What is it called?

Regulation (EU) 2019/1020 on market surveillance and compliance of products (the "Compliance and Enforcement Regulation") is one part of the so-called "Goods Package" that was proposed by the European Commission in December 2017. The other part is Regulation (EU) 2019/515 on the mutual recognition of goods.

What is it about?

The Compliance and Enforcement Regulation strengthens the existing compliance and enforcement rules in the EU. The existing compliance framework sets out a hierarchy of obligations for economic operators involved in the supply chain for products, with responsibilities allocated according to the role that economic operator plays in the supply chain. The manufacturer has ultimate responsibility for conformity of the product, the importer must ensure that the manufacturer has fulfilled its obligations and the distributor, which is the category that encompasses retailers, must act with due care with respect to applicable requirements.

Enforcement has traditionally been a Member State competency in the EU. There is an established EU-wide structure to aid the enforcement of product safety rules, which includes the ability for Member States to provide their market surveillance authorities with certain powers and the ability to impose penalties for breaches of rules. However, Member States have broad discretion to determine the nature and severity of enforcement measures.  

The Compliance and Enforcement Regulation seeks to address a range of issues connected with the practical application and enforcement of EU product safety rules. A particular focus is on products sold directly into the EU from third countries, often online. A number of the changes directly address perceived issues with the compliance of such products, including introducing:

(1) a requirement for there always to be an EU-based economic operator responsible for certain products;

(2) responsibilities for fulfilment service providers in respect of products handled by them where there is no other EU-based economic operator with responsibility for compliance; and

(3) a minimum set of enforcement powers that Member States must provide to enforcement authorities.

Who and what does it apply to?

The Compliance and Enforcement Regulation applies to products subject to the Union harmonisation legislation listed in Annex I (70 different pieces of legislation) including toys, electrical equipment and electronics, construction products, medical devices, machinery, cosmetics, PPE, crystal glass, textile products and more.

It establishes obligations for economic operators including "the manufacturer, the authorised representative, the importer, the distributor, the fulfilment service provider or any other natural or legal person who is subject to obligations in relation to the manufacture of products, making them available on the market or putting them into service in accordance with the relevant Union harmonisation legislation." It also sets out procedures and requirements for market surveillance authorities, customs authorities, a new Union Product Compliance Network, administrative cooperation groups and the European Commission.

Why does it matter?

The Compliance and Enforcement Regulation will apply from 16 July 2021 (with the exception of certain provisions that will apply from 1 January 2021). It will bring in a number of important changes including:

  • A requirement for an EU-based economic operator responsible for certain compliance tasks for products that fall under the regimes listed in Article 4(5) (broadly, the CE marking regimes).
  • Responsibilities for fulfilment service providers in respect of products that fall under the legislation listed in Article 4(5) and are handled by them where there is no other EU-based economic operator with responsibility for compliance.
  • A minimum set of powers that Member States must provide to their market surveillance authorities.
  • A requirement for Member States to lay down rules for penalties for breaches of legislation to the extent they have not already done so.
  • The ability for Member States to authorise their market surveillance authorities to "the totality of the costs of their activities with respect to instances of non-compliance" from the relevant economic operator in certain circumstances.
  • Provisions to increase the exchange of market surveillance related information between market surveillance authorities, including the establishment of a Union Product Compliance Network that will be composed of representatives from each Member State.
  • Provisions to increase cooperation between customs authorities and market surveillance authorities, including specific details on the release for free circulation of products, suspension of release for free circulation and refusal to release for free circulation.

These changes are wide ranging and constitute a shake-up of the system of compliance and enforcement. It remains to be seen what the practical effect will be, however we can expect an increased focus on formal compliance requirements and likely an increased use of market surveillance powers and penalties as regulators gain new enforcement tools.

The Compliance and Enforcement Regulation will not apply in the UK unless the current transition period is extended beyond 16 July 2021. If it is not extended, then these new rules would only apply if the UK Government commits to adopting equivalent regulations as part of a Free Trade Agreement or the UK Government voluntarily decided to adopt equivalent regulations in the UK (there is a procedure under the Withdrawal Agreement for adopting new EU legislation after Brexit).

Where can I find it?

The Compliance and Enforcement Regulation can be found here.

Is there any guidance?

There is currently no published guidance available, but the European Commission is required to produce guidelines for the operation of Article 4, which contains the requirement for there to be an economic operator established in the EU responsible for certain compliance tasks for products that fall under the 70 regimes listed in Annex I. The European Commission has consulted on a draft version of those guidelines, and a final version is expected later in 2020. The European Commission has also consulted on changes to the Blue Guide, which provides guidance on EU product rules, to reflect changes brought in by the Compliance and Enforcement Regulation. An update is expected in 2020. Both of these timetables could be affected by the COVID-19 pandemic.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.