiency, see section below).

5.2.6 Effectiveness of provisions on product recalls

Product recalls are one of the most common measures to mitigate the risks posed by unsafe products in the EU 218 . Among the over-2000 measures reported each year through the EU Rapid alert system 219 about half concern recalling the products from consumers. The Directive does not contain any specific provisions for recall procedures and timelines, communication or the remedies to be offered to consumers. Producers undertake voluntary action to organise recalls but authorities can also order a recall on the basis of notifications of unsafe products from other countries or the results of their own market surveillance activities or if producers’ actions are deemed insufficient. As shown by the Implementation Study, each Member State follows its own approach, with some common elements, but also diverging practices.

While the effectiveness of product recalls varies considerably depending on factors such as channel of sale 220 and product category 221 , the proportion of products successfully recovered from consumers remains generally low, as recognised by a recent OECD report 222 . For instance, one Member State indicated that the return rate (understood as the number of products returned by consumers following the release of a product recall notice and other related communications) rarely exceeds 10%, except when products have been purchased online, which makes it easier for suppliers to contact and alert their customers about a recall 223 . Another national authority estimated that around 80% of products of low value with a short lifespan remain in consumers’ hands 224 .

The consequences of delayed and ineffective recalls are also exemplified by the deaths and injuries caused by products such as faulty airbags (estimated to have caused 35 deaths and 300 injuries worldwide 225 ) and baby sleepers (associated with 59 baby deaths in the US 226 ); see Annex 8.

In the interviews with authorities held in the frame of the GPSD Study, few of them were able to estimate recall effectiveness in terms of the percentage of the recalled consumer products that were actually collected. Several authorities also suggested that even though they collect related data, it is difficult to determine the effectiveness of product recalls. At a recent EU workshop, it was concluded that there is no systematic approach by the authorities to monitoring recall effectiveness 227 . 

The main obstacle to recall effectiveness is the difficulty of identifying and contacting the owners of recalled products, which means that many EU consumers are simply not aware that they own a recalled product. The Directive does not contain any requirements on consumer traceability and authorities interviewed for the Implementation Study mentioned that reaching the final consumer is a challenging task.

For most recalled products, customer data is not available or even if it is available, it is not used to inform affected consumers. Apart from motor vehicles (whose registration with public authorities is mandatory), registration schemes are only available for few higher-value product categories like domestic electric appliances and communication devices, and even in these sectors actual registration rates tend to be rather low 228 .. In addition, economic operators are hesitant about using customers’ information collected for other purposes (e.g. in the loyalty programmes or online sales) in the event of a recall because of a possible legal uncertainty about the compliance with the General Data Protection Regulation 229 . Limitations on customer data were also notified by online platforms in a Study on contractual relations between online platforms and their professional users 230 . Moreover, there are no systematic sources of indirect recall information for consumers. For instance, only 12 EU/EEA countries publish recall information on their websites 231 .

A second obstacle to recall effectiveness is the consumers’ reluctance to return a recalled product even if they are aware about the recall. An EU-wide survey commissioned by the European Commission showed that over a third of consumers (35%) did not react to a recall that was relevant to them: 31% continued using the product with extra caution, while 4% took no action whatsoever 232 . The corresponding figures in a most recent consumer survey in 10 EU countries were 24% and 13%, respectively 233 .

This may be caused by recall notices being unclear and/or minimising consumers’ perception of risk. For instance, the analysis of existing recall announcements showed that over half of them used terms and expressions, which could undermine consumers’ perception of risk, such as ‘voluntary/precautionary recall’, ‘potential concern/problem’, in rare cases’/in specific conditions’ or highlighting that there have been no reported injuries 234 . In addition, the procedure for consumers to return the recalled product may be complex and burdensome. 

In addition to the issues mentioned above, behavioural research 235 suggests that cognitive biases and heuristics may also influence consumers to take suboptimal decisions regarding how to respond to product recalls and may lead them not to take action. Biases such as information overload and framing effects mean that if recall notices are lengthy and unclear, consumers may ignore them, especially if they lack time. Over-optimism may result in consumers underweighting the risk posed by a recalled product, while inertia and endowment effect (i.e. the emotional bias that causes individuals to value an owned object higher, often irrationally, than its market value) relate to the fact that consumers have an inherent preference for status-quo, which in the case of recalls means keeping the product 236 .

