COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on liability for defective products
Date: 2022-09-28
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: damage, defective product, indemnification, market approval, market supervision, natural person, producer's liability, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.9.2022  SWD(2022) 316 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a Directive of the European Parliament and of the Council on liability for defective products          {COM(2022) 495 final} - {SEC(2022) 343 final} - {SWD(2022) 315 final} - {SWD(2022) 317 final}  
 
 
Table of contents 

1. 

INTRODUCTION ................................................................................................................................ 4 

1.1.  Political context ................................................................................................. 4 
1.2.  Legal context (see annex 7 for more details) ..................................................... 5 
1.2.1.  Main features of the PLD ........................................................................................ 5 

1.2.2. 

Interplay of PLD with other liability regimes ......................................................... 6 

1.2.3. 

Interplay of PLD with other EU legislation ............................................................ 7 

1.2.4. 

Interplay with ongoing initiatives ............................................................................ 8 

Specific interplay with the Artificial Intelligence Act and the impact assessment 

1.2.5. 
on AI liability .......................................................................................................................... 9 

2. 

PROBLEM DEFINITION .................................................................................................................. 10 

2.1.  What are the problems? ................................................................................... 10 
2.2.  What are the problem drivers? ........................................................................ 13 
2.2.1. 
Problem 1: Certain products, economic actors and damage in the digital and 
circular economy escape no-fault liability ............................................................................ 13 

2.2.2. 

Problem 2: Consumers face obstacles to getting compensation ............................ 20 

2.3.  How will the problems evolve? ....................................................................... 24 

3.  WHY SHOULD THE EU ACT? ........................................................................................................ 25 

3.1.  Legal basis ....................................................................................................... 25 
3.2.  Subsidiarity: Necessity of EU action ............................................................... 25 
3.3.  Subsidiarity: Added value of EU action .......................................................... 26 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ............................................................................... 26 

4.1.  General objectives ........................................................................................... 26 
4.2.  Specific objectives ........................................................................................... 26 
In order to adapt product liability rules to the digital age and circular economy: ................. 26 

In order to reduce disproportionate obstacles to getting compensation: ............................... 27 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .................................................................... 29 

5.1.  What is the baseline from which options are assessed? .................................. 29 
5.2.  Description of the policy options .................................................................... 30 
Policy options to adapt liability rules to the digital age and circular economy ..... 31 
5.2.1. 

5.2.2. 

Policy options to reduce disproportionate obstacles to getting compensation ...... 33 

5.3.  Options discarded at an early stage ................................................................. 34 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ........................................................... 36 

6.1.  Policy option 1a – Adaptations for products with digital elements and 

circular economy ............................................................................................. 37 

6.2.  Policy  option  1b  –  Inclusion  of  safety-relevant  software  in  its  own 

right and adaptations for circular economy ..................................................... 41 

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6.3.  Policy option 1c – Inclusion of software in its own right, new types of 

damage and adaptations for circular economy ................................................ 44 

6.4.  Policy  option  2.a  –  Easing  the  burden  of  proof  and  reducing 

disproportionate restrictions to make claims ................................................... 47 
6.5.  Policy option 2b – Reversing the burden of proof .......................................... 50 

7.  HOW DO THE OPTIONS COMPARE? ............................................................................................ 52 

7.1.  Effectiveness of the proposed policy options .................................................. 52 
Impacts of policy options ................................................................................ 53 
7.2. 
7.3.  Summary of policy options assessment ........................................................... 55 

8. 

PREFERRED OPTION ...................................................................................................................... 55 

8.1.  REFIT (simplification and improved efficiency) ............................................ 57 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .................................. 57 

ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 59 

1. 

LEAD DG, DECIDE PLANNING/CWP REFERENCES .................................................................. 59 

2.  ORGANISATION AND TIMING ...................................................................................................... 59 

3. 

4. 

CONSULTATION OF THE RSB....................................................................................................... 59 

EVIDENCE, SOURCES AND QUALITY ......................................................................................... 61 

ANNEX 2: STAKEHOLDER CONSULTATION ....................................................................................... 63 

1. 

2. 

3. 

4. 

5. 

6. 

CONSULTATION STRATEGY ........................................................................................................ 63 

INCEPTION IMPACT ASSESSMENT (IIA) .................................................................................... 63 

STAKEHOLDER WORKSHOPS ...................................................................................................... 63 

PUBLIC CONSULTATION ............................................................................................................... 64 

4.1.  Respondents by Stakeholder category ............................................................. 64 
4.2.  Respondents by country of origin .................................................................... 65 
4.3.  The Directive and the problems this initiative aims to address ....................... 66 
4.4.  Adapting the Directive to the digital age and circular economy ..................... 66 
4.5.  Reducing obstacles to making claims and getting compensation.................... 71 

TARGETED CONSULTATION ........................................................................................................ 74 

INTERVIEWS CONDUCTED BY EXTERNAL CONTRACTOR .................................................. 75 

ANNEX 3: WHO IS AFFECTED AND HOW? .......................................................................................... 76 

1. 

2. 

3. 

PRACTICAL IMPLICATIONS OF THE INITIATIVE..................................................................... 76 

SUMMARY OF COSTS AND BENEFITS ....................................................................................... 77 

RELEVANT SUSTAINABLE DEVELOPMENT GOALS ............................................................... 79 

ANNEX 4: ANALYTICAL METHODS ..................................................................................................... 80 

1.  DATA GAPS AND LIMITATIONS .................................................................................................. 80 

2.  GROSS VALUE ADDED OF INDUSTRIES UNDER THE SCOPE OF THE PLD ........................ 82 

3.  NUMBER OF LEGAL CASES AND COMPENSATION CLAIMS  ............................................... 82 

4. 

COST AND BENEFIT ANALYSIS ................................................................................................... 84 

4.1.  ASSESSMENT OF THE BENEFITS ATTRIBUTABLE TO STRICT LIABILITY UNDER 

THE PLD ............................................................................................................................................ 85 

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4.2.  ASSESSMENT  OF  THE  COSTS  ATTRIBUTABLE  TO  STRICT  LIABILITY  UNDER 

THE PLD ............................................................................................................................................ 88 

4.2.1. PRODUCT LIABILITY INSURANCE COSTS ................................................................................ 88 

4.2.2. LEGAL COSTS .................................................................................................................................. 90 

ANNEX  5  –  MATTERS  TO  BE  CLARIFIED  IN  THE  CONTEXT  OF  REVISING  THE 

PRODUCT LIABILITY DIRECTIVE ............................................................................................... 94 

ANNEX 6: VIABILITY OF NON-BINDING GUIDANCE ........................................................................ 96 

ANNEX 7: FURTHER DETAILS OF LEGAL CONTEXT ........................................................................ 98 

Interplay of PLD with other liability regimes ....................................................................... 98 

1.1.1. 

Interplay of PLD with other EU legislation .......................................................... 98 

1.1.2. 

Interplay with ongoing initiatives ........................................................................ 100 

ANNEX 8: PRODUCTS THAT MAY CARRY RISKS BUT ARE NOT DEFECTIVE .......................... 101 

ANNEX 9 – INDICATORS FOR MONITORING IMPACTS OF PREFERRED OPTION ..................... 103 

ANNEX 10 – SME TEST – SUMMARY OF RESULTS .......................................................................... 104 

Glossary 

Term or acronym 

Meaning or definition 

ADR 

AI 

AI Act 

BaU 

DSA 

EU AR 

FSP 

GDPR 

GPSD 

GPSR 

IA 

IIA 

IoT  

PLD 

PO 

Alternative dispute resolution 

Artificial intelligence 

Proposal for an AI Act (COM(2021)206) 

Business as Usual costs (costs that would be incurred anyway by 
business regardless of whether there is new legislation). 

Proposal for a Digital Services Act (COM(2020) 825) 

Authorised Representative serving as a legally-authorised person 
within the EU  

Fulfilment service provider 

General Data Protection Regulation (EU) 2016/679  

General Product Safety Directive (Directive 2001/95/EC)  

Proposal for a General Product Safety Regulation (COM(2021)346) 

Impact Assessment 

Inception Impact Assessment 

Internet of Things 

Product Liability Directive: Council Directive 85/374/EEC  

Policy option(s) 

3 

 
 
 
 
 
1. 

INTRODUCTION 

1.1. 

Political context 

The  Product  Liability  Directive1  (PLD)  provides  a  system  at  European  level  for 
compensating people who suffer physical injury or damage to consumer property due to 
defective  products.  Since  the  adoption  of  the  Directive  in  1985,  there  have  been 
significant changes in the way products are produced, distributed and operated, and key 
transformations to Europe’s economy are underway. 

The President of the Commission stressed in her political guidelines2 the need for Europe 
to lead the transition to a healthy planet and a new digital world. This twin challenge of a 
green  and  digital  transformation  must  go  hand  in  hand.  It  requires,  as  set  out  in  the 
European Green Deal, more sustainable solutions that are resource-efficient, circular and 
climate-neutral, such as extending the life of materials and the possibility to upgrade and 
repair  products  and  components.  It  also  requires,  as  set  out  in  the  Communication  on 
Shaping Europe’s Digital Future3, that everyone have a fair chance to reap the benefits of 
our  increasingly  digitised  society,  such  as  those  offered  by  innovative  products  using 
artificial intelligence and the internet of things. 

But these benefits do not come entirely without risks.  

When it comes to digital technologies, in order to minimise these risks and improve the 
safety of products that are placed on the market, the EU is in the process of modernising 
rules on machinery, radio equipment and general product safety, as well as creating new 
rules on safe and trustworthy artificial intelligence systems4. This initiative complements 
this modernisation drive by ensuring that when products do cause harm, consumers can 
be confident that their right to compensation will be respected and that businesses have 
legal certainty about the liability risks they face in the course of doing business. Taken 
together, these modernisation efforts should better enable Europe to pursue its own path 
towards  a  digital  transformation  that  works  for  the  benefit  of  people.  They  should 
contribute  to  a  fair  and  competitive  economy  and  a  frictionless  single  market,  where 
companies of all sizes and in any sector can compete on equal terms,  and can develop, 
market  and  use  digital  technologies,  products  and  services  at  a  scale  that  boosts  their 
productivity and global competitiveness. 

The European Parliament has also highlighted the need to ensure that liability rules are 
adapted  to  the  digital  world,  in  order  to  ensure  a  high  level  of  effective  consumer 
protection, and a level playing field with legal certainty for all businesses, while avoiding 
high costs and risks for SMEs and start-ups 5.  

When it comes to the circular economy, business models in which products are repaired, 
refurbished  or  upgraded  are  increasingly  common  and  central  to  the  EU’s  efforts  to 
achieve  sustainability  and  waste-reduction  goals.  This  initiative  aims  to  reinforce  such 

1  Council  Directive  85/374/EEC  on  the  approximation  of  the  laws,  regulations  and  administrative  provisions  of  the 
Member States concerning liability for defective products (OJ L 210, 7.8.1985, p. 29).  
2 political-guidelines-next-commission_en_0.pdf (europa.eu). 
3 Communication-shaping-europes-digital-future-feb2020_en_4.pdf (europa.eu). 
4 See section 1.2.3 for more details. 
5 Texts adopted - Civil liability regime for artificial intelligence - Tuesday, 20 October 2020 (europa.eu). 

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efforts  as  the  Sustainable  Products  Initiative6  by  ensuring  consumers  have  just  as  clear 
rights to compensation for harm caused by defective refurbished products as they do for 
entirely  new  products  and  creating  the  legal  clarity  about  liability  risks  that  industry 
needs to embrace circular business models. 

Due to the PLD’s very broad scope, covering potentially thousands of product types, it 
has  relevance  beyond  the  Digital  Age  and  Green  Deal.  Pharmaceuticals  are  a  product 
type  that  has  generated  considerable  case  law,  and  this initiative takes  into  account  the 
objectives of the Commission’s Pharmaceutical Strategy and the upcoming evaluation of 
Union pharmaceutical legislation7.  

The  evaluation  of  the  PLD8  in  2018  concluded  that  the  Directive  was  on  the  whole  an 
effective  and  relevant  instrument,  but  had  several  shortcomings:  it  was  legally  unclear 
how  to  apply  the  PLD’s  35-year-old  definitions  to  products  in  the  modern  digital  and 
circular economy; the burden of proof was challenging in the case of complex products; 
and the rules excessively limited the possibility of making claims. Its shortcomings in the 
area of emerging digital  technologies were further analysed in  the White Paper on AI9, 
the  accompanying  Report  on  Liability  for  AI,  IoT  and  Robotics10  and  the report  of  the 
Expert Group on Liability and New Technologies11. 

