·Checks of imported products are still considered insufficient in light of the increasing import from third countries and online sales, especially due to the limited available resources and fragmentation between authorities in different Member States; exchange of information and coordination among the authorities involved could be improved.

·The 'market surveillance programmes' and reports on activities carried out could also benefit from simplification and more strategic use;

·Inconsistencies in the approach followed by Member States authorities while carrying out market surveillance (e.g. interpretation of the concept of appropriate scale of controls, penalties, degree of cross-border cooperation) could be reduced. Coordination mechanisms within Member States should be improved and simplified;

·The relation between RAPEX, ICSMS and the safeguard procedures should be improved in order to reduce inconsistencies and confusion, to avoid duplication of work and useless administrative burden. In February 2017 the Commission released the first version of an interconnection between RAPEX and ICSMS. In 2016 safeguard notifications were implemented in ICSMS, with a second release due by end 2017;

·The scope of the market surveillance provisions could become much clearer; a few discrepancies in the definitions and terminology provided in the different sector specific legislations could be addressed when the sector legislation in question is reviewed;

The evaluation identified the following main areas where regulatory burdens could be minimised and rules could be simplified:

However, the potential for the Regulation to achieve full EU added value is still hindered by the sub-optimal level of cross-border exchange of information and cooperation, persisting difficulties in dealing with cross-border non-compliance, the lack of uniform implementation of the market surveillance framework at the national level and the insufficient rigour of controls, including imported products.

The EU added value of the Regulation mainly stems from provisions envisaging common information systems favouring administrative cooperation and enhancing collaboration between customs and Market surveillance authorities.

Overall the benefits of having a single piece of European legislation on harmonising market surveillance instead of several different pieces of national legislation are widely recognised by stakeholders. The harmonisation of rules is seen as contributing to the protection of safety and other public interests underpinning Union product harmonisation legislation, to the establishment of a level playing field and to the improvement in the free movement of goods. The Regulation facilitates transparency and unambiguous interpretation of rules.

Finally, the coherence of the Regulation with sectoral directives is safeguarded to a sufficient extent by the existence of the lex specialis provision. Nonetheless, in certain cases, discrepancies and gaps in the definitions and terminology provided in the different pieces of legislation diminish the overall clarity of the framework for market surveillance, although they do not hinder the implementation of the Regulation. The discrepancies and gaps different sector specific legislations could be addressed when the sector legislation in question is reviewed to align them with the horizontal definitions of Regulation (EC) N° 765/2008.

As for the external coherence some issues have been identified in relation to the GPSD, whose definitions are not always aligned with those of the Regulation. Moreover, the boundary between the GPSD and the Regulation is not always clear. These issues were tackled by the Commission in the legislative proposal put forward in 2013.

None of the stakeholders reported problems about internal coherence. The Commission could not identify any major internal incoherencies. However, the specification of some provisions currently very general would support more coherence in the implementation of market surveillance.

Coherence of the Regulation has been evaluated at two levels: internal coherence of the provisions of the Regulation within themselves, and external coherence of the Regulation with the GPSD and sectoral legislations in its scope.

The Regulation is overall relevant when considering current stakeholders’ needs associated to its general and specific objectives (cooperation and exchange of information, border controls) but it becomes less relevant with looking at needs related to new/emerging dynamics (increasing online trade, budgetary constraints at national level, market dynamics that require a fast reaction). As for online trade, for instance, the Regulation neither includes specific provisions covering online sales, nor does it provide for definitions that account for its specificities.

The Regulation’s definitions are generally clear and appropriate, however they are not fully complete and up-to-date, especially when considering the need to cover also online sales.

The analyses highlighted that a number of stakeholders find the scope of the Regulation not fully clear. Difficulties in understanding the Regulation’s scope might be exacerbated by technological developments introducing new forms of products.

The relevance of the Regulation has been assessed in terms of its scope (including its definitions and concept of lex specialis) and in view of stakeholders’ needs, including those related to new/emerging issues.

Efficiency gains might be achieved by more effective cooperation between industry and authorities. In this way, market surveillance authorities can take advantage of manufacturers’ technical knowledge and may be in a better position to identify non-compliant products on the market and set appropriate priorities for market surveillance activities.

In terms of benefits there is no evidence of cost savings for businesses as a result of the implementation of the Regulation in terms of administrative tasks or operational tasks if compared to the situation prior to 2008. Furthermore, the expected improved safety for consumers and other product users and level playing field for businesses are not confirmed by RAPEX notifications and by the statistics on the implemented restrictive measures at national level. An increase in RAPEX notifications and surveillance measures may also imply that Market surveillance authorities have become more effective in finding – and thus correcting - non-compliance making products dangerous. However this underlines that the Regulation is still not able to increase businesses' willingness to comply with the rules, thereby discriminating businesses that abide by the rules against those who do not.

With respect to costs for economic operators, information costs caused by the Regulation are perceived as insignificant. On the other hand business stakeholders point to the negative impact that some of the across-the-board inconsistencies in the approach to market surveillance followed by different Member States have on them. They also stress that the current enforcement mechanism is not able to create a level playing field for businesses that are selling products in the Internal Market. This might reduce businesses' willingness to comply with the rules and discriminate businesses that abide by the rules against those who do not.

The fact that Member States define their own market surveillance approach creates a big variation in the ways the different sectors are controlled and managed. This may also reduce the efficiency of the market surveillance when responsibilities of national authorities are not primarily related to market surveillance of non-food products within the meaning of the Regulation and this creates an overlap and duplication of activities.

Most of the costs of the market surveillance provisions are borne by Member States and their market surveillance authorities. Costs incurred by Market surveillance authorities vary considerably from one Member State to another. These differences might be related to different national organisational models requiring different levels of both human and financial resources. However, another possible explanation is the different approach followed by Market surveillance authorities in reporting data concerning the used financial resources as well as the performed activities. Data available suggests that the average annual budgets allocated to MSA activities over the 2010-2013 period do not correlate to the size of the market. The analysis of the efficiency of the Regulation has however been limited by the evident poor quality of data included in the national reports both in terms of completeness and comparability.

An additional enabling factor identified is the (lack of) cooperation between enforcement authorities and businesses. Among the main reasons for product non-compliance in the internal market is a lack of economic operators’ knowledge on the relevant legislative requirements to be complied with, as well as a deliberate choice to exploit market opportunities at the lowest cost, possibly due to low incentives to comply with the existing rules.

Overall, it seems that these discrepancies are due to the general nature of the requirements set out in the Regulation. This lack of specificity relates to Member States’ obligations as regards organisation, powers, resources and knowledge necessary to Market surveillance authorities for the proper performance of their tasks. The provision on national reports and programmes is also general, as it does not foresee the transmission of structured information from Member States to the European Commission relating to market surveillance activities, which is particularly evident in light of all the data limitations highlighted in the study. Moreover, the Regulation does not include specific provisions relating to the principles of cooperation between Member States. Finally, the Regulation is not specific enough to set a minimum and/or a maximum level of penalties, or any principles to define them. As discussed, this results in wide differences in the minimum/ maximum amounts within and across Member States, which lowers its power as an enforcement deterrent.

Powers attributed at the national level and the role of Customs in enforcing the Regulation influence the effectiveness of border control. Controls are indeed expected to be tougher in Member States where Customs act as Market surveillance authorities. Cooperation between Customs and Market surveillance authorities and with other EU Customs are a crucial element for enhancing market surveillance on imported products. In this respect, there are notable differences across Member States.

Resources are certainly a second enabling factor. The lack of resources is considered one of the main bottlenecks to market surveillance implementation and effective deterrence. The different levels of resources have implications on the way Market surveillance authorities perform their tasks. For instance, Market surveillance authorities’ market knowledge in order to target checks is not sufficient in sectors that require specific skills. Moreover, the excessive cost of testing is the most likely explanation for the low level of surveillance, which in some sectors is limited to mere documentary checks. Similarly, resources also influence Market surveillance authorities’ criteria for prioritisation of monitoring and enforcement activities, impacting on the “adequate scale” of controls (foreseen by Article 19 and 24). At the same time, resources influence strategies for market surveillance, which could be proactive rather than reactive.

The level of decentralisation of market surveillance structures for instance, impacts the level of existing cooperation and collaboration between national Market surveillance authorities. The more a Member State is decentralised, the more it will need numerous and complex coordination mechanisms.

The evaluation identified a number of enabling factors, relating to the different national implementations, which made the implementation of the Regulation more or less effective, eventually impacting the achievement of its objectives.

Moreover, national discrepancies in the implementation of the Regulation diminish its effectiveness in achieving a level playing field, inasmuch as they create disparities in the level of enforcement which influence regulatory/administrative costs to businesses across Member States and market behaviour.

