·Awareness of EU network and user satisfaction with its services (by economic operators, consumers and other end-users; market surveillance authorities)

·Compliance rates by Member State/sectors and for e-commerce (improvements in availability and quality of information, progress in reduction of compliance gaps)

·Number of measures taken by other authorities 'replicated' in each Member State

To provide an adequate basis for the monitoring and evaluation of the initiative, reference levels will be established to form a consolidated baseline. The methodology to monitor trends in (non)compliance will be examined, to complete the information from market surveillance controls where possible with surveys based on sampling , across sectors or in a selection and for special supply channels (e-commerce, imports). An evaluation by the Commission of the functioning of the new legislative framework could be foreseen in the mid-term (e.g. after 5 years of implementation).

By using ICSMS the monitoring of operational activity could take place on an ongoing basis at least yearly (e.g. number of mutual assistance requests, restrictive measures taken). The review of Member States enforcement strategies, market studies, user surveys and the identification and implementation of common priorities by the EU Product Compliance Network would allow on a yearly to bi-annual basis an analysis of progress towards higher level indicators (e.g. control levels in Member States, compliance gaps, usage of compliance assistance schemes). In this regard, an important task for the EU Product Compliance Network would be to set up and monitor overall performance indicators and perform peer reviews.

The most efficient scheme for a future evaluation is to use ICSMS as a main source of information and, on the basis of the indicators, to assess whether the proposal was effective and efficient, relevant given the needs and its objectives, coherent both internally and with other EU policy interventions and achieved EU added-value. The monitoring through ICSMS would be completed by the work of the EU Product Compliance Network and the provision by Member States of more reliable and more comprehensive information on compliance rates and enforcement activity as part of their national enforcement strategies.

The evaluation of Regulation (EC) No 765/2008 and the preparation of this impact assessment revealed important gaps in available information and the quality of data reported by Member States. It will be essential to establish a robust system to verify whether and to what extent the proposal has been effective in reaching its objectives, and whether the objectives have been met efficiently (i.e. at least cost), as well as the reasons for its success or shortcomings. Meanwhile, a number of the current reporting requirements for market surveillance authorities need to be simplified in order to alleviate the administrative burden for authorities.

The preferred option only establishes general principles, procedures and operational support mechanisms to the extent necessary for smooth, coordination between Member States. In line with the principle of subsidiarity, the implementation of the measures, in particular the enforcement decisions and actions against concrete products posing risks, are carried out by Member States.

While the existing Regulation (EC) No 765/2008 already requires Member States to grant necessary powers to market surveillance authorities, the further specification of some common, future-proof powers is foreseen to ensure market surveillance authorities could act more uniformly and cooperate on a more equivalent basis in cross-border enforcement. These powers may have to be reflected in national procedural laws according to the current availability of such powers in the Member States. They are in essence a refinement of the existing requirements and would not unduly impact or interfere with the institutional choices of Member States or the set-up of their enforcement and legal systems.

The measures would neither affect the Member States' competences in market surveillance, nor would it interfere with national enforcement or judicial systems. The deterrent effect of certain tools would be improved and the reach of measures extended, yet building on existing tools and aligning with comparable tools in other EU policy areas. The preferred options would not affect internal division of competences among authorities at national level, as Member States would remain responsible for their institutional set up and designation of competent authorities for market surveillance.

The preferred option would thus allow to step-up coordination of public enforcement activities while respecting subsidiarity principles:

A very large majority of stakeholders endorse the need for more coordination of enforcement among Member States, better sharing of intelligence and knowledge. Pooling efforts in these areas, as envisaged in the EU Product Compliance Network, would allow overall resources for market surveillance to be used more efficiently and increase coordinated, joint control activities in priority areas related to intra-EU trade as well as imports. More exchange of information and discussion among EU authorities would contribute to more consistent enforcement and the easier replication and re-use of evidence and enforcement decisions across jurisdictional boundaries would help to save costs. The stronger deterrent effect of enforcement tools in the preferred option would be directed at businesses trading non-compliant products.

The preferred option would ensure consistent enforcement of Union harmonisation legislation across the EU and allow tackling efficiently non-compliance spanning over several Member States. The measures contained in the preferred option would provide a proportionate response to the challenges national market surveillance authorities currently face as their action is constrained by jurisdictional boundaries, while products circulate freely in the Internal Market and many undertakings implement their business models in several Member States or at the EU level. With the high levels of intra-EU trade in harmonised products and increasing imports, through the main entry sea- and airports, the enforcement action – or weak spots in controls - in individual Member States impact directly on others and the Single Market as a whole. Over 500 authorities are engaged in market surveillance throughout the EU territory. Some 5 million businesses in the EU produce or distribute products covered by this initiative, for a value of 2 400 billion € or 69% of all manufacturing products. The unfair competition by the persistent and widespread presence of non-compliant products would gradually erode this economic basis. Achieving performant, coherent and consistent enforcement of EU harmonised product legislation would require a commensurate coordination effort at the EU level, coupled with effective tools for market surveillance authorities.

The effects of the preferred option on the various stakeholders, including SMEs, are set out in Annex 3.

·The preferred option would have minimal costs implications for businesses that trade compliant products. The stepped-up enforcement coordination, better knowledge exchange, prioritisation and peer reviewed enforcement strategies supported by the EU Product Compliance Network, would create a more level playing field and a more transparent and predictable enforcement environment across the Single Market. As a result businesses may see a reduction of some of the negative impacts of the across-the-board inconsistencies they currently face. Businesses' regulatory costs stemming from the market surveillance rules relate to their information obligations towards public authorities (e.g. responding to requests from authorities, information on non-compliances detected). These costs only occur occasionally and are considered insignificant especially compared to ensuring product conformity and traceability. The preferred option would only marginally increase costs for some businesses: The mandatory digital publication of some compliance information would imply a cost of 22 M€/year in total for the economic operators concerned (manufactures and importers). Some 3rd country traders might incur some extra costs to ensure a person responsible for compliance information is available in the EU. On the contrary businesses trading non-compliant products would face costs to incentivise them to better internalise the full compliance cost (e.g. via recovery of control costs, reputation costs).

·Member States would face costs to adapt and align (some) of their legislation and procedures (set-up costs 700 000€ all Member States), and as main running costs the advice service by Product Contact Points (3.5 M€/year, all Member States). However they would benefit from significant efficiency gains and cost savings thanks to the increased joint actions and coordination, assisted by the EU Product Compliance Network. The stronger and more fit-for-purpose enforcement powers, enhanced enforcement cooperation tools and re-use of other Member States' enforcement decision and evidence would allow market surveillance authorities to realise important costs savings and rationalise the market surveillance framework in the EU.

Other costs relate to pilot funding support to national enforcement strategies of 1 to 3 M€. The other measures (mutual assistance, performance indicator system, web-portal) would amount to set-up costs of 1 FTE and 1.1 M€, and running costs estimated at 4.7 FTE. The systematic use of IT-tools to communicate strategies and enforcement information may result in a small reduction of handling costs by the Commission (-0,5 FTE).

·The main costs of the preferred option would fall on the EU budget in the case of Commission hosting in relation to the EU Product Compliance Network 18 M€/year (staff, overheads and an operational budget for the medium size estimate Network). In the case of the EU-IPO hosting of the Network no immediate costs to the EU budget would occur, apart from modest set-up costs (70 000€). Set-up costs to allow interfacing of the IT tool for market surveillance and customs systems (incl. Single Window development) amount to 3,2M€ over 5 years.

Advice on product legislation by Product Contact Points would help businesses to comply with the EU product legislation. More wide-spread and easy accessible compliance information would be ensured for all users by (1) digital publication of basic compliance information by manufacturers and importers; (2) more systematic publication of restrictive measures taken by authorities, and (3) a web-portal for voluntary measures business may undertake to recall dangerous products. Partnerships and collaborative enforcement tools would allow businesses and market surveillance authorities exchange sector and compliance information efficiently.

The added deterrent effect to enforcement tools would discourage the trading of non-compliant product (more systematic publication of restrictive measures, control costs' recovery in case of non-compliant products). The common powers for market authorities would span the full supply chain and include specific digital investigation and enforcement tools. Market surveillance authorities could more easily trace and contact a person responsible for compliance information when there are doubts or findings about non-compliance, require intermediaries in digital supply chains to cooperate, and sanction absence of responses or lack of cooperation.

More efficient work-sharing between authorities in the coordinated controls, and re-use of evidence and enforcement decisions would allow them saving time and costs, which in turn would become available to reinvest in additional controls.

The EU Product Compliance Network would pool resources and provide additional joint capacity so that more coordinated, cross-border controls could take place. National enforcement strategies and shared market intelligence with an EU-perspective would help prioritise and target controls better. Upgraded IT tools supported by the Network, including exchanges with customs, would allow market surveillance authorities to cooperate and report efficiently.