Three Sustainable Development  Goals  (‘SDGs’)  have been identified  as relevant  to  the 
PLD and to this initiative: SDG 3 (healthy lives and well-being) linked to promoting safe 
products  and  compensating  victims  of  harm,  SDG  9  (fostering  innovation)  linked  to 
giving businesses legal certainty and SDG 12 (responsible consumption and production) 
linked to circular economy, enhancing product safety when substantial modifications are 
made. 

1.2.  Legal context (see annex 7 for more details) 

1.2.1.  Main features of the PLD  

The PLD lays down common rules at EU level for strict liability (i.e. liability irrespective 
of fault or negligence) of producers for damage caused by defective products.  It allows 
any  person  who  has  been  injured  by  a  defective  product,  whether  the  owner  or  a 
bystander, to claim financial compensation for death, personal injuries or for damage to 
consumer property where the property damage amounts to more than EUR 500.  

Product: A product is defined very broadly as “any movable, even though incorporated 
into  another  movable  or  into  an  immovable,  including  electricity”.  The  PLD  does  not 
cover  the  liability  of  service  providers12  but  it  does  apply  to  products  used  while 
providing services13.  

6 Sustainable products initiative (europa.eu). 
7 Revision of the EU general pharmaceuticals legislation (europa.eu). 
8 Evaluation of Product Liability Directive, SWD(2018)157. 
9  European  Commission,  White  Paper  on  Artificial  Intelligence  -  A  European  approach  to  excellence  and  trust, 
COM(2020) 65 final, 2020. 
10  European  Commission,  Report  on  safety  and  liability  implications  of  AI,  the  Internet  of  Things  and  Robotics, 
COM(2020) 64 final, 2020.  
11  Expert  Group  on  Liability  and  New  Technologies  (2019),  Report  on  Liability  for  artificial  intelligence  and  other 
emerging digital technologies. 
12 CJEU, Judgment of 10 June 2021, Case C-65/20; CJEU, Judgement of 21 December 2011, Case C-495/11.  
13 CJEU, Judgment of 10 May 2001. Case C-203/99.  

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Defect: A product is defective when it does not provide the safety a person is entitled to 
expect, taking all circumstances into account, including the presentation of the product, 
the reasonably expected use and the time when the product was put into circulation. The 
concept of “defect” is designed broadly since it has to apply to a huge range of products, 
and  its  interpretation  dynamically  adapts  to  changing  levels  of  safety  expectations,  in 
particular as new product legislation brings in new safety rules. 

Producer: A producer means the manufacturer of a finished product, the producer of any 
raw  material  or  the  manufacturer  of  a  component  part  and  any  person  who  puts  their 
trade  mark  on  the  product,  as  well  as  importers.  The  term  “producer”  is  deliberately 
broad  so  that  an  injured  person  can  easily  find  a  liable  person.  If  the  producer  is  not 
known, the supplier (e.g. seller) will be held liable unless he informs the injured person 
of the producer’s identity. 

Burden of proof: The claimant has the burden of proving the damage, the defect and the 
causal relationship between defect and damage in order to get compensation. The Court 
has endorsed national evidentiary rules intended to ease the burden of proof14. 

Exemptions:  Producers  may  be  exempted  from  liability  if  they  prove  certain 
circumstances,  for  example,  that  they  did  not  put  the  product  into  circulation,  that  the 
defect  probably  emerged  after  the  product  was  put  into  circulation  (“later-defect 
defence”, Art. 7(b)), or that the defect was undiscoverable based on the state of scientific 
and technical knowledge at the time the product was put into circulation (“development 
risk defence”, Art. 7(e)). 

Time-limits: Producers are also released from liability under the PLD 10 years after they 
put a product into circulation, and claimants have to start legal proceedings within three 
years of identifying the damage, the defect and the producer.  

1.2.2.  Interplay of PLD with other liability regimes 

National fault-based liability regimes 

The  distinctive  feature  of  the  PLD  regime  is  that  claimants  do  not  have  to  prove  the 
producer’s  fault  to  get  compensation,  because  this  proved  to  be  very  challenging  for 
claimants  as  production  became  more  technologically  complex  during  the  20th  century. 
Instead of proving fault, claimants have to prove the product was defective.  

The  PLD  does  not  exist  in  isolation  and  is  embedded  into  Member  States’  national 
liability  regimes,  where  it  is  applied  alongside  national  rules15.  These  unharmonised 
regimes  allow  compensation  claims  against  a  broader  range  of  liable  persons  for  a 
broader  range  of  damages,  covering  not  only  products  but  services,  and  for  longer 
periods  of  time.  But  victims  of  harm  have  to  prove  the  wrongdoer’s  fault16,  which  is 
more challenging to prove than defectiveness. The PLD does not  affect these rights, so 
the PLD sits coherently within the broader national regimes. Whenever the PLD does not 
apply, for example because the cause of the harm was not a product but a service or the 

14 CJEU, Judgment of 21 June 2017. Case C-621/15. 
15 Evaluation of Product Liability Directive, SWD(2018)157, p. 11. 
16 Depending on the circumstances, victims may also have a strict liability claim at national level for which they do not 
have to prove fault, for example claims against vehicle owners in most Member States. 

6 

 
                                                      
property damage was below the threshold, victims of harm will normally be able to make 
a fault-based liability claim at national level. 

Table 1. Difference between the PLD and national fault-based liability 

Scope 

PLD 
Products 

Liable person 

Producer (manufacturer, importer) and, in 
some cases, supplier/seller 
Private persons 

Type of victim 
protected 
Type of damage  Death, personal injury, damage to 

consumer property worth more than EUR 
500 

What victim 
needs to prove 
Period of 
liability 

Defect in product irrespective of fault 

10 years after putting product into 
circulation 

National fault-based liability 
Any human action or omissions, including 
manufacturing and using products and providing 
services 
Any wrongdoer: producer, service provider, users 
(both businesses and private persons), owner etc. 
Any victim: private persons, businesses, public 
entities 
Death, personal injury, damage to consumer property 
also under EUR 500; damage also to business 
property; pure economic loss, discrimination, pain 
and suffering (in some Member States) 
Fault – wrongful behaviour of a person17 

Various periods, but generally much longer 

The Sale of Goods Act18 and Digital Content and Services Directive19 gives consumers 
the right to remedy, i.e. replacement, repair or reimbursement, when digital content or a 
digital service is not in conformity or does not work properly. That concerns contractual 
liability,  whereas  the  PLD  concerns  extra-contractual  liability  of  producers  for 
injuries/damage  caused  by  a  lack  of  safety  –  a  complementary  tool.  The  General  Data 
Protection Regulation (GDPR)20 concerns liability of data processors and controllers for 
material  or  non-material  damage  caused  by  data  processing  that  infringes  the  GDPR, 
whereas the PLD provides compensation only for death, personal injury and damage to 
consumer property.  The  Environmental  Liability  Directive21  establishes  a framework to 
prevent and remedy environmental damage. It deals with pure ecological damage such as 
damage  to  protected  species  and  natural  habitats  as  distinct  from  damage  to  privately 
owned property, which is covered by the PLD.  

1.2.3.  Interplay of PLD with other EU legislation  

Product  safety  framework:  EU  product  safety  legislation  aims  to  ensure  that  only  safe 
products are placed on the internal market. If they are covered by sectoral legislation (e.g. 
on machinery, pharmaceutical products, toys, radio equipment) they have to comply with 
essential  health  and  safety  requirements  set  out  there.  Otherwise  they  fall  under  the 
General  Product  Safety  Directive22  and  are  required  to  be  safe23.  Safety  rules  are 

17 Note that alongside fault-based liability, all Member States have strict liability regimes where fault does not need to 
be proven, for example regimes covering the ownership of dangerous things such as motor vehicles. 
18 Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods.  
19  Directive  (EU)  2019/770  on  certain  aspects  concerning  contracts  for  the  supply  of  digital  content  and  digital 
services. 
20 Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on 
the free movement of such data (GDPR). 
21  Directive  2004/35/EC  on  environmental  liability  with  regard  to  the prevention and remedying of  environmental 
damage. 
22 Council Directive 87/357/EEC and Directive 2001/95/EC 
23 Beyond sectoral legislation and the GPSD, there is also technology-specific but horizontal product safety legislation, 
notably the proposed AI Act, see section 1.2.5. 

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enforced by market  surveillance  rules24, which ensure consumer protection by  stopping 
non-compliant products circulating or by bringing them into compliance. Product safety 
legislation  does  not  contain  specific  provisions  on  liability  of  manufacturers,  but  make 
reference  to  the  fact  that  the  PLD  applies  when  a  defective  product  causes  damage. 
Product  safety  and  product  liability  are  therefore  complementary  mechanisms  for 
achieving a functioning single market for goods that ensures high levels of safety. 

Cybersecurity:  The  Cybersecurity  Act25  and  the  recently  adopted  delegated  act26  under 
the Radio Equipment Directive27 are intended to mitigate cybersecurity risks, but they do 
not regulate the liability of producers. In addition, the Commission is preparing a Cyber-
resilience  Act28,  which  would  build  on  existing  rules  to  encourage  manufacturers  and 
software  developers  to  mitigate  cybersecurity  risks,  but  is  not  expected  to  touch  on 
liability.  

1.2.4.  Interplay with ongoing initiatives  

The proposed Machinery Regulation29 and proposed General Product Safety Regulation30 
(GPSR) aim, in their respective fields, to address the risks of digitalisation in the area of 
product safety, but not liability. The proposed Digital Services Act31 (DSA) sets out rules 
for online intermediary services, including online marketplaces. The proposal for a GPSR 
imposes additional obligations on them to tackle the sale of unsafe products online. None 
of these measures concern liability for defective products under the PLD.  

The  Circular  Economy  Action  Plan  202032  announced  a  sustainable  products  policy 
framework  intended  to  provide  high-quality,  functional  and  safe  products  designed  for 
reuse,  repair,  remanufacturing  and  high-quality  recycling.  The  Action  Plan  does  not 
contemplate measures on liability for defective products.  

1.2.5.  Specific interplay with the Artificial Intelligence Act and the impact 

assessment on AI liability 

The  proposed  Artificial  Intelligence  Act33  aims  to  ensure  that  high-risk  AI-systems 
comply  with  safety  and  fundamental  rights  requirements  (e.g.  data  governance, 
transparency,  human  oversight)  before  being  placed  on  the  market  or  put  into  service 
within  the  EU.  However,  there  is  no  corresponding  liability  of  the  AI-system  provider 
under the PLD when an AI system is defective and causes harm, because they do not fall 
clearly under definition of “producer” in the PLD. This is because AI systems themselves 

24 Established by Regulation (EU) 2019/1020 on market surveillance 
25  Regulation  (EU)  2019/881  on  ENISA  (the  European  Union  Agency  for  Cybersecurity)  and  on  information  and 
communications  technology  cybersecurity  certification  and  repealing  Regulation  (EU)  No  526/2013  (Cybersecurity 
Act) (Text with EEA relevance), OJ L 151, 7.6.2019, pp. 15-69.  
26  Commission  Delegated  Regulation  (EU) 2022/30  of  29 October 2021  supplementing  Directive  2014/53/EU of  the 
European  Parliament  and  of  the  Council  with  regard  to  the  application  of  the  essential  requirements  referred  to  in 
Article 3(3), points (d), (e) and (f), of that Directive 
27 Radio Equipment Directive 2014/53/EU, Article 3(3)(e) and Article 3(3)(f). 
28 How a European Cyber Resilience Act will help protect Europe, European Commission (europa.eu). 
29 COM(2021) 202 final. 
30 COM(2021)346 final. 
31 Proposal for a Regulation of the European Parliament and of the Council on a Single Market For Digital Services 
(Digital Services Act) and amending Directive 2000/31/EC, COM(2020) 825 final 
32 Circular economy action plan, March 2020 

33 Proposal for a Regulation of the European Parliament and of the Council laying down harmonised rules on artificial 
intelligence (AI Act), COM(2021)206 final. 

8 

 
                                                      
 
do not fall clearly within the outdated definition of “product” in the PLD, which is true of 
other  software  too,  not  only  AI  systems.  And,  while  products  that  make  use  of  AI 
systems, such as robots, are obviously products within the meaning of the PLD, the PLD 
is  not  well  adapted  to  dealing  with  such  products,  nor  other  products  in  the  digital  age 
(see Problem 1 below).  