The Regulation is not fully effective in relation to its strategic objectives of strengthening the protection of public interests and of ensuring a level playing field among economic operators through the reduction of the number of non-compliant products on the Internal Market. Data available actually point to the persistence and possibly to the increase of non-compliant products.

The border controls on imported products seem insufficient. The main difficulties are due to a lack of jurisdiction of the Market surveillance authorities outside of their Member State, particularly in the context of online sales.

The heterogeneity existing across Member States in the implementation of the Regulation allows an inference to be drawn that the level of market surveillance is certainly not uniform, given that Member States with more resources and powers have - at least - more tools for proper enforcement. As for its rigorousness, the serious lack of data and inhomogeneity of national reports do not allow for a thorough assessment. However, on the basis of the information available, the amount of resources attributed to market surveillance and activities reported cast some doubts on the ability of market surveillance authorities to perform checks at an adequate scale. Lack of relevant information may in some cases be an indication of actual enforcement gaps. The insufficient rigorousness of market surveillance is further supported by the stakeholders’ perception about the incapacity of the Regulation to deter rogue traders and the discrepancies in the penalty framework.

Uniformity and rigorousness of market surveillance has not been achieved yet, due to the significant differences across Member States in the implementation of the Regulation as to the organisation of market surveillance at the national level, the availability of resources (financial, human and technical), the strategies of market surveillance, the powers of inspection and of sanctions and the systems of monitoring and reporting. The general character of the Regulation’s requirements is likely to have allowed these different implementations.

Although coordination and cooperation has developed significantly, and is recognised as useful, they have not reached a level that can be considered satisfactory. In particular, despite the tools (i.e. RAPEX, ICSMS) that are in place to ensure cross-border market surveillance cooperation, they are not sufficiently used by Member States. As a result, Market surveillance authorities do not fully benefit from the advantages of these systems as they rarely restrict the marketing of a product following the exchange of information on measures adopted by another EU MSA against the same product. Also, the possibility for Market surveillance authorities and Customs to make use of finding (including test reports) by Market surveillance authorities in other EU countries and avoid duplication of work seems to be limited. The value of administrative cooperation which is essential for coordinating actions and learning from best practice is diminished by a lack of active participation in AdCos. The issue of limited resources is often invoked by Market Surveillance authorities to explain sub-optimal use of available coordination tools. In addition because the bulk of the market surveillance framework (powers, procedures) is set nationally authorities perceive market surveillance as a national matter and fail catch the spill over effects of their activities on the functioning of the Single Market. Moreover the lack of an administrative framework for the management of cross-border projects represents an important obstacle to their involvement in actions coordinated with other Member States.

The Regulation has been only partly effective in achieving its specific and strategic objectives.

The current market surveillance provisions do not attribute to the EU institutions any powers to 'control' the way national authorities carry out market surveillance. As mentioned the generality of the provisions setting out minimum requirements for the organisation and the performance of market surveillance does not allow setting benchmarks against which to assess national activities at EU level. On the other hand the market surveillance provisions seem to attribute to the Commission the role of facilitator in relation to the exchange of information among Member States.

The general view is that the market surveillance provisions support and usefully supplement market surveillance policies pursued by the Member States, especially in cross-border situations. Yet, there seems to be convergence of views that they do not do so sufficiently. The relevant provisions and their implementation should then be profoundly improved.

EQ18. To what extent do these provisions support and usefully supplement market surveillance policies pursued by the Member States? Do the provisions allow some sort of 'control' by the EU on the way national authorities carry out market surveillance?

However, the potential for the Regulation to achieve a full EU added value is still hindered by the sub-optimal level of cross-border exchange of information and cooperation, persisting difficulties in dealing with cross-border non-compliance the lack of a uniform implementation of the market surveillance framework at the national level and the insufficient rigour of controls, including on imported products.

Overall the Regulation therefore has the potential to contribute to the protection of safety and other public interests underpinning Union product harmonisation legislation, to the establishment of a level playing field and to the improvement of the free movement of goods. The harmonisation of rules is reported as a benefit. The Regulation facilitates transparency and unambiguous interpretation of rules, together with cooperation between countries and relevant authorities.

The EU added value linked to provisions dealing with market surveillance organisations at the national level is limited, mainly because the Regulation does not provide clear guidance on how to have a more homogenous market surveillance system. Finally, it is worth recalling provisions on national programmes and reports. Although they could provide significant EU added value in terms of monitoring of the enforcement of market surveillance, the lack of binding criteria on how they should be drafted and interpreted makes these documents far less relevant than initially expected.

The EU added value of the Regulation mainly stems from provisions envisaging common information systems favouring administrative cooperation and enhancing collaboration between customs and Market surveillance authorities. The Regulation has improved cooperation among actors involved in market surveillance activities. In this regard, the management of the RAPEX and ICSMS system at the EU level should not be disregarded, as they are two valuable tools that increase and enhance the exchange of information and open possibilities of collaboration between Member States. Moreover, the framework provided by the Regulation is useful in defining national market surveillance and the control of imported products policies. By clarifying the role of Customs, for instance, the Regulation has also enhanced their channels and opportunities of collaboration with other EU authorities. This benefit appears particularly important for “small countries”.

The analysis of the EU added value as per the specific provisions of the Regulation shows that some of them achieve a higher EU added value when compared to others.

The benefits of having a single piece of European legislation harmonising market surveillance instead of several different pieces of national legislation are widely recognised by stakeholders. By setting common requirements relating to the marketing of products, the Regulation per se already achieves a result which cannot be attained by a single Member State’s action. This is particularly relevant if we consider that the shortcomings in one Member State’s market surveillance system are likely to affect a considerable number of other Member States, in light of the absence of national borders within the internal market.

EQ17. What is the additional value resulting from the market surveillance provisions at EU level, compared to what could be achieved by Member States at national and/or regional levels?

The coherence of market surveillance provisions with the EU's policy of helping SMEs and start-ups to grow could be enhanced. Far too many obstacles remain for SMEs, start-ups and young entrepreneurs looking to grow in the Single Market. In particular, SMEs complain about understanding and complying with regulatory requirements. This means that non-compliance should be prevented by helping SMEs to understand and comply with these requirements. However, the provision of information about regulatory requirements is a missing element in the market surveillance provisions and in Union harmonisation legislation in general.

Therefore, it is obvious that, in the light of wider EU policy as outlined before, strengthening market surveillance provisions would be coherent with wider EU policy.

·In addition, the Commission proposed new rules to enable Member States' competition authorities to be more effective enforcers of EU antitrust rules. The proposal seeks to make sure they have all the tools they require to achieve this. It is intended to further empower the Member States' competition authorities. It aims to ensure that when applying the same legal basis national competition authorities have the appropriate enforcement tools, in order to bring about a genuine common competition enforcement area. The proposed rules, once adopted, will provide the national competition authorities with a minimum common toolkit and effective enforcement powers.

·Furthermore, the Commission put forward a proposal for the reform of the Consumer Protection Cooperation (CPC) Regulation, which governs the powers of enforcement authorities and the manner in which they can cooperate. The reform addresses the need to better enforce EU consumer law, especially in the fast evolving digital sphere. The proposal for an improved Regulation will equip enforcement authorities with the powers they need to work together faster and more efficiently.

·In the area of food and feed, Regulation (EU) 2017/625 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products will increase Member States' ability to prevent, eliminate or reduce health risks to humans, animals and plants. The new Regulation provides a package of measures that will strengthen the enforcement of health and safety standards for the whole agri-food chain. The new rules will gradually become applicable with the main application date being 14 December 2019.

Wider EU policy on the enforcement of Union legislation, by national authorities, evolved quite profoundly since the market surveillance provisions started applying. The European Commission that came into office in November 2014 has created increasing jobs, growth and investment its top priority and is pursuing it by deepening the Single Market across sectors and policy areas. Better enforcement of Union legislation is one of the key tools to achieve a fairer internal market which is one of the ten policy areas to be tackled under President Juncker's Agenda for Jobs, Growth, Fairness and Democratic Change. Consequently, many new initiatives were tabled by this Commission in order to improve the enforcement of Union legislation by national authorities.

A specific interpretation problem could arise when the 'lex specialis'-principle is combined with Article 15(3) which specifies that the application of the market surveillance provisions do not 'prevent market surveillance authorities from taking more specific measures as provided for in Directive 2001/95/EC.' The coherence problems relate to the definitions of the GPSD which differ from those of the Regulation. For instance, the definitions of “distributor”, “withdrawal”, “recall” are different from one piece of legislation to the other, while the definitions of “serious risk” and “dangerous products” are set in the GPSD and not in Regulation 765/2008, though the latter widely refers to these concepts. Moreover, the boundary between the GPSD and the Regulation is not always clear as the two pieces of legislation sometimes seem to overlap. These issues were specifically addressed by the Commission in the legislative proposal put forward in 2013, which is still pending.