To sum up, the increase in the number of product recalls over time and the fact that recalls are currently for most part organised on a voluntary basis can be considered as indications that the Directive has contributed to making recalls more widely used as a corrective measure. However, EU-wide general requirements regarding the recall procedure or communication are missing. This has been repeatedly reported as a significant shortcoming, suggesting that existing requirements are in themselves currently not sufficient to ensure effective recalls. The resulting limited effectiveness of recalls may negatively affect consumer safety and the degree to which there is a level-playing field for businesses in the internal market, affecting therefore the extent to which the objectives of the Directive are achieved in practice.

5.2.7 Impact of e-commerce in the effectiveness of the Directive

The evaluation showed that e-commerce poses additional challenges for the control of the safety of products sold online, thus questioning the effectiveness of the Directive in this regard. In particular, there is evidence pointing to the fact that the control of the safety of products sold online is more problematic than the one for unsafe products found in brick-and-mortar shops. Data coming from the Safety Gate/RAPEX for the period 2018-2019 show that the share of notifications of products 'sold online' in which one of the four traceability information items was missing (see table 4) was between 29,2% and 57,3% (depending on the item); the share for notifications not indicating ‘sold online’ in which one of the four traceability information items was missing was considerably lower (between 12,6% and 35%7).

Table 4: Number and share of Safety Gate/RAPEX notifications concerning unsafe consumer products with unknown product information items (by sales channel, 2018-2019)

Total number of notifications

Number of notifications regarding products not indicating 'online'

Share : Notifications not online missing information / Total notifications not online

Number of notifications regarding products indicating 'online'

Share : Notifications online missing information / Total notifications online

Total number of notifications for consumer products 2018-19

3 864

3590

-

274

-

Notifications in which information item is missing

- No manufacturer

1437

1 280

35,7%

157

57,3%

- No brand

800

700

19,5%

100

36,5%

- No type/model

531

451

12,6%

80

29,2%

- No batch number/barcode

805

667

18,6%

138

50,3%

- None of the four

52

17

0,5%

35

12,8%

Source: Prepared with Safety Gate/RAPEX data.

Furthermore, recent investigations from market surveillance authorities, consumer organisations and industry associations show worrying levels of unsafe products in some categories of products sold online:

·A campaign carried out in 2018 by DGCCRF 237 , the French market surveillance authority, showed that on average 42.8% of the inspected products online were unsafe. The level of dangerous products reportedly varied a lot depending on the product category: high rates of unsafe products were found for example in low priced jewellery (74%) and some electrical products (66%), while for cosmetics the rate was 16%. The situation also varied greatly considering the marketplace on which the samples were taken (ranging for example from 22% to 58% of unsafe products). The authority concluded that it found a significantly higher share of unsafe products on online marketplaces compared to products sampled across all distribution channels.

·In February 2020, six consumer groups from the BEUC network 238 tested 250 electrical goods, toys, cosmetics and other products bought from a number of online marketplaces. They selected the products based on possible risks and found that 66% of them failed EU safety laws with possible consequences such as electric shock, fire or suffocation.

·Also in 2020, Toy Industries of Europe 239 undertook a project to assess the safety and the legal compliance of toys bought from operators who sell on several online marketplaces present in the EU. The assessment was conducted on toys bought in seven EU markets - Denmark, France, Germany, Italy, the Netherlands, Spain and Sweden. The project showed that more than 97% of the 193 toys assessed did not comply with strict EU toy safety rules and 76% of 134 that were safety-tested had defects that made them unsafe for children. In addition, 83% of the toys bought as part of the project did not include necessary traceability information.

These results support the other evidence provided above. When interpreting the research presented in the previous paragraphs, it is important to recall that all quoted studies are based on risk-based sampling, i.e. they focused on products with a higher probability for non-compliances. While this is a standard approach used by market surveillance authorities, it means that results are not necessarily representative of the market overall, but provide insights into specific problem areas.

As already stated in the section on Relevance, the Commission has taken some actions to tackle this problematic. One major action has been the facilitation of the signature of the Product Safety Pledge by 9 online marketplaces. Most market surveillance authorities and the online marketplaces part of the Pledge see the signature of the voluntary commitments as positive, as it sets a cooperation framework and defines possible actions to be carried out by online platforms as an important player in the supply chain. The 3rd Monitoring Report of the Pledge 240 , published in November 2020, showed some progress: there are indications that signatories are taking actions to monitor Safety Gate/RAPEX notifications and remove product listings when notified by authorities. However, further than that it is challenging to analyse the effectiveness of the Pledge to appropriately ensure the safety of products sold online. The report also showed that there has been a divergence in the way online marketplaces calculated the Key Performance Indicators (KPIs), making it difficult to extract conclusions from those numbers and monitor the effectiveness of the commitments of the Pledge. Further negotiations with marketplaces to enhance the monitoring and accountability of the Pledge have proved to be complex. In addition, authorities, consumer organisations and other stakeholders have signalled that the Product Safety Pledge remains voluntary, so the infringement of those commitments cannot be penalised by authorities. There are also many players on the market that have decided not to adhere to the voluntary commitments, creating also an uneven level-playing field between online marketplaces targeting EU consumers.