The Commission is taking a holistic approach to liability through the revision of the PLD 
on  the  one  hand  (the  subject  of  this  impact  assessment),  and  AI-specific  measures 
concerning  national  liability  rules  on  the  other  (the  subject  of  the  AI  liability  impact 
assessment). The interplay between the two impact  assessments is  depicted in  the table 
below and the rationale is explained in section 1.2 of the AI liability impact assessment.  

Table 2. Interplay between PLD impact assessment and AI impact assessment 

Scope 

Liable person 

Current type of 
liability (see 
table 1 above) 

AI IA: AI specific problems & measures 

PLD IA: horizontal (i.e. not AI-
specific) problems & measures 
All products (including AI-
enabled products and AI systems 
themselves) 
Producer (manufacturer, importer)  Any wrongdoer: producer, service provider, user 

AI-enabled products and AI-systems themselves, 
and actions or omissions linked to AI, including AI-
enabled services 

Harmonised no-fault liability 
based on defect 

(both businesses and private persons), owner, etc.  
Non-harmonised national liability based on fault 
and, in some cases (e.g. for dangerous things like 
vehicles or drones) strict liability 

The  current  PLD  applies  to  a  vast  range  of  products  from  raw  materials  to  cancer 
medicines.  It  also  applies  to  AI-enabled  products,  like  robots,  but  the  PLD  is  not  well 
adapted to dealing with them. The revised PLD will adapt the rules for such products and 
ensure people injured by defective software, including AI software, can get compensation 
from software producers. The AI liability initiative also covers AI-enabled products and 
AI software, so the product scope of two impact assessments overlap. However, the two 
initiatives  apply  in  different  legal  situations:  The  PLD,  which  is  the  EU’s 
harmonised  no-fault  liability  regime,  exists  in  parallel  to  Member  States’  fault-
based liability regimes. The AI liability initiative creates no new route to compensation, 
it only facilitates the existing national route based on fault, and hence does not introduce 
any overlap with claims under the PLD.  

The two impact assessments address measures to ensure legal certainty and effectiveness 
of  all  routes  to  compensation:  both  under  the  PLD  and  under  national  liability  rules. 
Cross-references are made throughout the impact assessments where necessary to explain 
the interplay.  

2.  PROBLEM DEFINITION 

2.1.  What are the problems? 

The evaluation of the PLD found that, while the Directive was on the whole effective, its 
effectiveness  was  hampered  by  outdated  concepts  that  are  unclear  when  applied  to  the 
modern economy and by an unfair balance of interests between producers and consumers 
in some respects. 

9 

 
 
 
 
The  PLD  reinforces  the  EU’s  product  safety  rules  by  providing  an  additional  incentive 
for  producers  to  place  only  safe  products  on  the  market  in  order  to  avoid  liability 
(product liability law’s “deterrent effect”34). If, despite all the precautionary safety rules, 
a  product  is  not  safe  and  causes  damage,  the  PLD  helps  injured  parties  to  get 
compensation.  

The  PLD  has  a  wide  scope,  potentially  affecting  the  entire  manufacturing  sector  as 
defined in the NACE classification. However, according to the 2018 evaluation study, in 
the  reporting  period  (2000-2016),  there  were  only  798  court  cases  based  on  product 
liability  rules  in  EU27,  with  50-60  cases  per  year.  Around  60%  (476  out  of  798)  of 
claims  for  defective  products  were  successful  for  injured  parties  from  2000  to  201635. 
The other cases were decided in favour of producers. The evaluation study acknowledged 
that  this  was  likely  an  underestimate36.  This  is  due  to  the  difficulty  of  obtaining 
comprehensive  data  on  the  use  of  the  PLD:  out-of-court  settlements  are  often  on 
confidential  terms,  arbitration or mediation cases and many lower-court cases are often 
not published at all, and there is no monitoring at national level. This impact assessment 
and the accompanying study confirmed the lack of data on the number of cases of harm 
caused  by  defective  products  as  well  as  the  lack  of  a  common  injury  database  with 
meaningful  information37.  More  information  and  estimates  are  provided  in  section  5.1 
and in annex 4. 

The evaluation study found that 52% of cases relate to products in the categories of raw 
materials,  pharmaceutical  products  and  vehicles.  In  general,  the  parties  settle  product 
liability-related  claims  through  direct  negotiation  in  46%  of  cases,  whereas  32%  are 
resolved in court and 15% through mechanisms for alternative dispute resolution. Only a 
small share (7%) of claims under the Directive is decided through other means, such as 
settlements with the insurer of the responsible party38. 

The 2018 evaluation found that, in total, 79% of producers overall have product liability 
insurance39. This means that if a producer is found liable for a defective product and has 
to  compensate  a  victim,  the  compensation  pay-out  will  be  covered  by  product  liability 
insurance for c.a. 80% of all producers. 

Based  on  the  evaluation  findings,  two  main  problems  have  been  identified.  They  are 
summarised in the below table with respective drivers and consequences of the problems. 

Drivers - regulatory failures 
1.Liability rules unclear for products in the digital age  
- no liability for defects that emerge after product is 
marketed, including defective updates and cybersecurity 
vulnerabilities 
- unclear application to software and ancillary digital 
services 
- new types of damages such as damage to digital 
property are not covered 

Problems 
1. Certain 
products, 
economic actors 
and damage in the 
digital and circular 
economy escape 
no-fault liability 

Consequences 
FOR INTERNAL MARKET 
1.  Less incentive to market safe products for economic actors 

who impact safety but are not covered by regime. (Driver 1) 

2.  Unequal levels of consumer protection across EU (D1) 
3.  Consumers who are unsure of rights may not adopt 

innovative or “circular” products. (D1, 2) 

FOR BUSINESSES 
4.  Businesses unable to assess risk of liability due to 

34 John C.P. Goldberg, Twentieth-Century Tort Theory, 91 GEO. L.J. 513 (2003). 
35 The evaluation study found that there was no particular difference in the level of success of injured parties if the case 
is settled in court rather than out of it. 
36 Evaluation of Product Liability Directive, SWD(2018)157, p. 21.  
37 Geiss, O. et al. (2016), Injury and accident data collection efforts in Europe in support of consumer product safety 
policy. 
38 Evaluation of Product Liability Directive, SWD(2018)157. 
39  Evaluation  of  Product  Liability  Directive,  SWD(2018)157.  General  product  liability  insurance  policies  covers 
products’ strict liability, contractual liability and fault-based liability, such as negligence. 

10 

 
                                                      
2.Liability rules unclear for refurbished/remanufactured 
products  
3.No liable person under PLD when consumer purchases 
product from a 3rd country directly 

2. Consumers face 
obstacles to getting 
compensation  

4.Proving defectiveness and causal link with damage is 
very difficult and costly for complex products: 
- No right for victims to access necessary technical 
information held by producer  
- No explicit possibility to ease the burden of proof under 
the PLD 
- Liability for undiscoverable defects is uncertain (e.g. 
machine learning)  
Liability claims are subject to a number of restrictions: 
5.Liability ends after 10 years; need to start legal 
proceedings 3 years after damage 
6.No liability for property damage worth less than EUR 
500  

uncertainty and different interpretations in every MS (D1,2) 

5.  Businesses face unfair competition from 3rd-country 
producers who are beyond the reach of the PLD (D3) 

FOR CONSUMERS 
6.  Consumers less able to get compensation for defective 

products using digital technologies or “circular” products. 
(D1, 2) 

7.  Consumers left without compensation when purchasing 

from a 3rdcountry directly (D3) 

ENVIRONMENT 
Uncertainty may have negative impact on growth of circular 
economy (D2) 
FOR INTERNAL MARKET 
1.Unequal levels of consumer protection across EU (including 
divergent national implementation) (Drivers 4,6+D1) 

FOR BUSINESSES 
2.Uncertainty due to fragmentation could chill willingness to 
place innovative products on the market (D4+D1,2) 

FOR CONSUMERS 
3. Difficult and costly to get compensation for harm caused by 
complex products (D4) 
4.Invidual victims may unfairly bear risk of damage from 
undiscoverable defects (D4) 
5.Victims of harm that emerges after 10 years get no 
compensation. (D5) 
6.Victims of harm who miss 3-year deadline to start legal 
proceedings get no compensation. (D5) 
7.Consumers who suffer property damage less than EUR 500 
get no compensation. (D6) 

1.  Products,  economic  actors  and  damage  escaping  no-fault  liability  in  the  digital 
and circular economy 

No-fault  liability  of  producers  was  introduced  as  a  necessary  response  to  the  risks 
inherent in technological production in the 20th century. Products and technologies have 
continued  to  develop  since  the  PLD  was  enacted  in  1985  but  the  rules  have  not.  The 
safety  of  products,  be  they  robotic  lawnmowers,  connected  or  autonomous  vehicles  or 
smart home systems, is determined more and more by software and digital services that 
may be supplied once a product is already on the market. As the evaluation has shown, 
the PLD is no longer adapted for products in the digital age in a number of respects.  In 
the digital age, the features of a product are not set in stone when it is put into circulation, 
but  are  determined  by  software  and  digital  services  after  that  moment,  which  may  be 
provided by economic operators other than the producer of the “finished product”.  

Clarity on how liability rules apply to software is all the more important considering the 
software industry is a growth sector: the industry in Germany was expected to grow from 
EUR 18 billion to EUR 20 billion between 2018 and 202140. The safety of products with 
digital elements also depends on cybersecurity: lack of adequate cybersecurity is one of 
the  barriers  that  limits  the  uptake  of  new  technological  developments.  According  to 
Eurostat,  one  person  out  of  ten  in  the  EU-27  does  not  use  IoT  devices  due  to 
cybersecurity concerns, while in Austria, Germany, Finland and Portugal the percentage 

40 Annual growth rate of 2.9%; Netherlands: EUR 5.4 billion to EUR 6 billion (3.7%); Poland: EUR 2.1 billion to 2.4 
billion (4%). See  CSES with Wavestone, CSIL (2022), Impact assessment study on the revision of Product Liability 
Directive, section 2.1.1.1. 

11 

 
 
 
 
 
                                                      
is over 20%.41 The PLD’s ill-adaptedness to new technologies is in part evidenced by the 
fact that the evaluation found only one case relating to new technological developments 
in  the  reporting  period42.  As  these  developments  gather  pace,  the  lack  of  future-proof 
rules is likely to further undermine the effectiveness of the PLD (see section 2.3). 

In  the  circular  economy  too,  products  may  be  modified  by  refurbishers  and 
remanufacturers and placed back on the market, but  the PLD is  silent  on whether such 
economic  operators  are  subject  to  no-fault  liability.  Uncertainty  makes  it  difficult  for 
businesses to assess their liability exposure and may have negative effects on the growth 
of the circular economy. 

And new global supply chains that make it possible for consumers to purchase products 
directly  from  non-EU  producers  have  led  to  a  situation  where  no  EU-based  economic 
operator is  subject  to  no-fault liability in  the event  of defective products  causing harm. 
This leaves consumers with no one to get compensation from under the PLD and creates 
an uneven playing field  between EU producers and non-EU producers  who are  beyond 
the reach of the PLD. 

The  consequences  of  all  the  above  economic  operators  escaping  no-fault  liability  are 
various:  the  deterrence  function  of  the  PLD43,  designed  to  encourage  producers  to  do 
their  best  to  make  products  safe,  is  missing;  no-fault  liability  is  shouldered  instead  by 
other  economic  operators  (principally  hardware  manufacturers)  who  may  not  be  best 
placed to  minimise software-related safety  risks;  competition  between market  operators 
is distorted, since producers of hardware products and components are subject to no-fault 
liability;  levels  of consumer protection across the EU are unequal,  since  some Member 
States  do  impose  no-fault  liability  outside  of  the  PLD  regime  for  digital  services 
necessary  for  products  to  operate;  and  consumers  face  uncertainty  about  how  to  get 
compensation for harm caused by digital and refurbished or remanufactured products and 
from  whom.  Nevertheless,  it  is  worth  mentioning  that  the  effect  of  certain  products, 
economic actors and damage falling outside of the PLD’s no-fault liability regime does 
not  mean  a  complete  absence  of  compensation  for  victims  of  harm:  national  regimes 
provide for extra-contractual liability for fault or negligence. But the difficulties involved 
in  proving  fault  were  precisely  the  rationale  for  introducing  no-fault  liability  for 
producers in the first place by the PLD (see section 1.2 for more details). The existence 
of  alternative  routes  to  compensation  makes  consumer  protection  more  comprehensive, 
but it makes it very difficult to quantify the added value of no-fault liability. At the same 
time, economic operators usually have an insurance policy covering all type of potential 
liability  claims.  (The  impact  assessment  on  AI  liability  looks  at  challenges  in  proving 
fault specifically when certain AI systems are involved.) 