·Resources constraints leading to limited actual control activity, within the EU and on products entering the EU

Moreover, the common toolbox of investigative and enforcement powers for all market surveillance authorities would ensure that similar cases could be treated in the same rigorous way regardless of location. The EU Product Compliance Network would coordinate market surveillance actions, and based on Member State enforcement strategies, conduct peer reviews to ensure equally performant enforcement is available throughout the Single Market.

Working across borders would be made easier for Member States with new legal principles on the portability of test-reports, re-use of evidence and enforcement decisions taken in another Member State. Restrictive measures taken against non-compliant products in one member state could be more quickly and frequently replicated in other Member States, against non-compliant products traded within the EU and viz. imports. Thanks to effective mutual assistance requests, authorities in different member states could more easily call on each other to help in cross-border investigations and enforcement cases.

·A web-portal hosted by the Commission on voluntary measures taken by businesses on dangerous products (2(g))

·Obligation to appoint a person responsible for compliance information in the EU for 3rd country businesses when they do not work through an importer (3(d))

·Common investigative and enforcement powers for market surveillance authorities, adapted to new market developments, the global supply chains and e-commerce (2(d))

·Member State enforcement strategies to improve data and knowledge sharing and to help targeting enforcement and capacity building actions (2(b))

The differences between the hosting variants of the Network, either by the Commission or by the EU-IPO, are different in nature and require essentially a political balanced choice, between outsourcing of the Network to the EU-IPO with a more complex legal proposal and possibly more controversy in the inter-institutional phase and the feasibility of Commission hosting, taking into account the appreciation of the future multi-annual financial framework and resources that could be prioritised within the Commission to support the Network. Consequently the impact assessment does not express a preferred option among these hosting variants.

While the lower size variant of this Network would imply a significant improvement over the baseline in terms of enforcement coordination, more concrete impacts would require stepping up to the medium size variant which is consequently preferred as the targeted scale for the Network.

The EU Product Compliance Network is the measure entailing the most significant costs and would ensure a pivotal role in realising the expected improvement of enforcement in the Single Market.

Accordingly, the preferred option would be Option 3 (measures of option 2 and additional measure of option 3). This option will address in the most effective and efficient manner all policy objectives to lead to less non-compliant products and a fairer Single Market.

Option 2 would be much less ambitious compared to enforcement in other policy areas, where stronger tools and stronger EU level coordination would apply. Option 3, however, would align the enforcement of Union harmonisation legislation for non-food products to the enforcement in other policy areas (competition, food and feed controls, data/privacy and consumer protection). Option 4 would also be very coherent with enforcement in other policy areas. However, option 4 would also have quite considerable impacts on fundamental rights which should be explicitly addressed.

The costs of option 2 would be quite modest. Member States would incur some costs to align to new powers and procedures. The Commission/EU would incur modest cost for the improved performance monitoring. Adding on option 3 would be much more efficient for the Member States who would benefit from significant efficiency gains and costs saving (better cooperation procedures, coordination and Network support). However, the EU budget would incur significant cost for the establishment and running of the EU Product Compliance Network in case the Commission would host the Network; far reduced costs for the EU budget would results from the EU-IPO hosting variant. Businesses that sell non-compliant products would incur more costs as a result of a stronger improvement of market surveillance but would be expected to internalise these costs. The addition of option 4 would be quite costly, particularly for Member States as a result of the profound revision of their national systems and their administrative and criminal sanctions. In parallel, businesses would also incur costs for providing and updating full compliance information in the central database and expose their commercially sensitive information to high risks of undue access.

Overall as regards the effectiveness of the different options to achieve the policy objectives identified, option 2 is expected to lead to moderate improvements of information provision and cooperation tools, and a slight improvement of the coordination of market surveillance. This option would also lead to a limited improvement of actual market surveillance activity and controls. Adding on option 3, however, would be much more effective for improving the coordination of enforcement, and for achieving cross-border market surveillance. It would also constitute a considerable improvement of the deterrent effect of market surveillance tools and incentivise businesses to comply. The effectiveness of option 4 would also be high as a consequence of the extended and direct applicability of national restrictive measures, the stronger coordinated enforcement effect in certain cases (wide spread infringements) and the direct access to full compliance information for market surveillance authorities.

The measures in this option would more strongly impact on fundamental rights, thus requiring safeguards or mitigating measures to be explicitly addressed.

Strong coherence with the strengthening of enforcement in other policy areas (competition, food and feed controls, data/privacy and consumer protection, or customs sanctions).

Positive coherence the strengthening of enforcement in other policy areas (competition, food and feed controls, data/privacy and consumer protection).

The strengthening of enforcement would remain lower than in other policy areas, where stronger tools and stronger EU level coordination would apply.

Extended direct applicability of other Member States enforcement decisions, EU level enforcement decisions and approximation of sanctions would significantly impact in Member states systems and be highly intrusive.

Proportionate measures to increase market surveillance and deterrence, based on coordination and cooperation without significant impact on Member States' systems.

The Commission hosting variant for EU Product Compliance Network would entail uncertainty over effective resource allocation; the EU-IPO hosting variant would entail more political risks in the adoption phase of the proposal.

High feasibility from technical and legal perspectives. Moderate improvement of the legal framework, yet limited progress in actual enforcement and controls would risk not meeting stakeholder expectations.

Member states would incur more significant costs (more profound revision of their national systems administrative and criminal sanctions).

"Cost" on businesses are linked to correction of infringements, internalisation of these costs by companies whose products are found to be non-compliant.

Instead the EU budget would incur moderate to significant cost for the EU Product Compliance Network in case of the Commission hosting the Network; zero to reduced cost to the EU-budget would result from the EU-IPO hosting variant of the Network.

Significant improvement in enforcement (extended and direct applicability of national restrictive measures) and stronger coordinated enforcement effect in certain cases (wide spread infringements). Improved access to full compliance information for market surveillance authorities.

Some measures would have limited support from Member States in particular as they would seem to impact too heavily on national legal systems and enforcement prerogatives (direct enforceability of restrictive measures from other Member States, approximation of sanctions, adoption of EU level enforcement decisions). Businesses would not favour a centralised scheme for digital compliance. The feasibility of this option from political and stakeholder acceptance perspectives is therefore considered to be low.

Costs for Member States would on the one hand be very significant linked to the profound adaptations of their legal systems to include the approximated sanctions; on the other hand they would benefit from efficiency gains and cost savings due to the single process for widespread infringements and by relying even more than in option 3 on other Member States' decisions and evidence. The EU budget would incur moderate additional costs to cover the added tasks of the EU Product Compliance Network (in case of the Commission hosting the Network) to deal with widespread infringements and the centralised digital compliance database.

The direct enforceability of national restrictive measures in the whole of the EU and against non-compliant imported products, after a safeguard consultation procedure, would significantly increase the effect of restrictive measures against non-compliant products and would add to the deterrence of market surveillance. For certain widespread infringements the single process coordinated by the EU Product Compliance network could achieve potentially faster elimination of infringements in the whole EU territory and would increase the visibility of EU enforcement action. Approximated sanctions would in principle set a better level playing field, in particular for penalties, and would facilitate cooperation procedures up to actual imposition of penalties. A centralised database with full compliance information provided by businesses would enhance transparency for all users in the product supply chain and facilitate market surveillance authorities' work. This option would therefore maximise the coordination and consistency of enforcement in the Single Market.

This option would meet with broad stakeholder support, regarding the measures' content and the focus on increasing controls and deterrence throughout the EU. It would extend the deterrent effect of certain enforcement tools, however within the scope of market surveillance practice and applicable enforcement tools in relevant other policy areas. The increased operational support would build on and expand existing joint projects and networking activities that meet with strong Member State support. The feasibility of this option from technical and legal perspectives is therefore considered to be high. The hosting of the EU Product Compliance Network in the Commission would however be subject to greater uncertainty over the effective resources that could be allocated and maintained to the Network's Secretariat. The EU-IPO hosting of the Network would lead to a more complex legal proposal, amending the EU-IPO founding regulation to add market surveillance to its mandate, with the associated political risks for the adoptability of the proposal.

The added deterrent effect to enforcement tools would discourage the trading of non-compliant product (more systematic publication of restrictive measures, control costs' recovery in case of non-compliant products). Market surveillance authorities could more easily trace and contact a person responsible for compliance information whenever there are doubts or findings about non-compliance. The mandatory publication of basic compliance information would facilitate users and authorities' access to such information.

Depending on its size and resources, the Network could achieve moderate to significant increases in coordinated controls, support prioritisation and targeting of action based on improved market intelligence at the level of the Single Market, as well as the Customs Union for imports, and conduct peer reviews of market surveillance performance in Member States. While the lower size variant of the Network (32 FTE, 6M€ operational budget) would imply a significant improvement over the baseline in enforcement coordination, the medium estimate size variant (59 FTE, 10 M€ operational budget) and a fortiori the higher size variant (90 FTE, 14 € operational budget) would be more effective in achieving concrete results based on noticeable stepped up joint control campaigns in all product sectors and robust underlying exchange of intelligence and enforcement information.

