The Regulation on general product safety – new obligations for the e-commerce industry

Sale of products purchased on Asian markets, especially Chinese, is a common way of earning money, particularly in the e-commerce sector. This is not surprising, as a broad product range and competitive prices are only some of the elements that can encourage this way of running a business. Unfortunately, not all products bought on foreign markets comply with EU standards.

Toy Industries of Europe (TIE) is a toy manufacturers’ association, which aims to promote the right of every child to safe play. TIE has bought over 100 toys from external sellers from the EU and outside on 10 Internet trading platforms. 80% of these toys didn’t meet the EU safety norms, such as these specified in the EU Toy Safety Directive.

The aforementioned example perfectly illustrates that verifying the safety of products from outside of the EU should be an important part of any business that sells such goods. The GPSR regulation, which comes into force today, 13 December 2024, can be the answer to this challenge. It introduces a number of changes for retailers offering their products in stores as well as online. The aim of the new regulations is to ensure consumer protection by offering safe products on the EU market. As it usually is with such type of legislation, numerous obligations will be imposed on entrepreneurs.

The GPSR is directly applicable. This means that no initiative on the part of the Polish legislator is required for it to take effect.

Who is affected by the GPSR?

The provisions of the GPSR apply to a number of entities, including (i) manufacturers; (ii) authorized representatives; (iii) importers; (iv) distributors; (v) order fulfilment service providers. EU legislators often use the term ‘economic operator’ which covers all of the above, to simplify the navigation through the document.

From the e-commerce industry perspective, the key elements are duties which the GPSR Regulation imposes on ,,distributors”.20252024

According to the provisions of the Regulation, every person or legal entity in the supply chain who is neither producer nor importer and who makes a product available on the market is a distributor. Making a product available on the market, in turn, means delivering a product for distribution, consumption or use on the EU market as part of commercial activity, whether for payment or free of charge. In consequence, the term ,,distributor” is extremely broad and includes also ordinary sellers running online shops.

The qualification of a particular entrepreneur as a distributor entails numerous obligations. First of all, they must verify if a producer and, where applicable, an importer has complied with the requirements of the GPSR, which include, among others, (i) proper labelling of products enabling their identification; (ii) the manufacturer’s mark or the importer’s mark; (iii) enclosure of clear instructions and information to the product. Additionally, distributors must ensure that during the time which they are responsible for the product, the conditions of its storage or transport do not compromise the conformity of a product introduced to the market with the general safety requirement provided for by the GPSR.

What if a product sold turns out to be dangerous?

The aforementioned duty to verify if a producer and its importer have complied with the requirements provided for by the GPSR, translate into the ability to sell products. In the situation in which a distributor who, based on information held, finds or has reasons to suppose that a product does not comply with the provisions, shall not make the product available on the market, until it is compliant with the requirements.

Likewise, in the case when the distributor finds out that a product already available is dangerous or not compliant with standards, he should (i) immediately inform the producer or the importer, as applicable; (ii) ensure that corrective measures are taken to bring the product into compliance with the requirements, including, where appropriate, withdrawal from the market or recovery; and (iii) ensure that the market surveillance authorities of Member States, in which the product was made available, were immediately informed using the Safety Business Gateway portal, a tool designed to make it easier for producers and distributors to report dangerous products.

An unexpected change of places

Once assigned a role of a distributor or an importer is not permanent. If, for example, as an entrepreneur in the e-commerce sector one introduces on the market a product under one’s own brand (the GPSR defines it as introduction under surname or name or trademark of a given person or legal entity), one acquires the “producer’’ status and becomes subject to the responsibilities imposed on producers under the GPSR.

Similarly, in cases where a ‘significant modification’ is made to the product, i.e. one that affects the safety of the product and meets the following criteria: (i) consists of changing a product in such a way that is not provided for in the initial product risk assessment; (ii) because of the modification the nature of the risk has changed, a new risk has emerged or the level of risk has increased; and (iii) a modification for one’s own use was not introduced by consumers themselves or anyone acting on their behalf.