1.  Consumers face obstacles to getting compensation 

The PLD seeks to achieve a fair balance of interests between consumers and producers, 
and  the  importance  of  this  balance  has  been  stressed  in  every  application  report  since 
2001.  Whereas  producers  shoulder  liability  irrespective  of  fault,  claimants  shoulder  the 
burden of proof and face time limits and thresholds. The 2018 evaluation found that the 

41 Eurostat, Internet of Things - barriers to use, 2020 (consulted on 22 November 2021). 
42 Evaluation of Product Liability Directive, SWD(2018)157, p. 12. 
43  Confirmed  in  Joined  Cases  C-503/13  and  C-504/13,  Boston  Scientific  Medizintechnik  GmbH;  see  also  P. 
Machnikowski (ed.), European Product Liability: An Analysis of the State of the Art in the Era of New Technologies 
(2016), p. 100.  

12 

 
                                                      
balance  struck  in  the  current  PLD  was  not  always  fair  to  consumers,  due  to  the 
difficulties in proving liability when complex products cause harm, and due to the time 
limits and thresholds that disproportionately restrict the number of claims44. 

Stakeholders have deeply conflicting views, with a sharp divide between consumer and 
industry positions. Industry stakeholders, exemplified by Business Europe45, consider the 
current  balance  to  be  just  right.  They  acknowledge  that  complex  products  may  present 
challenges for consumers, but argue that national courts have the possibility to ease the 
burden  of  proof  where  necessary,  although  the  pharmaceuticals  industry  organisation 
EFPIA considers some national courts have gone too far, thus undermining the balance46. 
Consumer  organisations,  on  the  other  hand,  argue  it  is  difficult  and  costly  to  get 
compensation for harm caused by complex products; that individual victims unfairly bear 
the  risk  of  damage  from  new  technologies  whose  defects  are  undiscoverable  when  the 
product  is  put  into  circulation;  and  that  time  limits  and  thresholds  prevent  access  to 
justice. They also argue that the challenges for consumers will only get worse as products 
become ever more complex.47.  

2.2.  What are the problem drivers? 

2.2.1.  Problem  1:  Certain  products,  economic  actors  and  damage  in  the 

digital and circular economy escape no-fault liability 

1.1.1.1. Liability rules not adapted for products in the digital age 

The PLD allows a producer to escape liability if the producer can prove that a defect that 
causes damage probably came into being after the product was put into circulation48’ (the 
“later-defect defence”), because it is traditionally at that moment that the product leaves 
the producer’s control. This logic no longer reflects the reality of products in the digital 
age.  Producers  of  such  products  often  retain  control  of  them  after  they  are  put  into 
circulation, either by providing updates, delivering new functionalities through upgrades, 
or supplying digital services in the form of continuous updates in order to make, say, an 
autonomous vehicle or smart domestic appliance function. Software updates themselves 
can  be  defective,  and  have  been  identified  by  the  EU  Agency  for  Cybersecurity  as  the 
main causes of non-malicious security threats to IT systems and applications49.  

While providing defective updates can compromise product safety, so too can  failure to 
provide  them,  especially  when  it  comes  evolving  cybersecurity  threats.  For  example,  a 
cyber-attack may target a vulnerability in a machinery product’s software that makes the 
machinery malfunction and injure the user. Lack of adequate cybersecurity is one of the 
barriers that limits the uptake of new technological developments. In recognition of this, 
economic operators are now required to provide software and security updates to ensure 
the ongoing safety of products after they are placed on the market50. So software updates 

44 Evaluation of Product Liability Directive, SWD(2018)157, p. 61. 
45 Position paper of Business Europe in response to public consultation, p. 4. 
46  EFPIA,  European  Federation  of  Pharmaceutical  Industries  and  Associations,  Position  paper  in  response  to  public 
consultation, p. 8. 
47 BEUC (2020). Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-024 
- 07/05/2020. 
48 Article 7(b) of the PLD. 
49 European Union Agency for Cybersecurity (ENISA) (2021). ENISA threat landscape 2021, p. 82 
50 Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods, Art. 7(3). Other legislation 
requires  manufacturers  to  take  corrective  measures  if  a  product  is  no  longer  safe,  which  could  include  corrective 

13 

 
                                                      
 
are not only necessary to keep products safe, they are also required by legislation, yet the 
later-defect  defence  exonerates  producers  from  liability  under  the  PLD.  The  digital 
security  industry  (Eurosmart)  has  argued  that  the  “later-defect  defence”  makes  the 
concept of no-fault liability meaningless when applied to smart/connected products and 
AI systems that could let vulnerabilities emerge only after the placement of a product on 
the market.51 

But  who  is  liable  for  harm  caused  by  defective  software,  software  updates  and 
digital  services  that  make  products  work52?  BEUC,  the  consumer  organisation, 
considers  the  uncertainty  around  this  question  most  problematic  when  it  comes  to  3rd-
party  software  downloaded  separately  and  added  to  hardware,  for  example  a  software 
upgrade  or  an  entirely  new  software  module  in  a  domestic  robot53.  The  hardware 
manufacturer could invoke the later-defect defence, and the software manufacturer could 
argue that software is not a product and that no-fault liability therefore does not apply to 
him. This crucial question of whether software is a product is ambiguously answered by 
the  PLD,  which  defines  products  simply  as  “movables”.  This  led  two  Member  States 
(Austria and Belgium) to interpret the PLD as applying only to tangible items: “tout bien 
meuble  corporel”54.  And  this  question  around  tangibility  has  generated  decades  of 
intense  academic  debate55.  Economic  operators  too  argue  variously  that  only  software 
physically  embedded at  the time  the tangible product  is  put  into  circulation is  covered, 
but not any subsequently downloaded software (e.g. updates/upgrades)56; some insist that 
software, even if provided separately from a tangible product, is already covered57; some 
insist  software  developers  themselves  currently  qualify  as  producers;  some  argue  the 
opposite58.  

This lack of clear liability for software providers undermines the original intention of the 
PLD  to  make  “all  producers  involved  in  the  production  process  liable59,  and  is 
inconsistent  with  recent  EU  legislation  and  proposals  which  place  obligations  on 
software providers to ensure the safety of products60. For example, there are requirements 
for placing on the market software that is a medical device61, separately marketed safety 
components for machinery62 and AI systems63. (See also section 1.2).  

software  updates,  e.g.  Regulation  (EU)  2017/745  on  medical  devices,  Art.  83(3)(e);  Radio  Equipment  Directive 
2014/53/EU, Article 3(3)(e) and Article 3(3)(f); COM(2021)346 final, Art. 7(1)(h) and recital 23. 
51 Position Paper of Eurosmart (2020) in response to public consultation, p. 3.  
52  Expert  Group  on  Liability  and  New  Technologies  (2019),  Report  on  Liability  for  artificial  intelligence  and  other 
emerging digital technologies, p. 41. 
53 European Commission (2020), Report on the Safety and Liability Implications of Artificial Intelligence, the Internet 
of  Things  and  Robotics.  P.13;  Vellinga,  N.  (2019),  Automated  Driving:  Liability  of  the  Software  Producer  and  the 
Producer  of  the  Automated  Vehicle.  University  of  Groeningen.  Social  Science  Research  Network  Electronic  Paper 
Collection; Wagner, G., (2018) Robot Liability, p.11. 
54 Duncan Fairgrieve (2020), Product Liability, 3rd edition, p. 292.  
55 See P. Machnikowski (ed.) (2016), European Product Liability: An Analysis of the State of the Art in the Era of New 
Technologies, p. 46 for an overview. 
56 Response to inception impact assessment, June 2021: BSA – Software Alliance. 
57 Response to inception impact assessment, June 2021: MedTech Europe, Siemens Healthineers. 
58 Response to inception impact assessment, June 2021: Google. 
59 Product Liability Directive, 4th recital.  
60 Christiane Wendehorst (2020), Study on Safety and Liability Related Aspects of Software, p. 82. 
61 Regulation (EU) 2017/745 on medical devices. 
62 COM(2021) 202 final. 
63 COM(2021)206 final. 

14 

 
                                                                                                                                                              
Manufacturers  of  finished  products  and  of  hardware  components64  have  argued  that 
subjecting  only  hardware  producers  to  no-fault  liability  is  unfair,  given  that  today’s 
products operate in an ecosystem composed of hardware, software and ancillary services, 
which are difficult to  distinguish  one  from  another65. They argue that the safety of 3rd-
party software updates or of a control app downloaded to a user’s smartphone is outside 
of  their  control  and  they  point  to  the  key  principle  of  product  liability:  that  liability 
should be imposed on the party best able to minimise safety risks66. Industry associations 
in  the  automotive  industry  have  noted  that  services  and  data  can  be  crucial  to  the 
operation  of  a  vehicle  and  its  safety,  such  as  geolocation  data  and  its  supply  on  a 
continuous  basis  in  an  autonomous  vehicle67.  Legal  experts  have  pointed  out  that 
excluding software providers from no-fault liability is  especially incongruous when the 
digital component is more important  for the overall functioning of the product than the 
physical  part  itself.  68  This  might  be  the  case  in  IoT  ecosystems,  for  example  a  smart 
home system, where software and digital services have a greater role in determining how 
safely the system works than the individual hardware components. It essentially leads to 
a narrowing the scope of the PLD as more and more products on the market are of a type 
that  can  be  influenced  by  software  or  that  relies  on  updates  or  digital  services  to 
operate69.  This  may  explain  why  the  evaluation  identified  only  one  court  case  in  the 
period  2000-2018  in  which  a  consumer  sought  compensation  under  the  PLD  for 
software-related harm70.  

Representatives  of  the  software  industry,  however,  have  argued  that  shielding  software 
providers from no-fault liability is justified since software providers cannot control how 
their  software  will  be  used71.  It  seems  the  same  could  be  said  of  any  component, 
however.  They  have  also  argued  that  a  hardware  manufacturer  who  has  paid  out 
compensation  can  claim  that  back  from  software  providers  through  contractual 
agreements,  if  the  software  was  to  blame  for  the  harm.  Hardware  manufacturers, 
however, have stressed that it can be difficult to pursue such claims under contract law 
since software producers may insist on liability being excluded by contract72.  

While the focus above has been on software and digital services responsible for the safe 
operation  of  hardware,  software  itself  may  also  cause  personal  injury  or  property 
damage. For example, a medically-approved smartwatch app intended to  send an alarm 
notification to the user or doctor when it recognises irregular heartbeats could defectively 
fail to do so, leading to injury73, or a defective app or computer programs could cause a 

64  For  example  ACEA  (car  manufacturers),  APPLiA  (domestic  applicance  manufacturers),  CLEPA  (automotive 
suppliers). 
65 European Commission (2020), Report on the Safety and Liability Implications of Artificial Intelligence, the Internet 
of Things and Robotics, p.61; For more detailed information about servitisation of the European economy: European 
Commission (2018), Study on the potential of servitisation and other forms of product-services provision for Eu SMEs 
66 Gerhard Wagner, Robot Liability (2018), Paper based on a presentation at the Münster Colloquium on EU Law and 
Digital Economy, Liability for Robotics and the Internet of Things 
67  Feedback  to  inception  impact  assessment  from:  CLEPA  (European  Association  of  Automotive  Suppliers) 
(europa.eu). 
68 Twiggs-Flesner, C., (2021), Guiding Principles for Updating the Product Liability Directive for the Digital Age. ELI 
Innovation Paper Series, p. 5 
69 P. Machnikowski (ed.) (2016), European Product Liability: An Analysis of the  State of the Art in the Era of New 
Technologies, p. 691, and at ELI Webinar on  Guiding Principles for Updating the Product Liability Directive for the 
Digital Age, 23 February 2021. 
70 EY, Technopolis, VVA (2018), Study accompanying Evaluation of Product Liability Directive, p. 24. 
71 Response to inception impact assessment, June 2021: Bitkom and BSA – Software Alliance. 
72 Interview with representative of automotive suppliers in the context of the supporting impact assessment study. 
73 Christiane Wendehorst (2020), Study on Safety and Liability Related Aspects of Software, p. 50. 

15 

 
                                                      
computer  battery  to  overheat  or  explode74.  In  neither  case  could  the  software 
manufacturer currently be held liable under the PLD.  

What  about  types  of  harm  other  than  personal  injury  and  property  damage?  The 
2018  evaluation  highlighted  that  products  using  digital  technologies  are  capable  of 
causing a broader  range  of harm than traditional products,  in  particular  a) damage to  a 
user’s  digital  property,  and  b)  infringement  of  personality  rights  such  as  privacy  or 
discrimination75. 

