Companies Must Prepare to Embrace the New Rules
On April 25th, the Council of the European Union (EU) adopted the long-awaited EU General Product Safety Regulation (GPSR). The adoption of the GPSR was the final step of the revision of the outdated EU General Product Safety Directive (Directive 2001/95/EC, or GPSD). The GPSR will enter into application on 13 December, 2024.
The ink has yet to dry, but one thing is certain: selling consumer products in the EU will never be the same. That applies both to manufacturers based in and outside the EU. In this article, I summarize the main highlights of the GPSR.
A Regulation and Not a Directive
First of all, the GPSR is a regulation and not a directive. A regulation has a direct effect in all EU Member States without the intervention of national legislators. A directive needs to be transposed into national law and often allows Member States to include deviating provisions, which obviously jeopardizes the single market principle. That is no longer possible with a regulation. The provisions of the GPSR therefore apply in full in all EU Member States.
Safety Net
Like the GPSD, the GPSR is a legal safety net, but it contains more extensive and more far-reaching provisions than the GPSD. Some of the provisions do not apply to products covered by Union harmonization (or sectoral) legislation since they are already covered in such legislation. Other provisions do apply in order to complement Union harmonization legislation, for example, when certain types of risks are not covered by that legislation. This sometimes makes it a difficult puzzle to determine which provisions of the GPSR do or do not apply to a specific product. It is important to note that the provisions in some areas (for example, recalls and remedies) apply to all products within the scope of the GPSR.
The Scope of the GPSR
The GPSR applies to consumer products but excludes the following products:
- Medicinal products for human or veterinary use;
- Food;
- Feed;
- Living plants and animals, genetically modified organisms, and genetically modified microorganisms in contained use, as well as products of plants and animals relating directly to their future reproduction;
- Animal by-products and derived products;
- Plant protection products;
- Equipment on which consumers ride or travel where that equipment is directly operated by a service provider within the context of a transport service provided to consumers and is not operated by the consumers themselves;
- Aircraft referred to in Article 2(3), point (d) of Regulation (EU) 2018/1139; and
- Antiques.
It is worth noting that the GPSR now also covers software embedded into a product as well as stand-alone software. The GPSR also addresses the safety of products linked to new technologies and the new risks to consumer health, safety, and personal security posed by these technologies.
The regulation is applicable to new, used, repaired, or reconditioned products but does not extend to products marked for repair or reconditioning before use. Furthermore, the GPSR operates without prejudice to the rules established by Union law on consumer protection.
Introduction of “Health” Considerations
Remarkably, the GPSR refers to the WHO definition of “health:” “The World Health Organization defines ‘health’ as a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” The term “product safety” thus takes on a much broader meaning and a whole new dimension.
We should not underestimate the profound implications that this legislative shift can bring to the legal landscape. Manufacturers should adopt a broader and more comprehensive perspective when assessing potential health risks associated with the products they bring to the market.
Let’s use mobile phones as an illustrative example. It has become increasingly evident that providers of social media applications employ algorithms intentionally designed to foster addictive behavior. Additionally, a growing body of scientific research underscores the potential adverse effects of mobile phones on the mental well-being of children.
While an outright ban on mobile phones may appear implausible when compared to the regulation of, for example, alcohol or cigarettes, there is a growing recognition of the need for measures to significantly reduce their usage. Within the EU, we are already witnessing the emergence of initial initiatives aimed at addressing this issue.
Furthermore, the proposed EU Product Liability Directive notably introduces a clear definition of “product” that explicitly encompasses ”software.” Additionally, it specifies that the term ”damage” should be understood as ”material losses resulting from death or personal injury, including medically recognized harm to psychological health.” This reflects the EU’s efforts to adapt product liability regulations to the digital age and acknowledge that software, as a product, can have wide-ranging implications, including not only physical harm but also harm to mental health.
The possibility of class-action lawsuits against mobile phone manufacturers and social media giants like Facebook is not beyond consideration.
Risk Assessment (Pre-Market)
Compared to the GPSD, the GPSR gives much more attention to risk assessment. Unless already covered by Union harmonization legislation, the GPSR requires manufacturers to conduct an internal risk analysis and draw up technical documentation. In other words, in most cases, a manufacturer will have to conduct a risk analysis and prepare technical documentation before a product is put on the market.
In line with the previous section, it is remarkable that “mental health” must also be included in that risk assessment. The GPSR for example, stipulates that a risk assessment:
“[…] should take into account the health risk posed by digital connected products, including on mental health, especially on vulnerable consumers, in particular children. Therefore, when assessing the safety of digital connected products likely to have an impact on children, manufacturers should ensure that the products they make available on the market meet the highest standards of safety, security and privacy by design in the best interests of children.”
This may influence the way we assess the risks of, for example, gaming and social media. And what to think of the metaverse?
