In depth 

Background

The new guidelines published by the Commission relate to a key provision of the Regulation (Article 4), which requires that, for certain types of CE marked products placed on the EU market, there must be an economic operator in the EU who, on request, provides the authorities with information or takes certain action. 

Under the Market Surveillance Regulation, products that are sold online or otherwise distance-sold by sellers located outside of the EU are considered to be placed on the market if the sale is targeted at end-users in the EU. This is determined on a case-by-case basis through a range of factors including the language(s) used for ordering, means of payment and geographical areas to which dispatch is possible. 

The above provisions are intended to create a comprehensive framework to protect consumers from unsafe and non-compliant products which are distance sold to them from outside of the EU and which have, to date, been the subject of limited market surveillance as a result of the difficulties of verifying and enforcing requirements. These provisions are also intended to help create a level playing field and protect EU sellers of compliant products from unfair competition.

When does Article 4 apply and who is the economic operator?

The Article 4 requirements apply to certain types of CE marked products including those falling within the scope of the following regimes: toys, electrical and electronic equipment, radio equipment, energy-related products, gas appliances, construction products, machinery, outdoor equipment, equipment for use in potentially explosive atmospheres, pressure equipment, simple pressure vessels, pyrotechnic articles, recreational craft, measuring instruments, non-automatic weighing instruments, personal protective equipment and unmanned aircraft systems (drones).

The following entities can act as the economic operator for the purposes of satisfying the requirements under Article 4 provided that they are established in the EU: 

1. the manufacturer, 
2. importer, 
3. authorised representative (appointed by the non-EU manufacturer), or 
4. fulfilment service provider, where none of (a), (b) or (c) is established in the EU (notably this does not include postal services or parcel delivery services).

Crucially, where there is no EU responsible economic operator the product must not be placed on the EU market. 

The name and contact details of the chosen economic operator must be placed on the product, its packaging, the parcel or in an accompanying document. This information must be present when the product clears customs and so should be added prior to shipping, otherwise products may be refused entry into the EU. The guidance suggests that individual products should in principle only bear the name of the relevant economic operator for that particular unit. This will pose difficulties for products sold into the EU through multiple supply channels with different entities qualifying as the economic operator for different units. Market surveillance authorities may impose penalties and require the relevant economic operator to take corrective action where they find that the name and contact details of the economic operator are missing or false.

What are the tasks of the economic operator?

The economic operator referred to in Article 4 has a number of mandatory obligations including verifying that the declaration of conformity and technical documentation have been drawn up and informing the relevant market surveillance authorities when the product presents a risk. The economic operator is also required to cooperate with and take certain action when required by the relevant authorities, such as providing any information and documentation to demonstrate the conformity of the product and ensuring that the necessary corrective action is taken to remedy non-compliance. Member States are required to adopt penalties for non-compliance with these obligations.

Note that the Article 4 obligations apply regardless of any potential additional obligations applicable to the economic operator under sector-specific legislation (e.g., by virtue of it qualifying as the "importer" or "manufacturer" under that legislation).

Online and distance sales

Article 4 will apply to products sold through online marketplaces; this is significant for e-commerce platforms and companies that use them, often to sell third party products. Sellers based outside the EU (including those based in the UK post Brexit) who plan to offer in scope products for sale to EU consumers should take steps to verify whether there is an economic operator to fulfil the Article 4 requirements (e.g., confirming whether the manufacturer has already appointed an authorised representative by written mandate to meet this obligation).

There are no specific obligations on online marketplaces where they are merely providing intermediary services to third-party sellers, although they will be expected to take action upon becoming aware of products available on their platform which do not comply with Article 4 if they wish to rely on the exemption laid down in Article 14(1) of Directive 2000/31/EC (i.e., the hosting defence).  However, where online marketplaces also provide fulfilment services for non-EU sellers, they will assume the responsible economic operator role where there is no other EU entity already satisfying that role. Therefore, it will be crucial for fulfilment service providers to identify that there is already a responsible economic operator so as to avoid assuming the obligations themselves, including the labelling obligations that must be complied with before products are imported into the EU. 

Final remarks

Article 4 and the new guidelines reflect the EU's continued focus on ensuring EU product legislation adequately addresses new forms of selling and methods of distribution.  They develop further the position that the EU has taken in guidance in recent years (for example in "The 'Blue Guide' on the implementation of EU product rules 2016") in respect of distance sellers and fulfilment service providers, and ensure that this is now reflected in legally binding regulation. 

Please do not hesitate to contact us if you have any questions regarding the guidelines or would like to discuss the potential impact of Article 4 on your business.