Damage  to  digital  property76:  The  PLD  covers  damage  to  items  of  consumer  property, 
but  not  all  Member  States’  legal  systems  treat  intangible  goods  as  property77.  For 
example,  if  an  external  hard-drive  is  defective  and  erases  all  digital  content  from  the 
computer’s hard-disk without physically damaging the computer itself, in some Member 
States  the  consumer  can  seek  compensation  under  the  PLD  for  the  resultant  economic 
loss e.g. restoring the digital content or purchasing new software licences78, but in others 
only if the hard-disk itself were physically damaged79. In a case in Bulgaria, a defective 
hard-drive  erased  digital  content  from  the  claimant’s  computer  and  the  damage  was  in 
principle  deemed  recoverable  by  the  court,  although  the  claimant  could  not  prove  the 
digital  content  had  been  stored  on  the  computer80.  The  increasing  prevalence  of 
connected  devices  and  cybersecurity  risks  may  make  this  sort  of  damage  to  digital 
property more common81, although EU rules on product safety82 and on cybersecurity83 
should  mitigate  these  risks  through  tougher  cybersecurity  requirements.  It  should  be 
recalled, however, that the PLD acts as a safety net when, despite the safety rules, harm 
occurs.  BEUC, the consumer organisation,  considered the lack of common approach  to 
compensating  such  losses  problematic,  because  of  the  unequal  protection  of  consumers 
across the Union84.  

Losses  due  to  infringement  of  fundamental  rights:  A  novelty  of  products  in  the  digital 
age, in particular wireless/IoT products, such as connected toys like the Cayla doll85, or 
smart meters, is their use of personal data, which, if not protected, could cause harm such 
as mental suffering86. The impact assessment study found that in almost all scenarios of 
data protection failings, a controller would be identifiable and the GDPR would provide a 
route to compensation. This might, however, not be the case if, say, a baby monitoring 

74  Position  paper  in  response  to  public  consultation:  Civil  liability  –  adapting  liability  rules  to  the  digital  age  and 
artificial intelligence. 
75 Evaluation of Product Liability Directive, SWD(2018)157, p. 56. 
76 Protection of personal data, which is not considered as property under Union law, is addressed under “losses due to 
infringements of fundamental rights”. 
77 Under German law (Art. 90 BGB) a thing must be corporeal, whereas under Austrian law (Art. 285 ABGB) a thing 
may  also  be  intangible;  See  also  Expert  Group  on  Liability  and  New  Technologies  (2019),  Report  on  Liability  for 
artificial intelligence and other emerging digital technologies, p. 19. 
78  Expert  Group  on  Liability  and  New  Technologies  (2019),  Report  on  Liability  for  artificial  intelligence  and  other 
emerging digital technologies, p. 59 
79 Position paper of Insurance Europe in response to public consultation, p. 2: Civil liability – adapting liability rules to 
the digital age and artificial intelligence 
80 Bulgarian case no. 20942/2012. Reported in Evaluation of Product Liability Directive, SWD(2018)157, p. 12.  
81 See for instance:  
https://www.taylorwessing.com/en/insights-and-events/insights/2021/04/product-liability-for-an-iot-data-breach  
82 COM(2021)346 final, Art. 7(1)(h). 
83 Regulation (EU) 2019/881; Also GDPR mandates data accuracy and integrity (Art. 5(1)(d) and (f). 
84 BEUC (2020). Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-024 
- 07/05/2020, p. 15. 
85 German regulator bans spying doll Cayla | www.beuc.eu.  
86 e.g. due to a stranger communicating with a child through a doll. 

16 

 
                                                      
camera  were  operated  by  a  natural  person  without  personal  data  being  processed  by  a 
responsible  controller/processor.  In  such  a  situation,  if  a  security  vulnerability  made  it 
possible for other individuals to watch the live feed from this device, the processing of 
personal data might fall under the GDPR’s so-called household exemption87, meaning no 
compensation  under  the  GDPR.  Manufacturers  of  IoT  products  –  in  that  example  the 
producer  of  the  camera  –  will  be  obliged  under  a  recently  adopted  delegated  act88  to 
equip their devices with features to guarantee the protection of personal data and privacy. 
BEUC, the consumer organisation, has argued that the PLD should apply  in such cases 
and  whenever  flaws  in  IoT  products  lead  to  privacy  infringements89.  Industry 
stakeholders have pointed out that the victim would have a claim under national tort law 
or contract law against the camera manufacturer. 

Besides  privacy,  digital  technologies  can  lead  to  infringements  of  other  fundamental 
rights.  The  draft  AI  Act  lays  down  rules  to  minimise  the  risk  of  AI  systems  taking 
erroneous or biased decisions in critical areas such as education, training or employment 
that could lead to economic loss or emotional harm, e.g. failure to get a job due to biased 
AI  recruitment  software  or  failure  to  get  a  loan  due  to  biased  credit-rating  software. 
Several  stakeholders considered it  would  be difficult to  get  compensation for software-
induced  discrimination,  although  they  pointed  to  the  significant  role  of  the  user  of  the 
software and not only the producer, and therefore questioned whether this was a problem 
to  be  addressed  under  the  PLD90.  (The  impact  assessment  on  AI  liability  looks  more 
closely  at  liability  rules  for  discrimination  caused  by  AI-systems.)  Also  concerning 
damages: See annex 5 concerning a clarification for psychological harm damages. 

1.1.1.2.Liability rules unclear for refurbished/remanufactured products 

Circular  business  models  in  which  products  are  refurbished  or  remanufactured  are 
increasingly common and central to the EU’s efforts to achieve sustainability and waste-
reduction  goals.  However,  as  explained  in  section  2.2.1.1,  under  the  PLD  the  original 
manufacturer is  not  liable for defects  that emerge after  a product  is  put  into  circulation 
and the PLD is silent on whether economic operators who modify products and put them 
back on the market can themselves be treated as producers and therefore subject to no-
fault  liability.  The  aerospace,  automotive  and  heavy-duty  equipment  sectors  make  up 
more than 80% of the European remanufacturing industry, and electrical  and electronic 
as well as medical equipment have witnessed an expansion in demand91. In the medical 
devices  sector  alone,  the  market  for  refurbished  and  remanufactured  products  is 
estimated  to  be  EUR  600  million/annum  in  the  EU,  and  is  divided  roughly  equally 
between original equipment manufacturers and 3rd-party refurbishers92. 

87 Article 2(2) of GDPR; Example scenario provided by JRC. 
88 Commission Delegated Regulation (EU) 2022/30 of 29 October 2021 supplementing Directive 
2014/53/EU of the European Parliament and of the Council with regard to the application of the essential 
requirements referred to in Article 3(3), points (d), (e) and (f), of that Directive. 
89 BEUC (2020). Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-024 
- 07/05/2020, p. 15. 
90  Position  paper  in  response  to  public  consultation  of  Austrian  Bundesarbeitskammer;  Civil  liability  –  adapting 
liability rules to the digital age and artificial intelligence; and feedback on inception impact assessment from: Future of 
Life Institute. 
91 ERN (2015), Remanufacturing Market Study (for Horizon 2020, grant agreement No 645984), p. 42 
92  Estimate  provided  by  COCIR,  European  trade  association  representing  the  medical  imaging,  radiotherapy,  health 
ICT and electro-medical industries; see case study on medical devices in the circular economy annexed to supporting 
impact assessment study. 

17 

 
                                                      
Remanufacturing and refurbishing are industrial practices in which a product is returned 
to at least its original performance to match the original manufacturers’ specifications93, 
and  involves  various  steps  such  as  disassembly,  cleaning,  repair/replacement  of 
components,  reassembly  and  testing,  before  the  product  is  put  back  into  circulation94. 
Stakeholder 
and 
that 
refurbishers/remanufacturers  face  legal  uncertainty  as  to  the  extent  of  their  liability 
exposure95.  The  home  appliance  industry  noted  that  clearer  rules  would  give  original 
manufacturers  confidence  to  allow  independent  third-party  operators  to  carry  out 
refurbishments96. 

original  manufacturers 

confirmed 

feedback 

both 

The  question  of  who  is  responsible  for  the  safety  of  modified  products  has  been 
addressed  in  the  Commission’s  “Blue  Guide”  on  the  implementation  of  EU  product 
safety  legislation:  an  economic  operator  who  makes  important  changes  to  or  who 
overhauls a product should be seen as putting a new product into circulation and should 
be  responsible  for  safety  compliance97.  This  concept  of  “substantial  modification”  has 
been  integrated  into  legislation  and  legislative  proposals  in  recent  years98  and  the 
Medical Devices Regulation explicitly includes economic operators who fully refurbish 
devices  in  its  definition  of  manufacturer99.  While  there  is  no  evidence  of  victims 
currently  going  uncompensated  for  damage  caused  by  substantially  modified  products, 
the  existing  liability  rules  are  not  future  proof  or  coherent  with  this  legislation,  as  the 
notion of substantial modification is absent from the PLD.  

In contrast to situations of substantial modification, the mere repair of products does not 
create uncertainty for the application of liability rules. A repair is rather an individualised 
service, in which a product is returned to working order and then typically given back to 
the owner. There is no new product and there is no new distribution, so no grounds for 
product  liability to  be triggered. Repairers can of course be found liable under national 
fault-based rules, however, for undertaking a faulty repair. 

1.1.1.3. No  liable  person  under  the  PLD  when  consumer  purchases  product  from  a  3rd 

country directly 

Alongside  the  producer,  which  includes  own-branders,  importers  are  also  liable  for 
product  defects  under  the  PLD.  The  rationale  for  this  is  that  enforcing  a  compensation 
claim against a producer in a third country would present consumers with insurmountable 
difficulties.100  

The emergence of e-commerce is a major global development of the last few decades, but 
for  the  most  part  buying  online  is  analogous  with  buying  offline  and  the  PLD  applies 
equally well: producers and importers are treated the same whether a purchase was made 
online or offline. However, online marketplaces now also make it possible for consumers 
to purchase products directly from non-EU producers without the involvement of an EU-

93 ERN (2015), Remanufacturing Market Study (for Horizon 2020, grant agreement No 645984), p. 7; BS 887-Part2. 
94 PWC for DG GROW (2017), Refurbishment of medical equipment (report on promising KETs-based product nr. 4)  
95  See  for  example  position  papers  of  Business  Europe,  Mouvement  des  Entreprises,  European  Law  Institute  and 
Finnish Competition and Consumer Authority in response to the public consultation.  
96 Response to targeted survey: APPLiA, trade association representing manufacturers of home appliances. 
97 Commission Notice (2016), The ‘Blue Guide’ on the implementation of EU products rules 2016, p. 15 to 17. 
98 Proposal for a Regulation of the European Parliament and of the Council on machinery products,  COM(2021)202; 
proposal for a Regulation on General Product Safety (GPSR), COM(2021)346. 
99 Regulation (EU) 2017/745 on medical devices, Art. 2(1)(30). 
100 Explanatory Memorandum of PLD, Supplement Bulletin EEC 1976_11, para 10. 

18 

 
                                                      
based importer. In such cases, if a product is defective and causes harm, there is no EU-
based  liable  person  from  whom  to  seek  compensation  under  the  PLD.  64%  of 
respondents  in  the  public  consultation  agreed  there  was  a  need  to  adapt  liability  rules 
where there is no EU importer101. 

Such  “direct  imports”  have  increased  in  recent  years:  around  150  million  small 
consignments are imported free of VAT into the EU each year102 and it has been reported 
that in 2017 there were 150 000 private consignments coming from China to individual 
consumers per day103. The problem is expected to be mitigated by upcoming legislation. 
To  better  ensure  the  safety  of  “directly  imported”  products,  the  draft  Digital  Services 
Act104  requires  online  marketplaces  that  intermediate  sales  between  sellers  and 
consumers to collect information on sellers using their marketplace and suspend services 
to  the  seller  if  they  fail  to  disclose  requested  information.  The  already  in  force  Market 
Surveillance  Regulation105  requires  an  responsible  person  (either  a  manufacturer, 
importer, authorised representative or fulfilment service provider) to be established in the 
EU  in  order  for  certain  products  within  its  scope  to  be  placed  on  the  market,  and  the 
proposal for General Product Safety Regulation proposes to extend this requirement to all 
products.  These  measures  can  be  expected  to  reduce  the  risk  of  dangerous  products 
reaching the internal market. However, if harm does occur, compensation would not be 
available  under  the  PLD  as  authorised  representatives  and  fulfilment  service  providers 
are  not  among  the  liable  persons  covered  by  the  PLD.  Other  means  of  compensation 
could  be  available  under  national  liability  rules,  but  only  on  grounds  of  fault  or 
negligence.  

