EUROPEAN COMMISSION

Brussels, 19.12.2017

SWD(2017) 466 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

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

laying down rules and procedures for compliance with and enforcement of Union harmonisation legislation on products and amending Regulations (EU) No 305/2011, (EU) No 528/2012, (EU) 2016/424, (EU) 2016/425, (EU) 2016/426 and (EU) 2017/1369 of the European Parliament and of the Council, and Directives 2004/42/EC, 2009/48/EC, 2010/35/EU, 2013/29/EU, 2013/53/EU, 2014/28/EU, 2014/29/EU, 2014/30/EU, 2014/31/EU, 2014/32/EU, 2014/33/EU, 2014/34/EU, 2014/35/EU, 2014/53/EU, 2014/68/EU and 2014/90/EU of the European Parliament and of the Council

{COM(2017) 795 final}
{SWD(2017) 467 final}
{SWD(2017) 468 final}
{SWD(2017) 469 final}
{SWD(2017) 470 final}

Contents

1.What is the problem and why is it a problem?

1.1Introduction

1.2Context

1.2.1Regulatory context

1.2.2Economic context

1.3What is the problem?

1.4Problem drivers

1.4.1Fragmentation of market surveillance (within EU/ on products entering EU) hampers effectiveness and uniformity of controls

1.4.2Resources constraints limit the rigour of controls (within the EU/ on products entering the EU)

1.4.3Current control systems lack deterrence and enforcement tools are insufficient to respond to evolving markets and business models

1.4.4Knowledge and information gaps concerning product compliance

1.5Who is affected, in what ways and to what extent?

1.6How would the problem evolve, all things being equal?

1.7Conclusions of the evaluations

2.Why should the EU act?

3.What should be achieved

3.1General policy objectives

3.2Specific policy objectives

3.3Consistency with other EU policies and with the Charter for fundamental rights

4.What are the various options to achieve the objectives?

4.1Option 1 – Baseline

4.2Option 2 – Improvement of existing tools and cooperation mechanisms

4.3Option 3 – in addition to Option 2 Increased deterrence effect to enforcement tools and stepped up EU coordination

4.4Option 4 – in addition to Option 3 Centralised EU level enforcement in certain
cases

5.What are the impacts of the different policy options and who will be affected?

5.1Option 1 - baseline

5.2Option 2 – Improvement of existing tools and cooperation mechanisms

5.3Option 3 – in addition to Option 2 Increased deterrence effect to enforcement tools and stepped up EU coordination

5.4Option 4 - in addition to Option 3 Centralised EU level enforcement in
certain cases

6.How do the options compare?

7.Preferred option

7.1Preferred option contents and costs

7.2Subsidiarity and proportionality of the preferred option

8.How would actual impacts be monitored and evaluated?

8.1Practical arrangements of the evaluation: when, by whom

8.2Operational objectives and indicators to monitor compliance for the preferred
option

1.What is the problem and why is it a problem?

1.1Introduction

This initiative is announced in the Single Market Strategy, Upgrading the Single Market: more opportunities for people and business, adopted by the Commission on 28 October 2015 1 and constitutes one of the main initiatives of the 2017 Commission Work Programme. 2 It is part of the "Goods Package". It should be set in the context of the fourth priority policy area to be tackled under President Juncker’s Agenda for Jobs, Growth, Fairness and Democratic Change, i.e. a deeper and fairer internal market with a strengthened industrial base.

The Single Market Strategy aims, inter alia, at strengthening the Single Market for Goods. It notes that the increasing number of illegal and non-compliant products on the market distorts competition and puts consumers at risk. According to the Strategy, 'many economic operators disregard the rules either through lack of knowledge or intentionally to gain a competitive advantage. More deterrence is needed […]The Commission will therefore introduce an initiative to strengthen product compliance by providing the right incentives to economic operators, intensifying compliance checks and promoting closer cross-border cooperation among enforcement authorities, including through cooperation with customs authorities'.

However the Single Market can only function well and be fair for people and businesses if all market players play by the rules. It is therefore essential that such EU legislation is correctly implemented by everyone on the ground to maintain the highest level of protection and to safeguard the competitiveness of businesses across the EU.

1.2Context

1.2.1Regulatory context 

The Single Market has been a frontrunner in EU economic integration. The most important legislative obstacles have been eliminated through EU harmonisation legislation 3 . The objective of this legislation is twofold, first ensuring that industrial products placed on the European market guarantee high levels of protection for health and safety and the environment and secondly, ensuring the free movement of industrial products by replacing national rules with a single harmonised set of conditions for placing these products on the market.

The basic product rules are set out in Union harmonised legislation, which covers the great majority of industrial products such as toys, machinery, radio equipment, electrical and electronic devices, cosmetics, gas appliances, measuring instruments, pressure equipment, chemical substances that could be found in products belonging to a wide range of sectors, energy using products and many others 4 . The rules are applicable to both consumer products and products used in the context of professional activities, regardless of whether traded in physical 'brick- and mortar' shops or online and regardless of whether produced domestically or imported from third countries, as long as they are offered on EU markets. On the other hand, products manufactured in the EU for exports to third countries are not subject to these rules.

Union harmonised rules set specific requirements relating to product technical characteristics and/or other mandatory information or documentation that should accompany the products or be made available to authorities upon request. The main aim of these rules is to protect European citizens from health, safety, environmental and other risks and to improve the competitiveness of businesses by eliminating unjustified barriers to trade. In addition Union product rules, due to harmonisation, benefit businesses in terms of increased opportunities to exploit economies of scale. When products available on the market effectively comply by the harmonised rules, consumers will find it easier to compare products and their prices and will therefore also benefit in terms of lower search and transaction costs. The specific product requirements set out in the legislation depend on the nature and purpose of products and may vary greatly between different areas of legislation and from sector to sector. For instance, in the case of toys the rules cover all (mechanical, chemical, etc.) characteristics of the products so to ensure they will not endanger the health of children. In other cases however relevant rules focus exclusively on one aspect of products (e.g. level of noise emissions of equipment for use outdoors, electrical hazards or chemical substances contained in products, labelling on the composition of textile and footwear, amount of energy consumption implied by a domestic appliance, electro-magnetic compatibility of products using radio frequencies).

Furthermore, the purpose of these rules is often the protection of health and safety but it could also cover other relevant public interests: for instance in the case of measuring instruments (gas, petrol, electricity, taxi meters, scales, etc.) rules cover a number of product (mechanical, software-related, etc.) aspects intended to guarantee the accuracy of measurement and therefore the fairness of transactions between buyers and suppliers of goods to be measured; rules concerning restriction on the use of chemical substances in batteries are also intended to prevent pollution of the environment; rules on electromagnetic compatibility intend to ensure the correct use of spectrum by electronic products. In the case of some products, different sets of rules (i.e. different piece of Union harmonisation legislation) containing complementary requirements are applicable (e.g. to address electrical hazards, electromagnetic compatibility, and energy consumption aspects).

Products covered by Union harmonisation legislation must comply with it, in order to be legally marketed in the EU. In order to strengthen the enforcement of product requirements the New Legislative Framework was adopted in 2008. This is a package of measures that aims to improve market surveillance and creates a toolbox of measures for use in product legislation. The New Legislative Framework consists of:

· Regulation (EC) 765/2008 setting out the requirements for accreditation and the market surveillance of products to be fulfilled by Member States,

· Decision 768/2008 /EC on a common framework for the marketing of products, which includes reference provisions to be incorporated whenever product legislation is revised. In effect, it is a template for future product harmonisation legislation.

In particular, according to Regulation (EC) No 765/2008 Member States must ensure effective surveillance of their market. They are required to organise and carry out the monitoring of the products made available on the market or imported. Member States have to take appropriate measures to ensure that the rules set out in Union harmonisation legislation, are respected in the EU and, in particular, to prevent the making available on the market and use of non-compliant and/or unsafe products 5 . For that purpose Member States must:

·Correctly implement the provisions of the relevant legislation and allow for sanctions proportional to any infringements;

·Control the products (whatever their origin) introduced on their market in order to ensure that they have been subjected to the necessary procedures, that the marking and documentation requirements have been respected and that they have been designed and manufactured in accordance with the Union harmonisation legislation requirements. In the case of products imported from third countries, customs authorities should be closely involved in the market surveillance activities.

·Organise market surveillance according to minimum common requirements (appointment of competent authorities, resources, market surveillance programmes, reviews and assessment of market surveillance, etc.).

·Cooperate with authorities in other member states by sharing information on products controlled and activities carried out, in particular by making use of the common database (ICSMS) and taking part in the Rapex Rapid Alert mechanism (RAPEX) for products presenting a serious risk.

Annex 6 provides an extensive description of market surveillance requirements laid out in and exchange tools made available by the Regulation.

Furthermore, on the basis of Decision 768/2008/EC the EU legislators committed to review applicable Union harmonisation legislation according to the reference provisions identified, including among other the following aspects relevant for market surveillance:

·definitions of relevant economic operators (i.e. manufacturer, importer, distributor) and corresponding responsibilities concerning product compliance and traceability depending on their role in the supply chain, and

·provisions on specific market surveillance procedures (so-called 'safeguard procedures') to be applied when authorities have reasons to believe that a product does not comply with common rules.

At the time of writing an important part of EU harmonisation legislation has been reviewed and now incorporates those reference provisions. 6

The following box provides an overview of market surveillance rules applicable to products subject to EU product rules depending on whether they now incorporate the reference provisions of Decision 768/2008/EC.

Box 1: Architecture of main market surveillance rules applicable to products subject to EU product rules

In 2013, the European Commission adopted proposals for new rules improving the safety of consumer products and market surveillance for all non-food products, in the so-called Consumer Product Safety and Market Surveillance Package 7 . The proposals intended to address the need to streamline, simplify and improve market surveillance rules and procedures to make it easier for national authorities and economic operators to apply and follow them. Specifically, at that time the Commission stressed that market surveillance rules are spread across three separate 'tiers' - Regulation (EC) N° 765/2008, the General Product Safety Directive and various pieces of product harmonisation legislation (not aligned with reference provisions set out in Decision 768/2008/EC) and that the relationship between the three tiers is often unclear, particularly as many consumer products are covered by all three. The new proposals were also seizing the opportunity to align mutatis mutandis the definitions of the relevant economic operators and market surveillance procedures laid down in the General Product Safety Directive to the reference provisions of Decision 768/2008/EC. Last but not least, the proposals contained an obligation for manufacturers and distributors to indicate the origin of products.

However, the negotiations between the European Parliament, the Council and the Commission are stalled since long. In its session of 26-27 May 2016, the 'Council took note of a request made by eleven member states to renew efforts with a view to moving forward negotiations on the Consumer Safety/Market Surveillance package (8985/16). The package is currently blocked in the Council […]. The presidency verified that positions within the Council remain unchanged 8 .' The discussions on the proposals were not resumed and it is reasonable to assume that any progress on the proposals in view of its adoption by the co-legislator is highly unlikely.

Meanwhile, the Commission evaluated Union harmonisation legislation in 2014 9 . One of its main outcomes was that market surveillance is considered to be the weakest part of the implementation system, partly due to the inherently difficult nature of the task and in part due to varying levels of resources and technical expertise available in different countries 10 .

Because of the urgency to address major gaps in the enforcement of Union product harmonisation legislation the Commission launched the new initiative under the Single Market Strategy. This aims at introducing changes to the EU rules on market surveillance that concern aspects not specifically targeted from the 2013 Package (e.g. controls in the context of e-commerce) or go beyond the solutions proposed at that time (e.g. as regards cross-border cooperation). In addition the new initiative takes into account the latest legislative developments of Union sector specific legislation, in particular the fact that an increasing number of product harmonisation directives or regulations have been incorporating the reference provisions of Decision 768/2008/EC.

The initiative has the ambition to step up enforcement of product requirements set out in a very broad range of Union legislation 11 by setting up horizontal rules applying across the board on top of sector-specific rules.

This impact assessment examines options to improve the legal framework for market surveillance of harmonised products and constitutes and ex-ante assessment in the meaning of article 30 of the Financial Regulation to the extent that funding and resourcing of market surveillance by the EU budget could be significantly affected 12 .

1.2.2Economic context 

The value of EU harmonised products amounted on average to more than 2 400 billion euro per year during the period 2008-2014, and corresponds to about 69% of the overall value of manufacturing products in the EU 13 . Around 1.2 million businesses are involved in the manufacturing of industrial products (65% of all businesses active in the EU manufacturing sector). Furthermore, the value added of wholesale and retail traders whose sales are likely to include harmonised products during the 2008-2015 period is estimated around 850 billion euro per year. The number of enterprises active in the distribution of products in these sectors is estimated around 4 million and the number of their employees over 22.5 million people 14 .

Figure 1: Trade of harmonised products: sold production and trades with non EU countries (2008-2015, EU-28), € billions

Source: Prodcom – statistics by product, EUROSTAT (2016)

Furthermore, the intra EU imports of products for which harmonised product rules exist represent also 66% of the value of the overall (intra-EU) imports of manufacturing goods (€1,183 billion).

Figure 2: Value of intra EU imports: harmonised products vs non-harmonised products (annual value and annual average 2008-2015, EU-28, EUR billion)  15

Source: EU trade since 1998 by SITC, EUROSTAT (2016); Average: Harmonised products 1,183 EUR billion, non-harmonised 602 EUR billion.

1.3What is the problem?

Many products on the EU market do not comply with the rules on industrial products set in Union harmonisation legislation. This means that their substantive characteristics are not in line with what is prescribed by EU rules and/or that mandatory markings, warnings, labels and other information are lacking, incomplete or incorrect.

Non-compliant products cause harm to buyers and law-abiding undertakings alike. In practice, non-compliance means that citizens are exposed to potentially dangerous products or that the environment is put at risk. The following box provides some examples of non-compliant goods recently notified to the Commission by national authorities that are likely to seriously endanger the health and safety of their users. However the type and the seriousness of harm (e.g. injury to buyers, injury to workers, property loss, unfair transactions, pollution, and security problems) suffered as a consequence of non-compliance depend on the specific product at stake and the degree of the non-compliance presented by the product. Non-compliance with substantive or technical product requirements (e.g. physical properties of a product) is often expected to bring about more serious consequences than non-compliance with requirements of formal nature (e.g. mandatory warnings, labels or documentation accompanying the products or to be provided upon request), however the latter may also have serious implications (e.g. buyers using the product improperly lacking instructions). Non-compliance with formal aspects or mandatory markings is also important. It may be spotted more easily than technical non-compliance and cannot be disregarded as it may signal the likelihood of technical non-compliance: in particular the lack of CE marking signals that the manufacturer was not aware of applicable product legislation and that possibly the product was not intended for the EU market.

Furthermore, non-compliance means that undertakings selling compliant products face distorted competition from those undertakings which cut corners or deliberately flout the rules to gain a competitive edge. According to some stakeholders non-compliant imports from 3rd countries have a negative (indirect) effect on employment in Europe 16 . More details on the consequences of the problem are provided in section 1.5 below.

Box 2: Examples of non-compliant products presenting a serious risk for their users

Although non-compliance often passes unnoticed and the exact share of non-compliant products on the market cannot be quantified with precision across all the product sectors, the problem of non–compliance appears to be rather widespread and even in some sectors the majority of products checked turn out to be non-compliant.

In 2014, 2015 and 2016 respectively a total of 2 435, 2 123 and 2 126 notifications of dangerous products were submitted by Member States through the European rapid alert system for dangerous non-food products ‘RAPEX’ 17 .

In the public consultation organised by the European Commission 89% of all respondents considered the products in their 'sector'' 18 as affected to some extent by non-compliance (for 26% of total respondent non-compliance concerns most products in the sector, for 42% of them concerns some and for 21% it concerns few products), only 4% answered that this was not the case, while 7% answered "I do not know" (see Figure 3). When asked to indicate the approximate proportion of non-compliant products in their sector 45% of respondents chosen declared themselves as unable to estimate it, while the rest indicated different estimates ranging from close to zero up to "more than 50%". The answers provided more frequently were: "0 to 5%" (given by 14% of respondents), "6 to 10%" (11%) and "11 to 20%" (11%). Additional details can be found in Annex 2 section 2. It is noted that the representation of respondents in terms of activity sectors and Member State origin is well balanced. The findings of the consultation therefore support the thesis that non-compliance of products with applicable requirements cannot be considered as a problem that affects exclusively specific sectors or countries.

Figure 3: Are the products in your sector(s) affected by non-compliance with product requirements laid down in EU harmonisation legislation?

Source: public consultation

The levels of non-compliance vary by Member State and by product sector. Estimates at sector level are hardly available. However, for instance, in the case of the Ecodesign Directive dealing with products such as electric equipment, air-conditioning systems, machines tools etc., a 2009 study estimated non-compliance to be 10% - 20% 19 ; as concerns the Energy Labelling Directive a stakeholder mentions non-compliance rates of 20 to 50% 20 . In the area of gas appliances existing studies indicate non-compliance levels of 5% - 10% 21 . In a consultation conducted by the European Commission in 2010 in ten sectors 22 , 92% of businesses considered that their sector is affected by non-compliance.

The closest proxy for the level of non-compliance in different sectors is given by shares of products found to be non-compliant during inspections carried out by market surveillance authorities jointly or individually which shows a fairly gloomy picture, although it is noted that authorities focus checks on areas where infringements of products legislation are more likely and that the figures might overestimate average non-compliance rates. For instance, on the basis of data reported by Member States in the period 2010-2013 23 non-compliance was found on average in 32% of inspections conducted in the field of toys, 47% in the field of construction products, 34% in the field of low voltage electrical equipment, 58% in the field of electromagnetic and radio equipment and 40% in the field of personal protective equipment. 24  The complete overview on non-compliance found by national authorities during national inspections in 30 different groups of sectors can be found in section 5 of Annex 9. The table below provides a summary view.