Adding-on to option 2, the easier transferability of evidence and enforcement decisions would make cross-jurisdictional cooperation much more efficient and allow Member States to benefit from cost-savings. The potential effect of individual restrictive measures in the Single Market and on imports would be enhanced. The EU Product Compliance Network would practically assist coordination and facilitate joint control campaigns. The pooling of resources and additional joint capacity would alleviate resources constraints in Member States that prevent them to engage in more coordinated, cross-border controls and to take the wider Single Market perspective better into account.

This option builds on existing legal provisions and tools that are already available and used in many Member States. The feasibility of this option from technical and legal perspectives is considered to be high and a few concrete simplification measures would be feasible in the short term. There is broad stakeholders support for the measures in this option, but it would not meet stakeholder expectations in achieving more robust market surveillance activity and deterrence.

Formalised procedures for mutual assistance requests and a common toolbox of investigative and enforcement powers would allow market surveillance authorities to work more efficiently and effectively in cross-border cases and tackle infringements in digital and international supply chains. Better available information and assistance for businesses would help them to comply with product legislation upfront, avoiding costly corrective action. Increased monitoring and comparison of performances would give better oversight of the state of market surveillance across the EU and strategic member state enforcement strategies would allow targeting controls better. However this option improves first and foremost the legal framework and procedures. This option would be less instrumental to overcome resources constraints, and as such it would be unlikely to trigger a noticeably increase in actual control activity or coordinated enforcement. Modest costs would be incurred by the Commission and the Member States.

Magnitude of impact as compared with the baseline scenario (the baseline is indicated as 0): +++ strongly positive; ++moderately positive, + positive; neutral; - - - strongly negative; - - moderately negative, - negative;? uncertain; n.a. not applicable. When talking about costs: + means 'savings', while – means 'cost'

4(d) In addition to the digital publication of the Declaration of Conformity (option 3 g), the centralised product database should ensure appropriate security of its contents (protection of commercial property).

4(c) For the implementation of an approximation of sanction it would be essential to ensure the rights to effective remedy, fair trial, right of defence and the principles of legality and proportionality.

A right to remedies for the consumers stemming from the purchase of non-compliant goods would strengthen the current set of consumers rights and thus empower consumers and their confidence when buying goods.

4(a) / (b) The national restrictive measures would only take place in the case of confirmed non-compliant product(s), after investigation by market surveillance authorities. For the joint, single investigations by the Network the decision to launch an investigation would need to be duly motivated and recorded. Non-compliant products infringe EU product law and thus compromise the public interests these rules set out to protect (e.g. health and safety of users, consumer and environment protection). The existing principles of proportionality of restrictive measures by market surveillance authorities and consultation of the economic operator prior to a restrictive measure remain fully applicable. The same principles would apply to the joint, single procedure. The national restrictive measures themselves would be subject to national procedural safeguards and remedies; or to the European Court of Justice for decisions taken in widespread infringement cases by the EU Product Compliance Network/Commission.

Certain measures in this option may impact on fundamental rights. In accordance with Article 52 of the Charter a careful balancing of limitation to these rights has to be made with the objective of general interest of protecting consumers, users and the environment from unsafe and non-compliant products.

Improving enforcement of legislation aimed at the protection of the environment (e.g. legislation chemicals substances, detergents, pollutant emissions, etc.) is expected to have a positive environmental impact.

The increased enforcement, including the efficient tackling of widespread infringements and stronger deterrent tools in this option will have a positive preventative impact on consumer protection and product safety.

Some further positive impacts on employment could be expected due to reduced unfair competition and an improvement of competitiveness.

Consumers and other professional users, including SMEs, would have easier access to product compliance information (centralised digital compliance information, more visibility of restrictive measures, including widespread infringements). Improved information and better compliance levels that would be achieved in this option would also benefit consumers in terms of lower search and transaction costs, as product would be more truly comparable in the purchasing process.

This option would maximise the consistency of enforcement, providing more predictability and legal certainty to cross-border trading businesses, in particular SMEs.

This option would further improve the functioning of the Single Market with wider-ranging, faster decisions against non-compliant products (manufactured in the EU and/or imported) and with more deterrence effect. Competitiveness of law-abiding companies would be improved due to the further reduced unfair competition from non-compliant products.

4(d) The Commission would incur the cost of the set-up of the centralised product database and the maintenance (set-up 4.5 M€, maintenance costs 450.000€/year ).

4(b) The added mandate to the EU Product Compliance Network to conduct investigations and take decisions would imply a one-off setting up of internal procedures (0,2 FTE). It would require resources to manage the single investigation and decisions for the widespread infringements and coordinate the consultation and input into the investigations by member states, consultation of economic operator(s) (for each case 0,5-1 FTE, 69,000€-138,000€ and possible testing costs, depending on the products/test a few hundred to thousands € per product). The number of cases would not be very high in the first years, but would develop with increased coordinated market surveillance (e.g. one or two cases in a majority of sector by year, would total for around 15-20 sectors the need for 10-20 FTE). This tasks would not seem feasible in the lower variant of the Network (30 FTE, 6 M€ operational budget), but could be more easily phased in the medium (60 FTE) and higher (60 FTE) estimated sizes.

4(a) The extended enforceability of national restrictive measures could entail some additional costs for the Commission, but these are not expected to be very significant (mainly monitoring of the notifications, which could however be facilitated by the EU Product Compliance network (3 b)). The right to remedies for consumers would not entail any cost for the Commission.

4(c) The approximation of sanctions would entail significant costs for Member States to adapt their national systems for administrative and criminal sanctions including penalties . The alignment cost of national systems would vary according to the national structures.

4(b) The extended mandate of the EU Product Compliance Network to perform investigations and adopt enforcement decisions would require the coordination and participation of market surveillance authorities for the widespread infringements concerned. On balance market surveillance authorities would save costs, as the joint, single process would be managed by the Network, and allow sharing out efficiently the investigation and legal analysis tasks, according to need. Based on estimates of the average cost of product investigations potentially available everywhere in the Single market rough estimates of cost savings for a single investigation could total at least some 20 000 €.

In most Member States a procedure for remedies for consumers and other end-users would need to be adapted or created and this implies additional costs, which however are difficult to quantify due to several different organisational structures.

The introduction of the measure would entail alignment of procedures and legislation in the Member States. The higher number of safeguard notifications to submit and review would require additional effort (1-3 FTE/Member State, 3,5 M€/year).

4(a) The extension of enforceability of national restrictive measures would not entail costs related to the initial investigation. The more extensive consultation with other Member States may sometimes involve a need for discussion and resolution of objections . Market surveillance authorities relying on the initial investigation and decision when they encounter the same non-compliant product later, would save an important part of costs (testing, more limited procedural costs).

The main costs are linked to the risks of undue disclosure or access to commercially highly sensitive information in the technical documentation, and potential loss of confidential information to competitors. Even individual incidents would entail very high costs for the companies concerned and would outweigh possible benefits.

4(d) Comparatively to the total compliance costs, the additional cost for the companies concerned (manufacturers, importers) to upload and update the documentation in a central database is relatively modest: around 122,37 €/year (for different company sizes ranging from 105,52 €/year to 144,54 €/year) . For larger companies and/or those manufacturing complex products with many compliance documents there may be one-off set-up costs to allow automatic updating or transferring of documents to the central database. These one-off costs could be considerable but are difficult to estimate as they depend on the number of products/compliance documents and the extent of each company's systems.

4(c) Approximation of sanctions as such would not entail costs for businesses. Sanctions when applied would only concern businesses trading non-compliant products.

The right to remedies to consumers would imply additional costs for businesses selling non-compliant products. Should remedies be contractual this would imply a direct cost for the distributor who made available the product to the consumer, amounting to the selling price of the product, and a cost to the manufacturer against which the distributor has a right to redress, according to procedures under national jurisdictions. Should remedies be non-contractual, damages would largely depend on the type of product and the personal detriment to the consumer.

4(a) / 4(b) Costs of extended enforceability of national restrictive measures and the single investigations and decisions by the EU Product Compliance network would concern businesses trading non-compliant products. They would face single proceedings, instead of multiple ones.

Approximated sanctions, including penalties, would further reduce the burden on Member States when they need to follow-up those cases where the trader does not comply with the restrictive measures. A more common framework on the types and levels of sanctions would facilitate the handling of the enforcement phase of cases that originated in other Member States (especially in administrative proceedings).

The direct applicability of national restrictive measures, centralising for widespread cases the investigation and decision into one single process and decision by the EU Product Compliance Network would simplify and reduce the handling of separate national proceedings in the Member States.

4(d) In the public consultation 68% of authorities rated a centralised digital compliance system favourably. The majority (56%) of business respondents disapproved of this option (only 29% agreement).