See Annex 5 for details of clarifications needed on the role of online marketplaces.  

2.2.2.  Problem 2: Consumers face obstacles to getting compensation 

1.1.1.4.Proving defectiveness and causal link with damage is very difficult and costly for 

complex products 

The most significant condition for an injured person to get compensation under the PLD 
is proving that the product was defective and that this defectiveness caused the damage 
suffered. Failure to discharge this burden of proof is the most frequent reason for a claim 
to be rejected (accounting for 53% of total rejections)106.  

There is by and large consensus among stakeholders that the more complex a product is, 
the greater the asymmetry of information between the producer and consumer. This can 
make  it  harder  for  claimants  to  produce  the  evidence  needed  to  prove  the  producer’s 
liability: whereas proving a collapsed garden chair is defective might be straightforward, 
proving  a  pharmaceutical  is  defective  may  require  considerable  expertise,  which  the 
producer has at its disposal but the claimant does not. Stakeholders disagree on the extent 
of  the  problem:  98%  of  consumer  and  NGO  respondents  and  members  of  the  public 

101 63.9% (179 out of 280) agreed or strongly agreed; 20% (56 out of 280) disagreed or disagreed strongly. 
102 European Commission (2017), Modernising VAT for e-commerce   
103 Eurocommerce (2019), Creating a level-playing field for retail in Europe. 
104 COM(2020) 825 final, Art. 5. 
105 Regulation (EU) 2019/1020 on market surveillance. 
106 Evaluation of Product Liability Directive, SWD(2018)157, p.23 

19 

 
                                                      
consider  that  technically  complex  products  present,  to  a  large  or  very  large  extent, 
difficulties for proving liability, whereas as only 45% of business respondents do107. 

Difficulties getting information. Claimants have no right under the PLD to get technical 
information  from  producers  in  court108.  However,  the  ECJ  has  noted  that  access  to 
information makes it easier for a claimant to produce the necessary evidence to prove the 
producer’s liability, and has endorsed national rules that give claimants this right. Based 
on data from 24 Member States, the support study for this impact assessment found that 
all but one (CZ) had some rules in place for disclosure of documents in court. The rules 
vary, however, in terms of what can be requested: in SE any document can be requested, 
whereas  in  DE,  EL,  IT,  NL  and  PL  the  specific  document  has  to  be  named;  failure  to 
disclose information can result in a penalty in FR and PL, whereas in DE the element the 
claimant  was  seeking  to  prove  can  be  presumed  by  the  court.  The  level  of  consumer 
protection in terms of information rights is therefore divergent across the EU109. 

Difficulties  proving  liability.  Even  if  a  claimant  gets  the  information,  proving  liability 
can  still  be  difficult.  This  is  demonstrated  by  the  fact  that  national  courts  make  use  of 
various mechanisms to make it easier for claimants to come up with the proof. National 
courts have, for example, held that products that do not comply with safety requirements 
can be presumed to be defective110, and claimants do not need to show how a defect was 
caused or what specific defect led to the lack of safety111. National courts have referred 
questions  on  how  to  apply  the  PLD’s  burden-of-proof  rules  three  times  in  the  last  10 
years112.  In  response,  the  ECJ  has  endorsed  national  rules  that  allow  courts to  presume 
the  existence  of  a  causal  link  even  if  there  is  no  conclusive  evidence,  so  long  as  the 
factual  evidence  available  was  sufficiently  robust113.  It  has  also  ruled  that  a  pacemaker 
could be considered defective without proof of actual defect by virtue of being from the 
same production series as another pacemaker already proven to be defective114. The ECJ 
has  therefore  endorsed  efforts  of  national  courts  to  make  it  easier  for  claimants  to 
produce the evidence needed to prove the producer’s liability.  

Industry stakeholders such as Business Europe115 argue that national courts have shown 
they have the tools they need to ease the burden of proof where necessary. EFPIA argues 
that some national courts have already gone too far in easing the burden of proof and the 
inconsistency  of  approaches  is  negative116.  Consumer  organisations117  argue  that  while 
the ECJ judgments on information obligations and easing the burden of proof  are to be 
welcomed, they do not go far enough in helping consumers to prove liability, especially 

107 97.1% (135 out of 139) compared with 44.6% (45 out of 101).  
108 CJEU, Judgment of 20 November 2014, Case C-310/13. 
109 CSES, Wavestone, CSIL (2022), Impact assessment study on the revision of Product Liability Directive, Annex 4.2. 
110 European Commission (2020), Report on the Safety and Liability Implications of Artificial Intelligence, the Internet 
of Things and Robotics. P.14 
111 Defectiveness could be inferred by the fact that the susceptibility (in this case brakes that seized without warning) 
was  not  present  in  other  bikes  of  the  same  type;  see  Baker  v  KTM  Sportmotorcycle  UK  Ltd  and  another  (2017), 
EWCA Civ 378. 
112 CJEU, Judgment of 20 November 2014, Case C-310/13; CJEU, Judgment of 21 June 2017, Case C-621/15; CJEU, 
Judgment of 5 March 2015, Joined Cases C-503/13 and C-504/13. 
113 CJEU, Judgment of 21 June 2017, Case C-621/15; the case turned on whether a causal link between a vaccine and 
the onset of multiple sclerosis could be inferred from the fact that the disease manifested itself shortly after injection 
and there were no family antecedents related to the disease. 
114 Joined Cases C-503/13 and C-504/13.  
115 Position paper of Business Europe in response to public consultation, p. 4. 
116 Position paper of EFPIA, European Federation of Pharmaceutical Industries and Associations in response to public 
consultation, p. 8. 
117 Position paper of BEUC, the consumer organisation, in response to public consultation, p. 7. 

20 

 
                                                      
in  complex cases  – consumer protection is  therefore insufficient and uneven across the 
internal  market.  The  European  Group  on  Tort  Law  consider  the  fact  that  courts  take 
divergent approaches makes future court decisions unpredictable, which is a problem for 
legal  certainty.  See  also  Annex  8  concerning  products  that  carry  risks  but  are  not 
defective.  

Development risk defence: The development risk defence allows the producer to escape 
liability  when  the  product  was  defective  when  put  into  circulation  but  the  ‘state  of 
scientific and technical knowledge’ at that time did not allow for the particular defect to 
be discovered118. The PLD allows Member States to derogate from applying the defence: 
Finland and Luxembourg derogate entirely, while Spain, France and Hungary derogate in 
respect of certain categories of product119. 

Consumer  organisations  have,  over  many  years,  argued  that  the  defence  should  be 
removed, since producers are always better placed than individual consumers to mitigate 
and insure against risks caused by their products, even if they were undiscoverable at the 
time  the  product  was  put  into  circulation120.  Industry  stakeholders  have  argued  equally 
strongly in support of the defence designed to encourage innovation. The defence itself 
has rarely been used in practice though – successful use of the defence accounted for 4% 
of rejected claims  121. The 2018 evaluation found that the development risk defence was 
an  important  factor  for  guaranteeing  the  relative  stability  of  product  liability  insurance 
costs within the internal market while avoiding significant increases in litigation levels. It 
also found that whether or not a Member State had a derogation had little impact on the 
number of product liability cases in that country122.  

However, the Expert Group pointed out that assessing the state of scientific knowledge at 
the  moment  of  putting  into  circulation  fails  to  take  account  of  the  fact  that  producers 
retain control over digital products beyond that moment and therefore have the means to 
address  defects  that  become  discoverable123.  This  is  true  of  many  digital  products, 
including IoT and AI-enabled products, as discussed in section 2.1.1.1. 

1.1.1.5. Liability ends after 10 years; need to start legal proceedings 3 years after damage 

Producers  are  released  from  liability  under  the  PLD  10  years  after  putting  the  product 
into circulation: an unlimited period would be unreasonable, given that products age and 
higher  safety  standards  are  developed  over  time124.  In  addition,  victims  are  required  to 
start  legal  proceedings  within  three  years  of  the  day  on  which  they  became  aware,  or 
should reasonably have become aware, of the damage, the defect and the identity of the 
producer.  

The length  of the periods, 10  years and three  years respectively,  represents  an effort  to 
balance the interests of producers and consumers.  In respect of most products, the time 
limits does not seem to hamper the effectiveness of the PLD.  The percentage of claims 

118 Art. 7(e), PLD. 
119 ES: pharmaceuticals and foodstuffs; FR: products of the human body, such as blood products; HU: pharmaceuticals. 
120 BEUC (2020). Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-
024 - 07/05/2020, p. 17. 
121 Evaluation of Product Liability Directive, SWD(2018)157, p.23 
122 Evaluation of Product Liability Directive, SWD(2018)157, p.31 
123  Expert  Group on  Liability  and New  Technologies  (2019),  Report  on  Liability  for  artificial  intelligence  and  other 
emerging digital technologies, p. 6; also response of European Law Institute to the public consultation. 
124 Product Liability Directive, Article 11 and 11th recital. 

21 

 
                                                      
rejected once proceedings were started is low: in respect of the 3-year time limit, 4%, and 
in  respect  of  the  10-year  time  limit,  residual125.  However,  this  will  certainly  be  an 
underestimate,  since  a  claim  would  not  be  admissible  in  the  first  place  if  it  could  be 
shown that the 10-year period had expired. 

In the public consultation 69% of non-business respondents argued the 10-year time limit 
presented obstacles to compensation to a moderate, large or very large extent, while 49% 
said the same of the 3-year time limit126. For business respondents the figures were 14% 
and  11%  respectively127.  BEUC  and  a  French  patient  organisation128argue  that  the  10-
year  time  limit  is  too  short  in  respect  of  products  capable  of  damage  to  health  that 
becomes evident only after a long time, such as pharmaceuticals, chemicals, foodstuffs or 
construction  materials  like  asbestos,  and  that  this  disproportionately  limits  access  to 
justice. Pharmaceuticals, chemicals and foodstuffs account for 26.3% of product liability 
cases129, or an average 12 cases per year, but long latency periods are very rare130. One 
example  that  representatives  of  pharmaceutical  victims  have  pointed  to  is  Sodium 
Valproate (Depakine), a medicine prescribed to pregnant women until 1971, has severe 
adverse effects,  including  for subsequent  generations,  which emerge after  expiry of the 
10-year period131. In such cases it is not possible to make a compensation claim under the 
PLD  and  a  claimant  would  have  to  rely  on  fault-based  national  rules  to  seek 
compensation. The European Court on Human Rights too has ruled that time limits have 
consequences for access to justice. In respect of a Swiss law that set a 10-year limit for 
claiming compensation for diseases caused by asbestos, the Court ruled that applying the 
time limit “to persons suffering from diseases which could not be diagnosed until many 
years after the triggering events, was liable to deprive those persons of the opportunity to 
assert their claims before the courts”132.  

In  respect  of  the  three-year  time  limit  to  start  legal  proceedings,  personal-injury 
lawyers133 and a French patient organisation134 argued it can be too short in the case of 
personal injuries, since gathering evidence before starting proceedings takes considerable 
time,  and  victims  may  be  recovering  from  injuries  during  that  period.  However,  the 
extent  of  this  problem  is  mitigated  by  the  fact  that  the  PLD  permits  Member  States  to 
suspend or interrupt the three-year period according to their national rules, for example in 
the  case  of  disability  or  where  it  is  otherwise  equitable  to  do  so.  No  such  possibility 
exists to extend the 10-year time limit. 

1.1.1.6. No liability for property damage worth less than EUR 500 

Producers do not have to provide compensation under the PLD for damage to consumer 
property  amounting  to  less  than  EUR  500.  The  purpose  of  the  threshold  was  to  avoid 
excessive  litigation  and  was  conceived  as  part  of  the  balance  of  producers’  and 
consumers’ interests. The 2018 evaluation found that the threshold overly limited claims 

125 Evaluation of Product Liability Directive, SWD(2018)157, p.28: 4 cases out of 798 reported cases. 
126 125 and 90 out of the total 181 non-business respondents respectively. 
127 14 and 12 out of the total 110 business respondents respectively. 
128 Responses of BEUC and France Assos Santé to the public consultation. 
129 144 cases out of 547. 
130 Law Insider, Latent Injury Definition. 
131 France Assos Santé, response to Inception Impact Assessment, June 2021. 
132 Howald Moor and Others v Switzerland – 52067/10 and 41072/11 (ECHR 069-2014). 
133 Interviews conducted as part of the IA support study. 
134 Response of France Assos Santé to the public consultation. 