Table 1: Percentage on non-compliant products found in sectors inspected (averages for all Member states having reported information)

Source: national reports and Commission elaboration.

In the case of REACH and CLP Regulations, whose data were not included in previously mentioned reports, concerning chemicals, more than 200 000 controls per year were reported by the EU Member States from 2007 until 2014. The average level of compliance calculated is reported to be 86% 30 . Conversely the average level of non-compliance is estimated at 14%.

Furthermore, 74% out of the 38,946 investigations (with specified risk) recorded by Members States in the Information Communication System for Market Surveillance (ICSMS) during the period 2008 – 2016 concern non-compliant products. Unlike figures contained in Table 1, these data allow capturing the seriousness of the consequences on the non-compliance found. In particular 2,209 (6%) of these investigations showed products presented a serious risk, 6,214 (16%) a high risk, 8,590 (22%) a medium risk, 12,617 (32%) a low risk, while for 9,316 (24%) investigations no non-compliance was identified. 31

Estimates based on shares of products found to be non-compliant in the course of joint inspections by market surveillance authorities are reported in the following table. They show that in all campaigns but one between 35% and 90% of product tested were found to be non-compliant in some regard. Often products were also non-compliant in relation to different aspects. In all cases substantive or technical non-compliance affects a sizeable share of products (at least 46% of toys tested, 77% of LED lighting equipment, at least 27% of energy and heating meters, respectively 44% and 67% of solar panel inverters in two subsequent years, 68% of repeaters for mobile phones and 51% of drones).

Table 2: Estimates of non-compliance based on results of joint market surveillance authorities in specific sectors

Source: mostly reports from joint actions

Additional information on no-compliant products provided by stakeholders can be found in Annex 7 section 2.

As mentioned above product requirements set out in a very broad range of Union legislation vary greatly between different areas of legislation and from sector to sector. As a result findings presented on non-compliance concerning one specific sector cannot be 'summed' to analogous findings in other sectors to provide a general quantification of the degree of non-compliance with EU product legislation as a whole.

Furthermore, it is a fact that despite the broad scope of this initiative that aims at rules applicable horizontally to several product areas, evidence available focuses on only a sub-set of products for which national authorities were able to report information on the outcomes of their controls carried out individually or jointly. Nevertheless, for all sectors/product groups where information is available, it consistently points to the presence of a non-negligible number of non-compliant products. Similarly feedback from the public consultation and regular contact with stakeholders confirms the perception that the problem of compliance of Union product rules in the Single Market is of general nature and does not affect exclusively a few sectors.

1.4Problem drivers

The problem of non-compliant products within the Single Market is driven by four main factors, namely (1) fragmentation of the organisation of market surveillance in the EU, (2) resources constraints for market surveillance authorities, (3) low deterrence of the current enforcement tools, notably with respect to imports from third countries and e-commerce and (4) important information gaps (i.e. lack of awareness of rules by businesses and little transparency as regards product compliance).

These problem drivers result mainly from the evaluation of the market surveillance provisions of Regulation (EC) 765/2008, which highlighted certain weaknesses in the regulatory framework that need to be addressed in order to improve the functioning of the Regulation. In the description of the problem drivers below, references are included to the findings of the evaluation where relevant.

Figure 4: Problem tree

1.4.1Fragmentation of market surveillance (within EU/ on products entering EU) hampers effectiveness and uniformity of controls

Market surveillance in the Single Market is fragmented in particular along national borders, within the EU and at the external borders. As explained in the evaluation of Regulation (EC) No 765/2008 the current legal framework does not set explicit obligations on how market surveillance shall be organised at the national level, this being left to Member States’ prerogative. Therefore, market surveillance is differently organised at the national level in terms of sharing of competences and powers between market surveillance authorities. In this regard, three types of overall models (centralised; decentralised at the sectoral level; decentralised at the regional/local level) 44 have been implemented by Member States, although with a number of additional country-specific nuances. As a result for each set of products falling within EU harmonisation rules (e.g. cosmetics, toys, pressure equipment) a specific national authority (or even several local or regional authorities) is appointed in each Member State.

Overall, more than 500 market surveillance authorities exist in the EU 45 . Each authority is competent exclusively for products made available in the part of the single market that corresponds to the national territory of a Member State or a smaller part within the Member State. Furthermore, controls of products entering the EU requires the involvement of customs authorities, i.e. yet a further set of actors. Conversely, businesses often supply products from outside the jurisdiction of the market surveillance authority where the end customer is located. Overall, harmonised products represent about 65% of intra-EU trade in goods 46 , although the percentage depends on the specific sector 47 . Furthermore, recent developments in the online market show an increasing proportion of retail sales with a cross-border dimension 48 .

The fragmentation of competences has important consequences on the efficiency and effectiveness of controls. First of all, when restrictive measures are ordered, market surveillance authorities find it is difficult to enforce their decisions in other Member States due to the territorial scope of administrative decisions, their enforceability and language issues. Respectively 52% and 55% of authorities participating in the consultation confirmed that businesses located in another Member State do not reply to requests for information/documentation and for corrective actions 49 , 50 . Thus, in practice authorities can effectively address non-compliance issues only with businesses located in their national territory (e.g. national or local distributors) 51 . Second, this atomisation of competences implies that authorities focus on products available in their jurisdiction and therefore a product that is found to be non-compliant in one Member State may in practice still be made available in another Member State.

In order to address these issues the current regulatory framework includes a number of legal, administrative and financial tools (e.g. common database ICSMS 52 for exchange of information on results of inspections, notifications of restrictive measures based respectively on RAPEX and safeguard clause procedures 53 , mutual assistance 54 , administrative cooperation groups called 'AdCos' 55 , joint actions 56 and Customs Union principles 57 ) allow coordination among market surveillance authorities in different Member States.

However, the findings of the evaluation of Regulation (EC) No 765/2008 show that despite the clearly positive role played by these different cross-border cooperation tools, they are not exploited to an extent sufficient to trigger effective coordination and efficient work sharing among surveillance authorities in the Single Market 58 . For instance: the ICSMS database is only used and to different degrees by a subset of Member States (see Annex 11.1.1); the systems for notifying restrictive measures are not systematically used by national authorities and the response provided by recipient authorities is fairly weak both in terms of official 'reactions' and follow-up measures taken (Annex 11.1.2); mutual assistance among authorities willing to contact economic operators located in another Member States only takes place occasionally (Annex 11.1.3); the degree of active participation in administrative cooperation groups is still unsatisfactory (Annex 11.1.4); joint market surveillance actions are carried out only in some sectors and on an-hoc basis and, in most cases, are triggered by EU funding; yet, even EU funding is not sufficient if authorities cannot rely on some administrative framework for the management of the joint projects (Annex 11.1.4-1.6), customs risk management systems are still managed to a large extent nationally. As a result the overall degree of cross-border cooperation remains fairly weak and so it is not sufficient to address the limitations of jurisdiction described above. Market surveillance is still seen to a large extent as a 'national matter' and authorities continue to focus mainly on domestic priorities. Due to national organisation of market surveillance and pressures on staff resources, cross-border cooperation projects may seem more burdensome and their benefits more diffuse and not delivered in the short term.

Furthermore, the evaluation of Regulation (EC) No 765/2008 notes that the relevant EU provisions are drafted in such general terms 59 that Member States have implemented the Regulation in many different, specific forms. Differences emerge not only in terms of distribution of competences, but also in terms of internal coordination mechanisms, level of deployed resources (financial, human and technical), market surveillance strategies and approaches, powers of inspection and sanctions (including for border controls) and penalties for product non-compliance. 60 The heterogeneity existing across Member States in the implementation of the Regulation allows concluding that the level of market surveillance is certainly not uniform, given that Member States with more resources and powers have - at least - more tools for a proper enforcement. This lack of uniformity allows inferring that market surveillance might also be more rigorous in some Member States than in others. Potential effects are a less effective deterrence power, an unequal playing field among businesses in some Member States and also potentially imbalances in the level of product safety across Europe.

1.4.2Resources constraints limit the rigour of controls (within the EU/ on products entering the EU) 

Information available and the findings of the evaluation of Regulation (EC) No 765/2008 show that resources for controls are limited 61 . The availability of limited resources (staff, budget, laboratory capacity) for market surveillance is often mentioned by stakeholders as a factor reducing authorities' ability to detect and punish non-compliance. In their national reports concerning market surveillance activities carried out between 2010 and 2013, authorities indicated that the lack of sufficient resources affected enforcement action in at least 12 Member States. On the other hand, in most Member States the exact amount of resources allocated to market surveillance is not clear. This is because market surveillance is not identified as an activity with a clearly identified budget: in many cases authorities responsible for market surveillance have at the same time to carry out tasks of another nature and the budget of those authorities does not earmark funds for market surveillance.

The analysis carried out during the evaluation shows that according to available data:

·Resources allocated to market surveillance amount on average to a few euros per thousand inhabitants (with the exception in particular of medical devices, cosmetics and toys) and from 0 to maximum 0.5 inspectors per million inhabitants 62 .

·The total budget available to all Member States' authorities having reported the information, in nominal terms 63 decreased during 2010-2013 period (from €133.4m to €123.8m); also it is concentrated in a limited number of countries and large differences could be noted in terms of budget available to each country during the four year-period 64 .

·A similar trend was noted for human resources: over the period 2010-2013, a reduction of staff available to MSAs can be observed together with a concentration of staff in a small number of Member States 65 .

Similarly also the number of customs officials has seen a continuing downward trend of about 10% since 2010 67 . This explains at least partially the fact that product compliance checks by customs remains fairly limited in relation to the number of imports 68   69 . Stakeholders often report that the order of magnitude of controls in one of one of the biggest harbours is only 0.1%.

Figure 7: Total staff resources available to customs during 2010-2015 at EU level 70  

The perception about limited resources and the difficulties in providing concrete figure is mirrored by the results of the public consultation: 51% of respondents reported having experience or knowledge of instances where market surveillance authorities lacked sufficient financial or human resources to carry out specific tasks in at least a given sector; however only 18% were able to provide an estimate of the approximate financial gaps; those estimates range from 1 to more than 50%. Furthermore, respondents establish a clear link between current level of deterrence of market surveillance in their sectors and authorities resources as deterrence is expected to improve by giving authorities more resources (72% of respondents) and through more efficient use of existing resources (73%). As mentioned in the evaluation the amount of resources available for controls cast doubts on the ability of market surveillance authorities to perform appropriate checks on the characteristics of the products on an "adequate scale". Besides risk profiles of products, market surveillance authorities and customs confirm that in first instance they determine the “adequate scale” of controls mainly on the basis of financial and human resources available. Data available show that in many Member States the number of inspections is rather low in comparison with total population and that the average correlation with the number of enterprises in every country is very low 71 .

1.4.3Current control systems lack deterrence and enforcement tools are insufficient to respond to evolving markets and business models

Lack of willingness to comply with applicable requirements for products marketed in the EU constitutes another explanation for non-compliance 72 . This was confirmed by the public consultation where 78% of participants considered that the lack of willingness to comply was among the top three reasons for non-compliance. 33% considered it the main reason for non-compliance.

Box 3: Academic research about deterrence and incentives to comply

The evaluation of Regulation (EC) No 765/2008 attempted to assess the deterrence or rigorousness of the system of controls in the Single Market and concluded, despite the limitations in the analysis due tothe serious lack of data and inhomogeneity of national reports, that market surveillance is not sufficiently rigorous. Lack of relevant information on control activities may be also in some cases an indication of actual enforcement gaps. This finding is further supported by stakeholders’ perception about the incapacity of the Regulation to deter rogue traders, 75  and the discrepancies in the penalty framework.

When looking at the current system of market surveillance in their respective sectors only 9% of all respondents to the public consultation consider it deterrent to a significant extent, while 33% considers it as deterrent to a moderate extent and 46% as not deterrent.

This is likely linked to existing gaps and inefficiencies in the enforcement that lead to a low probability of detection of non-compliance. The threat of enforcement will not act as a deterrent if people do not believe non-compliance is likely to be discovered or punished. As regards the causes for these inefficiencies the previous sections already referred to the fragmentation of controls and the limitation in resources available. Further challenges for market surveillance identified during the evaluation of Regulation (EC) No 765/2008 are the difficulties of enforcing products requirements with respect to imports from third countries and e-commerce (see below).

To face these developments the authorities would need to rely on a more suitable toolbox, however the authorities' powers contained in the Regulation (EC) No 765/2008 do not explicitly take into account the developments of online trade. Moreover, many market surveillance authorities still lack some important enforcement tools 76 . Furthermore, border controls of imported products remain fairly limited in relation to the number of imports 77 .

Box 4: Enforcement tools of market surveillance authorities

The table below presents an overview of the enforcement tools.

Table 3: Enforcement tools

Details by Member States: Annex 13. Source: evaluation of market surveillance provisions of Regulation (EC) No 765/2008

1.4.3.1    The development of e-commerce sales and digital supply chains

Firstly, the e-commerce market is growing very rapidly within the overall retail sector. The Digital Single Market Strategy considers e-commerce as a main driver for growth. The Commission estimates the value of retail e-commerce at €231 billion (around 1.8% of EU GDP) 79 . Trade in goods is estimated at €212 billion and represents by far the biggest share of the online market. The Digital Single Market is a very important factor to boost jobs, growth, competition, investment and innovation. It will expand markets and foster better services at better prices, offer more choice and create new sources of employment. It will create opportunities for new start-ups and allow existing companies to grow and profit within a market of over 500 million people.

Box 5: E-commerce and the practical questions it raises in the supply chain

There are very significant practical challenges for market surveillance on products sold on-line. Market surveillance authorities report considerable difficulties in the identification and interception of products that are delivered to the end-user in single consignments via the conventional postal system. The import of individual parcels renders case-by-case controls at the border inefficient. Moreover, even where market surveillance authorities identify websites selling non-compliant products, they may simply be unable to identify the supplier using the website. On-line sales for which often suppliers and buyers are located in different countries exacerbate the difficulties higlighted in previous sections as regards the limitation of authorities' jurisdicition vis-à-vis business based in other Member States or in a third country 82 .

As a result of innovations in the digital economy authorities' powers and tools are increasingly challenged and some of the traditional authorities' working tools ineffective. A case in point is mystery shopping which in case of online sales requires authorities to dispose of ad hoc payment tools that do not mention the authority's identity. Therefore they need tools adapted to the specific enforcement challenges of the digital economy (e.g. possibility to request information from Internet registers, powers to take off illegal content from webites).

1.4.3.2    The increase in imports from third countries

Imports of harmonised goods from third countries represent a sizable and increasing share of products supplied on the EU market, as it went up from 24% in 2008 to over 30% in 2015. In 2015 they were estimated to value almost 750 € billions 83 .

Many respondents to the public consultation found it difficult to indicate the proportion of products imported from third countries in their sector 84 ; however the general perception among stakeholders is that imports are affected by non-compliance 85 . The analysis of RAPEX notifications supports the findings that the non-compliance of imports from extra EU is a relevant issue: from 2010 to 2016 notifications concerning imported products were around 75% of yearly published notifications and the percentage remained overall stable over the period. On average, 59% of total yearly notifications concern products from China.

However, the evaluation of Regulation (EC) No 765/2008 concludes that, in light of the increasing importance of EU trade with third countries, checks of imported products are insufficient 86 . It is often difficult to trace and intercept non-compliant products imported from outside the EU and entering through numerous entry points. In addition EU surveillance authorities have difficulties to effectively contact and sanction businesses established outside the EU who sell non-compliant products directly to buyers in the EU. 65% of authorities participating in the public consultation confirm authorities do not know how to identify and contact businesses located in third countries and 59% confirm that businesses contacted do not reply to requests for information/documentation and for corrective action 87 . Despite some existing informal international cooperation arrangements, the number of non-compliant products that can effectively be traced back to the economic operator and sanctioned at the source in 3rd countries remains limited 88 .

More structured cooperation and information exchanges at international level would help having more efficient and effective market surveillance also on the EU market. However, “access” to the Information and Communication System for Market Surveillance (ICSMS) 89 and the RAPEX Rapid Alert System for dangerous non-food products can only be allowed to third countries by way of an international agreement based on strict requirements ensuring reciprocity and confidentiality corresponding to those applicable in the Union. 90 To date, due to these restrictive requirements, only the non-EU members of the European Economic Area have such full access to these systems, based on the EEA agreement.

Furthermore, the procedure for checking products when they enter the EU is fairly outdated. It was conceived in 1993 and slightly updated in 2008 but without any fundamental changes. In 2013 the new EU Customs Code significantly upgraded the use of risk management to target customs controls and established the principle of coordinated 'one-stop shop' controls of customs jointly with other authorities 91 . Furthermore the Customs code consolidated the scheme for Authorised Economic Operators 92 that have a good track-record with customs based on thorough audits and can therefore benefit from certain facilitation of their procedures with customs. The provisions in Regulation (EC) No 765/2008 have not evolved with these changes 93 . As a consequence there is a suboptimal exchange of information and enforcement cooperation between customs and market surveillance authorities on non-compliant products 94 , risks assessment 95 and economic operators 96 . The provisions on recovery of costs (e.g. for tests or destruction of products) in case of non-compliant products are also not aligned.

1.4.4Knowledge and information gaps concerning product compliance

Information gaps that have an impact on non-compliance and on the impact of corrective action requested by authorities should also be mentioned.