In practice, this means that national authorities can contact the hosting providers who, when notified of unlawful activity, if they want to benefit from the exemption of liability, have to remove or disable the content, meaning that the unsafe/non-compliant products would no longer be accessible to EU customers through their services. Yet, in many cases, these national authorities are not necessarily the market surveillance authorities who usually can only act with respect to 'economic operators'.

Following Article 15 of the E-commerce Directive, Member States cannot impose either a general obligation on these providers to monitor the content or a general obligation to actively seek facts or circumstances indicating illegal activity. This means that national authorities cannot establish a general obligation for intermediaries to actively monitor their entire internet traffic and seek elements indicating illegal activities such as unsafe products. The ban on requesting general monitoring, however, does not limit public authorities in establishing specific monitoring requirements, although the scope of such arrangements have to be targeted.

Furthermore, the coherence between the market surveillance provisions and the liability regime of intermediary service providers whose liability is regulated by the Electronic Commerce Directive 2000/31/EC is not entirely clear in many cases. Intermediary service providers carrying out hosting activities benefit from an exemption of liability for damages or criminal sanctions related to the content provided by third parties using their networks. However, the liability exemption is not absolute. In the case of hosting activities, which are the most relevant for the product safety and compliance area, the exemption only applies if the intermediary service provider has no actual knowledge or awareness about the illegal nature of the information hosted and upon obtaining such knowledge or awareness of the illegal content (for instance by a ‘sufficiently precise and adequately substantiated’ notice, it acts expeditiously to remove it or disable access. If they do not fulfil these conditions, they cannot be covered by the exemption and thus they can be held liable for the content they host.

Conversely, the obligation for market surveillance authorities to cooperate with economic operators regarding actions which could prevent or reduce risks caused by products made available by those operators, will not apply to other businesses than manufacturers, authorised representatives, importers and distributors. The same thing goes for the obligation of market surveillance authorities of one Member State which decide to withdraw a product manufactured in another Member State, to inform the economic operator concerned at the address indicated on the product in question or in the documentation accompanying that product.

The definition of 'economic operators' in Regulation (EC) No 765/2008 and the definition of economic operators in other Union harmonisation legislation are sometimes incoherent. Article 2 of Regulation (EC) No 765/2008 defines economic operators as ‘the manufacturer, the authorised representative, the importer and the distributor.’ However, several pieces of Union harmonisation legislation create obligations for businesses which are not considered ‘economic operators’ for the purpose of Regulation (EC) No 765/2008. The consequence is that some important provisions of Regulation (EC) No 765/2008 cannot be applied. For example, it allows market surveillance authorities to ‘require economic operators to make such documentation and information available as appear to them to be necessary for the purpose of carrying out their activities, and, where it is necessary and justified, enter the premises of economic operators and take the necessary samples of products. They may destroy or otherwise render inoperable products presenting a serious risk where they deem it necessary.’ This will not be possible for economic operators that are not included in the definition of Regulation (EC) No 765/2008.

Nonetheless, the market surveillance provisions show some incoherencies with other instruments of EU law that can give rise to interpretation difficulties and so raise regulatory costs for businesses and authorities. The following incoherencies were identified:

Yet, there is a substantial difference between the enforcement of, on the one hand, 'private' intellectual property rights and, on the other, public safety and consumer protection rules that all products should comply with. The fact that a product is infringing an intellectual property right is already a strong signal that the product is not likely to comply with Union harmonisation legislation. However, the measures taken pursuant to Directive 2004/48/EC and Regulation (EU) No 608/2013 allow these products to be removed from the market and prevent them from entering the market so that enforcement of Union harmonisation legislation is no longer necessary under these circumstances. Therefore, the market surveillance provisions seem to be coherent with the Union rules on the enforcement of intellectual property rights.

They are also coherent with the Union rules on the enforcement of intellectual property rights. An efficient and effectively enforced intellectual property infrastructure is necessary to avoid commercial-scale intellectual property rights (IPR) infringements that result in economic harm. Directive 2004/48/EC on the enforcement of intellectual property rights lays down the measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights within the single market. In addition, Regulation (EU) No 608/2013 concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2003 sets out the conditions and procedures for action by the customs authorities where goods suspected of infringing an intellectual property right are, or should have been, subject to customs supervision or customs control within the customs territory of the Union, particularly goods declared for release for free circulation, export or re-export, goods entering or leaving the customs territory of the Union and goods placed under a suspensive procedure or in a free zone or free warehouse.

Most of the market surveillance provisions are coherent with other Union legislation setting out market surveillance procedures, especially the legislation that expressly refers to the market surveillance provisions.

EQ15 - To what extent are the market surveillance provisions above still coherent with other Union legislation on market surveillance on non-food products?

As for internal coherence, overall, the market surveillance provisions of the Regulation are consistent within themselves and in the scope of the legislation. Furthermore roles and tasks of all different stakeholders concerned by the Regulation are well-defined and no duplication of activities has been traced. The analysis – supported by stakeholders’ opinions - has not identified any overlaps or contradictions between the Regulation’s provisions in scope of this study. However, some areas for improvements have been identified. In this respect, there are areas where further guidance and clarity would be beneficial For instance, the Regulation does not provide any specific methodology to be followed by the Member States to review and assess the functionality of the surveillance activities. Similarly, the Regulation does not include provisions related to the principles of cooperation between the Member States (i.e. spontaneous and/by request provision of information, fullest availability for cooperation, reciprocity basis, including in case of negative response/no information). At present, provisions about the implementation of market surveillance are too general, thus allowing for significant differences in the implementation of the Regulation in terms – for instance – of communication and collaboration tools existing within/among Member States, endowments of powers and resources, “adequacy” of checks.

One of the difficulties in the lex specialis rule follows from the relative unclarity of the distinction between "general" and "special". It follows that no rule can be determined as general or special in the abstract, without regard to the situation in which its application is sought. Thus, a rule may be applicable as general law in some respect while it may appear as a particular rule in other respects. This principle is often difficult to apply in practice and requires a careful comparison between two sets of rules. As a result, it is not straightforward to assess which provisions of the Regulation apply and which articles of the sector-specific legislation are covered by the lex specialis principle. These interpretation problems often result in an excessive administrative burden and in legal uncertainty.

The purpose of this 'lex generalis'-principle is to solve any conflict between legal rules. One way to organise relationships between different legal rules is to conceive them in terms of relations between what is "general" to what appears "particular". The question of how to deal with specialised sets of rules in their relationship to general law and to each other is usually dealt with by two sets of doctrines: the interpretative maxim lex specialis derogat lex generali and the doctrine of self-contained regimes. Legal literature generally accepts the lex specialis as a valid general principle of law. In accordance with the principle lex specialis derogat legi generali, special provisions prevail over general rules in situations which they specifically seek to regulate. Many stakeholders consider that the concept of lex specialis is a suitable interface to address market surveillance in specific sectors, as it is relevant and causes no difficulties in implementation.

·Secondly, Articles 27, 28 and 29 (i.e. controls of products entering the Union market) apply to all products covered by Union legislation in so far as other Union legislation does not contain specific provisions relating to the organisation of border controls.

·Firstly, Article 15(2) specifies that each of the provisions of Articles 16 to 26 (i.e. the Union market surveillance framework) apply in so far as there are no specific provisions with the same objective in Union harmonisation legislation.

EQ13. Is the concept of lex specialis still a suitable interface between the market surveillance provisions in the Regulation and those in other (notably sector) legislation?

The issue of the scope was also raised in a UK public consultation about the pending 'Market Surveillance proposal', 13 respondents (7 trade associations, 2 government agencies, 1 local authority, 1 individual, 1 micro business and 1 ‘other’) did not think the scope gave enough clarity on the coverage provided by market surveillance activity on certain products, whilst 19 respondents (9 trade associations, 2 government bodies, 2 local authorities, 5 large businesses and 1 ‘other’) thought that it did. Of those that considered that the proposal’s scope did give enough clarity, 4 respondents (3 trade associations, 1 government body) thought that, although the scope was generally sufficiently clear, clarification was needed for specific provisions pertinent to their own interests. Similar remarks were made by European business associations and during the Council Working Party meetings about the proposal.

Notwithstanding the lack of clarity of the scope, there seems to be a common understanding that Union legislation that regulates commercial practices is excluded from the scope of the market surveillance provisions. Its enforcement is subject to Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the Regulation on consumer protection cooperation).