4(c) 63% of respondents (54% of public authorities, 65% of businesses and 72% of consumers) to the public consultation favoured a more detailed common methodology in calculating fines and 65% (65% of public authorities, 65% of businesses and 63% of consumers) considered the deterrence of market surveillance would increase by imposing higher fines for serious non-compliance.

4(b) 63% of the respondents (49% of public authorities, 74% of businesses and 58% of consumers) agreed that the effectiveness of market surveillance would increase by using decisions against non-compliant products established by authorities of different Member States in close coordination (e.g. in a EU product Compliance forum) and being applicable simultaneously in all relevant jurisdictions. Only 43% of the respondents (47% of public authorities, 37% of businesses and 56% of consumers) to the consultation expressed support for the possibility of centralised decisions against non-compliant products supplied in various EU Member States by the Commission.

4(a) While 66% of the respondents (58% of public authorities, 69% of businesses and 77% of consumers) to the public consultation agreed that the recognition of national decisions in other EU Member States would increase the effectiveness of surveillance, only 33% supported the possibility of the direct applicability of national decisions in other Member States.

Distributors and other intermediaries could not have full access to documentation, but most of the detailed technical documentation would not be relevant for them in order to verify the compliance of the product with the legal requirements. They would find it easier to search a centralised database, instead of researching the information on decentralised websites of companies .

4(d) With a Centralised product database, with commercially non-sensitive information (declaration of conformity, user instructions) as well as the sensitive technical documentation, market surveillance authorities would benefit from the centralised, immediately available documentation. It could especially improve the availability of information on products from 3rd country manufacturers. A centralised database in itself however would not mean that the underlying information is correct and which would be a concern in relation to imports from China in particular. Moreover, for imports and within the EU, most of the interaction between companies and market surveillance authorities when they investigate a product concern specific questions and issues beyond the documentary information .

The feasibility of approximation of the types of sanction and corresponding level of penalties may be low as it could be perceived to constitute an undue interference in the design of Member State enforcement systems as this is a fundamental aspect of how enforcement systems are set up .

However the likelihood of detection and the certainty of sanctions play a more important role than severity of sanctions in deterring crime . Furthermore, even if all Member States would introduce the same notional minimum penalty into their national criminal codes, this would by no means result in a common penalty level available to the sentencing judge. The lower penalty level available to the sentencing judge is influenced by other legal mechanisms that continue to be diverse across national criminal justice systems. For example, rules on mitigation, aggravation and judicial powers to predetermine the proportion of the sentence that must actually be served can all significantly affect notional minima. Therefore, it is important to note that the in abstracto minimum sanctions provided for in the national criminal codes, the nominal minimum penalties, by no means correspond to the in concreto sanctions imposed in a specific case. Even if the penalty level could influence deterrence, rules on early and conditional release are also relevant to the calculus .

4(c) Approximation of sanctions, including penalties would help to increase the deterrent effect of the authorities' toolbox. The approximation of the types of infringements and non-criminal sanctions would create a more level field for companies in terms of the sanctions to which they are exposed. Businesses trading non-compliant products would be subject to more uniform penalties (possibly also more proportionated to the seriousness of non-compliance) regardless of their location.

The overall number of individual cases that could be tackled in this way might however be limited . Beyond cases related to widespread non-compliant products, this measure could however also be suitable and effective for certain supply streams or business models (e.g. specific imports supply routes, e-commerce business models involving several traders).

The possibility for the Network to conduct investigations and take enforcement decisions, would allow to further streamline work and reduce duplication of investigations and decisions (in the extreme 28 decisions would be reduced to one in this measure). One could see a potentially faster elimination of the infringement in the EU, compared to reliance on mutual assistance or gradual elimination as/when the concerned product is found and action taken in each Member State. The consistency of enforcement would be maximised in this measure.

4(b) The additional mandate to the Network to investigate and take decisions in case of widespread infringements (e.g. serious non-compliance found with well-known smartphones or toys brands) would improve the effectiveness of enforcement for the cases concerned and significantly raise the visibility of EU action (viz. EU traders and third country operators).

Overall, the extended direct application of national measures, coupled with approximation of sanctions 4(c), would allow focussing mutual assistance request on demands for complements to an investigation or systems audits, or cases that remain unresolved due to non-responsive traders and/or litigation. The rate of authorities that would never or rarely be able to follow-up on restrictive measures of other member states would be reduced .

The intensified consultation on all national restrictive measures as part of the extended safeguard procedures in this measure would contribute to the consistency of enforcement in the EU. The number of restrictive measures could however be significant , with possible difficulties for the authorities to effectively screen them in an extended safeguard mechanism. The feasibility of the measure may also be lower given that only a minority of stakeholders rated direct applicability of national measures favourably.

4(a) Direct enforceability of national restrictive measures and the right to remedies extended to the whole EU would further reduce duplication of work and different proceedings. The deterrent effect would potentially be very high and improve the response of traders to requests for voluntary measures in the initial phases of the proceedings, preceding the issuance of restrictive measures. Early resolution of non-compliance, avoiding coercive enforcement would add to the efficiency gains for market surveillance authorities .

Magnitude of impact as compared with the baseline scenario (the baseline is indicated as 0): +++ strongly positive; ++moderately positive, + positive; neutral; - - - strongly negative; - - moderately negative, - negative;? uncertain; n.a. not applicable. When talking about costs: + means 'savings', while – means 'cost'

The digital publication of the Declaration of Conformity by businesses would have an impact on protection of personal data, as the names of the persons signing the declaration would become more easily traceable when made available online. This impact could be moderated by allowing electronic seals or full company references, yet without personal names.

The implementation of the publication of restrictive measures (‘naming’, (e)) in this option may impact on certain fundamental rights (presumption innocence, right to due process/effective remedy, rights of defence, data-protection and right to privacy). The publication of restrictive measures contributes to risks prevention, increased information and awareness by users about the specific products involved and product safety and compliance in general. The publication of restrictive measures would concern primarily confirmed measures (rather than interim findings, yet to be investigated cases). This is without prejudice to the rapid publication of dangerous products, where due to the seriousness of the non-compliance and risk for the users, an early publication in the Rapid alert system is warranted as soon as possible. The restrictive measures themselves and their publication would be subject to national procedural safeguards and remedies.

In the implementation of the principle of presumption of non-compliance and the issuance of restrictive measure in cross-border cases (a), the right of defence and effective remedy would have to be ensured for the businesses concerned. The measures would only take place in the case of confirmed non-compliant product(s), after investigation by market surveillance authorities. Non-compliant products infringe EU product law and thus compromise the public interests these rules set out to protect (e.g. health and safety of users, consumer and environment protection). The existing principles of proportionality of restrictive measures by market surveillance authorities and consultation of the economic operator prior to a restrictive measure remain fully applicable. The restrictive measures themselves would be subject to national procedural safeguards and remedies.

Certain measures in this option may impact on fundamental rights. In accordance with Article 52 of the Charter a careful balancing of limitation to these rights has to be made with the objective of general interest of protecting consumers, users and the environment from unsafe and non-compliant products.

Improving enforcement of legislation aimed at the protection of the environment (e.g. legislation chemicals substances, detergents, pollutant emissions, etc.) is expected to have a positive environmental impact.

The EU Product Compliance Network would allow improving the public information and transparency of enforcement across the EU, similar to option 2 but with increased impacts. The peer reviews would contribute to promoting best-practices in good administration.

The increased enforcement and stronger deterrent tools in this option will have a positive preventative impact on consumer protection and product safety.

Some positive impacts on employment could be expected due to reduced unfair competition and an improvement of competitiveness of EU manufacturers.

Consumers and other professional users, including SMEs, would directly benefit from easier access to relevant information (publication restrictive measures, digital compliance information, identity/address of responsible economic operators (e.g. manufacturer) and a person responsible for compliance information in the EU where applicable). With more information and to the extent that actual improvement of compliance levels would be achieved, consumers would benefit in terms of lower search and transaction costs.

The improved consistency of enforcement across the EU would provide more predictability and legal certainty to cross-border trading businesses, in particular SMEs.

Due to the increased enforcement activity, easier cross-border enforcement cooperation and the added deterrent effect of enforcement tools, this option would have positive impacts on the functioning of Single Market as more non-compliant products could be detected and removed and unfair competition from rogue traders more effectively addressed. The stronger enforcement tools would incentivise operators to comply, including those supplying or sourcing from 3rd countries.

3(g) The mandatory digital publication of compliance information by businesses would not entail additional costs for the Commission.

The EU Product Compliance Network would support the relay of publication of restrictive measures issued by Member States and the sharing of information on restrictive measures information between market surveillance authorities and customs. The measures related to the enforcement toolbox ((e) publication of restrictive measures / (f) recovery control costs) are implemented by national market surveillance authorities and would not entail costs for the Commission or EU budget.