First of all, market surveillance authorities frequently point out that lack of knowledge of product rules on the part of businesses is an important problem to address. 97 Clearly ignorantia juris non excusat, nevertheless unawareness or misunderstanding of requirements seems to explain part of the non-compliances that can be found in the market, as an essential condition for regulatory compliance is that businesses have to be aware and understand their obligations under applicable legislation 98 . The public consultation indicated that 80% of respondents consider lack of knowledge of rules among the three top explanations for non-compliance and 27% consider it as the first reason. Furthermore, 63% of the respondents believe it would be effective to reduce the level of non-compliance if authorities, besides enforcement, would also provide information on applicable requirements. On the other hand, most respondents excluded that non-compliance could be mainly due to ambiguity/excessive complexity of the rules, as only 10% of them considered this the primary explanation for non-compliance.

The Commission evaluation of Union harmonisation legislation in 2014 99 recommended the expansion of the role of the Product Contact Points to harmonised products so as to provide a first point of contact for and basic information about Union harmonisation legislation to firms.

Second, consumers and other stakeholders often lack information about the compliance of products they purchase, use, distribute or compete with. The general public and individual consumers are normally not aware of issues relating to product compliance, which are often not visible to non-experts, unless the product would be clearly dangerous 100 . For instance compliance does not appear to be a main criterion when choosing a product to purchase. This is supported by the fact that the compliance or non-compliance of the product does not play a visible role in the contractual terms between the seller and the purchaser of a good. Furthermore, information on risks posed by products does not always reach consumers and other end-users at the same time and in a timely, structured way all across the Single Market. It is also noted that authorities' decisions on non-compliant products often contain business secrets and are hardly made available to the public. This lack of transparency contributes to the low incentives to compliance because it reduces the potential for pressure from other interested parties, such as consumers, trade-unions, industry associations and competitors that can also influence compliance through the mechanisms of reputation and legitimacy.  Distributors, according to most directives and regulations, must act with due care in relation to the requirements applicable when they make a product available on the market. Thus they potentially play an important role in preventing the marketing of non-compliant products 101 . In practice however, provided that distributors, who are to a large extent SMEs, are aware of the relevance of compliance, they rely mostly on documentation made available (or not) from the product manufacturer or the importer, and only a minority of them uses information on non-compliant products such as the Rapex notifications or newsletters by association or consumer organisations 102 .

The above mentioned 2014 evaluation recommended a faster transition towards “e-market surveillance” in which economic operators will be expected to make as much compliance information (e.g. declarations of conformity) available online as possible while more sensitive technical documentation and supporting test data requested by MSAs could be transferred electronically via secure data transmission.

1.5Who is affected, in what ways and to what extent?

Potentially all people resident in the EU, i.e. about 500 million people, can be affected by non-compliance which exposes them to potentially dangerous products or puts the environment at risk. Similarly, employees of EU businesses purchasing harmonised products (such as electrical and electronic equipment or machinery), i.e. potentially the whole EU workforce regardless of the business sector of the employer, are exposed to the risk of harm from non-compliant products.

Furthermore, non-compliance means that undertakings selling compliant products face distorted competition from those undertakings which cut corners or deliberately flout the rules to gain a competitive edge. The number of manufacturing and retail enterprises active in the harmonised sectors and potentially affected by the unfair competition of businesses trading non-compliant products is mentioned in section 1.2.2 above. 99% of manufacturing enterprises are SMEs (78% micro-enterprises, 16.4% SMEs employing up to 49 persons and 4.4% SMEs employing between 50 and 249 persons). Almost 100% of retail enterprises are SMEs (93.6% microenterprises, 5.4%, employing up to 49 persons and 0.7% SMEs employing between 50 and 249 persons).  103 Furthermore over the period from 2008 and 2014, around 1.2 million manufacturing enterprises were operating within harmonised sectors, representing more than 65% of the total number of active enterprises in the manufacturing sector (around 1.8 million) 104 .

The findings of the public consultation confirm that product non-compliance affect negatively citizens and responsible businesses. More specifically non-compliance is considered to have a negative impact on buyers by 76% of respondents (51% consider the impact "significant", 25% "moderate"), while only 8% consider this is not the case and the others reply "I do not know". In practice the type and the seriousness of harm (e.g. injury, property loss, unfair transactions, pollution, security problems) suffered as a consequence of non-compliance depend on the specific product at stake and the degree of the non-compliance presented by the product. For example: toys for children below 3 years old that contain small detachable parts present the risk of choking and may provoke fatal accidents; professional machineries with unprotected cutting parts may provoke cuts or other serious injuries or even death to workers; mobile phones exploding can provoke injury or death to one or more people and damages of different degrees to properties (cars, houses, planes); a faulty meter at petrol pumps may imply economic losses for either the pump manager or the purchasers; energy-using products (e.g. washing machines) consuming more energy than declared on the mandatory label bring about economic harm to the owners; batteries or electronic equipment containing heavy metal will pollute the environment when disposed of; cars producing emissions well beyond the legal limits will exacerbate air pollution. The ecodesign and energy labelling measures in place until 2015 were estimated to save 175 million tons of oil equivalent (mtoe) primary energy per year in the EU 105 , yet non-compliance reduces the energy savings by 10%.

Furthermore, the great majority of businesses (80%) participating in the consultation confirm non-compliance has a negative effect on sales and/or market shares of businesses complying with legal obligations. Roughly half of them consider the effect as respectively "significant" or "moderate" (see Figure 8).

The competitive advantage enjoyed by rogue traders can be significant since ensuring products made available are compliant implies necessary costs. For example, the total estimated annual costs of compliance of EU legislation on industrial products across eight harmonised product cases (electric motors, laptops, domestic refrigerators/freezers, lifts, gardening equipment, petrol pumps, air conditioners and integrated circuits) have been estimated 106 at €342 million. At a per company level total compliance costs have been estimated to amount to 0,48% of turnover 107 . Operators who manufacture or distribute non-compliant products do not incur all these costs and thus enjoy significant savings that will be reflected in the final price of their products, hence distorting competition and causing possible loss of market-share by compliant companies. The price differential at stake, putting compliant firms at a disadvantage, cannot be calculated for product sectors or the market as a whole. While nearly 80% of businesses' respondents in the public consultation indicated that sales or market-shares of compliant companies are affected, an accurate quantification of the negative effects of non-compliance on the sales of responsible businesses is difficult to provide: only 24% of business respondents to the public consultation were able to provide an estimate of the loss in sales experiences due to the competition from non-compliant products. The large majority of the estimates provided fall into the three following ranges: most indicate an approximate loss in their companies' sales due to competition from non-compliant product of 0-10%, and some 11-20%, 21-30%.

Figure 8: Do businesses complying with legal obligations experience negative effects on sales and/or market shares due to the presence of non-compliant products?

Source: public consultation

1.6How would the problem evolve, all things being equal?

The problem of non-compliant products is not expected to go away in the foreseeable future if no action is taken.

a) Non-compliance: The previous paragraphs provide a number of indications of non-compliance. Due to the underlying variation in sectors and the multiple interlinked factors that lead to non-compliance, an extrapolation from these data or robust conclusions on trends in non-compliance rates are more difficult to project. However, the analysis of the RAPEX notifications on dangerous products between 2006 and 2015 and information reported by national authorities for the 2010-2013 period 108 conducted during the evaluation of Regulation (EC) No 765/2008 suggest that non-compliance has increased in 2010-2015 with respect to the previous period 109 . Although it cannot be excluded that more findings of non-compliance are the results of authorities' increasing efforts, one can reasonably assume 110 that non-compliance will persist and probably continue to increase, especially in areas where product testing is expensive or where in-house laboratories are not available:

Table 4: Annual average of RAPEX notifications by product category over the periods 2006-2009 and 2010-2015

The trend of increasing figures of non-compliance was also confirmed by the national reports, in particular with respect to eco-design and energy labelling and in the pyrotechnics sector:

Table 5: MSAs' Findings of non-compliance 111

b) Trade in products: One can also reasonably assume that the value of harmonised products on the EU internal market, which has been on average €2,478 billion during the period 2008 – 2014, will remain at the same level. Since the outbreak of the financial crisis in 2008 the figures show some development which could mean that values of trade could increase in the future.  

Figure 9: Value of harmonised products within the EU28 (2008-2014), €b

Source: Evaluation of Regulation (EC) No 7652/2008; elaboration on PRODCOM – statistics by product, EUROSTAT (2016)

One can also assume that the imports of products from third countries will represent an increasing share of products supplied on the EU market, as it went up from 24% in 2008 to over 30% in 2015. In 2015 they were estimated to value almost 750 € billions 112 .

c) Fragmentation of market surveillance, wihtin EU and at external borders: The fragmentation of market surveillance competences along national boundaries is not expected to evolve. Informal cooperation among authorities has been exploited to a large extent, however it has reached its limits and has proven insufficient to address the problem of surveillance of the Single Market.

d) Resources constraints limiting market surveillance and controls: There are no indications that the situation of resource allocation will improve. Resources for market surveillance have decreased since 2010 and are unlikely to substantially increase in most Member States. 

e) Lacking deterrence and insuffient enforcement tools to respond to evolving markets, business models: The further expansion of cross-border online shopping in the EU and the well-established globalisation of manufacturing processes are expected to further reinforce the problem of fragmentation of jurisdiction defined along national borders and difficulties with the control of imports from third countries. In addition, technological change, increasing complexity of product and innovation in both product design and service delivery are changing the relationship between products and services that are part of the same value chain, and constitute new challenges for all actors in the supply chain and market surveillance authorities.

f) Knowledge and information gaps: The problem of lack of awareness about product rules is expected to persist and even worsen overtime since the possibility of on line trade substantially facilitates the marketing of products by newcomers and non-professional actors. The ongoing Digital Single Gateway intitiative will contribute to facilitate access to information on applicable EU rules already provided on Commission webpages, as it will be found more easily by businesses browsing on national websites. However the initiative will not address the need to set up additional support infrastructure in this domain.

These factors will have an increasingly negative impact on the effectiveness of market surveillance activities carried out by national authorities and the probability of detection of non-compliant products. Consequently businesses' incentives to comply are expected to decrease further overtime and non-complaince increase.

1.7Conclusions of the evaluations

This impact assessment builds on two separate evaluations. The general conclusions are reported here. Where relevant more detailed conclusions and findings are referred to in the different sections of this impact assessment report:

The first is the evaluation of Union harmonisation legislation of 2014 113 . One of its main outcomes was that market surveillance is considered to be the weakest part of the implementation system, partly due to the inherently difficult nature of the task and in part due to varying levels of resources and technical expertise available in different countries 114 . As regards market surveillance, it pointed to the importance of coordination mechanisms, the lack of uniformity in approach to market surveillance across EU28 and differing levels of resources and technical capacity 115 . This evaluation recommended to expand information and advice to businesses, and to ensure a faster transition to e-market surveillance with more use of digital means to demonstrate compliance and communicate with market surveillance authorities.

The second is the evaluation of the market surveillance provisions of Regulation (EC) No 765/2008 which examined their effectiveness, relevance, coherence and efficiency and added value of action at EU level 116 . Its mains conclusions are as follows:

Effectiveness: Coordination and cooperation mechanisms have significantly developed, and are recognised as useful, but they have not reached a level that can be considered satisfactory, especially to trigger more effective cross-border enforcement among Member States and achieve more uniform and rigorous market surveillance throughout the Single Market. The evaluation concluded that the Regulation is not fully effective in this regard. The general character of the Regulation’s requirements leave too wide scope for different heterogeneous implementations that do not take cross-border and Single Market perspectives sufficiently into account.

Efficiency: The efficiency of the Regulation has been assessed in terms of costs incurred by different stakeholders, benefits produced, and the extent to which desired effects (results and impacts) have been achieved at a reasonable cost. Important gaps and poor quality of data in the national reports hampered the assessment, which would need to be addressed in improvements of the reporting and monitoring mechanisms.

Relevance: The Regulation broadly meets stakeholders’ needs, but the evaluation pointed out that it responds less well to needs related to new/emerging dynamics, especially with reference to increasing online trade and budgetary constraints at national level.

Coherence: Differences in definitions and terminology in some sectoral product legislation were noted and sometimes unclear boundaries with the General Product Safety Directive (external coherence). While these issues may cause some uncertainties in the Regulation's application, they do not significantly hinder its implementation.

EU added value: While the potential is not fully reached, the evaluation confirms the added-value per se of a horizontal framework for market surveillance of harmonised products manufactured within the EU and imported from 3rd countries, in addition to sector specific legislation.

Moreover the evaluation identified certain areas where regulatory burdens could be minimised and rules could be simplified, often as part of a wider problem or weakness of the current Regulation 117 . Specific administrative simplifications are highlighted in the impact assessment section of this report.

Box 6: Evaluation findings REFIT potential

2.Why should the EU act?

The single market for products is a key achievement of the European Union. Yet, the elimination of national barriers for industrial products offered plenty of opportunities to less scrupulous traders who do not apply the Union harmonisation legislation. The EU has therefore the right to act on the basis of Article 114 TFEU, in order to ensure the proper functioning of the single market for industrial products and to increase the efficiency of cross-border market surveillance. Article 168 (1) and Article 169 (1) of TFEU complement this right to act. The first stipulates that a high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities, the latter provides that in order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall, amongst others, contribute to protecting the health, safety and economic interests of consumers.

Despite the existence of the single EU market, the enforcement of Union harmonisation legislation is the Member States' competence. The proper implementation of the principle of subsidiarity therefore requires that the procedures and actions against concrete products posing risks are carried out by Member States.

However, as a matter of fact, the enforcement of Union harmonisation legislation within the single market creates major challenges for public authorities whose action is constrained by their jurisdictional boundaries, while many undertakings implement their business models in several Member States or at the EU level. To increase the level of compliance on the market, every Member State depends on the market surveillance of its neighbours. Consequently, weaknesses in the organisation of market surveillance in one single Member State can seriously undermine the efforts taken by other Member States to keep non-compliant products from the market; this creates a weak link in the chain. This interdependence is reinforced by the fact that the competence of market surveillance authorities is limited to the national territory. Where action is needed in other jurisdictions, authorities must rely on their colleagues in other Member States.

Therefore to ensure consistent enforcement of Union harmonisation legislation across the EU and to tackle efficiently non-compliance spanning over several Member States, it is necessary to coordinate public enforcement activities. The issue being addressed has therefore cross-border aspects which cannot be sufficiently achieved by the Member States’ individual actions because they cannot ensure cooperation and coordination by acting alone. This needs to be achieved at the Union level. Furthermore, action at the EU level would produce clear benefits (compared to Member States’ action) in terms of effectiveness and efficiency, in order to ensure smarter enforcement of Union harmonisation legislation across the EU.

3.What should be achieved

3.1General policy objectives

The general objective of this initiative is to improve the functioning of the Single Market by increasing compliance with EU product harmonisation legislation and, conversely, reducing the number of non-compliant products on the EU market. In a single market where products move freely, compliance with EU legislation serves the protection of public interests (consumers and workers' health, environment protection, etc.) and fair competition equally.

Stepping up compliance with EU product harmonisation legislation requires a holistic approach that aims at improving at the same time incentives to comply and effectiveness of market surveillance.

3.2Specific policy objectives

Against this background, the specific objectives of this initiative are:

1.Reinforcing market surveillance cooperation procedures, reducing fragmentation and inefficiencies;

2.Increasing operational enforcement capacity, improving efficiency of market surveillance action, targeting of controls, and availability of resources;

3.Strengthening the enforcement toolbox, allowing market surveillance authorities to use more deterrent, effective and future proof tools;

4.Promoting compliance with EU legislation on non-food products, improving accessibility of compliance information.

The objectives cover market surveillance within the EU and at the external borders and encompass digital and traditional supply chains. Similarly, each objective pursues simplification and possibilities to reduce administrative burden where relevant.

3.3Consistency with other EU policies and with the Charter for fundamental rights

The Commission recognised the essential role of enforcement networks and set out to encourage and help Member States to improve their capacity to enforce EU law and make sure that administrative authorities and inspectorates are sufficiently and adequately equipped to perform their tasks 118 .

The policy options take into account similar work recently undertaken regarding enforcement in other areas, for example in the area of food and feed where Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products 119 will increase Member States' ability to prevent, eliminate or reduce health risks to humans, animals and plants. Furthermore, the Commission put forward a proposal for the reform of the Consumer Protection Cooperation (CPC) Regulation 120 , which governs the powers of enforcement authorities and the manner in which they can cooperate. In addition, the Commission proposed new rules to enable Member States' competition authorities to be more effective enforcers of EU antitrust rules 121 . The proposal seeks to make sure they have all the tools they require to achieve this. It is intended to further empower the Member States' competition authorities. Stronger enforcement powers are also a key issue in other recent legislative initiatives 122 and data protection laws 123 and recent legislative developments in the field of fertilisers 124 .

With increasing product imports yet declining resources for customs, the Customs Union's governance would need to be better geared to current and future challenges. The policy options take into account the advocated coordination and inter-agency cooperation mechanisms, enhanced risk assessments including at the level of the Customs Union to make controls more efficient and effective 125 . Regarding global trade, the Commission reaffirmed its policy based on openness and cooperation. However to combat situations where rules exist but are not respected, the EU would need to have the instruments at its disposal to restore a level playing field and act decisively against countries or companies that engage in unfair practices. Strong enforcement of EU rules would also ensure that all companies present or active in the EU which break the rules are effectively sanctioned, in cooperation with Member State authorities and strengthened EU customs risk management in order to facilitate and accelerate legitimate EU trade, while ensuring the safety and security of citizens by stopping fake or dangerous goods permeating EU borders 126 .