In addition, the presence of unsafe products in online channels can have an impact on the level-playing field for businesses. A study published by Eurocommerce 241 showed estimations on how much lower the purchase price would be if the products did not comply with EU Product Safety Rules. The cost difference between products produced in accordance with EU rules and standards, and produced without taking account of the EU rules was considered as significant. While such calculations cannot be extrapolated to a whole category of products, they give an indication of the possible detriment of the presence of rogue traders.

The evidence described above shows that e-commerce allows for a growing flow of consumer products (both those falling under the Directive and those falling under harmonised legislation) to enter the EU market including unsafe and recalled products, with traders and products being often untraceable. While these problems also do occur in the ‘offline’ environment, they are more relevant in the online environment which allows products to enter the EU market without having a relevant economic operator in the EU. It can therefore be concluded that on balance, the emergence of e-commerce has negatively affected the effectiveness of the Directive in terms of enforcing the general safety and traceability requirements, but also with respect to effective market surveillance by the Member States.

5.2.8 Impact of new technologies in the effectiveness of the Directive

The development of new technologies is also putting into question the effectiveness of the Directive as a safety net for products, aspects and risks not covered by product harmonisation legislation.

As stated in the section on Relevance, the uncertainties regarding the applicability of the Directive to new technologies, such as to new risks, have also an impact on its effectiveness. A good example can be the follow up of a Safety Gate/RAPEX notification from Iceland regarding a smartwatch for children 242 . The Icelandic authority argues that this product would not cause a direct harm to the child wearing it, but lacking a minimum level of security, it can be easily used as a tool to have access to the child. As one of the product’s intended function is to keep children safe through localisation, a consumer would expect that it would not pose security threats to children that may affect their safety by potentially being tracked and/or contacted by anyone. As measures regarding this product were notified to Safety Gate/RAPEX, authorities in the rest of Member States took follow-up actions.

However, as the surveys for the GPSD Study showed, many of those authorities were unsure if the Directive applied to such risks due to the lack of explicit provisions in that regard. The lack of explicit provisions and/or guidelines with regard to the safety of new technologies has a negative impact on the effectiveness of the Directive. Furthermore, almost half of the interviewed Member States authorities reported that they currently do not carry out inspections on products incorporating new technologies, which could also be due to such lack of clarity. The report on the safety and liability of new technologies 243 also concluded that EU product safety legislation would need to be further clarified for legal certainty.

The example of consumer products using new technologies illustrates both the strengths and the weaknesses of the general safety requirement of the Directive. It confirms the advantage of a general requirement that products need to be safe independent from the technology used, i.e. the safety requirement being technology-neutral. However, it also has shown its weakness in that certain key definitions, such as “safe product” and “product”, which are broad and unspecific to apply in a wide range of situations, can be ambiguous in the context of new technologies, and therefore create practical difficulties for the application of the Directive, which reduce its effectiveness.

5.2.9 Effectiveness of the Food-Imitating Products directive

The number of Safety Gate/RAPEX notifications of food imitating products is small. Between 2013 and 2019, a total of 114 notifications (less than 20 per year on average) that relate to food imitating products, as table 5 shows. Moreover, it seems that the product category “Food-imitating products” was only used up to 2015; afterwards, the products have been categorised according to their use (cosmetics, clothing, etc.), and aspects related to the imitating nature of the product were incorporated in the risk assessment of the product itself (but not in a systematic manner by all Member States).

Table 5: Notifications to Safety Gate/RAPEX related to food-imitating products

Product category

Year

Total

2013

2014

2015

2016

2017

2018

2019

Cosmetics

3

1

28

1

33

Decorative articles

1

1

4

17

23

Food-imitating products

26

12

8

46

Other

2

2

Stationery

2

2

Toys

1

4

3

8

Total

27

13

8

4

1

36

25

114

Source: Safety Gate/RAPEX

To address this issue, in 2019 the Commission circulated a questionnaire to Member States on the implementation of the FIPD. Its outcome showed that there are very different interpretations of the FIPD (and notably whether food-imitating products should be banned per se or be subject to a risk assessment). These divergences rendered the FIPD ineffective in practice, as there is not a harmonised approach for this category of products in the EU.