In particular in the lower estimated size of the Network (30 staff, 6 M€ operational budget), the cost would be comparatively modest considering the number of sectors to cover by this initiative . The medium size Network (59 staff, 10 M€ operational budget) would be more performant in achieving more concrete results with more and more regular actual controls and enforcement information exchanges that the input resources would support. While costs would be incurred for the Network at EU level, the joint activities would allow important efficiency gains for Member States and trigger cross-border controls and coordinated enforcement that is currently hampered by a lack of resources. In the baseline only few coordinated control campaigns are conducted and/or co-funded, so that a quantification of impacts over the baseline are difficult to project; however in principle the Network's cost-benefit ratio would be positive. Overall, put into perspective of the 500 market surveillance authorities that the EU Product Compliance Network would coordinate, the staff and costs levels are relatively moderate. If only 5 staff in each of the 500 market surveillance authorities would be related to activity with a cross-border dimension, the additional coordination staff projected for the Network would represent 1-4% .

·In case of EU-IPO hosting, while the costs would be incurred by the agency, the charge to the EU-budget would be limited to an ad-hoc grant or balancing subsidy in future years in case the EU-IPO own resources would not suffice (from an Internal market budget line/heading 1A of current Multi-annual Financial Framework). One-off start-up costs would be limited and relate to adaption of internal procedures and transfer of IT systems from the Commission .

·In case of Commission hosting of the Network, the costs would be charged in full to the EU budget (staff costs to as administrative costs to heading 5, and the operational budget, in principle Internal Market budget lines, heading 1A in the current Multi-annual Financial Framework).

The ultimate budget needs would depend firstly on the size variant and its corresponding lower, medium or upper ranges of staff and operational costs. Secondly, the hosting of the Network in the Commission or in EU-IPO would lead to differences in charges to the EU budget:

The main part of the resources would be dedicated to support for cross-border and coordinated enforcement activities and IT tools. Set-up costs to allow interfacing of MSA and customs systems (including Single Window development) amount to 3,2 M€ over 5 years (~640K€/year). The costs to conduct peer reviews would be covered by these estimated network costs, including the performance indicators and benchmark costs that form the basis for peer reviews (option 1).

3(b) / 3(c) The costs to support the EU Product Compliance Network could range from 10 to 26M€ per year in total for the Network's Secretariat, covering human resources (30 to 90 FTE), building/infrastructure costs and an operational budget (e.g. procurement of market studies, meeting support costs, product testing costs in joint control campaigns):

3(a) No additional costs would derive from the measures to ensure portability of evidence and enforcement decisions. The existing cooperation tool ICSMS includes in the baseline the functionalities to review enforcement decisions of other member states, to exchange test results and would be adapted for better mutual assistance exchanges in option 2.

For both 3(f) and 3(g) some limited initial set-up costs compared to option 2 would occur for authorities to familiarise themselves with access and use of digital compliance information and new powers, including possible adjustment of existing provisions at national level .

3(f) The authorities are expected to incur lower operational costs for investigations and corrective action thanks to the possibility to recover costs of checking products found to be non-compliant. The percentage of saving is directly linked to the share of non-compliant products found. For instance in the case of the “Market Surveillance Joint Action for Measuring Instruments-MarketSurv MID” on active electrical energy meters and heat meters, the costs of which amount approximately to 350 000 €, authorities could have been able to recover about 175 000€.

3(e) The publication of restrictive measures is expected to imply some (modest) additional procedural costs (notably to ensure businesses views are correctly represented and confidential information excluded).

Besides savings in administrative handling costs, Member States would benefit from efficiency gains due to joint preparations and legal analysis which they would have to perform each on their own if they were to do the controls purely on their own. In the baseline only a few coordinated campaigns take place, on an ad-hoc basis. Therefore compared to the baseline, precise efficiency gains are difficult to project, but examples from other areas and projects suggest that they could be significant .

3(b)/(c) Member States may have adjustment costs to ensure liaison to the EU product Compliance Network, including participation in the peer review mechanism . However on balance the Network would be able to take on project management and coordination tasks that now fall on market surveillance authorities' staff including ADCO chairs. Product testing costs that are part of joint actions could be financed directly by the Network. Pooling of resources (e.g. joint market studies, procurement of tests) would also allow costs savings to Member States.

3(a) The principles ensuring the possible re-use of evidence (portability of test-reports) across all Member States would allow important cost savings for the authorities re-using the evidence, partly or fully. The authorities would not duplicate the investigative phase but would nevertheless incur the costs of adopting own decisions. The total saving would depend on the number of cases in which a market surveillance authority could rely on evidence or decisions produced by others and the sector or type of investigation concerned (e.g. standard, relatively low cost physical testing for some consumer products or more complex tests involving chemical analysis). Costs of testing equipment and (outsourced) laboratory test represented 30 to 50% of recent market surveillance co-funded projects . No additional costs are anticipated linked to the communication of the initial evidence, since information concerning investigations (test reports, etc.) would be available through the existing cooperation tools (ICSMS).

3(g) Digital publication of compliance information could cause, for some companies, a one-off setup cost to create an in-house database with electronic versions of the documents to be uploaded. Costs would be limited (only non-sensitive documents are concerned; the declaration of conformity as such is a fairly simple document). Recurrent additional cost would be negligible at company level (estimated at an average of €48/year, according to company size from actual savings to €14/year to €102/year); totalling for all concerned companies in the EU around 22 M€/year .

3(b) The EU Product Compliance Network would not lead to additional requirements or need for extra compliance efforts by businesses, nor does it entail new reporting obligations. If anything the improved consistency and predictability of enforcement could reduce regulatory costs for cross-border trading businesses.

The bulk of additional "costs" linked to this option are strictly for businesses (both those based in the EU and in third countries) selling non-compliant products. They would be asked to face their responsibilities and bear the costs linked to non-compliance. They would also pay the cost incurred by authorities for controls and corrective action concerning their products 3(f). All these costs would be linked to the non-compliance found and its seriousness. Cost recovery would be proportionate to the expense effectively incurred by authorities to test the products. The measures would incentive more businesses to internalise compliance cost, instead of marketing non-compliant products creating unfair competition and placing cost on businesses that abide by the EU product legislation. Overall additional costs on compliant businesses will be more than compensated by the benefits in terms of level playing field as more deterrence will reduce the risk of 'free-trading' by unscrupulous operators.

3(d) Some businesses located outside the EU that place products directly in the EU (i.e. without an importer such as in the case of on-line sales) and who would not already have a contact in the EU, would incur cost to appoint a person responsible for compliance information. The overall cost of businesses regularly supplying the EU market would not increase because most of these businesses, as part of their normal supply chain, already have a business partner in the EU who would answer questions from market surveillance authorities and take steps to remove non-compliant products from the market. For the operators that supply directly to EU consumers from outside the EU, costs would relate to the selection of a party able to fulfil the function of e.g. authorised representative or importer and the set-up of the relative contract. Annual fees would range between about €360 and €1500 per year per business depending on the complexity of products. These costs concern only a portion of third-country businesses and do not imply an unequal treatment vis-à-vis other business, as they actually remedy the current unbalanced situation where EU and third countries businesses with a presence in the EU can be reached and possibly sanctioned by authorities while others cannot.

3(a) The authorities' reliance on existing evidence and enforcement decisions issued by a national authority would not entail significant additional costs with respect to the baseline. Administrative burden for businesses would be lower as the measures would avoid additional sampling and duplication of requests for information from different authorities concerning the same product. The burden for businesses consulted by an authority prior to the adoption of enforcement measure (e.g. to provide additional information/explanations and counter-arguments to the authority's assessment) is not expected to be higher with respect to the baseline.

The easier enforceability of market surveillance measures through the availability of a person responsible for compliance information and the possibility to order testing and compliance demonstration, directly from and at the cost of the economic operator, would reduce the burden on market surveillance authorities. They would spend less time and costs associated with tracing traders (in particular for imports) and other evidence gathering in the case of suspected non-compliance, as the person responsible for compliance information could be ordered to take care of this.

Concrete improvements for authorities would results in the short term from the common principles on test-reports portability, presumption of non-compliance, and issuance of restrictive measures in cross-border cases. These measures would provide more legal certainty to market surveillance authorities, who would find it easier to rely on evidence and enforcement decisions already produced by other authorities elsewhere in the EU. These measures would reduce and/or simplify the handling of infringement cases compared to the current situation where authorities often have to duplicate work also performed by other authorities on the same product. With clearer possibilities to issue restrictive measures directly to operators in other Member States, following the notification via a safeguard procedure, the authority in the country where the operator is established would not need to intervene in this phase – its role and thus handling costs could be reduced and limited only to cases where no satisfactory enforcement results could be obtained (e.g. residual mutual assistance requests to enforce sanctions).