The consistency with the Charter for fundamental rights is considered in the assessment of the options.

Figure 10: Policy objectives and options to achieve them

4.What are the various options to achieve the objectives?

In order to address the problems identified in section 3 and its underlying drivers, a number of policy options have been identified. These options include a baseline scenario and a series of measures that are presented from the lightest to more far-reaching means to tackle the drivers of the problem and reduce the number of non-compliant products in the single market. A detailed description of the measures in each option is provided in sections 4.3-4.7 below.

Box 7: Discarded options

4.1Option 1 – Baseline 

The baseline scenario is the "no policy change" option. This implies that market surveillance provisions in Chapter III of Regulation (EC) No 765/2008 in its current version remain as the applicable legal framework.

4.2Option 2 – Improvement of existing tools and cooperation mechanisms

This option would involve a modest revision of the market surveillance framework, building on existing legal provisions and formalising current ad-hoc cooperation mechanisms. These additions would address some of the shortcomings identified by the evaluation of the implementation of the current market surveillance rules.

The measures in this option are

Variants of the measures considered but discarded at early stage and not further assessed in detail 142 :

–Provision of assistance to businesses by a centralised help-desk service at EU level building on the Your Europe Advice service and as a complement to the Digital Single Gateway.

–Introducing mandatory frequencies and control intensity covering all product categories and controls within EU Member States and products entering the EU from 3rd countries (complementing or instead of risk based approach to market surveillance controls).

4.3Option 3 – in addition to Option 2 Increased deterrence effect to enforcement tools and stepped up EU coordination

This option would involve important additions to the market surveillance framework, expanding existing provisions and adding coordination structures for enforcement cooperation, building on option 2. These additions would address most of the shortcomings identified by the evaluation of the current market surveillance rules.

The additional measures in this option are:

Variants of the measures considered but discarded at early stage and not further assessed in detail 165 :

–Digital compliance systems based on voluntary inputs from economic operators, or including labelling requirements relating to specific or new technologies (e-labelling, bar or quick scan codes);

–Introduction of administrative fees for all market surveillance controls (irrespective of whether the product is found compliant or non-compliant);

–Outsourcing of the Product Compliance Network to an association or informal network of Member States; the establishment of a formal, new EU decentralised agency to host and manage the Product Compliance Network.

4.4Option 4 – in addition to Option 3 Centralised EU level enforcement in certain cases

This option would involve a significant modification of the market surveillance framework, by adding for certain enforcement tools or infringements EU level measures and actions, building on option 3. These modifications would also address additional shortcomings identified by the evaluation of the current market surveillance rules.

The additional measures in this option are:

Variants of the measures considered but discarded at early stage and not further assessed in detail 174 :

- Carrying out of investigations and ultimately sanctioning of economic operators by the Commission separate from and instead of Member States.

5.What are the impacts of the different policy options and who will be affected?

5.1Option 1 - baseline 

The baseline scenario is the "no policy change" option. This implies that market surveillance provisions of Regulation (EC) No 765/2008 in its current version remain as the applicable legal framework. The impacts are described in section 1.3 , 1.4 and 1.5.

5.2Option 2 – Improvement of existing tools and cooperation mechanisms

5.3Option 3 – in addition to Option 2 Increased deterrence effect to enforcement tools and stepped up EU coordination

5.4Option 4 - in addition to Option 3 Centralised EU level enforcement in certain cases

6.How do the options compare?

·Option 2 - Improvement of existing tools and cooperation mechanisms

Formalised procedures for mutual assistance requests and a common toolbox of investigative and enforcement powers would allow market surveillance authorities to work more efficiently and effectively in cross-border cases and tackle infringements in digital and international supply chains. Better available information and assistance for businesses would help them to comply with product legislation upfront, avoiding costly corrective action. Increased monitoring and comparison of performances would give better oversight of the state of market surveillance across the EU and strategic member state enforcement strategies would allow targeting controls better. However this option improves first and foremost the legal framework and procedures. This option would be less instrumental to overcome resources constraints, and as such it would be unlikely to trigger a noticeably increase in actual control activity or coordinated enforcement. Modest costs would be incurred by the Commission and the Member States.

This option builds on existing legal provisions and tools that are already available and used in many Member States. The feasibility of this option from technical and legal perspectives is considered to be high and a few concrete simplification measures would be feasible in the short term. There is broad stakeholders support for the measures in this option, but it would not meet stakeholder expectations in achieving more robust market surveillance activity and deterrence.

·Option 3 - in addition to Option 2 Increased deterrence effect to enforcement tools and stepped up EU coordination

Adding-on to option 2, the easier transferability of evidence and enforcement decisions would make cross-jurisdictional cooperation much more efficient and allow Member States to benefit from cost-savings. The potential effect of individual restrictive measures in the Single Market and on imports would be enhanced. The EU Product Compliance Network would practically assist coordination and facilitate joint control campaigns. The pooling of resources and additional joint capacity would alleviate resources constraints in Member States that prevent them to engage in more coordinated, cross-border controls and to take the wider Single Market perspective better into account.

Depending on its size and resources, the Network could achieve moderate to significant increases in coordinated controls, support prioritisation and targeting of action based on improved market intelligence at the level of the Single Market, as well as the Customs Union for imports, and conduct peer reviews of market surveillance performance in Member States. While the lower size variant of the Network (32 FTE, 6M€ operational budget) would imply a significant improvement over the baseline in enforcement coordination, the medium estimate size variant (59 FTE, 10 M€ operational budget) and a fortiori the higher size variant (90 FTE, 14 € operational budget) would be more effective in achieving concrete results based on noticeable stepped up joint control campaigns in all product sectors and robust underlying exchange of intelligence and enforcement information.

The added deterrent effect to enforcement tools would discourage the trading of non-compliant product (more systematic publication of restrictive measures, control costs' recovery in case of non-compliant products). Market surveillance authorities could more easily trace and contact a person responsible for compliance information whenever there are doubts or findings about non-compliance. The mandatory publication of basic compliance information would facilitate users and authorities' access to such information.

This option would meet with broad stakeholder support, regarding the measures' content and the focus on increasing controls and deterrence throughout the EU. It would extend the deterrent effect of certain enforcement tools, however within the scope of market surveillance practice and applicable enforcement tools in relevant other policy areas. The increased operational support would build on and expand existing joint projects and networking activities that meet with strong Member State support. The feasibility of this option from technical and legal perspectives is therefore considered to be high. The hosting of the EU Product Compliance Network in the Commission would however be subject to greater uncertainty over the effective resources that could be allocated and maintained to the Network's Secretariat. The EU-IPO hosting of the Network would lead to a more complex legal proposal, amending the EU-IPO founding regulation to add market surveillance to its mandate, with the associated political risks for the adoptability of the proposal.

·Option 4 – Centralised EU level enforcement in certain cases

The direct enforceability of national restrictive measures in the whole of the EU and against non-compliant imported products, after a safeguard consultation procedure, would significantly increase the effect of restrictive measures against non-compliant products and would add to the deterrence of market surveillance. For certain widespread infringements the single process coordinated by the EU Product Compliance network could achieve potentially faster elimination of infringements in the whole EU territory and would increase the visibility of EU enforcement action. Approximated sanctions would in principle set a better level playing field, in particular for penalties, and would facilitate cooperation procedures up to actual imposition of penalties. A centralised database with full compliance information provided by businesses would enhance transparency for all users in the product supply chain and facilitate market surveillance authorities' work. This option would therefore maximise the coordination and consistency of enforcement in the Single Market.

Costs for Member States would on the one hand be very significant linked to the profound adaptations of their legal systems to include the approximated sanctions; on the other hand they would benefit from efficiency gains and cost savings due to the single process for widespread infringements and by relying even more than in option 3 on other Member States' decisions and evidence. The EU budget would incur moderate additional costs to cover the added tasks of the EU Product Compliance Network (in case of the Commission hosting the Network) to deal with widespread infringements and the centralised digital compliance database.

Some measures would have limited support from Member States in particular as they would seem to impact too heavily on national legal systems and enforcement prerogatives (direct enforceability of restrictive measures from other Member States, approximation of sanctions, adoption of EU level enforcement decisions). Businesses would not favour a centralised scheme for digital compliance. The feasibility of this option from political and stakeholder acceptance perspectives is therefore considered to be low.

Effectiveness

Overall as regards the effectiveness of the different options to achieve the policy objectives identified, option 2 is expected to lead to moderate improvements of information provision and cooperation tools, and a slight improvement of the coordination of market surveillance. This option would also lead to a limited improvement of actual market surveillance activity and controls. Adding on option 3, however, would be much more effective for improving the coordination of enforcement, and for achieving cross-border market surveillance. It would also constitute a considerable improvement of the deterrent effect of market surveillance tools and incentivise businesses to comply. The effectiveness of option 4 would also be high as a consequence of the extended and direct applicability of national restrictive measures, the stronger coordinated enforcement effect in certain cases (wide spread infringements) and the direct access to full compliance information for market surveillance authorities.

Costs - Efficiency

The costs of option 2 would be quite modest. Member States would incur some costs to align to new powers and procedures. The Commission/EU would incur modest cost for the improved performance monitoring. Adding on option 3 would be much more efficient for the Member States who would benefit from significant efficiency gains and costs saving (better cooperation procedures, coordination and Network support). However, the EU budget would incur significant cost for the establishment and running of the EU Product Compliance Network in case the Commission would host the Network; far reduced costs for the EU budget would results from the EU-IPO hosting variant. Businesses that sell non-compliant products would incur more costs as a result of a stronger improvement of market surveillance but would be expected to internalise these costs. The addition of option 4 would be quite costly, particularly for Member States as a result of the profound revision of their national systems and their administrative and criminal sanctions. In parallel, businesses would also incur costs for providing and updating full compliance information in the central database and expose their commercially sensitive information to high risks of undue access.

Coherence

Option 2 would be much less ambitious compared to enforcement in other policy areas, where stronger tools and stronger EU level coordination would apply. Option 3, however, would align the enforcement of Union harmonisation legislation for non-food products to the enforcement in other policy areas (competition, food and feed controls, data/privacy and consumer protection). Option 4 would also be very coherent with enforcement in other policy areas. However, option 4 would also have quite considerable impacts on fundamental rights which should be explicitly addressed.

Accordingly, the preferred option would be Option 3 (measures of option 2 and additional measure of option 3). This option will address in the most effective and efficient manner all policy objectives to lead to less non-compliant products and a fairer Single Market.

The EU Product Compliance Network is the measure entailing the most significant costs and would ensure a pivotal role in realising the expected improvement of enforcement in the Single Market.

While the lower size variant of this Network would imply a significant improvement over the baseline in terms of enforcement coordination, more concrete impacts would require stepping up to the medium size variant which is consequently preferred as the targeted scale for the Network.

The differences between the hosting variants of the Network, either by the Commission or by the EU-IPO, are different in nature and require essentially a political balanced choice, between outsourcing of the Network to the EU-IPO with a more complex legal proposal and possibly more controversy in the inter-institutional phase and the feasibility of Commission hosting, taking into account the appreciation of the future multi-annual financial framework and resources that could be prioritised within the Commission to support the Network. Consequently the impact assessment does not express a preferred option among these hosting variants.

7.Preferred option

7.1Preferred option contents and costs

How does the preferred option address the problem drivers (identified in section 1.3)?:

·Fragmentation of market surveillance hampering effectiveness and uniformity of controls

   Working across borders would be made easier for Member States with new legal principles on the portability of test-reports, re-use of evidence and enforcement decisions taken in another Member State. Restrictive measures taken against non-compliant products in one member state could be more quickly and frequently replicated in other Member States, against non-compliant products traded within the EU and viz. imports. Thanks to effective mutual assistance requests, authorities in different member states could more easily call on each other to help in cross-border investigations and enforcement cases.

   Moreover, the common toolbox of investigative and enforcement powers for all market surveillance authorities would ensure that similar cases could be treated in the same rigorous way regardless of location. The EU Product Compliance Network would coordinate market surveillance actions, and based on Member State enforcement strategies, conduct peer reviews to ensure equally performant enforcement is available throughout the Single Market.

·Resources constraints leading to limited actual control activity, within the EU and on products entering the EU

   The EU Product Compliance Network would pool resources and provide additional joint capacity so that more coordinated, cross-border controls could take place. National enforcement strategies and shared market intelligence with an EU-perspective would help prioritise and target controls better. Upgraded IT tools supported by the Network, including exchanges with customs, would allow market surveillance authorities to cooperate and report efficiently.

   More efficient work-sharing between authorities in the coordinated controls, and re-use of evidence and enforcement decisions would allow them saving time and costs, which in turn would become available to reinvest in additional controls.

·Lacking deterrence and insufficient enforcement tools to respond to evolving markets, business models

   The added deterrent effect to enforcement tools would discourage the trading of non-compliant product (more systematic publication of restrictive measures, control costs' recovery in case of non-compliant products). The common powers for market authorities would span the full supply chain and include specific digital investigation and enforcement tools. Market surveillance authorities could more easily trace and contact a person responsible for compliance information when there are doubts or findings about non-compliance, require intermediaries in digital supply chains to cooperate, and sanction absence of responses or lack of cooperation.

·Knowledge and information gaps concerning product compliance

   Advice on product legislation by Product Contact Points would help businesses to comply with the EU product legislation. More wide-spread and easy accessible compliance information would be ensured for all users by (1) digital publication of basic compliance information by manufacturers and importers; (2) more systematic publication of restrictive measures taken by authorities, and (3) a web-portal for voluntary measures business may undertake to recall dangerous products. Partnerships and collaborative enforcement tools would allow businesses and market surveillance authorities exchange sector and compliance information efficiently.

Costs:

·The main costs of the preferred option would fall on the EU budget in the case of Commission hosting in relation to the EU Product Compliance Network 18 M€/year (staff, overheads and an operational budget for the medium size estimate Network). In the case of the EU-IPO hosting of the Network no immediate costs to the EU budget would occur, apart from modest set-up costs (70 000€). Set-up costs to allow interfacing of the IT tool for market surveillance and customs systems (incl. Single Window development) amount to 3,2M€ over 5 years.

Other costs relate to pilot funding support to national enforcement strategies of 1 to 3 M€. The other measures (mutual assistance, performance indicator system, web-portal) would amount to set-up costs of 1 FTE and 1.1 M€, and running costs estimated at 4.7 FTE. The systematic use of IT-tools to communicate strategies and enforcement information may result in a small reduction of handling costs by the Commission (-0,5 FTE).

·Member States would face costs to adapt and align (some) of their legislation and procedures (set-up costs 700 000€ all Member States), and as main running costs the advice service by Product Contact Points (3.5 M€/year, all Member States). However they would benefit from significant efficiency gains and cost savings thanks to the increased joint actions and coordination, assisted by the EU Product Compliance Network. The stronger and more fit-for-purpose enforcement powers, enhanced enforcement cooperation tools and re-use of other Member States' enforcement decision and evidence would allow market surveillance authorities to realise important costs savings and rationalise the market surveillance framework in the EU.

·The preferred option would have minimal costs implications for businesses that trade compliant products. The stepped-up enforcement coordination, better knowledge exchange, prioritisation and peer reviewed enforcement strategies supported by the EU Product Compliance Network, would create a more level playing field and a more transparent and predictable enforcement environment across the Single Market. As a result businesses may see a reduction of some of the negative impacts of the across-the-board inconsistencies they currently face. Businesses' regulatory costs stemming from the market surveillance rules relate to their information obligations towards public authorities (e.g. responding to requests from authorities, information on non-compliances detected). These costs only occur occasionally and are considered insignificant especially compared to ensuring product conformity and traceability. The preferred option would only marginally increase costs for some businesses: The mandatory digital publication of some compliance information would imply a cost of 22 M€/year in total for the economic operators concerned (manufactures and importers). Some 3rd country traders might incur some extra costs to ensure a person responsible for compliance information is available in the EU. On the contrary businesses trading non-compliant products would face costs to incentivise them to better internalise the full compliance cost (e.g. via recovery of control costs, reputation costs).

The effects of the preferred option on the various stakeholders, including SMEs, are set out in Annex 3.

7.2Subsidiarity and proportionality of the preferred option

The preferred option would ensure consistent enforcement of Union harmonisation legislation across the EU and allow tackling efficiently non-compliance spanning over several Member States. The measures contained in the preferred option would provide a proportionate response to the challenges national market surveillance authorities currently face as their action is constrained by jurisdictional boundaries, while products circulate freely in the Internal Market and many undertakings implement their business models in several Member States or at the EU level. With the high levels of intra-EU trade in harmonised products and increasing imports, through the main entry sea- and airports, the enforcement action – or weak spots in controls - in individual Member States impact directly on others and the Single Market as a whole. Over 500 authorities are engaged in market surveillance throughout the EU territory. Some 5 million businesses in the EU produce or distribute products covered by this initiative, for a value of 2 400 billion € or 69% of all manufacturing products. The unfair competition by the persistent and widespread presence of non-compliant products would gradually erode this economic basis. Achieving performant, coherent and consistent enforcement of EU harmonised product legislation would require a commensurate coordination effort at the EU level, coupled with effective tools for market surveillance authorities.

A very large majority of stakeholders endorse the need for more coordination of enforcement among Member States, better sharing of intelligence and knowledge 276 . Pooling efforts in these areas, as envisaged in the EU Product Compliance Network, would allow overall resources for market surveillance to be used more efficiently and increase coordinated, joint control activities in priority areas related to intra-EU trade as well as imports. More exchange of information and discussion among EU authorities would contribute to more consistent enforcement and the easier replication and re-use of evidence and enforcement decisions across jurisdictional boundaries would help to save costs 277 . The stronger deterrent effect of enforcement tools in the preferred option would be directed at businesses trading non-compliant products.