During a meeting of the Consumer Safety Network organised in November 2019, Member States agreed that the development of guidelines would not enhance the effectiveness of the FIPD and legal changes might be needed to address the diverging interpretations of this directive.

5.2.10 Conclusion on effectiveness

The Directive appears overall to have met its objectives of ensuring a high level of safety of consumers, while ensuring an effectively operating internal market for goods. Overall, the Directive has reached a reasonable uniformity in its implementation and the set of its rules makes it effective.

However, certain provisions of the Directive have proven to affect negatively its effectiveness, resulting in a continuing influx of new unsafe products on the market. This relates, as highlighted above, to the lack of a mechanism to arbitrate disputes on risk assessment, challenges on the traceability of unsafe products, lack of resources of market surveillance authorities, as well as the impact of e-commerce and new technologies on the effectiveness of the Directive. Furthermore, more clarity could be sought with regards to product recalls and other key definitions. The current divergences of interpretation of the FIPD among Member States has also resulted to be inefficient, so actions in that respect should be pursued.

5.3 Efficiency

5.3.1. Analysis of costs

The current costs of compliance with the Directive are directly accruing to businesses and market surveillance authorities, and indirectly to consumers in the form of costs of consumer goods and taxes.

5.3.1.1 Costs for businesses

The Directive applies fully to consumer products for which no specific EU harmonised legislation exists. It does not apply to industrial/professional products. While the Directive is also applicable to harmonised consumer products to the extent that there are no specific provisions with the same safety objective in the EU harmonised legislation, the significance of this ‘residual effect’ of the Directive depends on several factors, most notably on the extent to which EU harmonised legislation reflects the same level of protection. As the residual effects on manufacturing and distribution of harmonised products are in any case expected to be minor compared to the effects in the area of non-harmonised products, this assessment focuses on the latter. In other words, the following assessment only considers the costs of compliance with the Directive for manufacturers and distributors of non-harmonised consumer products.

Following this approach, the estimation of business costs is based on the following steps and detailed in Appendix 2:

·Step 1: Estimation of EU companies’ total annual turnover from the production and/or sales of non-harmonised consumer products in the EU - Based on this approach, the total EU turnover from non-harmonised products in the selected sectors amounts to EUR 773 billion for EU manufacturers, EUR 750 billion for EU wholesalers and EUR 581 billion for EU retailers.

·Step 2: Deduction of extra-EU export – This results in an estimation of an annual EU turnover related to non-harmonised products of EUR 655 billion for EU manufacturers, EUR 707 billion EUR for EU wholesalers and approx. EUR 485 billion EUR for EU retailers.

·Step 3: Deduction of industrial and professional products - As a result, the total annual EU turnover of EU companies from non-harmonised consumer products is estimated at EUR 1032 billion EUR.

·Step 4: Derivation of empirical estimates for companies’ product safety-related costs – These estimates take into account activities such as managing product safety, testing for product safety, and product recalls.

·Step 5: Extrapolation of EU companies’ annual costs related to the Directive including business-as-usual costs that occur also in absence of regulation.

·Step 6: Deduction of business-as-usual costs and extrapolation of EU companies’ annual compliance cost related to the Directive

As indicated in table 6, the estimated costs for EU businesses to comply with the Directive amount to EUR 1.1 billion per year, of which EUR 343 million accrue to EU manufacturers, EUR 321 million to EU wholesalers and EUR 439 million to EU retailers.

Table 6: Estimated annual cost for businesses to comply with the GPSD, by company size class, in million EUR

Cost by company size

Total costs

Company size (employees)

From 0 to 49

50 – 249

250 or more

All size categories

Total of manufacturing

79

101

163

343

Total of wholesale

118

81

122

321

Total of retail

232

44

163

439

Total

428

226

448

1 102

Source: GPSD Study, based on company costs survey and Eurostat data.

With regards to SMEs, companies with less than 50 employees are estimated to have GPSD-related costs (after business-as-usual costs such as costs related to general due diligence activities have been subtracted) of approx. 428 million EUR per year, and companies with 50 to 249 employees are estimated have GPSD-related costs of approx. 226 million EUR per year (see Table 6 above). Accordingly, SMEs account for 59% of the total of GPSD-related compliance costs in the EU, in line with their overall share in the market. It should be noted that due to the relatively high number of EU SMEs that engage in wholesale and (particularly in) retail sectors compared to manufacturing sectors (and compared to large EU companies which are more engaged in manufacturing activities), GPSD-related measures that impact on the distribution chains of non-harmonised consumer products can be expected to have a higher aggregate impact on EU SMEs than measures that impact on manufacturers.

