How will new EU regulation 2019/ 1020 impact e-commerce businesses outside the European Union?

New regulation on product conformity and market surveillance for businesses selling to the European Union

The boom of e-commerce, coupled with the prevalence of increasingly complex consumer product supply chains, has led to new product safety challenges and issues in the global market, and, as a result, pressure has increased to strengthen enforcement measures in this area.

The growing number of illegal and non-compliant products from online shops has created a number of problems in the EU market, disrupting competition among traditional businesses and potentially putting consumers at risk. As a result the EU has developed the Strategic Agenda 2019-2024 (which comprises Regulation 2019/1020), to address regulation on market surveillance and product compliance. “Developing a strong and vibrant economic base” is among its four priorities.

What is Regulation (EU) 2019/1020

The European Union published Regulation (EU) 2019/1020 on Market Surveillance and Compliance of Products on 20 June 2019. The regulation aims to protect customers’ health and safety, the environment and other public interests by improving and modernising market surveillance.

The new regulation covers all non-food products, and includes 70 Regulations and Directives, such as medical devices, PPE, toys and children’s products, clothes, footwear and accessories. This regulation will be applicable to both the e-commerce and physical marketplaces.

Regulation (EU) 2019/1020 – Key Points

• Regulation (EU) 2019/1020 aims to improve how the free movement of goods principle works by strengthening market surveillance of products covered by EU harmonisation legislation. This will ensure the protection of health and safety, in general and in the workplace, and protect consumers, the environment, public security and other public interests.
• It lays down rules and procedures for economic operators and establishes a system for their cooperation with supervisory authorities.
• It establishes controls on products imported into the EU.
• It deletes and replaces Articles 15 to 29 of Regulation (EC) No 765/2008 (on Accreditation and market surveillance) and amends Directive 2004/42/EC and Regulation (EU) No 305/2011 (on Construction products).
• The Regulation (EU) 2019/1020 will be effective from 16 July 2021 (inclusive). However, several articles (29, 30, 31, 32, 33 and 36) will apply from 1 January 2021.

How will this impact e-commerce?

Several key points from the legislation specifically impact online shops:

Point 1

A “fifth” economic operator is included in the EU legislation, known as the “Fulfilment Service Provider”. Until now, economic operators have been divided into four groups: manufacturers, authorised representatives, importers and distributors. The new regulation introduces a new role in the value chain, the Fulfilment Service Provider. The Fulfilment Service Provider is an economic operator, or any natural or legal person performing, in the course of commercial activity, at least two of the following services: warehousing, packaging, addressing and dispatching, without having ownership of the products involved.

By outlining this new economic operator role, owners and operators of e-commerce sites will likely bear some of the liability in relation to product compliance and conformity, in the same way as the four existing roles currently do. Further detail on the addition of the Fulfilment Service Provider role to Regulation (EU) 2019/1020 can be found in point three.

Point 2

Products may not be offered for sale to EU consumers without an Economic Operator established in the EU. This element will have a significant impact on online marketplaces and e-commerce sites located outside the EU. Unless these non-EU third-party retail companies have economic operators within the EU, they will not be eligible to sell their products in the region.

Point 3

Some of the current responsibilities of economic operators in relation to product compliance will also be applicable to the new role of the Fulfilment Service Provider. These include:

• To maintain EU conformity and performance declarations and present these documents, as well as technical documentation, to authorities upon request;
• To inform authorities when they believe a product poses a risk;
• To cooperate with authorities, when requested, by taking immediate corrective actions which might include remedying a fault, announcing product recalls or destroying stock if a product is considered non-compliant by authorities, thus helping to eliminate or mitigate risks to European citizens.

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