Yet, it is unclear whether Articles 15 to 26 of the market surveillance provisions apply to other directives and regulations. For example, the question arises if other Union legislation falls within the scope of Regulation (EC) No 765/2008, and especially Union legislation that either regulates certain aspects of the marketing of products, or merely restricts or prohibits the marketing of products. Some confusion on the scope of the Regulation has emerged also from the analysis of national reports (some of which added sectors not in the scope of the Regulation), and considering input from economic operators.

Article 15 of Regulation (EC) No 765/2008 defines ‘[Union] harmonisation legislation’ as ‘[Union] legislation harmonising the conditions for the marketing of products’. Union harmonisation legislation includes the legislation that expressly confirms that the market surveillance provisions apply. Other Union harmonisation legislation also refers to these provisions. Although there is no cross-reference between the market surveillance provisions and the legislation listed below, there seems to be no doubt among stakeholders that the definition of Article 15 includes the so-called 'New Approach' legislation as well as other legislation on non-food products.

EQ12. Is there an issue on the scope (i.e. all EU product harmonisation legislation) of the measure or some of its provisions?

Consumer and business organisations views point in the same direction. They indicate that Regulation (EC) No 765/2008 goes in the right direction to achieve effective or efficient enforcement of EU product rules but that market surveillance should be further strengthened.

(6)There is a lack of cooperation by certain economic operators and some abuse by businesses of the legal principles concerning the notification of restrictive measures contained in Article 21 (1) and (2) of Regulation (EC) 765/2008.

(5)There is a lack of knowledge amongst economic operators about applicable product rules. In some sectors formal requirements such as technical documentation and CE marking are disregarded by businesses, possibly due to lack of knowledge or misunderstanding of those requirements.

(4)Penalties laid down in national law might not be a sufficient deterrent, in particular in the case of larger companies trying to market non-compliant products;

(3)There is the difficulty of dealing with products from third countries sold via informal channels (marketplaces), and the ineffectiveness of market surveillance techniques in this case.

(2)There is a need to reinforce customs controls. Furthermore, to make it harder for non-European manufacturers, whose non-compliant products have been rejected by a customs authority, to switch to other customs clearance locations, improved cooperation between the customs authorities of the EU Member States also seems necessary. For some Member States there exists a mismatch between the customs product classification and the nomenclature used by market surveillance authorities, which hamper cooperation in some areas.

(1)Current control procedures are not suitable for handling products sold online. Moreover, for effective market surveillance of products sold on the internet and that are offered from outside the EU, collaboration with customs authorities is of crucial importance.

Market surveillance authorities identified different topics to which the Regulation does not provide satisfactory answers and where progress could be made ('common challenges'):

Overall, the Regulation meets stakeholders’ needs in the sense that it is relevant in relation to their needs. Stakeholders consider the existence of market surveillance provisions as a major step forward, compared to the situation before 2010, while pointing to cross-border cooperation and controls at the external borders as areas where progress can be made.

EQ11. To what extent do the effects of the market surveillance provisions satisfy (or not) stakeholders' needs? How much does the degree of satisfaction differ according to the different stakeholder groups?

Similarly, the market surveillance provisions only address in very general terms that Member States have to entrust their market surveillance authorities 'with the powers, resources and knowledge necessary for the proper performance of their tasks.' Yet, it is undisputable that the resources for market surveillance authorities were reduced in many Member States as a direct consequence of budgetary constraints, and that the market surveillance provisions were not relevant in addressing this problem.

The market surveillance provisions in the Regulation provide national authorities with basic powers (request information, take product samples, enter business premises) however they do not specifically take into account the shortening life of a number of mass products, which require for instance increased cooperation with the relevant economic operator, ability to act quickly to restrict the marketing of non-compliant goods (also taking necessary interim measures) and informing consumers.

Products stored in such fulfilment houses are considered to have been supplied for distribution, consumption or use in the EU market and thus placed on the EU market. When an online operator uses a fulfilment house, by shipping the products to the fulfilment house in the EU the products are in the distribution phase of the supply chain. The Commission indicated that the activities of fulfilment service providers go beyond those of parcel service providers that provide clearance services, sorting, transport and delivery of parcels. The complexity of the business model they offer makes fulfilment service providers a necessary element of the supply chain and therefore they can be considered as taking part in the supply of a product and subsequently in placing it on the market. Thus, where fulfilment service providers provide services as described above which go beyond those of parcel service providers, they should be considered as distributors and should fulfil the corresponding legal responsibilities. Taking into account the variety of fulfilment houses and the services they provide, the Commission concluded that the analysis of the economic model of some operators may conclude that they are importers or authorised representatives. However, several member States indicated that this guidance is unsatisfactory.

When only the fulfilment service provider is located in the EU, the only way for authorities to verify that products comply with EU applicable legislation is to contact the fulfilment service provider, which may not cooperate on a voluntary basis. In order to take investigatory or enforcement actions, authorities would need a strong legal basis which prevents any risks to successful prosecution.

This new business model of use of fulfilment service providers raises challenges for authorities, especially when the economic operator selling the goods (manufacturer, online platform) is located outside the EU and the transfer occurs directly between that economic operator and the consumer located in the EU, without any identifiable responsible economic operator within the EU to be held accountable. The only identifiable EU economic operator in the supply chain is the fulfilment service provider that stores the goods.

Fulfilment services can be described as services provided by a company that will store products, receive orders, package products and ship them to customers. There is a wide range of operating scenarios for delivering fulfilment services. Some fulfilment service providers offer all of the services listed above, while others only cover them partially. Their size and scale also differ, from global operators to micro businesses operating from small premises. Their willingness to collaborate with authorities also varies; some fully cooperate with authorities, while others do not, mostly because they are not aware of the safety and compliance obligations applicable to the products they store/deliver.

During the last years, there was a lively debate among market surveillance authorities and businesses whether the market surveillance provisions also apply to new types of businesses in e-commerce, such as 'fulfilment service providers'.

The overall limited relevance of the Regulation to online sales, including from third countries, is underlined by stakeholders. The concepts of 'online trade' and 'e-commerce' do not appear in the provisions, and the definitions do not refer to online traders. One could argue that the provisions are sufficiently neutral to cover which ever form of trade, but the input from interested parties clearly shows that the market surveillance provisions fail to provide clear solutions for market surveillance on online trade, notwithstanding the existing guidance. Market surveillance on products sold online is particularly challenging, and the Regulation does not seem to be able to properly address related specificities. Specifically, the Regulation does not include specific provisions covering online sales, nor does it provide for definitions that account for its specificities. As mentioned above, the same definitions of “making available on the market” and “placing on the market” do not consider the complex distribution chains of online sales, as also highlighted by some stakeholders when discussing both import from third countries and online sales. Also, when considering the economic operators involved in the online sales supply chain, the Regulation does not reflect the latter complexity, for example leaving a grey area on whether fulfilment houses, which according to various stakeholders represent an increasing concern, should be subject to market surveillance. In general the Regulation does not specify if and how surveillance authorities can request information and cooperation from new types of economic actors playing a role in the supply of online sales but who may not fall within the traditional definitions of economic operators.

The relevance of the market surveillance provisions in view of new developments is becoming increasingly problematic:

EQ10. To what extent are market surveillance provisions of the Regulation still relevant in light of for instance increasing online trade, the increase in imports from third countries, shortening product life, increasing budgetary constraints at national level, etc.?

With regards to benefits, evidence already shown on the increase in the adoption of restrictive measures and corrective actions undertaken by economic operators shows that product non-compliance increased consistently from 2006-2009 to 2010-2015. As already mentioned, this data could be interpreted in two opposite ways, inasmuch as an increase in RAPEX notifications may also imply that Market surveillance authorities have become more effective in finding – and thus correcting – non-compliance. In any case, they indicate that a number of non-compliant products are still made available in the Single Market and that therefore the goals of the Regulation have not been fully achieved. No differences have been identified in country-specific patterns.

The differences in the budgets allocated to MSA activities and average costs might be related to the fact that Member States have different organisational models requiring different levels of financial resources. However, another possible explanation might be sought in the different approaches followed by Market surveillance authorities in reporting data concerning the used financial resources as well as the performed activities (e.g. definition of 'inspection').

Figure 21: Average annual budget available to Market surveillance authorities in nominal terms vs average no. of enterprises active in Harmonised sectors

Table 14 on Market surveillance authorities’ average number of inspections, costs of inspections and cost of tests show significant differences in the costs between Member States. The low correlation between the number of inspections and the size of national markets was explained in section 6.1.2.1. This is further proved by the comparison of the financial resources allocated to surveillance activities at Member State level with the size of local market of harmonised products when (imperfectly) measured by the average number of enterprises active in the national market as the average annual budgets allocated to MSA activities are not correlated with the number of enterprises active in the harmonised sectors.

EQ9. Are there any significant differences in costs (or benefits) between Member States? If so, what is causing them?