The preferred option would thus allow to step-up coordination of public enforcement activities while respecting subsidiarity principles:

The measures would neither affect the Member States' competences in market surveillance, nor would it interfere with national enforcement or judicial systems. The deterrent effect of certain tools would be improved and the reach of measures extended, yet building on existing tools and aligning with comparable tools in other EU policy areas. The preferred options would not affect internal division of competences among authorities at national level, as Member States would remain responsible for their institutional set up and designation of competent authorities for market surveillance.

While the existing Regulation (EC) No 765/2008 already requires Member States to grant necessary powers to market surveillance authorities, the further specification of some common, future-proof powers is foreseen to ensure market surveillance authorities could act more uniformly and cooperate on a more equivalent basis in cross-border enforcement. These powers may have to be reflected in national procedural laws according to the current availability of such powers in the Member States. They are in essence a refinement of the existing requirements and would not unduly impact or interfere with the institutional choices of Member States or the set-up of their enforcement and legal systems.

The preferred option only establishes general principles, procedures and operational support mechanisms to the extent necessary for smooth, coordination between Member States. In line with the principle of subsidiarity, the implementation of the measures, in particular the enforcement decisions and actions against concrete products posing risks, are carried out by Member States.

8.How would actual impacts be monitored and evaluated?

8.1Practical arrangements of the evaluation: when, by whom

The evaluation of Regulation (EC) No 765/2008 and the preparation of this impact assessment revealed important gaps in available information and the quality of data reported by Member States. It will be essential to establish a robust system to verify whether and to what extent the proposal has been effective in reaching its objectives, and whether the objectives have been met efficiently (i.e. at least cost), as well as the reasons for its success or shortcomings. Meanwhile, a number of the current reporting requirements for market surveillance authorities need to be simplified in order to alleviate the administrative burden for authorities.

The most efficient scheme for a future evaluation is to use ICSMS as a main source of information and, on the basis of the indicators, to assess whether the proposal was effective and efficient, relevant given the needs and its objectives, coherent both internally and with other EU policy interventions and achieved EU added-value. The monitoring through ICSMS would be completed by the work of the EU Product Compliance Network and the provision by Member States of more reliable and more comprehensive information on compliance rates and enforcement activity as part of their national enforcement strategies.

By using ICSMS the monitoring of operational activity could take place on an ongoing basis at least yearly (e.g. number of mutual assistance requests, restrictive measures taken). The review of Member States enforcement strategies, market studies, user surveys and the identification and implementation of common priorities by the EU Product Compliance Network would allow on a yearly to bi-annual basis an analysis of progress towards higher level indicators (e.g. control levels in Member States, compliance gaps, usage of compliance assistance schemes). In this regard, an important task for the EU Product Compliance Network would be to set up and monitor overall performance indicators and perform peer reviews.

To provide an adequate basis for the monitoring and evaluation of the initiative, reference levels will be established to form a consolidated baseline. The methodology to monitor trends in (non)compliance will be examined, to complete the information from market surveillance controls where possible with surveys based on sampling , across sectors or in a selection and for special supply channels (e-commerce, imports). An evaluation by the Commission of the functioning of the new legislative framework could be foreseen in the mid-term (e.g. after 5 years of implementation).

8.2Operational objectives and indicators to monitor compliance for the preferred option

(1)

     Communication from Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Upgrading the Single Market: more opportunities for people and business, COM(2015)550/2.

(2)      COM(2016) 710 final: http://ec.europa.eu/atwork/key-documents/index_en.htm

(3)      For a glossary of terms and abbreviations see Annex, page 85.

(4)      Annex 7 Section 1 contains a non-exhaustive list of product sectors covered by Union harmonisation legislation potentially affected by this initiative.

(5)          According to Article 16 of Regulation (EC) No 765/2008 “Market surveillance shall ensure that products covered by Union harmonisation legislation which, when used in accordance with their intended purpose or under conditions which can be reasonably foreseen and when properly installed and maintained, are liable to compromise the health or safety of users, or which otherwise do not conform to applicable requirements set out in Union harmonisation legislation are withdrawn or their being made available on the market is prohibited or restricted and that the public, the Commission and the other Member States are informed accordingly. Member States shall ensure that effective measures can be taken in relation to any product category subject to Union harmonisation legislation”.

(6)       https://ec.europa.eu/growth/single-market/goods/new-legislative-framework_en  

(7)      COM(2013)75: Proposal for a Regulation of the European Parliament and of the Council on market surveillance of products; and COM(2013)78: Proposal for a Regulation and of the European Parliament and of the Council on consumer product safety and repealing Council Directive 87/357/EEC and Directive 2001/95/EC.

(8)       http://www.consilium.europa.eu/en/meetings/compet/2016/05/26-27/  

(9)      COM(2014)25 and SWD(2014)23.

(10)      SWD(2014)23, section 4.8.

(11)      More than 60 pieces of legislation are listed in Annex 7 Section 1.

(12)      Chapter V of Regulation (EC) N° 765/2008 sets out funding provisions for all aspects of the Regulation, including market surveillance.

(13)      This value has been calculated considering the value of sold production – value of extra EU exports + value of extra EU imports at product level; the analysis at sectorial level estimates the turnover of harmonised products manufactures in the EU to be around 4 500 billion euro (see Annex 5) .  

(14)      Annual detailed statistics for industry and trade (NACE Rev. 2, B-E) [sbs_na_dt_r2 and sbs_na_ind_r2] - EU 28 (Last update: 13.01.17 - Source of data: Eurostat). It should be noted that a precise breakdown between wholesale and retail trade in harmonised products and non-harmonised products is not available. An attempt has been made to identify those wholesale and retail sub-sectors that are likely to be involved in the sale of harmonised products but their sales are likely to include non-harmonised products as well. The added value is therefore likely to be overstated.)

(15)      Annex to the REFIT Evaluation on the application of the market surveillance provisions of Regulation (EC) No 765/2008, section 7 Market analysis. NACE sectors and PRODcom codes were selected to target as closely as possible only harmonised goods that come under the scope of the Regulation (EC) No 765/2008. A conservative selection was made for certain sectors (e.g. food, agriculture, pesticides, certain chemicals were excluded or only partially taken on board); the results obtained in this evaluation study are therefore lower for harmonised goods than if a wider selection of (sub)sectors are compared for trade in harmonised and non-harmonised products (market study on non-harmonised good and mutual recognition).

(16)      "Non-compliant products destroy industrial jobs!", http://www.industriall-europe.eu/Committees/IP/PolBrief/PB2016-08-MarketSurveillance-EN.pdf  

(17)      The system only registers information on non-compliances expected to lead to a serious risk, excluding than products presenting a relatively lower level of risk (i.e. high, medium, low) and non-compliance with administrative requirements when they are not expected to bring out a risk. Furthermore, most Member States de facto record in this system only serious risk concerning the safety of consumers' products so most of non-compliance linked to professional products and other types of public interests are not reflected.

(18)      This was defined as being the "sector of activity" for businesses supplying products and for conformity assessment bodies, the "sector of responsibility" for national authorities, "sector in which they purchase products" for citizens, consumers, end users, and "sector for which studies have been conducted or expertise gained" for academics or other legal experts.

(19)      European Commission, 'Evaluation of the Ecodesign Directive (2009/125/EC) - Final Report', 2009.

(20)      See position paper by trade-union federation "IndustryAll" quoting Ecofys, 2013. See also Annex 7 section 2 containing figures on findings of Deutsche Umwelthilfe e.V. (Environmental Action Germany) in Eastern Germany, p 4.

(21)      European Commission, Impact Assessment study on the review of the Gas Appliances Directive (2009/142/EC)- Final Report', 2009.

(22)      Commission Staff Working Paper 'Impact Assessment 10 Proposals to Align Product Harmonisation Directives to Decision No 768/2008/EC'. The consultation concerned the following sectors: Low Voltage, Electromagnetic Compatibility, ATEX, Lifts, Pressure Equipment, Simple Pressure Vessels, Measuring Instruments, Non-automatic Weighing Instruments, Civil Explosives and Pyrotechnic Articles.

(23)      The data were included in national reports published according to Article 18(6) of Regulation (EC) No 765/2008.

(24)      According to data provided by Member States on number of inspections carried out and on number of findings of non-compliance in the context of national reviews and assessment of market surveillance activities according to Article 18(6) of Regulation (EC) No 765/2008. This figure represents the weighting average of percentages at national level.

(25)    Simple pressure vessels and Pressure Equipment; Transportable pressure equipment; Lifts, Cableways; Measuring instruments, Non-automatic weighing instruments and Pre-packaged products; Marine Equipment; Non-road mobile machinery.

(26)      Machinery; Noise emissions for outdoor equipment; Electrical and electronic equipment under RoHS, WEEE and batteries; Chemicals (Detergents, Paints, Persistent organic pollutants); Ecodesign and Energy labelling; Motor vehicles and tyres.

(27)      Toys; Cosmetics; Personal Protective Equipment; Aerosol dispensers; Equipment and Protective Systems Intended for use in Potentially Explosive Atmospheres; Electrical appliances and equipment under LVD ; Recreational craft; Other consumer products under GPSD

(28)    Medical devices; Construction Products; Appliances burning gaseous fuels.

(29)      Pyrotechnics; Explosives for civil use; Electrical equipment under EMC; Radio and telecom equipment under RTTE; Efficiency requirements for hot-boilers fired with liquid or gaseous fuels; Fertilisers.

(30)      According to data provided by Member States and ECHA under Art 117 (1), (2) of REACH and Art 46(2) of CLP.

(31)      Data from the Information Communication System for Market Surveillance (ICSMS) (see Annex 7). It is noted that the notifications where the risk is not specified have not been included in the analysis. Furthermore, the information recorded in ICSMS is not representative of all inspections carried out by member States (see Annex 11 for more details on the degree of use of the system).

(32)       http://www.prosafe.org/images/Documents/JA2013/JA2013_Toys_Final_Technical_Report_24-02-2016.pdf  

(33)      Electromagnetic Compatibility - Report on the Fourth Joint Cross-Border EMC Market Surveillance Campaign on LED lamps (2011), http://ec.europa.eu/DocsRoom/documents/9868  

(34)      Much EU harmonisation legislation requires manufacturers to place a CE mark on the product to demonstrate its compliance with the applicable product laws to market surveillance authorities.

(35)      A Declaration of Conformity is a document attesting to the compliance of a product with applicable legislation.

(36)      Final report - MARKETSURV MID - A Joint project for market surveillance in the field of measuring instruments http://ec.europa.eu/DocsRoom/documents/20422  

(37)      Final report - MARKETSURV MID - A Joint project for market surveillance in the field of measuring instruments http://ec.europa.eu/DocsRoom/documents/20422  

(38)      Electromagnetic Compatibility - Report on the Fifth Joint Cross-Border EMC Market Surveillance Campaign on switching power supplies (2012/2013), http://ec.europa.eu/DocsRoom/documents/9869  

(39)      Report on the Sixth Joint Cross-Border EMC Market Surveillance Campaign on solar panel inverters - performed in 2014, http://ec.europa.eu/DocsRoom/documents/8064  

(40)      R&TTE directive - Report on the Fifth Joint Cross-Border R&TTE Market Surveillance Campaign (2013) - WLAN 5 GHz http://ec.europa.eu/DocsRoom/documents/9922  

(41)      Report - The Sixth Joint Cross Border R&TTE Market Surveillance Campaign on mobile phone repeaters - 2014 , http://ec.europa.eu/DocsRoom/documents/7718  

(42)      Report - The Seventh Joint Cross Border R&TTE Market Surveillance Campaign on remotely piloted aircraft systems , http://ec.europa.eu/DocsRoom/documents/13343  

(43)       https://echa.europa.eu/about-us/who-we-are/enforcement-forum/forum-enforcement-projects  

(44)      See section 5.1 of the evaluation .

(45)      See Annex 9 section 2 for an overview of the organisation of market surveillance at national level. The detailed list of authorities competent in the EU for the surveillance of products falling under specific legislation is available at: http://ec.europa.eu/DocsRoom/documents/12802 and http://ec.europa.eu/DocsRoom/documents/12803 .

(46)      See Annex 5.

(47)

   58% of participants to the public consultation found difficult to estimate the share of products placed on the market by businesses located in another EU Member State in their respective sector; however when estimates (based on product volumes were provided these pointed to a sizeable share of the market: more than 50% of the market (according to 18% of participants), between 21 and 40% (12% of participants); between 41 and 50% of the market (7% of participants).

(48)      According to the research by the European Multi-channel and Online Trade Association, 14% of online sales in 2014 were non-domestic business-to-consumer sales (including both EU and non-EU sales). From 2013 to 2018, with a compound annual growth rate of 12%, the online retail market is expected to be worth ca. EUR 234bn by 2018 - Forester Research Online Retail Forecast, 2013-2018, summary available here: http://ecommercenews.eu/online-sales-in-europe-will-grow-to-e233-9bn-by-2018/

(49)

     Taking action against non-compliant products traded by businesses located in another EU Member State was considered difficult businesses do not reply to requests for information/documentation (52% of authorities agreed/strongly agreed, 22% disagreed/ strongly disagreed, 26% no opinion/no experience /no answer) and for corrective actions (55% of authorities agreed/strongly agreed, 19% disagreed/ strongly disagreed, 26% no opinion/no experience /no answer). Furthermore 57% of authorities declared no experience in imposing penalties on businesses located in another Member State, while 25% of authorities agreed/strongly agreed enforcement of penalties is difficult, 7% disagreed/ strongly disagreed, 12% provided no answer. The previous percentages are based on the total number of participants to the consultation, including those not replying to this particular question.

(50)      It is also noted that major high costs components for market surveillance authorities are collecting/assessing information from businesses, interacting with authorities from other member states perceived often to lead to a dead end (study on the impact of digital compliance, VVA 2017, annex 14.

(51)

   Interestingly, 26% of authorities participating in the consultation believe they are not even entitled to contact a business outside its jurisdiction.

(52)      Annex 11.1.1 and 11.1.6.

(53)      Annex 11.1.2 and 11.1.6.

(54)      Annex 11.1.3 and 11.1.6.

(55)      Annex 11.1.4 and 11.1.6.

(56)      Annex 11.1.4-6.

(57)      Annex 11.2.

(58)      See section 6.1.1 in the Evaluation SWD.

(59)      For example, the market surveillance provisions oblige Member States to 'entrust market surveillance authorities with the powers, resources and knowledge necessary for the proper performance of their tasks' while market surveillance authorities must 'perform appropriate checks on the characteristics of products on an adequate scale'.

(60)      See section 6.1.2 of the Evaluation SWD.

(61)      See Annex 12 ; Chapters 6.1 and 6.2 of the evaluation and sections 6.1 and 6.2 of Annex 4 of the evaluation.

(62)      See sections 5, 6.1 and 6.2 of Annex 4 of the evaluation

(63)      Not all EU28 Member States provided reliable data for this indicator. Therefore, figures do not include Austria, Cyprus, Estonia, Greece, Croatia, Luxembourg, Slovenia, the United Kingdom and Hungary.

(64)      See section 5.2.1 of Annex 4.

(65)      See section 5.2.1 of Annex 4.

(66)      The analysis includes: BG, CZ, DE, DK, EE, ES, FI, IE, IT, LT, LU, LV, MT, NL, PL, PT, RO, SE, SK; the other MS have not provided complete and reliable data.

(67)      See also Annex 11 section 2.2.

(68)    DGTAXUD - Customs and MSA limited Report on customs controls in the field of product safety and compliance in 2015, July 2016 providing partial information on import controls from a selection of Member States.

(69)      See also annex 9: in absolute numbers controls are low compared to import volumes and on average 8% of controls are prompted by customs as reported by Member States for the period 2010-2013. Controls are concentrated in 6 product sectors (of 30). Moreover inspection coverage is low in the main entry points to the EU, the sea ports and Rotterdam in particular (Public consultation Position papers; Dutch Court of Auditors, Producten op de Europese markt: CE-markering ontrafeld, January 2017)).

(70)      The analysis includes: BG, CZ, DE, DK, EE, ES, FI, IE, IT, LT, LU, LV, MT, NL, PL, PT, RO, SE, SK; the other MS have not provided complete and reliable data. When interpreting these figures, it should be taken into consideration that not all the MS are able to provide the exact data on the allocation of their staff. This could be due to merged organisations where the customs are mixed together with tax administrations, etc. In such cases, data was only estimated by the MS.

(71)      Annex 12 and chapter 6.1.2.1 of the evaluation Regulation (EC) No 765/2008.

(72)      OECD, ibidem. See chapters 6.1 and 7.2 of the evaluation.

(73)      See Annex 13 section 3.

(74)      Therefore, enforcement can best be defined as a dialogue between regulators and firms addressing the various forces and motives for compliance within a firm. Third parties, such as public interest groups, and community organizations, can often exert pressure on firms to behave in a socially responsible way, and so be involved in this dialogue. Furthermore, if regulatees trust regulators as fair umpires who administer and enforce laws or regulations that have important substantive objectives, then the evidence is that compliance will be higher, and resistance and challenges to regulatory action will be low. However, it should also be noted that most accounts that find people to be compliant in response to dialogue, goodwill and trust also find that deterrence is necessary as a back-up for the minority of organisations that do not voluntarily comply. They also find that co-operative compliance is generally contingent upon persuading those of goodwill that their compliance will not be exploited by free riders who will get away with the benefits of noncompliance without being held to account for it. Thus deterrent and punitive sanctions must still be available in the background. See Levi, 1988; Scholz, 1997, p. 262.