5.3.1.2 Costs for authorities

Assessing the costs for market surveillance authorities to comply with the Directive is complicated due to organisational differences across Member States. Market surveillance systems for consumer products differ in the extent to which market surveillance is conducted by authorities with broader or with narrower sectoral responsibility, as well as to the degree of centralisation of the administration of each country. These organisational features affect how market surveillance of non-harmonised consumer products is organised, and in some cases the share of staff working on market surveillance of non-harmonised products is unknown.

To overcome this limitation, the estimate of market surveillance costs has been based on comprehensive staff data for 20 EU Member States obtained through interviews and surveys. Consequently, the estimation for total EU27 staff-related costs for market surveillance of non-harmonised consumer product amount to approximately EUR 122 million per year. Of this amount, EUR 14 million accrue in countries where responsibility for market surveillance is centralised and EUR 108 million in countries where responsibility for market surveillance is (partly) delegated to or competence of sub-national administrations (for more info see Appendix 2). Non-staff related costs of market surveillance activities for non-harmonised consumer products in the EU can be considered negligible (EUR 0).

5.3.2. Analysis of benefits

The main benefit of the Directive is the consumer protection and its consequential reduction of consumer detriment. The GPSD Study provided an analysis of detriment due to product-related injuries and fatalities in the EU (see Annex 4). The analysis concluded that the preventable detriment suffered by EU consumers and society due to product-related accidents (and related injuries and pre-mature deaths) can be estimated at EUR 11.5 billion per year. In addition to this injury related detriment, the consumers also suffer financial costs of a total value of EUR 19.3 billion for 2019 arising from the fact they have purchased unsafe products that they would not have purchased if they knew these products are unsafe While it is not possible to estimate the detriment suffered by EU consumers and society that is avoided by EU product safety legislation, including the Directive, it is reasonable to assume that in absence of the general safety requirement, the standards referenced and other provisions under the Directive, the detriment suffered due to product-related accidents and financial costs for consumers would be substantially higher, thereby outweighing the related costs for companies, market surveillance authorities and consumers.

Furthermore, the Directive has contributed with additional benefits:

·Increased consumer trust: as reflected in Figure 10, there has been an increase of consumer trust from 65% in 2008 to 78% in 2016;

·Increased business revenue (e.g. due to increased reputation /brand value);

·Improved quality / lifecycle of products;

·Better information on unsafe products/measures taken by authorities provided through the Safety Gate/RAPEX (more than 25,000 notifications since the establishment of the system);

·Better supply chain management due to traceability of products;

·Greater legal certainty;

·Lower operational risk for businesses;

·Deterrent effect on rogue traders;

·More level-playing field among businesses;

·Better functioning of the EU Single market;

·Higher level of protection of the environment due to reduction of unsafe products that also have environmental impacts (e.g. lead in PVC, siloxanes, Nonylphenol);

·Better access to the market in non-EU/EEA countries.

2.4.1.5.3.3. Balance and distribution between costs and benefits

About nine in ten respondents that had an opinion considered the costs due to product safety requirements of the GPSD to be at least “moderately proportionate” to the resulting benefits. Close to six in ten respondents that had an opinion even found these costs to be “largely proportionate” or “very proportionate”.

This largely positive assessment is consistent with the analysis of compliance costs (see table 7). A large part of costs related EU product safety legislation for consumer products are considered as business-as-usual costs (BAU), i.e. costs that companies would incur anyway (i.e. even in absence of product safety legislation, for example because these costs relate to their due diligence procedures). Compliance costs due to the safety requirements of the Directive that exclude business-as-usual costs are therefore limited, compared to the benefits the Directive brings, including in terms of contributing to the functioning of the internal market.

Table 7: Assessment of costs and benefits

Type

Assessment of cost/benefits

Costs

Companies’ compliance costs

Consumer product safety-related compliance costs are estimated at 0.59% of turnover for manufacturing sectors and 0.14% for retail and wholesale services sectors. Subtracting costs that companies would incur anyway (i.e. even in absence of product safety legislation, e.g. because these costs relate to due diligence), the estimated costs for businesses to comply with the GPSD amount to EUR 1.1 billion per year, of which EUR 343 million accrue to EU manufacturers, EUR 321 million to EU wholesalers and EUR 439 million to EU retailers

Member States’ costs for market surveillance costs

Total EU27 staff-related costs for market surveillance of non-harmonised consumer product amount to approximately EUR 122 million per year. Of this amount, EUR 14 million accrue in (smaller) countries where responsibility for market surveillance is centralised and EUR 108 million in (often larger) countries where responsibility for market surveillance is (partly) delegated to or competence of sub-national administrations