22 

 
                                                      
for  property  damage,  which  undermined  the  effectiveness  of  the  PLD  in  protecting 
consumer property135.  

BEUC136,  the  consumer  organisation,  has  argued  that  the  threshold  denies  victims  of 
property  damage  an  effective  remedy,  a  right  enshrined  in  Article  47  of  the  Charter  of 
Fundamental  rights. The threshold also  appears to be at odds with the objectives of the 
Directive  on  representative  actions137,  which  seeks  to  ensure  an  effective  remedy  for 
infringements that harm the collective interests of consumers, especially where individual 
claims might be considered small in isolation. That Directive explicitly lists PLD claims 
as  falling  within  its  scope138,  and  yet  the  EUR  500  threshold  excludes  smaller  claims 
from the outset. 

In the public consultation, 78% of non-business respondents considered the threshold an 
obstacle to getting compensation to a moderate, large or very large extent, compared to 
only  16%  of  businesses  respondents139.  Indeed  industry  stakeholders  have  argued  that 
consumers  have  other  routes  to  effective  remedies,  such  as  under  national  tort  law  or 
contract  law.  This  suggests,  however,  that  the  threshold  has  not  achieved  its  aim  of 
reducing overall litigation, but has merely displaced it away from the PLD140.  

In terms  of  consequences for the internal  market, Romanian authorities  have raised the 
concern  that  the  impacts  on  consumer  protection  of  a  single  fixed  threshold  across  the 
EU  vary  widely  depending  on  price  levels  for  consumer  goods  in  each  Member  State, 
because more consumer property falls below the threshold in cheaper Member States. In 
2020  prices  levels  of  consumer  goods  were  almost  three  times  higher  in  the  most 
expensive Member State compared to the cheapest141. Besides objections to the threshold 
per  se,  the  provision  has  been  transposed  divergently  at  national  level.  Most  Member 
States allow the total  amount of damages to be recovered once the claim exceeds EUR 
500. Other Member States (AT, DE, DK, ES, FI, FR, IT) reduce all damages awarded by 
EUR 500. On the former interpretation, a claimant who has suffered EUR 800 worth of 
damage would be compensated for the full amount; on the latter interpretation only EUR 
300.  The  different  interpretations  of  this  threshold  evidently  create  differing  levels  of 
consumer protection within  the internal  market.  Business stakeholders  did not  raise the 
different interpretations as a problem for them. 

2.3.  How will the problems evolve? 

The transition to a digital economy is still in its infancy. As automation and digitalisation 
continue to advance, the role of software and digital services in determining the safety of 
products will increase. For example, the global market for autonomous cars amounted to 
USD 508 billion in 2015 and has grown at a compound annual growth rate (CAGR) of 

135 Evaluation of Product Liability Directive, SWD(2018)157, p.25. The impact assessment study could not find data 
on how many cases under the PLD concern property damage.  
136 BEUC (2020). Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-
024 - 07/05/2020, p. 16. 
137 Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers 
138 Annex I of Directive (EU) 2020/1828. 
139 131 out of 167, and 16 out of 102 respectively. 
140  Chatzipanagiotis,  M.  P.,  Leloudas,  G.,  (2020),  Automated  Vehicles  and  Third-Party  Liability:  A  European 
Perspective, University of Illinois Journal of Law, Technology & Policy, pp. 109-199. P. 127. 
141 See Eurostat data from 2020, according to which Denmark has the highest price level (141% of EU average) and 
Romania  the  lowest  (55%);  see  also  Fourth  report  on  the  application  of  Council  Directive  85/374/EEC, 
COM(2011)547. 

23 

 
                                                      
12.7% since then. The market is forecast to amount to USD 3195 billion by 2030142. As 
automation  increases  in  cars  and  numerous  other  products,  an  increasing  proportion  of 
accidents will be caused by defectiveness compared to the negligence or fault of a driver 
or user. The prominence of the producer for liability purposes will therefore increase143, 
and with it the importance of a future-proof PLD. The lack of clarity on what products, 
producers and damage fall within the PLD would exacerbate the lack of a level playing 
field between economic operators who put hardware into circulation and those who put 
software  into  circulation.  As  the  EU  product  safety  framework  continues  to  be 
modernised  to  address  new  digital  risks,  the  PLD  would  be  left  behind,  no  longer 
coherently  mirroring  safety  rules,  and  therefore  no  longer  providing  an  effective  safety 
net when harm involving digital technologies occurs. The growth of digital economy and 
the  potential  increase  in  the  number  of  injuries  related  to  these  products  could  lead  to 
greater  divergence  as  courts  adopt  their  own  interpretations  of  outdated  definitions  or 
Member States or introduce parallel liability regimes to cover defects that occur after a 
product is put into circulation. 

The  transition  to  a  circular  economy  is  also  in  its  infancy.  As  it  becomes  increasingly 
possible to extend the life of materials through industrial processes, uncertainty about the 
liability  of  original  manufacturers  and  remanufacturers  could  make  it  difficult  for 
businesses to assess their liability exposure and get appropriate insurance.  

The  growing  trend  of  buying  products  directly  from  3rd  countries,  especially  through 
online marketplaces, will compound difficulties getting compensation for lack of an EU-
based liable person for consumers to turn to under the PLD,  

that  emerging  digital 

As  for  the  burden  of  proof,  the  divergent  approaches  to  disclosure  obligations  and  to 
easing  the  burden  of  proof  in  complex  cases  would  continue  to  be  taken  by  national 
courts. This would perpetuate an unequal level of consumer protection and undermine the 
predictability  of  court  decisions.  Importantly,  consumer  organisations  and  legal 
academics  believe 
technologies  will  exacerbate  existing 
difficulties144. The Commission’s Report on safety and liability implications of Artificial 
Intelligence,  the  Internet  of  Things  and  robotics  identified  the  same  concerns145.  This 
may  especially  be  the  case  in  complex  IoT  environments  and  cyberphysical  systems, 
such as smart home systems where many different connected devices and related services 
interact  and  AI-enabled  products  (see  case  study  in  section  2.2.  of  AI  liability  impact 
assessment). This view is not shared by industry stakeholders, who point to the absence 
of  empirical  evidence  that  new  technologies  will  exacerbate  evidentiary  difficulties. 
More information  on evidentiary difficulties due to  features specific to  AI technologies 
can be found in the parallel AI liability impact assessment. 

The effects of time limits and thresholds on limiting claims are not expected to evolve – 
these restrictions would simply continue.  

142  CSES  with  Wavestone,  CSIL  (2022),  Impact  assessment  study  on  the  revision  of  Product  Liability  Directive, 
section 2.1.1.1. 
143 Gerhard Wagner (2020), Verantwortlichkeit im Zeichen digitaler Techniken, Versicherungsrecht, p. 738. 
144 BEUC (2020), Product Liability 2.0 - How to make EU rules fit for consumers in the digital age, p. 17; European 
Commission (2020), Report on the Safety and Liability Implications of Artificial Intelligence, the Internet of Things 
and Robotics. 
145 European Commission (2020), Report on the Safety and Liability Implications of Artificial Intelligence, the Internet 
of Things and Robotics. 

24 

 
                                                      
3.  WHY SHOULD THE EU ACT? 

3.1.  Legal basis 

The  PLD  fully  harmonises  the  matters  it  explicitly  covers  and  is  based  on  Article  114 
TFEU  (ex-Article  95  TEC,  ex-Article  100  EEC  Treaty),  the  objective  of  which  is  the 
establishment  and  functioning  of  the  internal  market  by  approximating  national  rules. 
Any  revision  of  the  PLD  would  build  on  the  current  objectives  of  free  movement  of 
goods  and  creating  a  level  playing  field  for  companies  in  the  internal  market,  while 
ensuring consumer protection, and so would have the same legal basis. 

3.2. 

Subsidiarity: Necessity of EU action 

This  initiative  addresses  the  issues  identified  in  the  evaluation  of  the  PLD,  which  was 
carried  out  as  part  of  the  Commission’s  regulatory  fitness  and  performance  (REFIT) 
programme146.  The  evaluation  concluded  that  the  PLD  was  on  the  whole  relevant, 
effective,  efficient,  coherent  and  had  EU  added  value,  despite  some  shortcomings 
concerning  ease  of  application  in  the  digital  and  circular  economy  and  the  balance  of 
producer-consumer interests in some cases. 

In  the  public  consultation  conducted  for  the  evaluation,  more  than  85%  of  respondents 
considered  the  PLD  was  advantageous  for  consumers  and  producers,  and  stakeholders 
across  the  board  considered  the  advantages  could  not  be  achieved  with  national 
legislation alone. This is because goods circulate freely within the internal market and are 
capable of being defective and causing harm irrespective of the Member State in which 
they  were  produced  or  used.  Furthermore,  the  problems  identified  do  not  have  any 
particular national or sub-national specificities. 

Since the PLD fully harmonises the matters  it explicitly covers, Member States  are not 
allowed  to  make  changes  to  the  scope,  outdated  definitions  or  rules  of  the  PLD:  they 
must  be  made  at  EU  level.  In  the  absence  of  a  uniform  set  of  rules  on  compensating 
victims  harmed  by  defective  products,  manufacturers  would  be  faced  with  27  different 
sets  of  rules,  leading  to  different  levels  of  protection  for  consumers  and  distorted 
competition among market operators from different Member States.  

3.3. 

Subsidiarity: Added value of EU action 

The evaluation concluded that the added value of having EU-level product liability rules 
to  complement  EU-level  product  safety  rules  was  uncontested147.  Indeed  rules  on 
compensating  victims  harmed  by  defective  products  reinforce  EU  product  safety  rules, 
and  both  pursue  the  same  policy  goal  of  a  functioning  internal  market  for  goods  that 
ensures a high level of consumer protection. 

Regulatory action at EU level would ensure coherent implementation of product liability 
rules. It would provide legal certainty about what products, economic operators and types 
of  harm  fall  within  the  PLD’s  scope,  and  about  the  appropriate  balance  of  interests 
between producers and consumers across the EU. This would in turn help ensure the free 

146 Evaluation of Product Liability Directive, SWD(2018)157. 
147 Evaluation of Product Liability Directive, SWD(2018)157, p. 60. 

25 

 
                                                      
movement  of  goods,  a  level  playing  field  for  all  market  operators,  and  a  high  and 
consistent level of consumer protection. 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

4.1.  General objectives 

The  PLD  fully  harmonises  the  matters  it  explicitly  covers  and  is  based  on  Article  114 
TFEU  (ex-Article  95  TEC,  ex-Article  100  EEC  Treaty),  the  objective  of  which  is  the 
establishment  and  functioning  of  the  internal  market  by  approximating  national  rules. 
The  revision  of  the  PLD  pursues  two  general  objectives  to  address  the  problems 
identified, both of which build on those of the current PLD: 

1)  Continue  to  ensure  the  functioning  of  the  internal  market,  free  movement  of 

goods and undistorted competition between market operators; 

2)  Continue to ensure a high level of protection of consumers’ health and property. 

4.2. 

Specific objectives 

This initiative pursues five specific objectives (SOs). 

In order to adapt product liability rules to the digital age and circular economy: 

  SO 1: Ensure liability rules reflect nature and risks of products in the digital age 

The aim here is to ensure that not only traditional products that were commonplace in the 
1980s are adequately covered by product liability rules, but that digital products are too. 
Adapting  or  clarifying  definitions  will  bring  product  liability  rules  into  line  with  EU 
safety  legislation  already  adapted  to  digital  technologies,  and  will  help  reduce 
uncertainties in the implementation of the PLD.  

The aim is also to  reflect the reality that product safety is nowadays impacted after the 
formal  production  process,  including  through  updates/upgrades  or  through  evolving 
cybersecurity threats.  

The  aim  is  also  to  ensure  any  new  and  relevant  types  of  damage  that  products  using 
digital  technologies  may  cause  are  appropriately  covered,  with  the  goal  of  ensuring 
consistent  interpretation  (e.g.  of  digital  property)  and  avoiding  overlaps  with  other 
regimes (e.g. GDPR, non-discrimination legislation). 

  SO 2: Ensure liability rules reflect nature of products in the circular economy 

The aim here is to ensure that products  produced according to circular business models 
and placed on the market are adequately covered.  

  SO  3:  Ensure  there  is  always  an  EU-based  liable  person  for  defective  products 

bought from producers outside the EU  

The aim here is to ensure that when a consumer purchases a product directly from a non-
EU  producer,  there  is  an  economic  operator  based  in  the  EU  from  whom  to  seek 
compensation  if  the  product  is  defective  and  causes  harm.  The  aim  is  also  to  ensure 

26 

 
consumer  protection  no  matter  how  a  product  is  purchased  and  to  guarantee  a  level 
playing field for EU and non-EU businesses alike. 