(75)      As widely confirmed by economic operator/civil society representatives - for checks of Market surveillance authorities and checks of Customs respectively – and Market surveillance authorities and Customs. See also section 6.1.2 of the evaluation and section 6.1.1 of its Annex 4.

(76)    See section 6.1.2.2 of the evaluation.

(77)      See section 6.1.3 of the evaluation;

(78)      For instance in the United Kingdom the legislation allows MSAs to recover from economic operators costs borne to test products found to be non-compliant. The ways MSAs use this power differ among them: for example, HSE (Health and Safety Executive, the workplace safety enforcement authority) routinely charge for its enforcement activity, while the Trading Standards Institute (a consumer product safety authority) would generally not charge them, unless there was a prosecution. In Germany, local MSAs impose costs for testing (calculated by the laboratory) and fees for administrative expenses (calculated by personnel costs per hour) on a case-by-case basis.

(79)      SWD(2015)274.

(80)      See chapters 6.1 and 6.4 of the evaluation and sections 6.1 and 6.4 of Annex 4 of the evaluation.

(81)       http://www.supplychainquarterly.com/topics/E-Commerce/20120827-direct-to-consumer-challenges-for-distribution/  

(82)      More than in cross-border situations within the EU, authorities reported in the public consultation that they experience difficulties to identify and contact 3rd country businesses (45 of 69, 65 % agree viz. 15 of 69, 22% disagree and 13% no opinion). Authorities experience even more difficulties to obtain responses from economic operators in 3rd countries or their cooperation in corrective actions or indeed have no experience on the matter (40 of 67, 60% agree that foreign businesses do not reply, 23 of 67, 34% had no opinion; 40 of 69, 58% agree businesses contacted do not reply to requests for corrective action, 27 of 69, 39% had no opinion).

(83)      See Annex 5

(84)      49% consider they were unable to provide estimates or did not reply to the question; however 17%of respondents consider the proportion of imported products to be up to 20%, 15% of them between 21 and 50% and 18% of them beyond 50%.

(85)      15% of respondents believe non-compliance affects most of imported products, 43% some of them, 16% few of them. Only 2% consider imports not affected by non-compliance. 23% did not know or did not reply.

(86)      See section 6.1.3 of the evaluation.

(87)      Market surveillance authorities also find that it is often impossible to obtain documentation, including from importers who cannot get access to the required information from manufacturers (VVA study impact of digital compliance, 2017, Annex B 14).

(88)      E.g. Around a third of notified cases through the RAPEX-China system in 2015 was found to be traceable and could be investigated by the Chinese authorities.

(89)      Article 23 regulation (EC) N° 765/2008.

(90)      Article 12 (4) of Directive 2001/95/EC on general product safety.

(91)    Union Customs Code Art. 46, 47.

(92)      Union Customs code Art. 38.

(93)      See chapters 6.1, 6.2 and 6.4 of the evaluation and sections 6.1, 6.2 and 6.4 of Annex 4 of the evaluation.

(94)      There is not a clear and effective communication channel between customs and market surveillance authorities of different countries for customs decision not to release a dangerous or non-compliant product. Cross-border actions are needed to avoid re-entry of goods blocked by one country via another Member State or another entry point (Customs cooperation in the area of product safety and compliance controls of imported goods; Workshop report Vishegrad Group countries, October 2016)

(95)      E.g. RAPEX listed products are an import source for customs to develop risks profiles; however the wider information available in ICSMS on non-compliant products, restricted measures and economic operators count only among "other" incidental information sources (DGTAXUD, 2015)

(96)      Art. 38 of the Union Customs Code provides for consultation with other competent authorities if necessary in the process of granting AEO status, which is also subject to monitoring. However only 2 Member States indicated consultation takes place of market surveillance authorities prior to AEO status being granted. Moreover even if AEO status does not affect the operator or products as regards product compliance controls further to Regulation (EC) n° 765/2008, in practice most Member states report that they are generally subject to fewer controls than other non-AEO operators (DGTAXUD report "Mapping of differences in dealing with safety and compliance controls for products entering the Union", June 2016).

(97)      See chapters 6.1 and 6.3 of the evaluation and sections 6.1 and 6.3 of Annex 4 of the evaluation. See for instance Annex 9 section 3.4 and minutes of expert groups meeting
http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetailDoc&id=23085&no=1 (section 8).

(98)      OECD, 'Reducing the Risk of Policy Failure: Challenges for Regulatory Compliance', 2000, http://www.oecd.org/regreform/regulatory-policy/1910833.pdf  

(99)      SWD(2014)23, section 7.2

(100)    See figure 7 in Annex 9 to the Evaluation SWD.

(101)      The general rule is that, before making a product available on the market, distributors have to verify that the product bears the required conformity marking or markings, that it is accompanied by the required documents and by instructions and safety information in a language which can be easily understood by consumers and other end-users in the Member State in which the product is to be made available on the market, and that the manufacturer and the importer have complied with the requirements set out in the applicable Union harmonisation legislation.

(102)

     Study on the promotion on the use of RAPEX information by importers, distributors and retailers in the field of consumer product safety, with a particular focus on SMEs, CIVIC Consulting, August 2015, p. 42.

(103)      See Annex 5 section 2.1 and section 3.

(104)      For the period 2012-2014 more precise statistics on sector level have become available in EUROSTAT (digit 3 NACE code). These would indicate that about 900,000 businesses are involved in the manufacturing of industrial products (53% of all businesses active in the EU manufacturing sector) employing more than 20 million people (68% of all persons employed in the manufacturing sector.

(105)      SWD(2015) 139 final, p. 15-16 available at: http://ec.europa.eu/transparency/regdoc/rep/10102/2015/EN/SWD-2015-139-F1-EN-MAIN-PART-1.PDF

(106)      Commission Staff Working Document SWD(2014)23.

(107)       http://ec.europa.eu/smart-regulation/evaluation/search/download.do?documentId=9966151 .

(108)      The data were included in national reports published according to Article 18(6) of Regulation (EC) No 765/2008.

(109)      See section 4.3.1 of Annex 4 of the evaluation.

(110)      See section 5.3 of Annex 4 of the evaluation.

(111)      Data for 21 Member States: AT, BE, BG, CY, CZ, DK, EE, EL, FI, FR, HU, IE, IT, LU, LV, PL, PT, RO, SE SI, SK.

(112)      See Annex 5.

(113)      COM(2014)25 and SWD(2014)23.

(114)      SWD(2014)23, section 4.8.

(115)      SWD(2014)23, section 7.1

(116)      REFIT evaluation accompanying this initiative and impact assessment

(117)      Evaluation, section 7.6.

(118)      Commission Communication "EU Law: Better Results through Better Application", 13.12.2016, Pages 5-6.

(119)      Regulation (EU) 2017/625 of the European Parliament and of the Council of 15 March 2017 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products, amending Regulations (EC) No 999/2001, (EC) No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 and (EU) 2016/2031 of the European Parliament and of the Council, Council Regulations (EC) No 1/2005 and (EC) No 1099/2009 and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC, and repealing Regulations (EC) No 854/2004 and (EC) No 882/2004 of the European Parliament and of the Council, Council Directives 89/608/EEC, 89/662/EEC, 90/425/EEC, 91/496/EEC, 96/23/EC, 96/93/EC and 97/78/EC and Council Decision 92/438/EEC (Official Controls Regulation), OJ L 95, 7.4.2017, p. 1–142.

(120)      COM(2016)283 - Proposal for a Regulation of the European Parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws.

(121)      COM(2017)142 - Proposal for a Directive of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market.

(122)      Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017 on medical devices, amending Directive 2001/83/EC, Regulation (EC) No 178/2002 and Regulation (EC) No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC; Regulation (EU) 2017/746 of the European Parliament and of the Council of 5 April 2017 on in vitro diagnostic medical devices and repealing Directive 98/79/EC and Commission Decision 2010/227/EU; Regulation (EU) 2017/1369 of the European Parliament and of the Council of 4 July 2017 setting a framework for energy labelling and repealing Directive 2010/30/EU; COM(2016)31 - Proposal for a Regulation of the European Parliament and of the Council on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles]

(123)      Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/ EC (General data Protection Regulation).

(124)      COM(2016)157, SWD(2016)64 and 65.

(125)      Developing the EU Customs Union and its governance, COM(2016)813 final, 21.12.2016.

(126)      Point 3.3, Commission Reflection paper on harnessing globalisation, 10 May 2017, https://ec.europa.eu/commission/publications/reflection-paper-harnessing-globalisation_en  

(127)      Building on existing informal guidance on cross-border cooperation between market surveillance authorities and practical working arrangements http://ec.europa.eu/DocsRoom/documents/17108/attachments/1/translations  

(128)      See previous section 1.3.1.

(129)      Regulation (EC) No 765/2008 Article 18 (5) (6)

(130)      The possibility and in particular the definitive size of a fund or an enforcement component in a new, larger EU fund (including possible continuations of current funds e.g. COSME, Consumer programmes) is not examined as such in this impact assessment. Such an option would depend on the new multi-annual financial framework for the EU budget from 2021 onwards for which the outlines will only become available in the next year(s).

(131)      See previous section 1.3.2.

(132)      Besides resources and number of controls, which form the core of the current indicators, this would involve more systematic information collection on compliance gaps and parameters that underlie Member States profiles in terms of market structures, enforcement policies and organisation (see Annex 12).

(133)      See chapter 7.6 of the evaluation.

(134)      Member States are required to provide their market surveillance authorities with adequate powers; Article 18(3), 19 (1) of Regulation (EC) No 765/2008.

(135)      See Annex 13 section 1.2 for investigative and enforcement powers and their current availability in Member States

(136)      Even if internet content and websites can be easily moved and re-opened, stronger digital powers in the toolbox would allow market surveillance authorities to intervene when relevant and at least disrupt certain supply routes, avoiding too easy proliferation of illegal product offers compared to if they were not to have digitally fit powers.

(137)      Regulation (EC) No 764/2008 of the European Parliament and of the Council of 9 July 2008 laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32008R0764  

(138)      The Construction Product Regulation 305/2011/EU also provides for advice to businesses by the Product Contact Points.

(139)      The provision of relevant product legislation as such will be improved with the implementation of the Single Digital Gateway as part of the baseline ( http://ec.europa.eu/DocsRoom/documents/22761 ).

(140)       https://webgate.ec.europa.eu/gpsd-ba/index.do ; https://ec.europa.eu/consumers/consumers_safety/safety_products/rapex/alerts/?event=main.search  

(141)      Market surveillance provision integrated in Union harmonisation legislation (see reference provisions of Decision 768/2008/EC, e.g. R2(4) for manufactures, R4 (7) for importers, R5 (4) for distributors) and Articles 20, 22, 23 of Regulation (EC) No 765/2008 on notifications for products presenting a serious risks, implemented in the ICSMS and RAPEX applications.

(142)      For details see Annex 14 (point 2.6) and Annex 12 (point 2).

(143)      A general cooperation and information exchange requirement and communication of decisions from market surveillance authorities to customs are covered by Article 27(5) and 29 (5) of Regulation (EC) N° 765/2008.

(144)      For requests to undertake voluntary measures, Article 19 of Regulation (EC) No 765/2008 already provides for direct issuance to economic operators in other member states by market surveillance authorities.

(145)      Where a market surveillance authority finds that a non-compliance is not limited to its national territory, the safeguard clause mechanisms requires it to notify any restrictive measure to other member states and the Commission, who can react and/or submit objections within a given period set in the legislative act (normally 3 months). If no objection is raised within the deadline, the notified measure is deemed justified and other member states are required to take restrictive measures against the product concerned. When an objection is raised, the Commission must evaluate the measure, and after consultation with the member states and the economic operator, decides whether or not the notified restrictive measure is justified. In case the measure is justified, all member states are required to take restrictive measures against the product concerned.

(146)      See reference provisions R31(4) to R32, Decision (EC) No 768/2008, integrated since 2008 into around 20 EU product harmonisation legislative acts; the 2013 proposal on market surveillance generalised this safeguard mechanism for all products and sectors covered by the horizontal regulation.

(147)      See previous section 1.3.1.

(148)      Moreover the 2013 proposed included a European Market Surveillance Forum, to exchange information but with limited operational capacity, and established reference laboratories.

(149)      In the baseline the Commission supports an expert group Internal Market for Products, sub-group on Market surveillance, meeting once or twice per year; http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=2798 .

(150)      In the baseline 25 ADCOs are supported by the Commission (logistic support to meetings, via a service contract). https://ec.europa.eu/growth/single-market/goods/building-blocks/market-surveillance/organisation/administrative-cooperation-groups_en  

(151)      Details of the different size variants, core tasks of the Network and corresponding budget breakdown are given in Annex 12.

(152)      See Annex 12. Of the different governance models and possible hosts of the Network, the Commission and a decentralised agency were examined in more detail. These variants were found to provide in principle the formal, accountable and transparent structure to handle the enforcement coordination tasks as well as technical and legal capacity. The variant of hosting in an executive agency was found to be limited as regards the staffing profiles it could provide (administrative tasks and financial handling of a repetitive nature, linked to programmes in particular). Early discarded variants were: an informal network, outsourcing to an ngo/association structure (lack of authority, limited accountability with strong grant contribution dependence) as well as a new, dedicated market surveillance/product safety decentralised agency (contrary to current policy restrictions on new agencies).

(153)       https://euipo.europa.eu/ohimportal/en . Among the decentralised agencies of the Union examined in the context of this impact assessment, the EU-IPO was found to provide significant potential for synergies in terms of Single Market objectives pursued, nature and scope of tasks. EU-IPO tasks portfolio includes for instance: promotion of best-practices and common cooperation tools, stakeholder engagement, knowledge gathering and sharing (“Observatory”), enforcement information exchanges, including with customs and international partners (law enforcement databases), and training (“EU-IPO academy”). Counterfeit/IP infringements and non-compliance are often interlinked (cheap, imitation products; imports are an important source). EU-IPO moreover avails of important human and financial resources which could be a facilitating factor to integrate new tasks. See Annex 12 point 2.

(154)      See chapter 6.1.2 of the evaluation.

(155)      See also Annex 13 section 2

(156)      See previous section 1.3.3.2.

(157)      Provisions on procedures to deal with products presenting a risk at national level and union safeguard procedures, reference articles R31 to R33 Decision (EC) No 768/2008; Articles 20, 22, 23 of Regulation (EC) No 765/2008.

(158)    Article 22 of Regulation (EC) No 765/2008.

(159)      Article 19(2) of Regulation (EC) No 765/2008.

(160)      In total 21 of 22 Member States that responded to the evaluation survey, indicated they had such powers. In 14 Member States this power is available in over 14 sectors; in a further 7 Member States the power is available in a more limited number of sectors.

(161)      The approach of imposing administrative fees to recover inspection costs has been for a long time common practice for controls in the food area ( https://ec.europa.eu/food/safety/official_controls/legislation_en ). In the non-food area has been advocated by stakeholders to help authorities to effectively take action against non-compliant goods, as controls (e.g. laboratory tests) and corrective actions (e.g. recalls and destruction of products) are very costly.

(162)      Articles 189, 197 and 198 of the Union Customs Code regulate the sharing or recovery of costs related to the transport of goods to the place of examination, the handling and the taking of samples, as well as costs related to the confiscation or the destruction of goods.

(163)      See previous section 1.3.3.

(164)      By drawing up and signing the EU Declaration of Conformity the manufacturer assumes the responsibility for the conformity of the product, declaring that that the fulfilment of the applicable EU product requirements has been demonstrated. Authorised representatives and importers are required to keep copies of the declaration. A model declaration is in Annex III of Decision (EC) No 768/2008. For construction products a Declaration of Performance applies.

(165)      For details see Annex 14 (point 5.8) and Annex 12 (point 2).

(166)      This would not affect the existing obligations of market surveillance authorities to request first voluntary action by the economic operators (reference article R31 (1) Decision (EC) No 768/2008), nor the general requirements regarding proportionality of the measure imposed on the economic operator (Article 21 Regulation (EC) No 765/2008).

(167)      In addition to Directive 85/374/EEC on liability for defective products.

(168)      In the baseline, market surveillance authorities must be able to order product recalls (see Art. 20, 21 Regulation (EC) N° 765/2008). When an economic operator recalls a product this would normally entail for the consumer a replacement, refund or other compensation as appropriate. Moreover, in 2 Member States (PL, SI) in most sectors the power is available to order compensation to consumers; 12 Member States have such a power in place for a more limited number of sectors. In total such an additional power related to consumer compensation was found to be available in 14 (of 22 Member States that responded to the survey) for a majority or more limited number of sectors (For a detailed breakdown of powers and availability in Member States see Annex 13; based on the evaluation study of Regulation (EC) N° 765/2008).

(169)      The proposed market surveillance regulation (2013) included the possibility for the Commission to adopt implementing acts to take appropriate measures against certain products, group or category of products that would present a serious risk.

(170)    Article 41 of Regulation (EC) No 765/2008; provisions on sanctions and/or penalties in the EU product legislation.

(171)      Eco-design directive 2009/125/EC, Article 20, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02009L0125-20121204  

(172)      See chapter 6.1.2.2 of the evaluation.

(173)      The database could be construed as an extension of the future energy labelling product database, considering that many products in the scope of this energy labelling regulation would also be subject to EU product harmonisation legislation (e.g. the low voltage, electromagnetic compatibility, radio equipment directives); Proposal for a Regulation of the European Parliament and of the Council setting a framework for energy efficiency labelling and repealing Directive 2010/30/EU, COM(2015) 341 final - 2015/0149 (COD), 15.07.2015).

