EUROPEAN COMMISSION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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:

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).