As explained in the evaluation most of the enforcement costs stemming from current market surveillance rules are borne by public authorities, while regulatory costs on businesses only relate to information obligations (responding to requests from authorities, information on non-compliances detected) and are therefore regarded as insignificant by them.The enhanced enforcement coordination and priority setting supported by the EU Product Compliance Network and peer reviewed enforcement strategies would results in a better level-playing field, reducing some of the negative impacts of across-the-board enforcement inconsistencies that businesses face. The main potential for simplification and burden reduction lie nonetheless with authorities. This section focuses therefore on the measures in this option that would result in specific benefits in terms of administrative simplifications for authorities.

3(e) Respondents in the public consultation rated publication of restrictive measures as the top 1 measure to increase deterrence of market surveillance (75% (179 of 239) respondents agreed/strongly agreed). Authorities perceived the effectiveness of this tool higher (83%) than business respondents (67%).

3(d) 86% of the respondents (89% of public authorities, 85% of businesses and 80% of consumers) considered an obligation useful on businesses to appoint a person responsible for compliance information or designate an importer located in the EU. 67% support a broader definition of EU importer to explicitly include possible EU based main contractors of the manufacturer in the absence of another person responsible for compliance information in the EU.

In March 2017, the Commission consulted Member State market surveillance experts on the possible Network, its key tasks and options to host the Network in the Commission or in an existing EU Agency. While the remit of the Network would be coordination and cross-border enforcement issues, it was made clear in this consultation that the Network would not modify, replace or supersede responsibilities for market surveillance that remain the competence of Member States. The experts expressed broad support for an EU Product Compliance network , as an administrative support structure that would coordinate and assist implementation of market surveillance actions.

3(a)/(b) Authorities rank an increase in their resources as the best way to improve deterrence (87%, vs. 72% of overall responses). The efficiency gains in cooperation procedures and the increase in available resources that the EU Product Compliance Network could trigger, would be instrumental to overcome the current resources constraints.

66% of the respondents (58% of public authorities, 69% of businesses and 77% of consumers) to the consultation agreed that the principle of recognition of national decisions in other EU Member States increases the effectiveness of surveillance (contrasting with 33% that would support an even further step to simply apply any national decision across the EU).

3(a) 73% of the respondents (81% of public authorities, 69% of businesses and 69% of consumers) to the consultation agree that legal principles to ensure easy replication of measures taken by authorities in other EU Member States (e.g. portability of test results, presumption that products found to be noncompliant in Member State A are also non-compliant in Member State B) increase the effectiveness of surveillance. The possibility of using information on measures taken by another authority in the EU creates a spill-over effect ensuring they can be effective on a larger part of the Single Market (84% of respondents - 90% of public authorities, 80% of businesses and 84% of consumers).

Publication in decentralised manner, on the companies' websites, would come at minimal cost and offer flexibility for manufacturers and importers who would be responsible for publishing the declarations of conformity. The drawback is that it would be less easy for all interested parties, including traders, consumers and market surveillance authorities to find the information when it is dispersed over many websites. Additional tools (such as adding automatic object and data identification ) would however overcome this disadvantage.

3(g) Thanks to the wider digital availability of the basic product compliance information and manufacturer's details (on the Declaration of Conformity), authorities would be able to contact the economic operators more quickly and all parties in the supply chain and consumers will find it easier to access this information (e.g. to address questions, complaints) .

3(f) The more systematic recovery of control costs in the case of non-compliant products would have an important deterrent effect as it would increase the costs of infringement both in terms of money (recovery of costs borne by authorities for the controls and corrective measures) and with the publication of restrictive measures also in terms of reputation . The wider and more consistent application of cost recovery in all Member States would also level out possible perceived cost advantages or areas with weaker controls that could be exploited by unscrupulous traders.

3(e) The publication of information on restrictive measures would increase the transparency of information concerning compliance of products. Besides a blame message, publishing information on enforcement decisions also sends a message about correct behaviour therefore providing guidance to firms as to the correct implementation of product requirements . Availability of information on specific examples of non-compliances, especially when further disseminated by chambers of commerce and industry associations, also contributes to the goal of helping economic operators to comply. This measure will increase public opinion's awareness about the relevance of compliance and allow for increasing pressure from civil society and businesses peers . Disclosing information on non-compliant products identified by authorities and the companies involved in their supply triggers and empowers third parties (competitors, industry and consumers associations, etc.) to act as watchdogs pressuring companies to comply . They also allow responsible buyers to make more informed choice when purchasing products.

Respectively 85% and 69% of respondents in the public consultation agreed that the inclusion of an obligation to have an authorised representative and the possibility to broaden the responsibility of main contractors of the manufacturer (lacking other responsible persons) would increase effectiveness of enforcement. This would also be consistent with other policy areas such as data protection , and obligations in certain product sectors.

3(d) Detection and corrective action by authorities would be enhanced with the obligation to appoint a person responsible for compliance information in EU who would represent the 3rd country operator. Authorities would find it easier to contact and enforce requests for action, information such as the technical file, product samples etc. via such a person responsible for compliance information in the EU.

The medium and higher size variants of the Network could thus ensure a robust peer review cycle, underpinned by more and more regular reviews, in-depth exchanges on the results of the reviews and ultimate impacts towards more coherent enforcement across Member States. The impacts in the case of the lower estimated Network size would be much more diffuse given the long time period over which a review cycle could be completed.

·In the high estimated variant, the Network could undertake 7 in-depth reviews per year and complete a review cycle of all Member States in 4 years.

·In the medium estimate size, 5 in-depth review per year could be undertaken, completing a review cycle of all Member States in 6 years;

·In the lower estimated size for the Network, a limited number of 3 reviews per year would be feasible, a cycle covering all Member States requiring 10 years to be completed;

3(c) In this option the Network’s tasks would include “peer reviews”, building on the performance indicators and benchmarks (option 1). The Network would allow to facilitate more in-depth exchanges of underlying differences in Member States (such as risks assessment policies, frequencies of controls, sanctioning practices), leading to more coherent and uniform enforcement across Member States. The resources allocated to the Network condition the number of in-depth reviews and the time span over which Member States market surveillance systems could be reviewed:

·The legal construct of the Compliance and Enforcement initiative would be more complex in case of hosting of the Network by the EU-IPO, given that its founding regulation would need to be amended to include market surveillance tasks in its mandate, as well as some additional financial control and monitoring provisions should the agency require in the future a possible ad-hoc grant or subsidy from the EU budget to complement its existing resources. Given the recent difficult reform of the EU trade mark regulation, this indirect re-opening of the EU-IPO founding regulation may imply a risk regarding the adoptability of the legal proposal.

·Within the Commission the mobilisation of resources would be subject to more constraints compared to the EU-IPO hosting option, which has more flexibility to hire expertise as well as using its own operational budget resources. To establish and maintain the Network's secretariat support structure, the Commission would have to exploit synergies and redeploy staff from different departments in a context of competing policy demands on its resources. The EU-IPO hosting variant would offer better prospects for upscaling of the Network to the medium size variant, which is more performant as regards the impacts it could achieve.

·The main strength of the Commission hosting variant would be the strong synergies that could be maintained with the product policy and legislation development. The agency EU-IPO variant would be more geared to deliver operational outputs and allow Member States to take more ownership of enforcement coordination in the EU in which a strong role of the Commission could meet with reservations from Member States.

The different hosting options of the Network (Commission, decentralised agency EU-IPO) would not lead to significant differences in the outputs and impacts that could be realised by the Network. However the political and resourcing feasibility would differ:

Overall the lower estimated scenario of staffing and budget would allow a moderate level of cross-border coordination: compared to the baseline, it would imply a significant improvement in coordination effort. However impacts on product compliance or the visibility of the joint enforcement action would be less noticeable due to the limited number of actual control campaigns. The medium estimated scenario would constitute a more concrete step forward with more regular controls across product sectors, underpinned by stepped-up enforcement intelligence and information exchange. The upper level scenario would represent very significant progress in concrete and more wide-spread joint enforcement action, resulting in stronger deterrent effect against non-compliant products.

·The yearly number of new product controls records in the IT tool ICSMS could at least double, as all Member States would be linked up to ICSMS and its usage would be stimulated by the joint control campaigns that the EU Product Compliance Network would support . In the lower estimate progress may require a longer period of time and only a more step-wise upscaling of ICSMS would be feasible with fewer resources. The impact of the Network will range from addressing merely the basic needs of the existing systems (lower estimate) to significantly expanding their functionalities to support more extensive monitoring of enforcement actions, interfacing with Member State systems and efficient information relay to a public website (medium estimate), up to ensuring efficient interoperability with Member States and customs systems (upper estimate).

·The medium and higher estimated size would allow increasing control campaigns more significantly, by a factor 5 to 10, covering more sectors and products, involving more member states and addressing cross-cutting issues (e.g. online sales, complex products) . This would allow stepping up joint actions to 35-40/year (~at least 1 campaign/year per sector, medium size) or 75-80/year (~ at least 2 campaigns/year per sector, upper estimated size).