QR Code Not Accepted as the Only Means of Providing Product Safety Information
The QR code has been commonly accepted as a means to provide consumers with product safety information and instructions. However, despite heavy lobbying, the GPSR does not accept E-labelling as a replacement for old-fashioned labeling and thick multilingual manuals. Pursuant to the GPSR:
“…manufacturers shall ensure that their product is accompanied by clear instructions and safety information in a language which can be easily understood by consumers, as determined by the Member State in which the product is made available on the market. That requirement shall not apply where the product can be used safely and as intended by the manufacturer without such instructions and safety information.”
However, this provision does not apply to products covered by Union harmonization (or sectoral) legislation. For example, pursuant to the upcoming EU Machinery Regulation, which will replace the current Machinery Directive, instructions may be provided digitally.
Online Platforms Are The “New Market Surveillance Authorities”
An entirely new section has been included in the GPSR, detailing obligations for “providers of online platforms.” This seems to be a real game changer for both providers of online platforms and all economic operators who sell products through online platforms. Although providers of online platforms are not liable for the compliance and safety of the products themselves sold through their platform, they must ensure – through a battery of due diligence obligations – that traders using their platform only sell products that comply with applicable laws and regulations.
These provisions make providers of online platforms de facto the new “gatekeepers” when it comes to product compliance and safety. Since most traders sell products through online platforms, this could have a tremendous (and hopefully positive) impact on the level of product compliance and safety. If traders want to sell their products via Amazon or the like, they should be in control of their product compliance and safety processes. In case of repeated non-compliance, pursuant to the GPSR, providers of online platforms will have to suspend their services to that trader until further notice.
Traders Outside the EU Selling Directly to the EU Should Establish in the EU
Pursuant to the GPSR, economic operators established outside the EU can no longer sell directly to consumers in the EU through online channels without having a representative established in the EU. The representative established in the EU is the person or entity to be contacted if products do not comply with EU legislation. The GPSR states:
“Direct selling by economic operators established outside the Union through online channels hinders the work of market surveillance authorities when tackling dangerous products in the Union, as in many instances economic operators may neither be established nor have a legal representative in the Union. It is therefore necessary to ensure that market surveillance authorities have adequate powers and means to tackle in an effective manner the sale of dangerous products online.”
Economic operators established outside the EU must:
“…ensure that there is a responsible economic operator established in the Union, which is entrusted with tasks regarding such products, providing market surveillance authorities with an interlocutor and, where appropriate with regard to the possible risks related to a product, performing specific tasks in a timely manner to ensure that the products are safe. Those specific tasks should include regular checks with regard to compliance with the technical documentation, product and manufacturer information, instruction and safety information.”
Companies located in countries outside the EU (e.g., the United States) that wish to sell directly to consumers and other parties in the EU will have to prepare to comply with this new requirement.
Accident Reporting Duty
The GPSR introduces an obligation for manufacturers to report “without undue delay” accidents caused by products they have placed on the market. Accidents are defined as occurrences that result in an individual’s death or serious adverse effects on their health and safety. The report must be made to the competent Market Surveillance Authority of the Member State where the accident occurred. Importers and distributors also play an important role since they must report accidents to the manufacturer.
Do You Have a Recall Plan?
The GPSR prescribes that economic operators shall ensure that they have internal processes for product safety in place, allowing them to comply with the relevant requirements of the GPSR. This typically includes a Corrective and Preventive Action (CAPA) plan. Again, a reservation must be made regarding products subject to specific Union harmonization legislation.
In any case, it is highly recommended to properly safeguard internal processes for product safety within an organization. For example, companies may ask themselves the following:
- Do we have an adequate risk analysis procedure in place?
- Do we have a CAPA procedure in place?
- Do we have proper design validation procedures in place, considering the intended users and use?
- Do we have a proper complaint system in place?
- Does the executive management team take ownership of product compliance and safety within your company?
- Do we have proper procurement procedures and supplier agreements in place?
Companies seeking to enhance their product safety and recall procedures can consider using two ISO standards that are not widely known: ISO 10377, “Consumer product safety – Guidelines for suppliers,” and ISO 10393, “Consumer product recall – Guidelines for suppliers.” Both large and small businesses can use these standards to evaluate and enhance their safety procedures throughout the product development, production, and distribution phases. These standards emphasize that defects in design and production can be significantly reduced through preventative measures.
Recalling a Product? At Least Two Remedies
In the event of a product recall, the GPSR stipulates that consumers should be given a choice of at least two of the following remedies: repair, replacement, or a refund. Consumers may only be offered one remedy if the other remedies are impossible or disproportionate. This obviously leads to a discussion about what is meant by “disproportionate.”
I often make a comparison with the car industry, where repair seems the only proportionate remedy. We can all understand that, with some exceptions, a replacement or refund for a car that can be repaired would be disproportionate. Another example of a recall remedy that appears disproportionate is when a regulatory body responsible for market surveillance demands that a manufacturer of premium e-bikes provide consumers with a refund instead of a repair.