(174)      For details see Annex 13 (point 11).

(175)      The passing of cases between authorities in the IT-tool shows that 15% of “baton passing” are rejected, 23% remain pending with sometimes lengthy delays. 62% are accepted.

(176)      The pattern of follow-up to restrictive measures taken as baseline 30% never/rarely – 35% sometimes – 35% very often/always. Indicatively one could project in this option that the pattern would improve to: 15% never/rarely – 50% sometimes – 35% very often/always follow-up. This pattern relates only to whether follow-up is given, but does not address the nature or depth of follow-up, or its effect (e.g. helping in addressing a detected non-compliance fully or partially). (Estimated pattern, based on public consultation, feed-back to Commission by market surveillance experts).

(177)      In France the mandatory systems audits prior to the first placing of the market is operated nationwide with 18 FTE (covering manufacturers, importer and distributors whose turnover exceeds 2 M€ - see Annex 14). If this practice were to be generalised to the EU, important efficiency gains on resources could be achieved: Assuming more staff as a basis 54 (3*18 in the French example) would be needed to cover subsequent audits, random monitoring and follow-up, extrapolated to the EU this could be covered by 350-675 staff in total (based on average turnover/value added France/EU – number of enterprises France/EU in harmonised sectors). Compared to the total number of market surveillance inspectors for the harmonised sectors reported by Member States (4506 inspectors for 16 member states), the scope for optimisation and efficiency gains would be significant.

(178)      E.g. Handling of mutual assistance request (request for information that should be obtained from an intermediary in the supply chain), participation in joint control campaigns (e-commerce projects would require all participants to perform mystery shopping)

(179)      See overview of available powers, annex 13 The information is based on information from 22.Member States. While investigative and enforcement powers are generally available to market surveillance authorities in Member States, there are variations in terms of the coverage of sectors and some Member States reported far fewer availability of powers (notably: AT, BE, ES, IE, IT; DK and RO).

(180)      The power to sanction economic operators that do not cooperate is available in the 22 member states that reported information on powers (for 15 MS in more than 14 sectors, for 7 in fewer than 14 sectors). Requiring information or cooperation from any natural or legal person can only be done in 14 member states in over 14 sectors; in 8 member states in fewer than 14 product sectors. (Overview of available powers, Annex 13)

(181)      Market surveillance authorities find it often impossible to obtain compliance documents, especially from importers who cannot access documentation from manufacturers (e.g. intellectual property right protection) (Impact study digital compliance, VVA, 2017, Annex 14).

(182)      The average availability of these specific powers is lower, around 13 member states and only 7 for website shut downs. The power to order closure of websites is only available in 1 Member State in a majority of product sectors, in 6 member states in fewer sectors; in 14 Member States, market surveillance authorities do not yet have this specific power. It should be noted e-commerce enforcement is fairly recent for most authorities and that such a strong sanctioning power would be used as a last-resort where alternatives are not available or failed to address the infringement. With the developing e-commerce, the toolbox of market surveillance authorities should cover the full range of relevant powers, including strong ones, so that when needed, effective enforcement action can be taken regardless of the Member State thus contributing to an equivalent level of protection.

(183)    BSI, Study on Good-practices in the area of Compliance assistance and compliance schemes (2017, included in Annex 14); OECD (2014) Regulatory enforcement and inspections, http://www.oecd.org/gov/regulatory-policy/enforcement-inspections.htm .

(184)      The overview of current practices shows that of the 23 member states that reported practices, all engage in at least one type of activity to promote compliance (awareness raising, compliance assistance, formalised compliance programmes or partnerships; 8 of 23 (35%) engaged in one type of activity, 6(26%) in 2 types, 9 (39%) in all 3, with sometimes overlaps between the different practices types). (BSI study, annex 14). The inclusion of compliance promotion in the market surveillance framework would support the development of different types of compliance promotion and ensure that they become available more widely across the Member States. Formalised compliance programmes or partnerships could develop only over time however, as resources to set-up and maintain such schemes would be an important barrier (25% of identified practices in the study).

(185)      E.g. (Mandatory) systems audits in France before the first placing on the market; voluntary covenants or protocols in Netherlands (Annex 14)

(186)      E.g. Primary authority scheme, UK (Annex 14).

(187)    Market surveillance expert group, IMP-MSG, meeting 31 March 2017.

(188) '    Lack of knowledge' by businesses was flagged by 80 % of respondents (190 of 239) in the public consultation among the top 3 reasons underlying non-compliance, and 27% ranked it the top 1 reason.

(189)       This was confirmed in the review of the 'Primary Authority' scheme in the UK in 2013; the scheme offers businesses the opportunity to establish a partnership with one authority who then coordinates advice and guidance to the business across a range of regulatory matters (one-stop-shop principle) https://primaryauthorityregister.info/par/images/documents/acl-pa-evaluation.pdf  

(190)      Estimate based on the number of notifications of voluntary measures via the RAPEX system. Over the past 5 years these averaged 800, increasing from 609 (2012) to 922 (2016)

(191)      Results of the public consultation are provided in Annex 2 and on: http://ec.europa.eu/DocsRoom/documents/21181/attachments/1/translations/en/renditions/native .

(192)      See the results of informal consultation of Member States and minutes of the June 2016 public event (see Annex 2 sections 1.2.2 and 4).

(193)      See of the brief factual summary of the initiative, p. 21 ( http://ec.europa.eu/DocsRoom/documents/21181/attachments/1/translations/en/renditions/native ).

(194)      17% (33 of 190) disagreed/strongly disagreed.

(195)      Although there are more strong agreement/agreement answers, the pattern in the responses show a comparable spread over agreement and disagreement answers, relatively high 'no opinion' answers. No significant differences between authorities and business respondent categories.

(196)       http://www.orgalime.org/position/efficient-market-surveillance-online-trade-suggestions-better-handling-fulfilment-centres  

(197)       http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetailDoc&id=28611&no=1 (section 3.6)

(198)      Market surveillance expert group, IMP-MSG, meeting 31 March 2017.

(199)      Authorities’ and business’ responses concur that if the market surveillance authorities would have more knowledge about the relevant sector, they could use available resources more efficiently (81% of authorities agree/strongly agree; 86% of business respondents). Examples could be memoranda of understanding with business organisations to exchange information and common actions; agreements with certain intermediary traders (e.g. express carriers or internet intermediaries).

(200)      RAPEX Contact Points meeting of 14 October 2016 (see a summary of national RAPEX Contact Points’ positions in Annex 14 (point 6).

(201)      Stakeholders (businesses, consumer representatives, test laboratories, etc.) were consulted during two workshops held in April and November 2016 on how to "boost the use" of RAPEX.

(202)      See chapter 6.2 of the evaluation.

(203)      See section 1.3.3.1. Development of e-commerce and digital supply chains.

(204)      The number of cases depends on a number of variable factors, such as the availability of information to the authority to detect infringements, the nature and complexity of (new) cases, and the evolving handling capacity of authorities.

(205)      A rough estimate could be a reduction in the order of 2 days (0,01 FTE/year) by Member State, thanks to direct uploading of information into ICSMS by market surveillance authorities instead of requiring collection, handling and transferring of data in spreadsheet format via a national coordination point. This reduction would only be a small part of the total effort linked to planning and programming of inspections. Based on a tentative estimate in one Member State the total programming effort by authorities and national coordinating body would amount to just under 1 FTE/year, covering annual control programmes (180 days, 0,8 FTE/year), 4-yearly evaluation programmes (42 days, 0,2 FTE every 4 years) and a national plan (4-6 days, <0,05 FTE/year). For comparison, the drawing up of yearly updates of control programmes in the food area was estimated at around 42 person days (€10.430) per Member State. Only a part of this effort is related to collecting, uploading and transferring data (Annex XXII, impact assessment proposal for a regulation on official controls to ensure the application of food and feed law, SWD(2013) 167 final, May 2013).

(206)      Costs would be lower for requests for information and higher for enforcement measures. Requests are only expected for cases handled by foreign authorities that may concern economic operators based in a given countries but only in those cases where the businesses initially contacted by the requesting authority is not willing to cooperate.

(207)    See Annex 11, table 11-7, section 3.1.

(208)      Based on a tentative estimate in one Member State, the total programming effort by authorities and national coordinating body would amount to just under 1 FTE/year, covering annual control programmes (180 days, 0,8 FTE/year), 4-yearly evaluation programmes (42 days, 0,2 FTE every 4 years) and a national plan (4-6 days, <0,05 FTE/year). For comparison, the drawing up of yearly updates of control programmes in the food area was estimated at around 42 person days (€10.430) per Member State (Annex XXII, impact assessment proposal for a regulation on official controls to ensure the application of food and feed law, SWD(2013) 167 final, May 2013). The transmission of control programmes via the IT tool ICSMS would imply an administrative simplification estimated at 2 days (0,01 FTE/year) by Member State.

(209)      One-off efforts to adapt to new format and contents, around 0.2 to 0.3 FTE in the first year, i.e. 12,400 – 18,600 € (average staff costs 61.971€/year based on EUROSTAT 2006, updated 2010, for category ICSO1 legislators and senior officials; including salary, non-wage labour costs, 25% overhead costs)

(210)

     In the longer term, post 2020, the strategies could be the basis for applications for funding, while at the same time constitute an instrument for strategic planning and coordination.

(211)      Estimate aligned with the impact assessment for the Consumer Protection Cooperation. The powers in this initiative are largely aligned with the CPC proposal. Most affected are 32-35% of Member States who would have more new powers to foresee for market surveillance authorities and/or to extend significantly the coverage of powers to more product sectors: 35%*500 authorities*2000€ = 350,000 €, plus general training and familiarisation for others. The estimates of number of Member States concerned are based on a survey carried out as part of the evaluation of Regulation (EC) n° 765/2008, in which 22 Member States responded. The % used is rounded upward to 35% and applied to the full number of 500 authorities in order to include more rather than too few possible adaptation efforts. 15 (68%) of the 22 reporting MS had 10 or more of the 16 powers in over 14 sectors; 7 (32%) Member States had fewer than 10 of the 16 powers in over 14 sectors.

(212)      See availability of powers in Member States, Annex 13.

(213)      Annex 11 (2).

(214)      1 FTE on average 61,971€/year per Member State; 3 FTE would be 185,913 €/year (staff costs based on EUROSTAT 2006, updated 2010, for category ICSO1 legislators and senior officials; including salary, non-wage labour costs, 25% overhead costs)

(215)      Product Contact Point are operational in all Member States, dealing with mutual recognition requests. Reference is made to the impact assessment with respect to the initiative on mutual recognition indicating that most Product Contact Points are integrated in an already existing department dealing with internal market issues. PCPs, at the moment, are served by one person on average. The Product Contact Points would be strengthened to improve the functioning of the mutual recognition principle.

(216)      The possibility of a future fund, upscaling financial support for market surveillance, is not part of this impact assessment as such. Based on other EU support programmes (e.g. food controls), indicatively the size could range from 35 to 45 M€/year and 10-15 FTE to manage the funds, taking into account that additional, dedicated resources for coordinated cross-border are covered in option 3 (b) EU Product Compliance network. See Annex 12.

(217)      Limitations nonetheless remain to the potential for re-use of evidence from one jurisdiction in another. Each case still has to be assessed on its own, and particulars may slightly vary. Procedural law will require authorities sometimes to perform the full investigation themselves, including securing evidence, according to specific criteria (e.g. investigations under criminal law).    

(218)      See option 2, measure (a) mutual assistance: The pattern of follow-up to restrictive measures taken as baseline 30% never/rarely – 35% sometimes – 35% very often/always. The mutual assistance mechanism was indicatively project to improve this pattern to: 15% never/rarely – 50% sometimes – 35% very often/always follow-up. In option 3 (a) the additional measures would allow to further improve to 10% never/rarely – 40% sometimes – 50% very often/always follow-up.

(219)      The total efficiency gains or savings are difficult to project, given the gaps and variability of information on cost as well as on restrictive measures that could be concerned. Considering the varying use of ICSMS an average of 2000 non-compliant cases involving a medium, high or serious risk are nonetheless already recorded per year (see table 11 SWD evaluation, average 2014/2015/2016) and few safeguard notifications (e.g. 350 on average/year for the low voltage directive, from a limited number of countries). Even assuming a modest cost of a few hundred or few thousand € for testing and/or proceeding that could be saved per case, the potential for cost saving and efficiency gains would be very high.

(220)      For details of the resources for each variant and the related outputs by key tasks of the Network: see Annex 12.

(221)      From a baseline estimate of 5-7 campaigns or projects maximum to some 15/year (~ 1 campaign every 2 years by product sector, for a stable number of around 25 sectoral administrative coordination (ADCO) groups).

(222)      More ADCO groups could first of all be supported by the Network (at least 30, up from current 25), and at least one to two campaigns envisaged per year, and in addition cross-sector coordinated actions (e.g. novel, complex products) and specific actions such as controls targeting online sales, specific imports flows, etc.

(223)      From average 7000 new records/year in baseline. The current use of ICSMS varies by sectors and Member State (see Annex 14.1).

(224)      Article 151 of Regulation (EU) 2017/1001 of the European Parliament and the Council, codified version of the EU trademark regulation ( http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32017R1001 ).

(225)      See Annex 13, chapter 2.

(226)       http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2016.119.01.0001.01.ENG&toc=OJ:L:2016:119:TOC  

(227)      Cosmetics, medical devices, chemicals (REACH).

(228)    Judith van Erp, Naming without shaming, Regulation and Governance (2011) 5, 287-308

(229)      See http://www.howtoregulate.org/wp-content/uploads/2015/04/Handbook-INT-V1-3.pdf (section 7.11.2)

(230)      Gunningham N. et al. (2004) Social License and Environmental protection: why businesses go beyond compliance. Law and Social Inquiry 29, 307-341.

(231)

     Although these are not fines, in practice they would be perceived as such by business. Therefore, as regards to their impact it is noted that 65% of respondents to the public consultation consider that deterrence of market surveillance would increase by imposing higher fines for serious non-compliance.

(232)

     74% respondents to the public consultation believe deterrence could be increased by giving more publicity to restrictive measures adopted against non-compliance would increase (reputation effect). Similar measures are used for instance by UK authorities to strengthen the enforcement of minimum wages rules: http://www.bbc.com/news/uk-27751722 .

(233)      The benefits of such mandatory publication of basic compliance information were rated high compared to voluntary options. Positive impacts were noted regarding access to information, transparency, and ultimately positive impacts on compliance levels, product safety and environment (table 10, Impact digital compliance options, VVA, 2017; annex 14)

(234)      52% of businesses consulted in the study on digital compliance already add automatic identification tags and information to at least one item in their product portfolio. Automatic identification technologies were found to be often used to optimise logistics and supply chain management, however with varying degrees by sector (Impact digital compliance options, VVA, 2017; annex B 14).

(235)      Results of the public consultation are provided in Annex 2 and on: http://ec.europa.eu/DocsRoom/documents/21181/attachments/1/translations/en/renditions/native .

(236)      Moreover, the tasks of the Network are based on the measures that were rated most favourably in the public consultation, scoring ~80% of agree/strongly agree answers (How could resources for market surveillance be increased; be used more efficiently? Questions 11 and 13, see details of responses Annex 12 point 3.2). The additional consultation in the Expert group confirmed the selected key tasks.

(237)      The acceptability of stronger coordination and/or coordinated decisions at EU level was tested in the public consultation: respondents were more favourable to enforcement decisions taken in close coordination via a product compliance forum (63% strongly agree/agree) than enforcement decisions taken by the Commission (42%stronlgy agree/agree). The basic remit proposed for the Network (option 3(b) would be limited to coordination of enforcement, without a mandate to take enforcement decisions (Public consultation question 8 section cross-border market surveillance in the EU). The expert group consultation confirmed this basic remit as appropriate. (Option 4 (b) would add to the basic remit, coordinated enforcement decisions in case of widespread infringements.)

(238)      Broad support was noted on the concept and tasks of the Network. Further information was asked on issues such as size, available funding and how the Network would function in practice, including how existing IT systems could be re-used without adding new ones. Apart from one expert expressing concern about the risk of the Network loosing operational focus if it were hosted in the Commission, the hosting variants either by the Commission or in an existing Agency did not give rise to comments from the experts (IMP-MSG meeting, 31 March 2017).

(239)      See chapter 6.2 of the evaluation.

(240)      Potential efficiency gains or costs saving could be considerable: considering the varying use of ICSMS, already some 2000 cases per year are reported of non-compliant products involving a medium, high or serious risk. A rough estimate of inspection costs indicate costs range from 100€ to 5000€. If 10% of the recorded cases and test report evidence could be re-used by other member states, this would imply avoided costs 20 000€ to 1 M€ per year.

(241)      See annex 13 section 2. The potential for cost reduction would be considerable for authorities, given that in the baseline around 60% of authorities indicate to experience difficulties in contacting foreign businesses and/or not to obtain responses to requests (public consultation). In relation to imports, the volumes of small consignments and parcels total 185 million and the inflow of such shipments is increasing rapidly. Controls by customs and/or market surveillance authorities would be done on the basis of risks management, with parameters and criteria defined in each Member State and point of entry. Therefore it is difficult to establish, first of all, a reliable estimate of the number of future controls, the nature/depth of such controls and then an associated potential for costs reduction that would specifically be linked to infringement found as a results of the controls and that could be handled faster/more easily.

(242)      For more details, see Annex 13, chapter 2.