Benefitsa)

Better information on unsafe products through Safety Gate /RAPEX

In the period 2005 to 2019, a total 25 850 publicly available notifications were transmitted through Safety Gate/RAPEX, including 25 051 notifications concerning products with serious risks. In a 12 months period 2019/20, the analysed notifications affected some 41.8 million items in total

A better functioning internal market

The aim of free movement of (non-harmonised) goods within the internal market has been achieved. There were only few cases where Member States prohibited or hindered the import of products from other Member States that had been certified in line with EU product safety law, and these cases all related to specific harmonised legislation but not to the GPSD. There is no indication that Member States try to stop imports from other Member States for reasons of their insufficient level of safety. Standardisation has contributed to the uniform application of product safety law in the Member States. So far, a total of 80 standards were referenced under the GPSD

Increased consumer trust

Consumer trust in product safety in the EU has shown a slight increase over time, with the proportion of consumers agreeing that essentially all non-food products in their country are safe (or that only a small number are unsafe) increasing from 65% in 2008 to 78% in 2016, before decreasing again to 70%. The largest increase (9 percentage points) occurred between the 2014 and 2016 surveys, before returning in 2018 to slightly above the 2014 level

Reduced occurrence of products presenting health and safety risks & reduced number of accidents/injuries caused by unsafe products

Based on data from the European Injury Database (IDB) an estimated 11 million product-related injuries, in which consumers visited a hospital emergency department due to the injury, occur in the EU each year. The related detriment is estimated at EUR 76.6 billion per year. This is the sum of detriment caused by non-fatal product-related injuries, and the cost of premature death due to fatalities caused by mechanisms relevant for product safety (such as tools, strangulation, electric current, or fire) occurring outside of work-related locations. The preventable detriment suffered by EU consumers and society due to product-related accidents can be estimated at EUR 11.5 billion per year. In addition, consumers also suffer financial costs of a total value of EUR 19.3 billion per year arising from the fact they have purchased unsafe products that they would not have purchased if they knew these products are unsafe. It is reasonable to assume that in absence of the general safety requirement of the GPSD, and the standards referenced under the Directive, detriment suffered due to product-related accidents and financial costs would be considerably higher.

Source: GPSD Study

5.3.4. Conclusion on efficiency

This evaluation therefore concludes that the costs of the Directive are proportionate to the benefits it brings.

However, it should be highlighted that several of the factors that affect the effectiveness of the Directive may also influence its efficiency:

·Complexity of the legal framework for product safety, in particular the co-existence of two systems of rules on market surveillance;

·Difficulties on enforcement by market surveillance authorities the provisions of the Directive, in particular due to challenges posed by E-commerce and traceability;

·Lack of a mechanism to solve differences in risk assessment of authorities in different Member States;

·Outdated/unclear terms and concepts used in the Directive, in particular with regards to new technologies;

·Delays in notification of unsafe products through Safety Gate/RAPEX;

·Challenges related to the standardisation process;

·Suboptimal effectiveness of product recalls.

Consequently, actions aimed to address those issues would contribute to further enhance the efficiency of the Directive.

5.4 Coherence

5.4.1 Internal coherence of the Directive

This evaluation did not identify discrepancies or inconsistencies between the provisions of the Directive. This has been backed by stakeholders interviewed for the preparation of the GPSD Study. However, certain stakeholder have signalled that certain provisions of the Directive lack clarity. In particular, Art 5(1) of the Directive, that sets obligations for producers to provide necessary information for tracing the origin of a product, is considered to be very vague and subject to multiple interpretations. This vagueness has led to slight differences in implementation in Member States and a lack of certainty for economic operators.

5.4.2 Coherence with product harmonisation legislation and market surveillance

Article 1.2 of the Directive provides that the provisions of the Directive “shall apply in so far as there are no specific provisions with the same objective in rules of Community law governing the safety of the products concerned”. This definition of the scope of the Directive as lex generalis ensures its coherence with product harmonisation legislation, as there are no overlaps between the Directive and a specific instrument. This role of “safety net” is considered by stakeholders consulted for this evaluation as an unquestionable element and cornerstone for the protection of consumers in the EU, as well as an essential element for the free movement of goods in the Single Market. The interlinks of the Directive with sectorial legislation has also been acknowledged by the Court of Justice of the EU 244 .