·The low estimated size of the Network: The number of yearly coordinated control campaigns could double, to around 1 campaign every 2 years in the 25 product sectors where ADCO groups currently exist .

By the different size variants of the Network, moderately (low variant) to significantly more (medium to high variant) activity could be undertaken and corresponding results achieved. The most significant tasks and resources of the Network would be concentrated on the management of coordinated actions, market studies and common priority setting for these actions, as well as the management of communication and IT systems that would need to link up market surveillance authorities and customs to exchange relevant enforcement information. The depth and impact of the tasks carried out critically depend on the staffing level and operational budget allocated to the Network. The biggest difference would be:

The increased operational activity that the EU Product Compliance Network could trigger, would have a positive effect on the visibility of the enforcement activity, and hence on deterrence. Member State authorities would take restrictive actions against specific non-compliant products that are found in the more frequent joint actions. Moreover the publication of restrictive measures, guidance and compliance assistance promotion by the EU Product Compliance Network would have a preventative, dissuasive effect and help to improve compliance rates. Economic operators would see more EU-wide action rather than a patchwork of control campaigns or uncoordinated actions in individual Member States, which would discourage possible jurisdiction hopping of economic operators that could search for areas where controls would be weaker in the Single Market.

Overall, consistency of enforcement in the EU would see a strong improvement, due to the coordination on a much wider scale that the Network would support. In turn this will benefit businesses that trade cross-border (level-playing field, legal certainty and predictability).

Thanks to the sharing of market information, intelligence and stepped-up coordination in the Network, market surveillance authorities would be able to better integrate into their national controls the EU single market dimension (e.g. significant supply chains distributed over several countries but originating in one country, where controls would be most effective and efficient (sea/airport for imports, large manufacturers for intra EU trade)).

3(b) The EU Product Compliance Network would allow bringing together a critical mass of resources and implement activities that would lead to better prioritised joint actions based on improved intelligence, more joint and coordinated actions (including e-commerce) and improved information flow through ICSMS. More risks profiles shared with customs would lead to more and better controls on imports.

The support from the EU Product Compliance network and more use of ICSMS (b) (e.g. more control reports) and improved exchanges of information with customs would further reinforce these effects.

Overall, these measures would allow the majority of authorities to follow-up at least regularly on restrictive measures of other Member States . They would significantly reduce duplication of work and the inefficiencies linked to the need to carry out new tests or proceedings in different Member States as regards the non-compliance of the same products (either manufactured in the EU or imported from third countries) .

3(a) Cross-jurisdictional transferability of enforcement evidence and decisions. The recognition of test results among Member States as a default principle, would allow much faster exchange and re-use of enforcement evidence for a majority of cross-border cases. Thanks to the 'presumption of non-compliance' once an authority in the EU would have taken a decision against a particular product, authorities elsewhere in the EU would be able to base their own decisions more systematically on the findings of the initial authority and then consult the concerned businesses, instead of investigating a case from scratch .

Magnitude of impact as compared with the baseline scenario (the baseline is indicated as 0): +++ strongly positive; ++moderately positive, + positive; neutral; - - - strongly negative; - - moderately negative, - negative;? uncertain; n.a. not applicable. When talking about costs: + means 'savings', while – means 'cost'

The implementation of the investigative and enforcement powers in this option may impact on certain fundamental rights (right to due process/effective remedy, rights of defence, freedom to conduct business, data-protection and right to privacy). In accordance with Article 52 of the Charter a careful balancing of limitation to these rights has to be made with the objective of general interest of protection consumers, users and the environment from unsafe and non-compliant products. Market surveillance authorities would use powers on the basis of proportionality and necessity (e.g. possibly more intrusive investigative powers would only be used if needed for the investigation and no less-intrusive alternative would be available to obtain the evidence; certain enforcement powers such as requiring the closure of a website could only be used as last-resort). Moreover the use of the powers would be subject to national procedural safeguards.

Improved market surveillance would increase consumer protection and safety levels. Regarding governance, the use of enforcement strategies and performance indicators would enhance the transparency of market surveillance and have a positive effect in the area of good administration.

The impact of this option on the competitiveness of business would overall be positive since it would help businesses to comply without any further costs. SMEs would benefit from more assistance and information. Consumers would benefit from easily accessible and more comprehensive information on dangerous non-compliant products in the Common Portal. They could also contact the Product Contact Points about compliance issues and could be guided to possible solutions.

The more equal available enforcement powers in all Member States, improved mutual assistance mechanisms, better shared enforcement information and benchmarked performance would improve the level playing field and thus the functioning of the internal market for responsible businesses affected by the unfair competition of non-compliant products.

2(g) Common EU portal: Set-up costs of the IT platform and connection to the RAPEX webpage would be in the order of 45 000€. Moreover, the management of this portal would require 0.7 FTE for IT maintenance and to screen the information received from the economic operators and ensure that the requirements are met. Yearly maintenance costs would be 15 000€.

Initial set-up costs for the Commission would be 1 FTE to define the performance and benchmark system, building on the existing indicators and national reporting (including market studies and/or survey to establish methodology and reference levels (1M€). Running costs to manage the possible co-funding for pilot strategies, accompany the implementation of the strategies and performance indicator system by Member States, collect data, analyse and share the performance information, monitoring and reporting are estimated at 3 FTE.

2(b) and 2(c) Enforcement strategies and performance indicators: Based on the existing funding provisions of Regulation 765/2008, and within the existing spending ceilings, grant co-funding could be directed to some first national strategies as pilot cases in the short term (1-3M€/year). A possible new fund or part of a new fund post 2020 to support Member State enforcement strategies would require a considerable co-funding from the EU budget to ensure adequate coverage of all Member States and sectors.

2(a) IT set-up costs to include a mutual assistance mechanism would be limited (50.000 – 75.000€), given that a basic functionality to pass on cases to other authorities already exists in ICSMS. Additional effort would be required at EU level to monitor the implementation of the stricter rules on mutual assistance and existing 'follow-up' obligations, liaise with authorities and address questions (1 FTE).

2(g) The new common portal for voluntary measures would not create any administrative burdens or costs for Member States.

2(f) Product Contact Points are already available in all Member States and run by experts in product legislation. Due to the expansion of the remit of PCPs to harmonised goods, it would be likely that the number of information requests would increase quite sharply requiring an estimated 1 to 3 supplementary FTE per PCP (running costs for all 28 Member States could total 3,5 M€/year). Set-up costs would be negligible as the strengthening of the Product Contact Points is already planned to deal with their mutual recognition tasks.

2(d) One-off training costs to familiarise market surveillance authorities with the new common powers can be estimated at 2 000€ per authority (~500 000€ for all Member States). The most affected Member States would be those who currently lack certain investigative and/or enforcement powers: overall 18-19 of Member States provide for the powers either in a majority or in some product sectors. Member States who currently have the least number of powers and who would thus face more adaptation are AT, BE, ES, IE, IT, and to a lesser extent DK and RO. The costs of optional, collaborative enforcement tools would depend on the actual uptake by businesses and associations. The main challenge for authorities would seem to be resources, both human and financial. When businesses would pay a fee for the services rendered, authorities would not incur additional costs.

2(b) Enforcement strategies: Under the current Regulation (EC) N° 765/2008 Member States are obliged to set up control programmes and assess and report on the effectiveness of such programmes (Article 18 (5) and (6)). The use of 'enforcement strategies' would imply a shift in the contents of such programmes, rather than adding a new layer or reporting obligation. Besides initial alignment costs to adapt to the new form of programmes (estimated on average 15.000€ per MS in the first year), no significant additional administrative burden would be anticipated for Member States.

2(a) Mutual assistance requests: The authority receiving a request for mutual assistance would incur the operational costs related to the necessary investigative or enforcement steps. The size of the costs would depend on the specific case and number of requests. In most cases, the authorities receiving a mutual assistance request would only carry out ad hoc steps (e.g. request of information) while the requesting authorities would maintain the responsibility. The additional costs per request would amount only to a relatively small portion of the average costs of inspections (which are estimated roughly to average 703€, ranging from 50€ - 5 000€ ). In the baseline scenario, Member States are already required to follow up on other authorities' notifications; the mutual assistance request mechanism may lead to more requests being circulated among Member States. Depending on the nature of the request, this may imply more effort for market surveillance authorities, i.e. more systematic researches of non-compliant products found abroad and, if needed, adoption of a higher number of decisions. On balance the effort would however be off-set by efficiency gains that market surveillance authorities could obtain by receiving assistance for their own cases, and the reliance on systems audits on manufacturers and importers in the Member States where these are operators are established.

2(a), (b), (c) The measures in this option would not entail additional costs for businesses or create additional administrative burden. The common powers for market surveillance authorities, procedures for mutual assistance between authorities, and enforcement strategies and performance indicators would be measures directed at and implemented by Member States authorities and would not entail new obligation or costs for businesses.

