As the holiday season comes to a close, online shopping receipts are filling inboxes around the world. Online retail is big business, with companies taking advantage of the opportunities to get their products to consumers as quickly as possible.
However, changes to European Union (EU) legislation in 2020 could result in additional responsibilities and requirements for manufacturers, their authorized representatives, product importers and even fulfillment service providers.
Regulation 2019/1020/EU on market surveillance and compliance of products, published on June 25, 2019, and set to take effect on July 16, 2021, is designed to ensure that products placed on the European single market are safe and compliant with EU legislation. Among other goals, this regulation seeks to address the challenges of international e-commerce and online trade and will likely have major impacts on online retailers.
What Regulation 2019/1020/EU Means for Online Retailers
To prevent the sale of non-compliant products to EU consumers, Regulation 2019/1020/EU provides authorities a uniform framework for enforcing over 60 separate pieces of harmonized EU legislation, including the Restriction of Hazardous Substances (RoHS) Directive and the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation. Under article 6 of the new regulation, products sold online “shall be deemed to be made available on the market” if the offer is targeted at EU consumers or end users.
In-scope products on the EU market are subject to market surveillance and enforcement activities, and this legislation also empowers EU member state market authorities to:
- Order the removal of a product from online interfaces.
- Prohibit products from the EU market.
- Order product withdrawals or recalls.
- Require that economic operators, including fulfillment service providers, take steps toward ending instances of non-compliance.
- Carry out unannounced site inspections and/or physical product checks.
Furthermore, these actions could come at additional cost to online retailers, as member states can grant authorities further power to reclaim their costs from economic operators. In addition to lost profit or regulatory fines, companies could also be paying for the market surveillance activities that identified the non-compliant product.
Legislation & Products Affected
As mentioned above, Regulation 2019/1020/EU affects over 60 pieces of harmonized legislation and regulations, with implications for a wide range of products sold into the EU.
The affected regulations and legislation include:
- The RoHS Directive and RoHS 2 recast.
- The REACH Regulation.
- Directive 2006/66/EC, the Battery Directive.
- The Classification, Labelling and Packaging Regulation.
- Directive 2009/48/EC on toy safety.
- Directive 2009/125/EC, the Ecodesign Directive.
- Regulation (EC) No. 1005/2009 on substances that deplete the ozone layer.
- Regulation (EC) No. 1223/2009 on cosmetic products.
- Regulation (EU) 10007/2011 on textile fabric names and related labeling and marketing of the fiber composition of textile products.
- The Biocidal Products Regulation.
- The Waste Electrical and Electronic Equipment Directive.
Nearly every product sold in the EU is in scope of at least one of the regulations listed above. Therefore, online retailers selling products in scope of these regulations are impacted by Regulation 2019/1020/EU.
Non-Compliance, Online Selling Driving New Regulatory Development
The European Commission has found a significant volume of non-compliant products continue to make it to the EU market. In 2018 alone, 16 percent of non-compliant product alerts were for products available for sale online.
E-commerce fulfillment service providers have enjoyed relative freedom from regulatory requirements, due to the difficulties in making them legally responsible. This changes with 2019/1020/EU, as it brings these companies into scope by including them in its definition of “economic operators.”
Manufacturers typically use fulfillment service providers as a warehouse, leveraging them to store and ship products to end users. Amazon is one of the highest-profile examples of this, as their marketplace is widely used by other online retailers to fulfill customer orders.
Under the new definition established by 2019/1020/EU, these companies could fall in scope of the regulation’s requirements. Additional changes to the role of authorized representatives mean that online retailers may be required to appoint an individual to take responsibility for compliance information and documentation. If no authorized representative exists, fulfillment service providers could be responsible for compliance documentation.
A dedicated supply chain data management solution supports companies as they strive to demonstrate due diligence and maintain the information required to stay compliant with evolving regulations. To learn how Assent can help your company mitigate its risks, contact our experts.