What’s important, if a modification doesn’t affect the product safety, the entity making a modification is considered a producer only in relation to the modified part of the product. In the case when the change has an impact on the product safety, the entity making the modification is considered a producer in relation to the whole product.

Additional obligations for Internet traders

GPSR provides for an additional obligation for economic operators making products available on the Internet or in any other remote way. The offer of such products shall include clearly and visibly at least the following information: (i) a proper manufacturer’s mark, which will vary depending on whether he is resident or established in the EU (details described in Article 19 (a) and (b) of the GPSR); (ii) information that enables identification of the product, including its image, type as well as other product identifiers; and (iii) any warnings or information on safety, which should be on the packaging or included in the accompanying document in accordance with the GPSR or applicable EU harmonization legislation, in a language easily understood by consumers, as determined by the Member State in which the product is made available on the market.

Marketplace in the GPSR spotlight

GPSR states that providers of online platforms (i.e. marketplaces), by enabling business entities to reach a larger number of consumers, play the key part in the supply chain, and so in the product safety system as well. Because of that, also on these entities the GPSR imposes numerous obligations: (i) designation of a single point of contact enabling direct electronic communication with the market surveillance authorities of the Member States on product safety issues; (ii) registration on the Safety Gate portal; (iii) designation of a single point of contact for consumers; (iv) introduction of internal procedures related to product safety, so as to meet the relevant GPSR requirements without undue delay; (v) responding to orders to remove specific content from one’s interface, to prevent access to them or to display a clear warning; (vi) verifying the information about dangerous products on the Safety Gate portal; (vii) efficient handling of notifications concerning the safety of products offered for sale online; (viii) designing the interface in accordance to the GPSR requirements; (ix) suspension of services to entities that frequently offer products incompliant with the GPSR; (x) cooperation with the market surveillance authorities, entrepreneurs and certain economic operators in order to facilitate any action taken to eliminate or, if it is not possible, to reduce the risk posed by a product, which is or was offered online through their services.

Which products are excluded from the GPSR regulation?

The general rule following from the GPSR is that it applies to products for which there are no specific regulations. If specific products are subject to special requirements, then the GPSR applies only to aspects and risks, or risk categories not covered by those requirements.

However, there is certain a category of products that is explicitly listed as one to which the GPSR does not apply:  (i) medicinal products for human use or veterinary medicinal products; (ii) food; (iii) feed; (iv) living plants and animals, genetically modified organisms and genetically modified microorganisms used in a restricted manner as well as products from plants and animals directly related to their future reproduction; (v) animal by-products and derived products; (vi) plant protection products; (vii) equipment used by consumers for moving or travelling, where it is directly operated by the service provider as part of a transport service provided to consumers and it is not operated by the consumer themselves; (viii) aircrafts, mentioned in Article 2(3)(d) of Regulation (EU) 2018/1139; (ix) antiques.

Penalties for non-compliance

The GPSR itself leaves the question of sanctions to the discretion of every individual Member State. A project of domestic legislation on general product safety, which provides numerous provisions (over 20) containing sanctions for non-compliance with the requirements resulting from the GPSR and fines ranging from PLN 40,000 to PLN 1,000,000 (depending on the type of infringement), is currently being processed.

Summary

GPRS will constitute a challenge for the e-commerce industry, from which the entities subject to regulation will not run away. Every existing store, as well as one that is only to be created in the future, will have to adapt to the obligations assigned to it, so it is essential to establish what is our role at GPSR to properly assess what legal, organizational and technical measures should be taken, especially as fines for any infringements are not small.

A link to the press release on the study conducted by TIE: https://www.toyindustries.eu/80-of-toys-bought-from-third-party-traders-on-online-marketplaces-fail-eu-safety-standards-and-could-be-a-danger-to-children/