Therefore, the Regulation does not seem to be producing the envisaged benefits and the problem relatng to product non-compliance still remains. However, it is not possible to measure how this has impacted safety and uniform protection of consumers across the EU.

The analysis of responses to the survey highlights also that ‘Toys’, ‘Chemicals’ and ‘Electrical appliances under the Low Voltage Directive’ seem to be the sectors were the product non-compliance is more problematic. However, only for toys and chemicals is this perception confirmed by the indicators used to measure product non-compliance in the internal market.

During interviews, business’ associations were asked whether their industry had benefited from cost savings since the entry into force of the Regulation. The majority of the associations did not report cost savings as a result of the implementation of the Regulation in terms of administrative and operational tasks if compared to the situation prior to 2008. Furthermore, most stakeholders involved did not perceive a substantial variation in product non-compliance considering the period from 2010 to 2015; however the number of stakeholders that perceived an increase in product non-compliance is higher than the numbers of the stakeholders that perceived that product non-compliance diminished. This seems to be also confirmed by the increased number of RAPEX notifications and corrective measures taken by the Market surveillance authorities in the last few years.

EQ7. What are the main benefits for stakeholders and civil society that derive from the Regulation?

Unavailability of data about costs incurred by Member States Authorities in charge of market surveillance before 2008 did not allow for the calculation of additional costs deriving from new obligations introduced by the Regulation.

Streamlining the procedures for the notification of non-compliant products, which is currently carried out thorough two separate systems (Rapex and ICSMS), could further reduce administrative burden for authorities.

In addition there seems to be room for improvement in the drafting of national programmes. The administrative burden relating to this provision indeed seems sometimes higher than the benefits, especially because certain aspects of market surveillance activities do not change every year.

The analysis of the efficiency of the Regulation has been limited by the evident poor quality of data included in the national reports both in terms of completeness and comparability. This definitely shows the need for an in-depth reflection of the monitoring mechanisms in place that should allow the European Commission to get an updated and realistic picture on the implementation of the Regulation within the scope of this evaluation.

The fact that every Member State defines its own market surveillance approach (e.g. distribution of competence, interpretation of the concept of appropriate scale of controls, penalties) creates a high variation in the ways the different sectors are controlled and managed. Moreover, fragmentation throughout the Internal Market may interfere with Authorities’ early action and generate additional costs for businesses. Favouring a more consistent approach to market surveillance would there help reducing regulatory burden on economic operators. Different approaches may also reduce the efficiency of the market surveillance when responsibilities of national authorities are not primarily related to market surveillance of non-food products within the meaning of the Regulation and this creates overlapping and duplication of activities.

Most of the costs of the market surveillance provisions are borne by Member States and their market surveillance authorities. Enforcement costs for authorities are estimated on the basis of all financial resources assigned to market surveillance activities including communication and enforcement, related infrastructures as well as projects and measures aimed at ensuring compliance of economic operators with product legislation. Considering the limitations of the available data in terms of completeness and comparability, an estimation of the costs related to surveillance obligations is only possible for a limited number of countries that provided complete and reliable data in the reports. Even if the nominal budget for the countries considered remained virtually constant, the yearly number of inspections increased by 21%, while the yearly average number of tests in laboratories decreased by 7%.

As regards economic operators the evaluation has looked at possible costs related to information obligations as defined in Article 19 of the Regulation which are perceived as insignificant. On the other hand there is no evidence of any regulatory costs from the implementation of the market surveillance provisions. Compliance costs for businesses stem from the requirements in the harmonisation legislation, not from market surveillance provisions. Conversely, stakeholders argue that weak implementation would lead to supplementary costs. They indicate that ineffective controls at the EU’s external borders might create discrimination against European manufacturers as compared to their non-European competitors in the European internal market as well as the associated distortions of competition. They also suggested that the identification of non-compliant products might be reinforced by more effective cooperation between industry and authorities. In this way, market surveillance authorities could take advantage of manufacturers’ technical knowledge and might be in a better position to identify non-compliant products on the market and more efficiently set appropriate priorities for market surveillance activities.

The efficiency of the Regulation has been assessed in terms of costs incurred by different stakeholders, benefits produced, and the extent to which desired effects (results and impacts) have been achieved at a reasonable cost.

EQ6. What are the regulatory (including administrative) costs for the different stakeholders (businesses, consumers/users, national authorities, Commission)?

In conclusion, it is fair to say that the Regulation has not yet created a level playing field for businesses across the EU in light of the significant discrepancies in its implementation and of the dimension of product non-compliance. An unequal implementation also creates disparities in the level of enforcement and thus differences in the burden of controls borne by economic operators, which in some Member States and in some sectors is higher than in others. In addition, the increase in the number of non-compliant products signals that there are rogue traders that can still benefit from lower compliance costs, thus further hindering the achievement of a level-playing field within the internal market.

Table 13: Average annual number of RAPEX notifications on measures undertaken by economic operators over 2005-2009 and over 2010-2015

Similar conclusions can be drawn on the measures undertaken by economic operators to correct non-compliance. Since the entry into force of the Regulation, the most significant increase has been registered in the average number of notifications relating to product destructions.

Table 12: Average annual number of RAPEX notifications on measures undertaken by market surveillance authorities over 2005-2009 and over 2010-2015

On the other hand, however, the average number of RAPEX notifications has increased from one period to another in most Member States, with very few exceptions, which suggests that the Regulation has apparently triggered an increase in enforcement. Similarly, the number of restrictive measures imposed by Market surveillance authorities in reaction to non-compliant products has increased.

As already discussed, the Regulation has been implemented in different ways across Member States, resulting in an unequal level playing field among businesses in some Member States. Moreover, these discrepancies diminish the Regulation’s effectiveness in achieving a level playing field, inasmuch as they influence regulatory/ administrative costs to businesses across Member States (e.g. preparing documents and information requested by Market surveillance authorities/Authorities in charge of EU external border controls in implementing surveillance measures). Similarly, these discrepancies influence market behaviour (e.g. decision of companies to enter the EU market via certain Member States)

EQ5. How effective was the measure as a mechanism and means to achieve a level playing field among businesses trading in goods subject to EU harmonisation legislation? What have been the quantitative and qualitative effects of the measure on its objectives?

The evidence of an increasing number of non-compliant products covered by harmonisation legislation (as demonstrated by the rising number of RAPEX notifications and of restrictive measures taken by Market surveillance authorities) allows a conclusion to be drawn that the Regulation is not fully effective in relation to its strategic objectives of strengthening the protection of public interests through the reduction of the number of non-compliant products on the Internal Market and of ensuring a level playing field among economic operators providing a framework for market surveillance and controls of products. On the one hand, the increasing product non-compliance threatens the achievement of a high level of protection of public interests as long as these products present risks to consumers and end-users. On the other hand, a level-playing field among businesses trading goods subject to EU harmonisation legislation risks not being achieved as long as there is still the possibility for rogue traders to disregard legal requirements and sell non-compliant products.

Overall, there are still many products in the EU market that do not comply with legislative requirements. Similarly, the number of restrictive measures imposed by market surveillance authorities in reaction to non-compliant products has increased. Interestingly, the most significant increases have been registered in the most “coercive” measures (i.e. seizure, withdrawal, destruction). Other measures such as requests for information or corrective actions have even decreased. This could indicate that not only has non-compliance increased, but that its seriousness has worsened. Similar conclusions can be drawn on the measures undertaken by economic operators to correct non-compliance.

Table 10: Annual average value of harmonised traded products and average number of RAPEX notifications by product category over the periods 2006-2009 and 2010-2015

In order to better understand these increasing trends, it was useful to verify whether the average number of notifications is correlated wto the value of harmonised products traded in the internal market over the two periods considered (i.e. 2006-2009 and 2010-2015). However, since the product categories included in RAPEX slightly differ from the classifications available for the market analysis, only the following product categories were examined; a positive growth in the number of notifications is registered in five categories:

Overall, these increasing trends are consistent with those reflected in the national reports. As reported therein, Market surveillance authorities’ inspection activities resulting in a finding of non-compliance registered a positive average annual growth over the period 2010-2013 (13%), rising from 11,945 in 2010 to 18,316 in 2013.

The table below presents the average annual number of RAPEX notifications per category of products divided into two periods, i.e. 2006-2009 and 2010-2015, where 2010 is the year of the Regulation’s entry into force.

EQ4 - How effective was the measure as a mechanism and means to achieve a high level of protection of public interests, such as health and safety in general, health and safety at workplace, the protection of consumers, protection of the environment and security? What have been the quantitative and qualitative effects of the measure on its objectives?