Nevertheless, despite the full coherence of the Directive with product harmonisation legislation, some stakeholders state that there are in practice some uncertainties when determining the applicable legislation to a specific category of products. However, as the GPSD Evaluation and IA shows, the reasons for these practical challenges are not necessarily linked to the scope of the Directive, that by definition plays a residual role for harmonised products, but rather by the sometimes unclear scope of specific pieces of EU product harmonisation legislation or by the lack of guidelines or supporting documents to provide clarity to businesses.

An additional aspect that can contribute to such uncertainty is the existence of discrepancies between some of the definitions of the Directive and definitions of the product harmonisation legislation, in particular legislation following the New Legislative Framework (NLF) set by Decision 768/2008/EC 245 (see Table X). While the divergence of those terms is not significant, a lack of alignment has a negative impact on the coherence of the EU product safety framework.

Table 8: Comparison of key concepts in the Directive and Decision No 768/2008/EC

Concept

Directive 2001/95/EC (GPSD), Article 2 e-h

Decision No 768/2008/EC, Annex I, Article R1, points 3, 6, 14, 15

Producer

"producer" shall mean:

(i) the manufacturer of the product, when he is established in the Community, and any other person presenting himself as the manufacturer by affixing to the product his name, trade mark or other distinctive mark, or the person who reconditions the product;

(ii) the manufacturer's representative, when the manufacturer is not established in the Community or, if there is no representative established in the Community, the importer of the product;

(iii) other professionals in the supply chain, insofar as their activities may affect the safety properties of a product;

‘manufacturer’ shall mean any natural or legal person who manufactures a product or has a product designed or manufactured, and markets that product under his name or trademark;

Distributor

"distributor" shall mean any professional in the supply chain whose activity does not affect the safety properties of a product;

‘distributor’ shall mean any natural or legal person in the supply chain, other than the manufacturer or the importer, who makes a product available on the market;

Recall

"recall" shall mean any measure aimed at achieving the return of a dangerous product that has already been supplied or made available to consumers by the producer or distributor;

‘recall’ shall mean any measure aimed at achieving the return of a product that has already been made available to the end user;

Withdrawal

"withdrawal" shall mean any measure aimed at preventing the distribution, display and offer of a product dangerous to the consumer.

‘withdrawal’ shall mean any measure aimed at preventing a product in the supply chain from being made available on the market.

Source: GPSD Study

It also needs to be signalled that Decision 768/2008/EC is not yet aligned with Regulation 1020/2019 on market surveillance, that has incorporated new definitions such as “fulfilment service provider”. The Decision is also currently under evaluation.

The respondents have pointed out that the interlink between the Directive and legislation on chemicals, notably Regulation (EC) No 1907/2006 (REACH), sometimes lacks clarity. For instance, the term “product” is not used in REACH, as it refers instead to “articles”, while it uses “substances” for a chemical element and its compounds. Some respondents suggested that this can cause confusion, when the measures refer to, respectively a “dangerous product” (Article 2(c) and (g), Article 8(1)(e) and (f), Article 10(2)(a) and (d), Article 13(3) GPSD) and a “dangerous substance” (mainly Title VIII REACH). In particular, the question of whether the presence of a dangerous substance would always lead to the finding of a dangerous product pursuant to the Directive was raised. This issue has been tackled in the revision of the guidelines on the operation of the Rapid Alert System RAPEX in 2018. The revised guidelines set out that “[t]he risk level of a product may be considered to be serious if it contains a chemical substance either banned or in a concentration above the limit established by European legislation. Therefore, in cases where measures are taken against products containing a chemical substance subject to a restriction contained in EU Legislation, a notification may be submitted without a detailed risk assessment  246 . By presuming the serious nature of the risk when a product contains a substance either banned or in a concentration above the established limit, the work of market surveillance authorities is facilitated and this ensures the consistency of measures among Member States.

Due to the fact that chemical limits in sectorial legislation often concern specific categories of products, it is important to correctly classify a product, which can prove difficult for borderline cases. The consistency of chemical limits for products that present similarities but fall under different legislations (e.g. toys and childcare articles) can thus be raised, as well as the possibility to proceed by analogy when establishing a risk assessment for the products not covered by such restrictions.

In relation with food contact materials, the Evaluation observed that these products generally fall under the purview of food law 247 , however, some food contact materials may require an evaluation in line with the General Product Safety Directive. This may have implications that are not comprehensively addressed in the legal framework e.g. regarding which authority is responsible for a specific problem and also whether to notify the safety issue through Safety Gate/RAPEX or the Rapid Alert System for Food and Feed.