(243)      Small companies would save costs, micro enterprises incur higher costs. See Table 14 and 15, study on the impacts of digital compliance options, VVA, 2017, Annex B 14.

(244)      A rough estimate of inspection costs indicate costs range from 100€ to 5000€. While the number of re-use cases in the future is difficult to project, the potential for efficiency gains or costs saving could be considerable: considering the varying use of ICSMS already some 2000 cases per year are reported of non-compliant products involving a medium, high or serious risk. If 10% of the recorded cases and test report evidence could be re-used by other member states, this would imply avoided costs 20 000€ to 1 M€ per year.

(245)      Joint actions on heat and electricity measuring instruments; LED floodlights; vehicle service lifts, chain saws resulting from the 2013and 2014 call for proposals, DGGGROW.

(246)      For instance, in the case of the “Market Surveillance Joint Action for Measuring Instruments-MarketSurv MID” the tests of the 40 measuring instruments checked, which were sub-contracted to external laboratories, cost about € 190 000 (€ 4 750/product).

(247)      84 000€ in total. By member state 3000€/year = 28*0,05FTE*average salary 61 971€ (based on EUROSTAT 2006/2010, category ICS01 legislators and senior officials).

(248)      E.g. Joint procurement of tests by the Network would allow participating authorities to benefit from procurement/framework contracts with less administrative burden than if they had to do the procurement process fully themselves and each on their own. Joint procurement could also lead to better prices and conditions compared to purchases by individual authorities with lower volumes. It is difficult to project what reductions could be obtained, for which sectors/tests and how many tests could be performed at lower costs. However the potential for cost savings could be important reaching several million euros for all Member States (a 7,5 M€ saving would be realised if a 5% cost reduction were obtained over the average costs of 7 000 € for tests and 770 laboratory tests/year by Member State (average calculated costs and number of tests see table 14, SWD evaluation). The % cost reduction is a hypothesis, and merely serves to illustrate the potential benefits applied to market surveillance testing costs. The 2016 Commission study on the Feasibility of cross-border joint public procurement confirms that such joint procurement actions would require extra coordination effort, however realise significant benefits in terms of economies of scale and better prices (procurement savings), saving on process costs, learning effects and improved use/attraction of external co-funding ( http://ec.europa.eu/DocsRoom/documents/22102/ ).

(249)      The collaborative market surveillance by the Nordic countries to implement the eco-design and energy labelling directive led, is assessed to achieved a €28 million saving for the MSAs for a cost of €2,1 million in the joint project i.e. an ROI of 13 http://www.energy-efficiency-watch.org/fileadmin/eew_documents/EEW3/Case_Studies_EEW3/Case_Study_Nordic_Market_Surveillance_Final.pdf

(250)      Improved cooperation was assessed to potentially achieve a 50% efficiency in online investigation campaigns ('sweeps') of the Consumer Protection Cooperation network ; Annex VI impact assessment http://ec.europa.eu/consumers/consumer_rights/unfair-trade/docs/cpc-revision-proposal-impact-assessment_en.pdf

(251)      The possibility to publish restrictive measures and recover costs are already available in around 21 Member States as a basis (for 14 in majority of sectors, 7 in more limited number of sectors), the power to order consumer remedies is available in 14 Member States, in a limited number of sectors.

(252)      See Annex 12 for breakdown of costs by tasks and assumption underlying the costs estimates.

(253)      Staff costs would be corrected for the location of the agency in Spain (correction coefficient 88,1, per staff AD/AST 121 578€/year, CA 61 670€/year) and thus be slightly lower than the standard costings applicable for Brussel/Luxembourg (coefficient 100, AD/AST 138 000€/year, CA 70 000€/year).

(254)      Subject to integration of market surveillance among the tasks set out in Article 151 of in the EU-IPO founding Regulation (EU) 2017/1001, its resources can be used to cover new tasks associated with the Product Compliance Network. The EU-IPO counted at the end of 2016 with considerable resources which would facilitate the integration for the foreseeable future of additional tasks within its own existing resources structure (854 statutory staff, 62 national experts; yearly budget volume around 400M€ (average 2014/2015/2016), and an accumulated surplus of 182 M€) https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/contentPdfs/about_euipo/annual_report/ar_2016_annex_01_en.pdf

(255)      Overall less than €70.000. Estimated adaptation costs 0,15 FTE * €138,000; IT systems migration 1*0,15FTE*€138,000 + 2*0,15FTE*€70,000. In addition some travel and meeting costs in case the hosting agency is located outside Brussels. The changes to formal regulations or decisions would be part of a possible legal proposal resulting from this impact assessment and not included in these operational start-up costs.

(256)      As part of the Commission's proposal to strengthen enforcement of type approvals in the single sector of cars, the Commission's supported Technical Committee on Motor Vehicles was estimated at around 10 FTE, including 20 coordination meeting with member states/enforcement bodies, and requiring in addition 7.5 M€/year for technical assistance and testing primarily through the Joint Research Centre (COM(2016)31). In the baseline for this impact assessment, the Administrative Cooperation Groups (ADCOs) already cover around 20 sectors and over 50 meetings/year, and around 5 horizontal expert group meeting/year are supported.

(257)      Compared to partial data on total staff the projected staff for coordination would represent 0,4 to 1,2%. Detailed human resources data were reported by 19 Member States for the period 2010-2013 and amounted to 7,741 staff available for market surveillance in total. (Annex 13 point 3).

(258)      In the area of consumer protection based on enforcement experiences in the UK at local level, costs for the settlement of non-complex cases was reported to be 30% of costs of cases involving issuance of (simple) court orders (Consumer protection cooperation, SWD(2016)164)).

(259)      19 member states in 3 sectors reported in total an average of 2,300 measures per year (overview of market surveillance activities, based on national reports 2010-2013; Evaluation Regulation 765/2008).

(260)      See options 2(a) and 3(a): the pattern of follow-up to restrictive measures taken as baseline 30% never/rarely – 35% sometimes – 35% very often/always. Indicatively one could project in this option that the pattern to further improve to: ~0% never/rarely – 20% sometimes – 80% very often/always follow-up.

(261)      In the baseline the number of coordinated control campaigns is low (5-7 per year, by ADCO groups and/or EU-co-funded projects). There would be limited experience with exchanges as a basis to step up to much more strongly coordinated single procedures; the uptake would therefore be limited as a start and only gradually increase with more intensified intelligence sharing, coordination and cooperation (option 2). For a similar measure in the area of Consumer Protection Cooperation (COM(2016)164) it was estimated that 4 widespread cases with an EU dimension could be dealt with per year by the Commission in coordination with member states.

(262)      This literature focuses on the influence of three sanction characteristics, being certainty, severity and celerity. Certainty refers to the likelihood of being sanctioned. Severity refers to the stringency of the sanction. Celerity refers to the swiftness with which the sanction is imposed after committing the crime. Whereas there is substantial evidence that increases in the certainty of sanctioning substantially deter criminal behaviour, it is less clear that increases in the severity of the sanction yield general deterrent effects. It is the possibility that the sanction will actually be incurred if the crime is committed that will deter crime; R.  Apel & D. Nagin, ‘General Deterrence’, in M. Tonry (ed), The Oxford Handbook of Crime and Criminal Justice (Oxford University Press, 2011), 179–206, at 180.

(263)      Ibidem.

(264)      In other policy areas it has proven a major stumbling block making the approval of proposed legislation politically unfeasible (see Proposal for a Directive of the European Parliament and Council on the Union legal framework for customs infringements and sanctions (COM(2013)884).

(265)      Annex 14, study on Impacts of digital compliance, VVA, 2017.

(266)      The benefits of mandatory publication of full compliance documentation in a central database were rated higher comparatively to voluntary options. Positive impacts were noted regarding access to information, transparency, and ultimately positive impacts on compliance levels, product safety and environment. See Annex 14, Study Impact of digital compliance, VVA, 2017.

(267)      Results of the public consultation are provided in Annex 2 and on: http://ec.europa.eu/DocsRoom/documents/21181/attachments/1/translations/en/renditions/native .

(268)      Annex 14, Study impacts of digital compliance, VVA, 2017.

(269)      It is assumed that manual feeding and updating of documentation in a central database would be onerous for larger companies with many compliance documents, so that they are likely to seek forms of automatic transferring to the central database involving one-off set up costs (Annex 14, Study impacts of digital compliance, VVA, 2017).

(270)      The experiences with the implementation of the safeguard clause mechanism for non-compliances with a cross-border aspect show however that reactions or objection are very limited.

(271)      See Annex 11. Average inspection cost 703€ * 28 = 19 684 €. Further savings could be made on testing costs (average test cost 6837 €).

(272)      In a study on the legal framework for the protection of EU financial interests by criminal law (RS 2011/07) for a limited number of infringements legislative adaption costs alone were estimated to total € 3,583,572 for all Member States.

(273)      ICSMS already includes notification and reactions functionalities. In the current experience with objections in the safeguard procedures requiring action by the Commission, are limited.

(274)      Average testing costs calculated on the basis of data available for the 2010-2013 period were roughly 7 000€ per inspection. See annex 11.

(275)      Estimate based on costs energy labelling product database: 1.5 M€ * 3 taking into account that the sectors and type of documents to be covered are more extensive, and non-standardised unlike energy labelling and interface/integration to be made with the labelling database. Similarly maintenance costs 150.000/€ * 3.

(276)      Annex 2, public consultation results. Question 13, rates of agreement by various stakeholder groups: More enforcement coordination between member states: 80% authorities, 87% businesses, 84% consumers; More intelligence sharing between Member States: 84% authorities, 88% businesses, 88% consumers.

(277)      In the public consultation, Section 3, in Question 8 76% of respondents agree that more exchanges and discussion would prevent divergent conclusions among EU authorities; Question 5, 82% of respondents agreed to stronger procedures for mutual assistance, 86% agree re-use of evidence and enforcement decisions would be more efficient as inspections could focus better on other/specific issues, 81% would expect time and costs savings.

EUROPEAN COMMISSION

Brussels, 19.12.2017

SWD(2017) 466 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

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

laying down rules and procedures for compliance with and enforcement of Union harmonisation legislation on products and amending Regulations (EU) No 305/2011, (EU) No 528/2012, (EU) 2016/424, (EU) 2016/425, (EU) 2016/426 and (EU) 2017/1369 of the European Parliament and of the Council, and Directives 2004/42/EC, 2009/48/EC, 2010/35/EU, 2013/29/EU, 2013/53/EU, 2014/28/EU, 2014/29/EU, 2014/30/EU, 2014/31/EU, 2014/32/EU, 2014/33/EU, 2014/34/EU, 2014/35/EU, 2014/53/EU, 2014/68/EU and 2014/90/EU of the European Parliament and of the Council

{COM(2017) 795 final}
{SWD(2017) 467 final}
{SWD(2017) 468 final}
{SWD(2017) 469 final}
{SWD(2017) 470 final}

Contents

Annex 1: Procedural Information

1.Identification

2.Organisation And Timing

3.Consultation Of The Regulatory Scrutiny Board

4.Evidence Used For The Impact Assessment

5.Sources Used For The Impact Assessment

5.1Other reports, Commission documents and impact assessments

5.2References

6.External Expertise Used For The Impact Assessment

Annex 2: Stakeholder Consultation

1.Objectives Of The Consultation

1.1Consultation methods and tools

2.Results Of The Consultation Activities

2.1Meetings of the Expert Group on the Internal Market for Products – Market Surveillance Group

2.2Meetings of the Customs Expert Group

2.3Stakeholder conference of 17 June 2016

2.4Public Consultation

2.4.1Product compliance in the Single Market and deterrence of existing enforcement mechanisms

2.4.2Compliance assistance in Member States and at EU level

2.4.3Business' demonstration of product compliance

2.4.4Cross-border market surveillance within the EU

2.4.5Market surveillance of products imported from non-EU countries

2.5Targeted Consultation conducted by the Contractor

2.6Informal consultation of SMEs at the Small Business Act follow-up meeting with stakeholders in December 2016

3.Feedback To Stakeholders115

4.Feedback From The Expert Group On The Internal Market For Products – Market Surveillance And Conformity Assessment Policy (IMP-MSG) – 1 February 2016

4.1Difficulties and challenges for market surveillance for non-food products in the Single Market

4.1.1Contributions sent to the Commission in accordance with Article 18(6) of Regulation (EC) No 765/2008

4.1.2Future new actions to improve market surveillance – initial suggestions by Member States

4.2Questions to the Members of the IMP-MSG Group and overview of replies

4.2.1Information to economic operators

4.2.2Simplification of product legislation; alignment between legal requirements and verification procedures by MSAs

4.2.3Coordination of market surveillance at EU level

4.2.4Harmonisation of market surveillance practice across Member States

4.2.5Better control of products imported from third countries

4.2.6Better control of Internet commerce

4.2.7More and/or better use of resources; tools to support market surveillance authorities

4.2.8Stronger measures against economic operators; Penalties

4.2.9Digital compliance

5.Detailed Statistics From The Public Consultation

Annex 3: Who Is Affected By The Initiative And How

1.Sme Test

2.Stakeholders Affected By The Preferred Policy Option

Annex 4: Methods And Analytical Models Used In Preparing The Impact Assessment

Annex 5: General Market Statistics

1.Market Analysis

2.Detailed Statistics (Manufacturing)

2.1Analysis at sectorial level

2.2Analysis at product level

3.Detailed Statistics (Retail)

Annex 6: General Overview Of The EU Market Surveillance Framework For On Non-Food Products

1.Why Do We Need Market Surveillance?

2.Controls By Market Surveillance Authorities

3.Control Of Products From Third Countries By Customs

4.Member States Responsibilities

4.1National infrastructures

4.2National Market Surveillance Programmes (NMSP) and reviews of activities

4.3Public information

5.Market Surveillance Procedures

6.Corrective Measures – Bans – Withdrawals – Recalls

7.Sanctions

8.Cooperation Between The Member States And The European Commission

8.1Safeguard mechanisms

8.2The application of safeguard mechanisms step by step

9.Mutual Assistance, Administrative Cooperation And Exchange Of Information Among Member States

10.Rapid Alert System For Non-Food Products Presenting
A Risk

11.Icsms

11.1Role

11.2Structure

12.Summary Table of Provisions of Regulation (EC) No 765/2008 related to market surveillance by Member States

Annex 7: Union Harmonisation Legislation On Non-Food Products In The EU (2016) And Compliance Costs

1.Union Harmonisation Legislation

2.Evidende Of Non-Compliance At Eu Level

2.1Data from the Information Communistation System for Market Surveillance (ICSMS)

2.2Reviews and assessments of the functioning of market surveillance activities

2.3Joint market surveillance authorities in different sectors

3.Costs Of Compliance

3.1Terminology

3.2Introduction

3.3Preparatory actions and familiarisation with the legislation

3.4Substantive compliance with Union harmonisation legislation

3.5Conformity assessment procedures

3.6Estimates of costs at sectoral level

3.7Compliance costs by firm size

3.8Costs for public authorities of monitoring product safety and regulatory
enforcement

3.9Conclusions on the costs of compliance with Union harmonisation legislation for industrial products

3.10Case studies

3.10.1 Case Study 1 – Electric motors

3.10.2 Case study 2 – Laptops

3.10.3 Case study 3 – Domestic Refrigerators and Freezers

3.10.4 Case study 4 - Lifts

3.10.5 Case study 5 – Gardening equipment

3.10.6 Case study 6 – Fuel Dispensers (Measuring Instruments)

3.10.7 Case study 7 – Air Conditioners

3.10.8 Case study 8 – Integrated Circuits

Annex 8: Feedback On Market Surveillance In The EU [SWD(2014)23]

1.Challenges Facing Market Surveillance Authorities

2.Co-Operation And Information Sharing Between Market Surveillance Authorities

3.Risk-Based And Systems-Based Authorities

Annex 9: Review And Assessment Of Market Surveillance On Non-Food Products In The EU

1.Introduction

2.Overview And Assessment

2.1Belgium

2.2Bulgaria

2.3Czech Republic

2.4Denmark

2.5Germany

2.6Estonia

2.7Ireland

2.8Greece

2.9Spain

2.10France

2.11Croatia

2.12Italy

2.13Cyprus

2.14Latvia

2.15Lithuania

2.16Luxembourg

2.17Hungary

2.18Malta

2.19Netherlands

2.20Austria

2.21Poland

2.22Portugal

2.23Romania

2.24Slovenia

2.25Slovakia

2.26Finland

2.27Sweden

2.28United Kingdom

3.Main Findings

3.1Main findings on sector coverage

3.2Main findings on the overall resources available to market surveillance

3.3Main findings on the assessment of market surveillance carried out by Member States – discussion of evaluation criteria

3.4Main findings on challenges faced by market surveillance authorities

3.5Main findings on possible issues with current practice by market surveillance authorities

4.Case Study Of A Specific Sector: Toys

4.1On the number of product-related accidents, user and industry complaints

4.2On the number of inspections

4.3On the nature of inspections

4.4On the share of inspections prompted by customs

4.5On the outcomes of inspections: Finding of non-compliance

4.6On the outcomes of inspections: Measures and penalties

4.7On cross-border cooperation

4.8On budget and staff

4.9On the assessment provided by Member States

5.Average EU Statistics Per Sector Derived From The
2010-2013 Review And Assessment Reports

6.Template For The 2010-2013 Review And Assessments

7.Sectors Covered By Member States Reports

8.Overview Of Information Provided For The Toys Sector

Annex 10: Organisation Of Market Surveillance Outside The EU

1.Australia

2.Canada

3.Japan

4.South Korea

5.New Zealand

6.United States

1.1.1.

Glossary