An additional enabling factor has been identified in the (lack of) cooperation between enforcement authorities and businesses. Among the main reasons for product non-compliance in the internal market there seems to be a lack of economic operators’ knowledge on the relevant legislative requirements to be complied with, as well as a deliberate choice to exploit market opportunities at the lowest cost, possibly due to low incentives to comply with the existing rules. Several stakeholders expressed a need for a higher level of information flow from Market surveillance authorities to businesses and more practical guidance for economic operators. In the context of the interviews, an EU industry association suggested giving economic operators that are willing to comply the opportunity to do so before imposing sanctions, while another EU industry association suggested organising educational campaigns targeting economic operators.

The Regulation does not include specific provisions related to certain forms of cooperation between Member States, notably mutual assistance. This clearly impacts on the existing cooperation mechanisms and tools, as described in the previous sections. Finally, the Regulation is not specific enough to set a minimum and/or a maximum level of penalties, or any principles to define them. As discussed, this results in wide differences in the minimum/ maximum amounts within and across Member States, which lower the enforcement deterrence power.

Article 18(5)-(6) requires a periodical update of national programmes and a review of the functionality of market surveillance activities every four years, but it does not mention any timing for update, neither does it provide any specific methodologies for the review. The provision therefore does not foresee the provision of structured information from Member States to the European Commission relating to market surveillance activities, which is particularly evident in light of all the data limitations of national programmes and reports described in previous sections. This lack of harmonisation makes the national programmes and reports not immediately comparable across countries, which is a missed opportunity for Member States to benchmark and learn from each other’s experiences.

Overall, it seems these discrepancies are made possible by the general requirements set in the Regulation. This lack of specificity concerns the obligations of Member States as regards organisation (Article 18(3)). The Regulation foresees that Member States shall entrust Market surveillance authorities with the powers, resources and knowledge necessary for the proper performance of their tasks. However, without setting any minimum criteria or thresholds, this results in a wide variety of implementation forms, especially in terms of endowments of powers and resources. These are not always sufficient to grant an effective enforcement. The same considerations can be drawn of Article 19, stating that Market surveillance authorities shall perform “appropriate checks of products on an adequate scale”. As discussed, the “intensity” of market surveillance and the types of checks performed vary across Member States, this further deepening the differences in the enforcement levels.

Furthermore, controls are expected to be tougher in Member States where Customs act as Market surveillance authorities. If Customs have market surveillance powers, there is a substantial extension of their area of competence and a significant need for in depth expertise. While Customs powers are essential for the control of traded products, the introduction of Regulation (EC) No 765/2008 highlights the need for cooperation between Customs and Market surveillance authorities and with other EU Customs as a crucial element for enhancing market surveillance on imported products. In this respect, there are notable differences across Member States.

Powers attributed at the national level and the role of Customs in enforcing the Regulation influence the effectiveness of border control. For instance, based on the available data, 16 Member States do not have in-house testing laboratories for any (or almost any) sectors. The lack of laboratories, resulting in the impossibility for Customs to perform more in-depth and time-efficient controls, hinders potential improvement in border controls. However, in some Member States where Customs do not have laboratories, this shortcoming is compensated by Market surveillance authorities having their own laboratories in some sectors. On the one hand, this confirms that the testing is performed. On the other hand, the intervention of two different authorities (i.e. Market surveillance authorities and Customs) could make procedures slower.

Differences are also traced in Market surveillance authorities’ strategies for market surveillance. In general, proactive market surveillance is more cost-efficient than reactive market surveillance, because required resources can be defined in advance. However, not all market surveillance activities can be planned ahead. In order to avoid duplication, a market surveillance authority should check ICSMS and any other appropriate platforms (e.g. national database) to see if the same product has already been assessed. Once again it can be concluded that market surveillance is not uniform across the EU, being also strategically influenced by the level of resources, which is different from one Member State to another.

The availability of resources also influences Market surveillance authorities’ criteria for prioritisation of monitoring and enforcement activities. For instance, Market surveillance authorities and Customs determine the “adequate scale” of controls first on the basis of financial and human resources rationalisation, and then of product risk level. However, the Regulation requires Member States to give Market surveillance authorities all the resources they need “for the proper performance of their tasks”. This would imply that first Market surveillance authorities determine their targets in terms of controls, and sufficient resources would be given as a consequence. This may actually explain the low number of controls. Interestingly, the German Product Safety Act defines the adequate number of products to be tested by means of a “sample rate” (i.e. 0.5 products per thousand inhabitants per year, as an indicative target for each Federal State). The establishment of a clear benchmark makes it easier to calculate the number of MSA working hours and staff needed to perform such tests. However, the measure of adequate scale also depends on product features (i.e. whether it is a serial or single product).

The different levels of resources however have implications on the way Market surveillance authorities perform their tasks and therefore deserve consideration. For instance, Market surveillance authorities’ market knowledge in order to target checks is not sufficient in sectors that require specific skills. Moreover, few market surveillance authorities have their own in-house laboratories for product testing in the construction and in the chemical sector. Testing products is more costly and time consuming than simple documentary checks, since it often involves test laboratories and an officer is usually able to check only a few products per week (excluding the follow-up activities). The excessive costs of testing have been reported as the most likely explanation for the low level of surveillance in some sectors and they are, therefore, another possible explanation for the data gaps in the national reports. Inspections and testing in some areas are so costly that Market surveillance authorities usually perform or consider performing only documentary checks, this further confirming an unequal enforcement of market surveillance across sectors and across Member States. The higher or lower availabilities of laboratories for product testing seems to confirm a tendency to perform more or less laboratory tests at the national level.

A second element of differentiation is represented by available resources. As discussed, financial, human and technical resources vary greatly across Member States. There are significant differences in terms of budget availabilities to implement the Regulation’s provisions across Member States. Overall, the budget available for market surveillance decreased between 2010 and 2013 though variations at the national level did not follow a common trend. The budget indeed increased in nine Member States, decreased in seven and remained stable only in two. Possibly as a consequence of budget reduction, the number of inspectors also decreased. This picture suggests a diffused lack of resources for Market surveillance authorities, as also widely confirmed by stakeholders. In general, this is indicated as one of the main bottlenecks to market surveillance implementation and effective deterrence.

Crucial elements for the effectiveness of decentralised models are a clear attribution of tasks among authorities and to each MSA (i.e. that market surveillance is not just one "among other tasks" that a MSA has to perform in its daily activities – this also impacting on cost-effectiveness), the existence of a coordination board, the possibility for each MSA to have direct contacts with Customs, the visibility (to the public) of identity and contacts of relevant competent authorities. As far as the sector-decentralised model is concerned, formal channels and procedures for coordination are essential to have coherent policy approaches in different sectors. The crucial aspect for the local-decentralised model is to have a strong coordination body granting not only coherent policy approaches in different regions, but also coordination of investigations via a common database and a tool for common decision making.

Figure 18: Existing correlation between the level of decentralisation of market surveillance and the complexity of cooperation tools within a Member State

Each Member State organises market surveillance in a way that best suits its particular cultural and legal framework or legal system, so that there is no “one size fits all”. The lack of structured data on product non-compliance and on market surveillance activities makes the establishment of a causal link between the national organisation and the effectiveness of enforcement action not straightforward. Organisational models influence how market surveillance is performed, resulting in differences across the EU. For instance, as shown in the figure below, Member States with a centralised structure need to rely on fewer and simpler cooperation tools. In contrast, the more a Member State is decentralised, the more it needs to set up numerous and complex cooperation mechanisms.

The Regulation has been differently implemented across the EU. The first element of differentiation between Member States is their national organisation of market surveillance structures.

EQ3 - To what extent has the different implementation (i.e. discrepancies in the implementation) of the initiative in Member States impacted on the effectiveness of the measures on the objective?

EQ2 - Are there specific forms of the implementation of the Regulation at Member State level that render certain aspects of the Regulation more or less effective than others, and – if there are – what lessons can be drawn from this?

The above sections show the specific objectives identified in the impact assessment for the Regulation ((i) enhanced cooperation among Member States, (ii) uniform and sufficiently rigorous level of market surveillance, (iii) border controls of imported products) were only partly fulfilled.

Because of resource constraints the number of product compliance checks by customs remains fairly limited in relation to the number of imports. Stakeholders often report that the order of magnitude of controls in one of the biggest harbours is only 0.1%.

Other issues specifically inherent to online sales relate to products directly mailed to consumers, to the high number of intermediaries and to the low level of consumers’ awareness concerning the risks of buying products online.