Regarding market surveillance, as already stated above, there are two different systems established by the EU legislation: one applicable to product harmonisation legislation as established in Regulation 2019/1020 on market surveillance and the one set by the Directive for non-harmonised products. The existence of these two systems exacerbates the risk of weakening the general coherence of the product safety framework. The majority of respondents of the OPC confirmed having experienced problems with the divergence of rules between harmonised and non-harmonised products. Furthermore, some stakeholders stated that the implementation of two different set of rules is not even justified; a consumer organisation provided the paradoxical example that there are different market surveillance provisions for a baby doll bed that for an actual baby bed.

This has also been considered by market surveillance authorities as a major challenge, as the investigation and enforcement powers granted to them are different depending on each system. The maintenance of both systems also entails internal administrative costs and inefficiencies for Member States.

5.4.3 Coherence with standardisation policies

The evaluation identified that there is a divergence between the standardisation procedures set by Regulation (EU) No 1025/2012 248 and the Directive, as the latter counts with an additional step. However, this divergence is justified and corresponds to the fact that the Directive does not contain specific safety requirements in the legal text, so it requires an additional step for the setting up of such safety requirements.

However, the inter-links of both instruments can result in some inefficiencies. In line with this Regulation, after the decision on safety requirements by the GPSD Committee, the decision on the standardisation request is adopted by a different Committee, the Standardisation Committee, which is also the responsible for standardisation procedures in case of harmonised products. The involvement of two different Committees with Member States representatives is considered by the different actors involved to be not efficient and burdensome. Consequently, this has an impact on the coherence of the standardisation process of the Directive with the general framework provided by Regulation (EU) No 1025/2012. This is an area that could be subject to administrative simplification.

5.4.4 Coherence with consumer protection and product liability legislation

Some stakeholders have mentioned the lack of consistency between consumer rights under the Directive and other EU consumer protection framework with respect to redress options. For example, the Unfair Commercial Practices Directive 2005/29/EC (UCPD) 249  could provide remedies for the victims of unfair commercial practices in cases involving the purchase of unsafe products, such as a right to compensation. Furthermore the Consumer Sales Directive 1999/44/EC 250 , as well as the newly adopted Sale of Goods Directive 2019/771/EU 251 , could provide remedies for victims of non-conforming products, such as a right to a termination of contract. The General Product Safety Directive does not award such rights to consumers, which may not only limit the involvement of stakeholders in monitoring product safety, but also weaken the coherence of the consumer protection framework against unsafe products. However, the recently adopted Directive on representative actions for the protection of the collective interests of consumers 252 , includes Articles 3 and 5 of the General Product Safety Directive in the list of consumer legislation, a breach of which will entitle the qualified national entities to bring forward a representative action in case such breach harm or may harm the collective interests of consumers.

Directive 85/374/EEC concerning the liability for defective products 253 lays down common rules for strict liability (i.e. "liability without fault") of producers for damage caused by defective products at European Union level. It allows parties that have been injured by defective products to claim financial compensation for death, personal injuries or for damage caused to an item of property intended for private use with a threshold of 500 EUR. In order to successfully claim compensation, the injured person has to prove the damage, the defect and the causal relationship between defect and damage. The evaluation of the Product Liability Directive 254 , published in May 2018, concluded on its persistent correspondence to the general expectations the public can have from product safety legislation, such as the General Product Safety Directive. The EU product safety rules describe the safety levels that products placed on the EU market must meet. In turn, they represent the safety levels for these products that an injured person is entitled to expect under the Product Liability Directive. Moreover, the General Product Safety Directive states in its recital (36) that its provisions should not affect victims’ rights within the meaning of the Product Liability Directive, which remains an autonomous legal regime. However, the evaluation of the PLD also noted that as technological changes will bring about corresponding changes in the economy, the relevance of the PLD to these new needs will have to be ensured. 255

5.4.5 Coherence with E-commerce rules

The E-commerce Directive 256 establishes the general legal framework for electronic commerce in the EU. The obligations set out apply, inter alia, to online sellers of products and services or online advertisers, as long as they are providers of an information society service that fall within the scope of that Directive.

Under the E-commerce Directive, Member States cannot impose a general obligation on online intermediaries to monitor the content or a general obligation to actively seek the facts or circumstances indicating illegal activity.

Intermediary service providers carrying out hosting activities may benefit under certain conditions from an exemption of liability for illegal information provided by third parties using their networks or illegal activities initiated by third parties. However, the liability exemption is subject to specific conditions. It only applies if the intermediary service providers have no actual knowledge or awareness of the illegal activity or information hosted or, upon obtaining such knowledge or awareness (for instance by a ‘sufficiently precise and adequately substantiated’ notice 257 ), they act expeditiously to remove or to disable access to it. If hosting service provider