KANBrief 2/18

Proposal for an EU market surveillance regulation: initial assessment from a German regional government

On 19 December 2017, the European Commission presented a proposal for an EU market surveillance regulation. Should this regulation be adopted, it will have a decisive influence upon the enforcement of market surveillance. The German regional governments are however of the opinion that certain aspects of the regulation require substantial improvement. The regulation imposes a high bureaucratic overhead upon the authorities, and the selection of the intended instruments also requires improvement.

The European Commission considers drafting of 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 (...)” to be warranted by the following market developments (Proposal for an EU market surveillance regulation, Explanatory Memorandum, 1.1):

  • Disregarding of the rules by many economic operators
  • The increasing number of illegal and non-compliant products on the market
  • Distortion of competition
  • Risk to consumers
  • Need for greater deterrents
  • Underfunding of many market surveillance authorities and constraint by national boundaries
  • International activity of businesses, with rapidly evolving supply chains
  • E-commerce

Overall, these reasons appear valid. This has also been noted by the upper house of the German parliament (Bundesrat) in its comments on the proposal. A further crucial aspect is however whether the instruments intended for this purpose are suitable, required and proportionate. In its proposed form, the EU market surveillance regulation would involve the introduction or tightening of a great many reports and bureaucratic obligations. Not all of these changes have apparent practical benefits (Comment by the upper house of the German parliament (Bundesrat), publication No 771/17 (pdf, in german)).

Legal uncertainty: an obstacle to enforcement

The scope in Article 2(2) is subject to the EU regulations listed in the annex not containing provisions that govern enforcement more specifically. This constraint places the harmonization intended by the regulation in question, and permits controversial interpretations.

The definition of “economic operators” is also not sufficiently clear:

  • In formal terms, it is unfortunate that the economic operators are for the most part not defined directly, but with reference to other EU legislation. The Recreational Craft Directive for example is referred to for private importers. It is however unclear whether “economic operators” in the sense of this regulation is to cover private importers in general, or only of recreational craft. Inclusion of private importers in general would result in market surveillance being broadened with a crippling effect.
  • The definition of the economic operators under Article 3(12)(h), which is clearly also intended to cover fulfilment centres (fulfilment: all activities [supply to the customer, satisfaction of other contractual obligations] arising following entry into an agreement. These activities are generally performed by logistics service companies), combines the product processing steps characteristic of this area, namely warehousing, packaging and shipping of products to or within the Union market, with “and”. This makes classification as an economic operator too easy to circumvent.

Chapter III, Articles 7 and 8 govern agreements with economic operators concerning compliance partnership arrangements and memoranda of understanding that market surveillance authorities may reach with various stakeholders and organizations. The view here is that these arrangements may threaten the impartiality of the market surveillance authorities and lay them open to the charge that they are monitoring the results of their own consulting activity.

The requirement set out in Article 12, Paragraph 3 of the proposal that the making available of a product on the market is to be at least restricted in the event of any (including minor and non-hazardous) nonconformity is unlikely to be reconcilable with the principle of proportionality.

Closer regulation of mutual assistance is in principle to be welcomed. It is however not clear from the formulation whether the principle of cross-border enforcement is to be retained, or whether the authority in the economic operator’s territory is to be (solely) responsible in future. Clearer regulation is required in this respect.

The regulations governing the language for cooperation between the market surveillance authorities (proposal for an EU market surveillance regulation, Article 24 No 5) would also appear unsuitable in practice. Ultimately, every market surveillance authority would have to maintain translation capacity for all official languages. A solution involving a central translation service at EU level appears rational and should be made an objective.

Empowerment of the Commission to lay down implementing acts (In accordance with Article 291 of the TFEU, the European Commission [or in exceptional cases the Council of the European Union] shall lay down implementing acts where uniform conditions are required for the implementing of a Union act.) is a cause for concern. These implementing acts can be expected to lead to creeping expansion of the overhead, since supplementary procedures for implementation of the EU market surveillance regulation can be laid down to the disadvantage of the enforcing bodies.

Stefan Pemp

stefan.pemp@ms.niedersachsen.de