However, it is often difficult to trace and intercept non-compliant products imported from outside the EU and entering through numerous entry points. The main difficulties relating to controls of imported products are due to a lack of jurisdiction of Market surveillance authorities outside of their Member State, and to a lack of direct communication between Market surveillance authorities and businesses, particularly – again - in the context of online sales. As a consequence, businesses are not willing to collaborate with Market surveillance authorities' requests for corrective actions, for information/documentation or for paying penalties for non-compliance. 65% of authorities participating in the public consultation confirm authorities do not know how to identify and contact businesses located in third countries and 59% confirm that businesses contacted do not reply to requests for information/documentation and for corrective action. Despite some existing informal international cooperation arrangements the number of non-compliant products that can effectively be traced backed to the economic operator and sanctioned at the source in 3rd countries remains limited .

Imports of harmonised goods from third countries represent a large and increasing share of products supplied on the EU market, as it went up from 24% in 2008 to over 30% in 2015. In 2015 they were estimated to value almost 750 € billion. Many respondents to the public consultation found it difficult to indicate the proportion of products imported from third countries in their sector; however the general perception among stakeholders is that imports are affected by non-compliance. The analysis of Rapex notifications supports the findings that the non-compliance of imports from extra EU is a relevant issue: from 2010 to 2016 notifications concerning imported products were around 75% of yearly published notifications and the percentage remained overall stable over the period. On average, 59% of total yearly notifications concern products from China.

Although stakeholders indicate that powers attributed by the Regulation to Customs are adequate and the procedures for the control of products entering the EU market foreseen by Articles 27 to 29 of the Regulation are clear, easy to apply, and still relevant, checks of imported products seem to be insufficient. Border control is indeed one of the most challenging tasks for market surveillance nowadays, in light of the increasing importance of EU trade with third countries.

As for the general rigorousness of market surveillance in the Single market, the serious lack of data and inhomogeneity of national reports do not allow for a thorough assessment. However, the analysis of information available on the amount of resources attributed to market surveillance and activities reported cast some doubts on the ability of market surveillance authorities to perform checks at an adequate scale. Lack of relevant information may in some cases be an indication of actual enforcement gaps. Furthermore the low usability of data available in national reports is already a finding itself of a drawback of the Regulation in the achievement of its objectives, inasmuch as the major evidence on its functioning (i.e. the effectiveness of market surveillance controls) is so fragmented to render difficult its analysis. The insufficient rigorousness of market surveillance is also supported by the stakeholders’ perception about the incapacity of the Regulation to deter rogue traders, and the discrepancies in the penalty framework.

This lack of uniformity allows market surveillance to be more rigorous in some Member States than in others. Potential effects are a less effective deterrence power and an unequal level playing field among businesses in some Member States, this also potentially generating an unbalance in the level of product safety across Europe.

The heterogeneity existing across Member States in the implementation of the Regulation allows the conclusion to be drawn that the level of market surveillance is certainly not uniform, given that Member States with more resources and powers have - at least - more tools for proper enforcement.

The lack of uniformity in authorities' powers and national procedures can also explain the difficulty of market surveillance experts to endorse the common lines discussed in the context of administrative cooperation because ultimately those are not binding within their national administrations and vis-à-vis national courts. This contributes to explaining the lack of European perspective in the organization of national surveillance.

Finally, a high level of heterogeneity can also be traced in the level of sanctions and related procedures. The mapping performed shows that the level of penalties differs both among Member States and across sectors. Similarly, procedures for imposing sanctions differ. In some Member States, Market surveillance authorities can directly impose administrative monetary sanctions together with restrictive measures. In other Member States instead, Market surveillance authorities are obliged to recur to Courts even to impose administrative monetary sanctions. As result of these differences, the current system of penalties and sanctioning powers does not provide sufficient deterrence.

These differences highlight that while some powers of inspection and powers of sanctions are uniformly attributed across Member States, others are not, with considerable differences that lead to different models of enforcement power across the EU.

Similarly, the sanctioning powers in 17 EU Member States, considering the 33 sectors covered by the Regulation examined in national reports are widely distributed across sectors and Member States.

In light of this, the current level of protection and legal support to consumers is lower if compared to that for products marketed through other distribution channels.

As a result, non-compliance of products sold online is a real issue, especially when e-commerce popularity has increased amongst consumersand when 78% of participants to the targeted survey reported that there are non-compliance issues related to online trade. Controls effectively performed are considerably less than those that are necessary. As a consequence, also the incentive for economic operators to be compliant is low, considering the low risk of being caught and effectively punished.

Despite some Member States having tailored strategies to tackle online sold products, the current market surveillance approach to online sales is still conducted in a fragmented and uncoordinated way.

Difficulties are exacerbated in the case of cross-border online sales, where action –that should be particularly fast- is lengthy and costly due to jurisdictional constraints and becomes basically irrelevant when third countries are involved. Indeed, tackling websites outside of the EU is very difficult: communication and response by economic operators even when clearly identified are very limited, and cooperation with Authorities from different countries is not always fast and effective. Moreover, border controls of goods sold online are particularly difficult since there is no previous information about shipments, Authorities are not informed in advance that products are being imported, and often there are no electronic declarations.

Third, in some cases, in light of the already mentioned complex distribution chain, the same identification of the responsible economic operator is challenging, and even when authorities have the power to shut down websites, this might take several months and the action is ineffective since, as described above, sellers can change name and domain in a short time.

Second, irrespective of the existence of explicit powers, bodies, or procedures for online sales, enforcement activities are not straightforward: market surveillance on products sold online is particularly challenging for most Member States, due to both the high volumes of products and websites involved (that would require resources that are not available), and the difficulties in inspecting and sanctioning the responsible economic operator given the complex (and sometimes invisible) distribution chain, with products most of time directly delivered to consumers.

First, specific powers of inspections and sanctioning related to online sales are present only in few Member States: most Market surveillance authorities do not have enough power to deal with products sold online and powers of sanction are generally not extended to those kinds of product.

Vis-à-vis these specificities, the majority of stakeholders face specific issues related to online sales and current market surveillance does not seem to be fully effective to online sales for various reasons.

·Consumers are not fully aware of the risks associated with buying products online.

·Online channels can be used to make unsafe, withdrawn products return on the market;

·Economic operators are often located in third countries and Authorities are not informed in advance that products are being imported;

·In many cases, the number of parties and intermediaries determine a complex distribution chain, where especially the role of fulfilment houses and commercial platforms is not clear;

·Even though a web shop is shut down, it is very easy to create a new web shop changing the name and the domain in a short time; as a result, unsafe products withdrawn/banned from the EU market can return on the market through a different website or under a different legal name;

·Online sales are characterised by a high number of small consignments, with goods most of the time directly delivered to consumers;

Online sales have become an important issue for market surveillance. The analysis undertaken highlights the following specificities as relevant to understand the challenges market surveillance faces in the case of online sales:

Differences in the allocation of powers are evident also when looking at powers related to online trade, which as the following box shows, represent a specific issue where a more uniform market surveillance approach would be required across Member States.

The following figure displays the extent of the inspection powers in a sample of Member States for which relevant information was available.

Differentiation has been assessed also in terms of powers of inspection, which are differently attributed to national Market surveillance authorities (and across Market surveillance authorities within the same Member State) as they are established by different national legislative frameworks. Whereas core powers such as performing documentary and visual checks, physical checks on products, inspection of business’s premises, and product testing, are common to most Member States, additional powers can be granted to Market surveillance authorities depending on the Member State and the sector considered, which makes the approach to inspections heterogeneous across Member States and sectors. The same picture applies to Customs that can have different powers depending on the Member State considered. For instance, the power to destroy products and to recover from economic operators the related costs is granted to Customs in some countries, but not all.

Finally, heterogeneity exists in the system of monitoring and reporting set up by the Regulation, i.e. the national reports. As discussed, the Regulation aims to create a framework for market surveillance controls and sets up a monitoring system (through Article 18(6)) to supervise how and to what extent these controls are performed. However, national reports are not uniform or comparable across Member States, and present a significant number of gaps and inconsistencies. These issues reflect the existing differences in the organisation models – which make it for instance difficult to collect and/or aggregate data on market surveillance activities – but also differences in market surveillance approaches – e.g. the different interpretations of what an inspection is.

·The second analysis shows that the average correlation between the number of inspections and the number of enterprises per Member State– though positive - is very low (i.e. 0.15), therefore suggesting that Market surveillance authorities’ activities and efforts are not related to market dimensions. However the interpretation of the actual values per Member State cannot be pushed further due to several shortcomings of this proxy .

·The first analysis suggests that in many sectors and many Member States the number of inspections is rather low in comparison with total population. Figures for the number of laboratory tests are much smaller, confirming that the large majority of inspections focused mainly on documentary and possibly visual checks of conformity. It is also noted that information provided by Member States on inspections carried out often only covers a subset of sectors where market surveillance should take place. In some cases these information gaps may be interpreted as an indication of the lack of market surveillance activities.