The reporting requirements on Member States and communication of control programmes would be streamlined. The common IT-tool (ICSMS) would be used for simpler and quicker notification of competent authorities and exchange information on planned controls. This could result in the short term in some reduction of administrative burden linked to the communication to the Commission of control programmes. Most costs are linked to the planning and programming of controls. This part would remain, as it constitutes a necessary basis of enforcement strategies. For Member States, the strategy would become a strategic and information sharing tool, adding benefits over a mere reporting obligation. The direct uploading by Member States of this information in the common database (instead of dispatching on paper/electronic documents) would reduce handling requirements by the Commission (-0,5 FTE).

Effective mutual assistance requests would allow targeting controls at manufacturers/importers in the Member State of establishment. A market surveillance authority may choose to focus less on certain products/operators in the (local) distribution phase and rely instead on systems controls upstream for the concerned manufacturer/importers in another Member State. The market surveillance authority would avoid costs associated with the case-handling as well as economise on the reporting or on communicating information to others authorities and the Commission on individual cases. The realisation of these simplification benefits would however develop over time, depending on the uptake of the mutual assistance requests scheme, the use of powers including systems audits of large economic operators, and the implementation of enforcement strategies by Member States.

The ability to apply investigative and enforcement powers across all relevant parties in the product supply chain, streamlining the applicable definitions, implies an important simplification for market surveillance authorities. They will be able to investigate, require cooperation and act where needed and where their action can be most effective. The flexibility to work across the supply chain would be a major improvement in legal empowerment and certainty for market surveillance authorities who in the current system are confronted with varying definitions and texts, in particular for e-commerce. While online sales and market surveillance will increase, it is difficult to project the number of enforcement cases authorities would take on in future years and more in particular the specific proportion of infringement cases linked to new, additional economic players in the supply chain. In the longer term Member States would also benefit from the opportunity to organise their market surveillance more flexibly, as the powers will be common, independent of specific sectors or legislation.

As explained in the evaluation most of the enforcement costs stemming from current market surveillance rules are borne by public authorities, while costs on businesses only relate to information obligations (responding to requests from authorities, information on non-compliances detected) and are therefore regarded as insignificant by them.For this reason this section focuses on measures in this option that would result in specific benefits in terms of administrative simplifications for authorities.

2(g) A majority of Member States supported the creation of a common European portal on voluntary measures as long as this entailed a voluntary reporting by the economic operators without any investigation or approval by the national competent authority. Also other stakeholders generally agreed on the usefulness of comprehensive and up-to-date information on a single website.

2(f) The views expressed in the public consultation show broad consensus that promotion of compliance via information provision and guidance would be an effective approach to reduce non-compliance (information provision was rated very effective/effective by 78% (151 of 194) respondents and similarly guidance by 68% (131 of 192) respondents, with fairly equal patterns of responses between authorities and businesses. Business rated 'guidance' as slightly more effective (75%). A narrow focus on corrective enforcement action was rated 'not effective' by 60% of respondents.

2(e) The public consultation results indicate that there is potential to close knowledge and information gaps by using collaborative enforcement tools.

Member States market surveillance experts recognised that a common set of powers would help to facilitate cross-border cooperation and provide for an enforcement level-playing field across the EU. While some specific powers would need to be used only as last resort (e.g. requiring a take-down of a website, not merely specific illegal content it may feature), the experts expressed broad support for the possible range of powers that could be included in the market surveillance framework.

2(d) In the public consultation stakeholders expressed mixed views on the general impact that "more" powers for market surveillance authorities could have on deterrence and/or resources. Specific powers were rated with varying degrees of approval: 65% of respondents believe authorities should have power to carry out an inspection on behalf of another EU Member State's authority upon request; 59% of respondents believe authorities should have the power to notify acts on behalf of another EU Member State's authority upon request; 45% of respondents believe authorities should have the power to enforce fines on behalf of another EU Member State's authority upon request. The effectiveness and the necessity of powers to act against non-compliant products even if the economic operator is not based in the EU are supported by business stakeholders and authorities.

2(b) and 2(c) The use of performance indicators and monitoring by the Commission in this option aims first of all to improve the information basis and transparency on the state of market surveillance in the EU, and compare Member State performance. In the public consultation 69% (131 of 190) of respondents strongly agreed/agreed that better verification by the Commission of the functioning of market surveillance in Member States would make market surveillance in the Single Market more effective (55% of authorities, 78% businesses).

2(a) Tools such as the mechanism for mutual assistance requests would help to work efficiently across jurisdictional boundaries, as clearly advocated by authorities and businesses on different occasions. The majority of respondents to the public consultation (80% of authorities, 73% of businesses and 73% of consumers and other respondents) agree that stricter obligations for authorities to respond to requests for mutual assistance by other authorities would help enforcement vis-à-vis businesses located in another Member State .

2(g) The common EU web-portal for voluntary measures would allow faster and better information for consumers enabling them to timely act and thus protect their health and safety. Distributors would similarly be better informed. Given the overall positive reactions from stakeholders, it can be anticipated that the number of voluntary measures in the portal would increase rapidly, to around at least 800 notifications/year.

The Product Contact Points are available in all Member States, thus familiar with local chamber of commerce and associations and closer to smaller businesses that may have difficulties in easily accessing information or advice from EU centralised sources. By contrast larger businesses would be more likely to use the “formal” partnership or compliance programmes .

2(f) Thanks to the extension of the Product Contact Points to harmonised product legislation, businesses would have easy access to dependable information and advice.

Market surveillance authorities may however be cautious to engage in structural pro-active co-operation with sector organisations or fees-based assistance to businesses as it may blur the line with their role as independent inspectors (e.g. who decides what should be controlled). While interesting as a source of intelligence, evidence of non-compliance brought forward by businesses, even based on recognised testing-standards, would in many Member States not be admissible as formal evidence in proceedings.

2(e) Besides traditional enforcement powers, optional, collaborative enforcement tools and compliance assistance schemes with businesses would best be integral components of a comprehensive market surveillance regime. This option would incentivise Member States to develop more compliance schemes as part of their enforcement policy mix (together with measures 2(b) and 2(f)). Businesses and market surveillance authorities could justify the cost they deploy for such tools through reduced inspection scope or frequency, and that compliance problems could be addressed efficiently, in a preventative manner instead of by costly corrective action. Compliance programmes could help businesses to have more efficient ‘one-stop-shop’ contacts with inspections and regulatory bodies, and have access to consistent, coordinated advice. This would be especially relevant in Member States where market surveillance is carried out at several levels (national, regional and local).

Ultimately the deterrent effect of a better toolbox would depend on the actual use. For instance, over time, a coherent and regular use across Member States of the power to sanction absence of responses or documentation could incentivise more businesses to comply.

The availability of powers which are particularly relevant for e-commerce would also significantly improve (mystery-shopping, requiring illegal content to be removed from websites, suspension of websites). Availability of such powers directly to market surveillance authorities would allow them to react swiftly which is needed to be effective in the highly versatile e-commerce context. As a result, more non-compliant or unsafe products offers could be removed from the internet faster.

Moreover, the powers to require information and cooperation from any trader, intermediaries and relevant natural or legal persons in the supply chain, and where necessary sanction absence of response would equip market surveillance authorities better for the frequent situations where the economic operator is located in a 3rd country jurisdiction or difficult to trace or elusive (e-commerce).

2(d) Thanks to a clearer defined set of investigative and enforcement powers, market surveillance authorities across the EU would be able to work with common effective and deterrent tools, which would facilitate cross-border enforcement and the coherence of enforcement throughout the EU (in similar cases, all authorities would be able to apply equivalent investigation tools and enforcement powers). In the baseline an average 18-19 Member States already have the envisaged powers in a majority or some sectors (in 11-13 Member States market surveillance authorities have the powers in over 14 of 33 product sectors; a further 7-8 Member States in some product sectors). In the future these powers will be commonly available to all market surveillance authorities across Member States and sectors, thus guaranteeing an equivalent enforcement toolbox and the possibility for authorities to intervene with the same powers in similar cases regardless of the location of the infringement.

However this option in itself would not make significantly more resources available for market surveillance authorities or help to overcome the resources constraints that currently hamper them to carry out more inspections, perform product testing or participate in more coordinated cross-border control campaigns or invest in IT-tools. By better enforcement intelligence, controls could be better targeted. The existing resources would then be used more efficiently but this option would be unlikely to trigger a noticeable increase in actual control activity.

2(c) The performance indicators and benchmarks would also increase visibility of enforcement actions by market surveillance authorities and significantly improve the oversight of the state of market surveillance in the EU.

2(b) The use of enforcement strategies and performance indicators could in the short term help to promote a strategic and evidence-based approach to enforcement in Member States. The compliance and enforcement gaps assessment would help Member States to identify opportunities for increased cooperation between market surveillance authorities and with customs (e.g. in main entry points to EU market for imports) and improve