Moreover, from a sustainability point of view, repair is probably the better option. With the new EU proposal on the ”right to repair” for consumers, it is remarkable that a minimum of two remedies must be offered for recalls, while repair is clearly the most proportionate and sustainable remedy.
A Snag That Can Make the Burden of a Recall Even Bigger Than It Already Is
EU legislation normally excels with vague texts and open norms, which need further clarification by means of guidelines or that are expected to be further fleshed out by judges in court. It is, therefore, remarkable that some provisions of the GPSR contain very detailed provisions.
On the one hand, that is commendable; on the other hand, it can be very tricky. Here’s an example. In Chapter VIII, the GPSR prescribes that, in the event of a recall, the consumer must be instructed to “immediately stop using the affected product.” In addition, the GPSR stipulates that, in the event of a recall, the economic operator must collect the unsafe product from the consumer “if it is not portable.”
If we take this literally and apply it to dangerous cars, for example, consumers should stop using that car immediately, and the car would be required to be collected from the consumer by the manufacturer (or dealer). The question is whether this is really intended. It would undoubtedly lead to a logistical nightmare and a huge financial burden. Stakeholders, such as trade associations, seem to have overlooked this in the drafting phase of the GPSR.
GPSR vs. Sectoral Legislation
I contacted the EU Commission to highlight what appears to be a snag in the GPSR. Using cars as an example, their first reaction was that Chapter VIII of the GPSR does not apply to cars since there is already harmonized legislation in place providing certain provisions, including on recalls (EU Regulation 2018/858). However, the question is whether that is a correct assessment.
The EU GPSR is a so-called horizontal regulation that sets out general safety requirements for all consumer products (except if explicitly excluded from its scope) sold in the EU, including motor vehicles. Sectoral car legislation, such as EU Regulation 2018/858 on the approval and market surveillance of motor vehicles and their trailers, provides more specific safety requirements for motor vehicles and their components. However, it does not replace or derogate from the requirements of the GPSR. The sectoral legislation sets out additional requirements for the safety and performance of motor vehicles and their components but does not relieve manufacturers of their obligations under the GPSR. Therefore, any additional obligations under the GPSR would still apply to the car industry alongside the requirements of the sectorial car legislation.
Since the GPSR stipulates more detailed obligations with regard to remedies and recalls, such obligations would apply to all consumer products sold in the European Union that fall within the scope of the GPSR, including motor vehicles. The sectoral car legislation does not exempt motor vehicles from the requirements of the GPSR. Therefore, any additional obligations under the GPSR regarding recalls would be applicable to the car industry, as well as other industries. There are no provisions in Regulation 2018/858 specifically dealing with recall notices (e.g., “stop riding”) and remedies (e.g., collecting non-portable products). Hence, we may argue that Chapter VIII is also applicable to cars and other products that are covered by sectoral legislation.
If the Commission intended to exempt products covered by sectoral legislation from the application of Chapter VIII of the GPSR, then Chapter VIII should have been listed in Article 2(1)(b), which outlines the chapters exempted from the scope of the GPSR.
At the time of writing this article, my discussion with the EU Commission was still ongoing. Based on their latest reaction, it seems that they understand my concern. The EU Commission is still in the process of internal discussions regarding this matter. It is anticipated that the EU Commission will release guidelines aimed at assisting industries and other stakeholders in comprehending and applying the GPSR. These guidelines might offer some flexibility and proportionality with regard to the concerns addressed.
However, it is important to note that these guidelines do not carry the same legal weight as the GPSR itself, which is an official law. Consumers or their representative associations have the right to directly reference the explicit text of the GPSR when seeking to address related issues.
It Will Be Easier for Consumers to Submit Complaints to Authorities
The “Union Rapid Information System,” previously known as RAPEX, will be modernized to enable more efficient corrective measures to be taken across the EU. One of the aims is to make it easier to inform the public and enable consumers to submit complaints. Manufacturers and their reputation for product quality and safety will therefore have increased exposure.
Penalties
As a final comment, it is important to realize that the GPSR introduces penalties for those who violate the GPSR. “Member States shall lay down the rules on penalties applicable to infringements of the GPSR that impose obligations on economic operators and providers of online marketplaces and shall take all measures necessary to ensure that they are implemented in accordance with national law.”
The EU Commission “should carry out an evaluation of the implementation of the penalties laid down under the GPSR as regards their effectiveness and deterrent effects, and, where appropriate, adopt a legislative proposal in relation to their enforcement.”
Conclusion
A new wind is blowing in the EU in the field of product safety. Although the GPSR is not perfect, we can only welcome its arrival. Clearly, if you sell consumer products in the EU, you need to have your product compliance and safety processes in place. Only companies that take product safety seriously will be the winners in a market where product laws and regulations are becoming increasingly complex and demanding.