In order to assess to what extent market surveillance activities are proportionate to the dimension of the national market, the total number of inspections carried out by Market surveillance authorities has been compared respectively to the number of inhabitants and to the number of enterprises active in the harmonised sectors per Member State. It is stressed that both indicators represent imperfect proxies for the size of national markets and the results of the comparisons should be interpreted carefully:

The availability of resources seems to influence the depth of market surveillance controls. Some Member States perform a lot more physical checks of product than testing, and also have few in-house laboratories. Other Member States give higher importance to administrative aspects than to technical aspects, when checking compliance. Therefore, the intensity of enforcement activities varies across countries.

Furthermore, the availabilities of laboratories for product testing widely very across Member States, though a widespread lack of testing capacity can be identified.

·A similar trend was noted for human resources: over the period 2010-2013, a reduction of staff available to MSAs can be observed together with a concentration of staff in a small number of Member States. Furthermore, at least 12 Member States complain about the resources being limited.

·The total budget available to all Member States' authorities having reported the information, in nominal terms decreased during 2010-2013 period (from €133.4m to €123.8m); also it is concentrated in a limited number of countries and large differences could be noted in terms of budget available to each country during the four year-period.

·Available figures show that resources allocated to market surveillance amount on average to a few euros per thousand inhabitants (with the exception in particular of medical devices, cosmetics and toys) and from 0 to maximum 0.5 inspectors per million inhabitants.

Significant differences exist across countries regarding the availability of resources and numbers of inspections performed by the EU Member States in order to accomplish the tasks set out in the Regulation.

Firstly, the organisation of market surveillance is different across Member States, not only in terms of the level of centralisation of the organisational model (see section 5), but also in terms of available resources (financial, human, and technical). The amount of resources made available cast some doubts on the ability of market surveillance authorities to 'perform appropriate checks on the characteristics of products on an adequate scale'.

Nonetheless, a satisfactory level of uniformity and rigorousness of market surveillance has not been achieved yet. As regards the organisation of market surveillance at national level, Member States have implemented the Regulation in many different, specific forms, in terms of distribution of competences and internal coordination mechanisms, level of deployed resources (financial, human and technical), market surveillance strategies and approaches, powers of inspection and sanctions and penalties for product non-compliance. Apparently, there is no provision of the Regulation that has been implemented identically in at least two Member States.

The 2007 impact assessment of the Regulation was not very explicit on this point but foresaw that the preferred option would allow a more effective and efficient market surveillance. Furthermore, the relevant provisions in the Regulation are drafted in such general terms that it is impossible to measure precisely the progress that was made since 2010. For example, the market surveillance provisions oblige Member States to 'entrust market surveillance authorities with the powers, resources and knowledge necessary for the proper performance of their tasks' while market surveillance authorities must 'perform appropriate checks on the characteristics of products on an adequate scale'.

Coordination and cooperation mechanisms are significantly developed, consisting of an impressive number of initiatives, and all stakeholders recognise them as useful. However, they have not reached a level that can be considered satisfactory, especially considering those existing among Member States. In particular, despite the fact that necessary tools are in place to ensure cross-border market surveillance cooperation, they are not used to an extent sufficient to trigger effective coordination and efficient work sharing among surveillance authorities in the Single Market. There is still a need for higher level exchange of information, follow-up to enforcement carried out by other authorities and joint surveillance actions.

The overview provided in section 5 on EU financing made available on the basis of Regulation (EC) No 765/2008 shows that the initial calls for proposals launched by the Commission were very successful but the following calls were not. The reason for the limited use of EU financing of cooperation activities seems to be related to the complexity of administrative processes, both at the EU level as within the authorities who are also subject to national administrative rules. Notwithstanding simplifications in the grant management rules for EU co-funded projects and increased co-funding rates, market surveillance authorities have difficulties to take-up funding made available at EU level in the form of project grants . For each project a new partnership between different Member State authorities has to be constituted. The management of a project places a considerable burden on the lead authority expected to coordinate work with partners in other Member State authorities and to make financial commitments on their behalf. Member States complain about the lack of an administrative framework for the management of these actions and of the available money .

However, not all Market surveillance authorities participate in this form of administrative cooperation. Figures presented in section 5 show that during the 2014-2016 period for most AdCos (ATEX, CPR, EMC, LVD, MACHINE, PPE, PYROTECH, RCD, TOYS, WELMEC) about two thirds of Member States did take part in meetings (with a peak of 80% participation rate for the radio equipment group); however in others (GAD, LIFT, PED) only about 50% Member States participated in the meetings and in the case of CABLE, NOISE and TPED only about 30-40% of Member States were involved. Furthermore, according to the feedback received from AdCo Chairs, many Member States representatives participating in the meetings do not get actively involved in common discussions and activities. In light of this, the Commission has increased its support for these groups, underlining that the chairpersons bear a remarkable burden when organising meetings and that many Market surveillance authorities cannot attend due to budgetary constraints.

Authorities contacted through targeted interviews confirmed that participating in AdCos work proves to be essential for coordinating actions and keeping an eye on what Market surveillance authorities in other Member States do, as well as learning from each other. Furthermore, the number of AdCo groups has increased with respect to the period previous to the implementation of the Regulation, rising from “more than ten” to the current twenty-five This could possibly indicate an incentive to cooperate on sectoral market surveillance issues due to the introduction of the Regulation.

Furthermore, a closer look at ICSMS shows that, more than 80% of the cases transferred from one market surveillance authority to another ('baton passing') through the system are done within the same country. In addition, many of the cases that one market surveillance authority wishes to transfer to its colleagues in another Member State are rejected. The main reason for many rejections is that the 'target authority' considers itself as geographically or materially not competent to handle the case; a lack of resources was also frequently argued.

According to informal feedback from national experts, requests for mutual assistance among authorities in different Member States to supply each other with information or documentation and to carry out appropriate investigations are made and followed up only occasionally.

The respondents to the Public Consultation indicate that market surveillance authorities rarely restrict the marketing of a product following the exchange of information about measures adopted by another market surveillance authority in the EU against the same product. This occurs “sometimes” according to 34% of stakeholders and "never " according to 8% of respondents, while a minority declare that it occurs “very often” (12%) or “always” (6%). Cross-border cooperation remains problematic, according to the respondents .

Besides the sub-optimal use of information systems, cooperation between Member States faces additional challenges. Even if the majority (77%) of Market surveillance authorities and Customs consulted state that they cooperate with authorities based in other Member States and the large majority of Market surveillance authorities declare that they notify other Member States (75%), most of the Market surveillance authorities (78%) rarely restrict the marketing of a product following the exchange of information on measures adopted by another EU MSA against the same product.

The sub-optimal use of information systems to exchange information hampers also cooperation between Member States - that is mainly based on the use of those systems and on European-level initiatives (namely ability to respond and/or complement each other enforcement action, cooperation through AdCos, and joint actions).

However, the requirements of the provision on these programmes and reports are rather general, and this has led to the development of different practices in the preparation of these documents and hindered the provision of relevant information. Several efforts were made at experts' level to build common templates and procedures to capitalise the tools, which led to increasing uniformity in the content of the programmes. Nevertheless, information contained therein is often too generic to serve as a planning tool. Furthermore, many programmes are shared by Member States too late (i.e. months after the start of the period they refer to) to be able to learn from each other’s experience and enhancing collaboration . As regards national reports, important information gaps and issues of comparability of data limit the possibility to have a complete overview of market surveillance activities in the internal market.

The market surveillance programmes are considered potentially very useful by stakeholders because they are an opportunity to define market surveillance strategies and to inform consumers. The programmes are also useful to avoid overlapping of market surveillance actions, working as a tool for cooperation between market surveillance authorities. They can even contribute to ensuring a level playing field in Europe, since they allow Member States to acknowledge the differences in the enforcement actions and possibly to eliminate them. The national 'review and assessment' reports can importantly contribute to improving the effectiveness and efficiency of market surveillance activities since they help in verifying and monitoring implemented activities.

As for RAPEX, its use has significantly increased over the years, both in terms of the number of notifications and follow-up actions. Moreover, the number of follow-ups outweighed the number of total notifications from 2014, this possibly indicating that RAPEX is more and more recognised and used as an information tool for enforcing market surveillance. However, the use of RAPEX across Member States differs, indicating that some Member States are more proactive while others are more reactive in dealing with notifications. Yet, there are doubts on the full use of RAPEX considering that the number of notifications made in the system is not proportionate to the size of the national markets. For instance, Cyprus notifies on average more than Poland, Sweden and Romania. An obstacle to the use of RAPEX is the perceived redundancy of having different notification procedures and communication tools: some market surveillance authorities think that ICSMS, RAPEX and the safeguard clause should be integrated within a single information system to avoid double encoding of information and inco