In order to reduce disproportionate obstacles to getting compensation: 

  SO  4:  Ease  the  burden  of  proof  in  the  case  of  complex  products  and  clarify 
liability  for  undiscoverable  defects,  while  ensuring  fair  balance  between 
producers and consumers  

The aim here is to alleviate difficulties that consumers face in proving producers’ liability 
in the case of complex products, and so achieve a fairer balance of interests. The aim is 
also  to  provide  legal  certainty  regarding  defects  that  were  undiscoverable  when  the 
product was put into circulation. 

  SO  5:  Ease  restrictions  on  making  claims,  while  ensuring  fair  balance  between 

producers and consumers  

The  aim  here  is  to  ease  restrictions  that  currently  disproportionately  limit  consumers’ 
ability to make claims.  

27 

 
 
Intervention logic 

28 

 
 
 
5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1.  What is the baseline from which options are assessed?148 

that  ongoing 

The baseline – “policy option 0” – consists in no EU action, meaning no change to the 
current  PLD.  This  would  lead  to  the  continuation  of  the  shortcomings  identified  in  the 
evaluation of the PLD, and the problems and consequences described in Section 2. It is 
legislative  proposals  would  be  enacted  and 
assumed,  however, 
implemented. Proposals to make the product safety framework fit for the digital age (in 
particular  the  Machinery  Regulation,  GPSR  and  AI  Act)  principally  by  setting  safety 
requirements for placing products on the market, are expected to improve product safety 
and therefore reduce product-related harm in real terms as well as avoiding a future rise 
in  such harm due to  novel  risks brought  about  by  digital  technologies  (see also  section 
1.2.4). These safety requirements will help courts decide whether a product is defective, 
i.e. whether it provided the level of safety the public was entitled to expect. But victims 
of harm would still need to rely on the outdated PLD to seek compensation or fall back 
on  national  fault-based  liability  rules  if  the  product,  producer  or  harm  falls  out  of  the 
PLD’s scope. 

With  respect  to  products  from  3rd  countries,  it  is  similarly  assumed  that  the  proposed 
DSA and GPSR will be enacted and implemented (see also section 1.2.5). Both proposals 
will set out due diligence obligations on online marketplaces and the GPSR will require 
there  to  be  a  responsible  person  for  product  safety  purposes  based  in  the  EU.  Neither 
proposal concerns the question of whether such economic operators should be treated as 
producers for product liability purposes.  

This same baseline is used in the impact assessment on AI liability. To a small extent, the 
options analysed in that IA impact the evolution of the problems described in this IA. In 
cases where the PLD cannot currently be used effectively (e.g. to get compensation from 
an  AI-system  provider),  a  victim  of  harm  will  have  to  use  national  liability  rules 
requiring  proof  of  fault.  The  challenge  of  proving  fault  would  be  mitigated  by  the 
measures  considered  in  the  AI  impact  assessment,  by  easing  the  burden  of  proof  in 
limited circumstances. However, the AI impact assessment does not have any impact on 
how  the  options  of  this  IA  are  defined,  since  any  change  to  national  fault-based  rules 
would only complement and not substitute a digitally fit PLD based on no-fault liability. 
This  is  also  because  this  impact  assessment  is  relevant  not  only  for  AI  but  for  digital 
technologies in general (see section 1.3).  

The  PLD  potentially  affects  almost  the  entire  manufacturing  sector  (see  section  2.1). 
However,  according  to  the  evaluation  study,  there  are  only  around  50-60  court  cases 
based on product liability rules per year in EU27149. As acknowledged by the study itself, 
this  number  is  likely  not  complete,  and  more  realistic  figures  have  been  extrapolated 
using information from selected Member States’ databases, pointing to a range between 

148  Annex  4  provides  details  over  assumptions  as  well  as  the  estimation  methodology  used  to  assess  the  baseline 
scenario. 
149 Evaluation of Product Liability Directive, SWD(2018)157, p. 21. 

29 

 
 
 
                                                      
209 and 452 for the annual number of court cases across the EU27. In extrapolating 
these  figures,  the  expected  modest  reduction  in  product-related  harm  as  a  result  of 
ongoing  product  safety-related  legislative  proposals  has  been  taken  into  account  by 
making  conservative  assumptions  about  the  lower  range,  even  if  the  reduction  is  not 
directly quantifiable and does not directly affect the size of the remaining problem (see 
more details in Annex 4). 

The  evaluation  found  that  most  liability-related  claims  were  settled  out  of  court150  and 
interviews with industry associations and product liability lawyers as part of the IA study 
suggested that there might  be as  many  as 6-7 times the number of cases settled out-of-
court  compared  with  cases  that  actually  go  to  court151.  Thus,  it  is  estimated  a  range 
between  1,255  and  3,165  for  the  annual  number  of  out-of-court  proceedings  across 
the EU27.  

Evidence  collected  through  stakeholder  consultation  confirms  the  2018  evaluation’s 
finding that the financial size of compensations to victims varies widely depending on the 
product  and  sector,  the  nature  and  extent  of  the  damage,  and  the  circumstances  of 
individual  cases.  For  the  purpose  of  the  impact  assessment,  the  compensation  paid  for 
deaths in the EU27 is estimated in the range of 20,000-1,500,000 EUR; the compensation 
paid  for  personal  injuries  is  estimated  in  the  range  1,500-700,000  EUR;  and  the 
compensation paid for property damages is estimated in the range 5,000-25,000 EUR. 

Economic operators covered by liability insurance would not have to directly compensate 
victims  since  their  liability  insurance  would  cover  pay-outs  to  victims  in  case  they  are 
found  liable  for  a  defective  product.  The  liability  insurance  premiums  faced  by  these 
economic  operators  are,  however,  assumed  to  increase152.  The  total  value  of  product 
liability insurance premiums in the EU27 in 2021 is estimated to be equal to 33.38 billion 
EUR. Out of this, only a small share relates the risk of no-fault liability under the PLD 
(estimated around 1-2% of the total premiums).  

Finally,  there  is  considerable  variance  in  the  costs  of  legal  cases  involving  PLD 
compensation  claims,  depending  on  (1)  the  product  and  its  complexity  (2)  the 
circumstances  of  the  case  and  (3)  the  Member  State  concerned  and  the  prevailing 
differences in legal costs. Legal costs for court proceedings across Europe is estimated in 
the  range  of  500  EUR  –  40,000  EUR.  Legal  cost  per  out-of-court  proceedings  across 
Europe  is  estimated  in  the  range  of  500  EUR  –  25,000  EUR  (proxies  for  the  average 
values  have  been  used  in  the  calculation,  only  for  the  purpose  of  an  overall  rough 
estimation). See annex 4 for details concerning baseline assumptions. 

5.2.  Description of the policy options 

Three  policy  options  were  identified  to  address  problem  1  and  two  policy  options  to 
address  problem  2.  In  order  to  address  all  problems  that  the  initiative  aims  to  tackle, 
option 1a, 1b or 1c (addressing problem 1 relating to the digital age and circular economy 

150  Evaluation  of  Product  Liability  Directive,  SWD(2018)157,  p.11:  with  46%  settled  in  direct  negotiation,  32%  in 
court, 15% through alternative dispute resolution and a residual 7% solved through other means, such as the insurance 
of the responsible party. 
151  CSES  with  Wavestone,  CSIL  (2022),  Impact  assessment  study  on  the  revision  of  Product  Liability  Directive, 
section 4.4.1.2. 
152 According to the Evaluation of Product Liability Directive, SWD(2018)157, 79% of producers overall have either a 
general  (57%),  or  a  specific  (22%)  product  liability  insurance  policy,  covering  pay-outs  to  victims  in  case  they  are 
found liable for a defective product. See section 6. 

30 

 
                                                      
and concerning mainly the scope of the regime) would have to be combined with option 
2a  or  2b  (addressing  problem  2  related  to  obstacles  in  getting  compensation  and 
concerning mainly the internal balance within the regime). 

The  combinations  of  measures  in  each  policy  option  were  developed  based  on 
stakeholder  input  during  the  impact  assessment  study  and  were  also  presented  to 
stakeholders, notably at the Stakeholder Workshop in December 2021, with no calls for 
exploring alternative combinations. 

Each measure was analysed separately in the impact assessment study and this analysis 
informed the choice of combinations. Since each problem is independent from the other, 
the  options  for  each  problem  are  analysed  separately.  For  greater  transparency  on  the 
impact  of  different  elements  within  each  option,  the  costs  and  benefits  (increase  of 
insurance premiums and compensations for victims) related to  each measure are shown 
separately in section 6 of the impact assessment. 

5.2.1.  Policy options to adapt liability rules to the digital age and circular 

economy 

Option 1a – Adaptations for products with digital elements and circular economy 

Digital: Under PO1a, manufacturers of products with digital elements would be liable, as 
now,  for  defects  in  the  overall  product,  but  this  would  include  liability  for  updates  to 
software  and  for  digital  services  that  are  necessary  for  the  product  to  operate.  They 
would  also  be  liable  if  harm  results  from  an  unreasonable  failure  to  provide  a  security 
update153.  If  the  defect  lay  in  the  digital  elements  themselves,  a  victim  of  harm  would 
also be able to seek compensation directly from the providers of such software or digital 
services – they would be treated as producers (like any other manufacturers of a tangible 
components today) – or from the manufacturer of the overall product. Applying joint and 
several liability would ensure a victim of harm does not have to seek compensation from 
both parties154. There would be no change to the types of damage that are compensable: 
personal injury and damage to consumer property. The revised PLD would, however, in 
all policy options  clarify that medically diagnosed psychological  damage is  included in 
the concept of personal injury (see annex 5 for details). 

Circular:  The  revised  PLD  would  make  explicit  that  economic  operators  that  make  a 
substantial modification to a product and place it back on the market, such as refurbishers 
and remanufacturers, fall within the concept of “producer”. The original producer would 
remain jointly and severally liable for its contribution, in the same way that component 
manufacturers are liable for flaws in their components that make a product defective. The 
option would bring the PLD into line with the trend in the product safety framework to 
take account of substantial modifications (see section 2.2.1.2).  

3rd-country products: Under this option, when a defective product is bought from a 3rd 
country in the absence of an importer, and it causes harm, it would be possible to hold the 

153  This  would  not  create  an  obligation  to  provide  updates.  Where  such  obligations  do  exist,  (e.g.  in  Art.  7(3)  of 
Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods, , that would provide a yardstick 
for courts to assess what level of safety a person is entitled to expect in respect of updates. 
154 As is the case today, if ultimate responsibility for the defect lies with the component producer (in this case, the 
software provider), the manufacturer of the overall product could make a recourse claim against them to recoup the 
costs of compensating the victim.  

31 

 
                                                      
producer’s  “authorised  representative”  liable  if  one  has  been  appointed.  Authorised 
representatives are already subject to liability under the Medical Devices Regulation, and 
the Market Surveillance Regulation and proposed GSPR155 should ensure that when there 
is no importer an authorised representative is appointed in a majority of cases.  

The  revised  PLD  would  in  all  policy  options  clarify  that  while  providers  of  online 
marketplaces are subject to a liability exemption when they merely intermediate sales, if 
they play the role of producer, importer or seller for a given product, they may be liable 
under the PLD (see annex 5 for details). 

Option 1b  – Inclusion of safety-relevant software in its own right and adaptations 
for circular economy 

This option includes measures envisaged under option 1a. 

Digital:  This  option  builds  on  option  1a  and  would  mean  a  broader  scope  of  the  PLD. 
Whereas  option  1a  would  cover  only  component  software  necessary  for  a  tangible 
product to operate, option 1b would recognise safety-relevant software as a product in its 
own  right.  This  would  include  3rd-party  add-on  software  that  is  not  necessary  for,  but 
nevertheless  influences,  the  operation  of  a  tangible  product  (such  as  a  downloaded  3rd-
party software module for a service robot) and standalone software that itself may cause 
harm  (such  as  medical  device  software).  While  a  producer  of  add-on  software  and  the 
manufacturer  of  the  overall  tangible  product  would  be  jointly  and  severally  liable  for 
harm caused by defective software, the manufacturer of the overall product would, unlike 
under PO1a, be able to use the later-defect defence by showing that that add-on software 
was  outside  of  its  control.  The  types  of  damage  that  are  compensable  would  remain 
limited to  personal  injury  and damage to  consumer property, but  the text  would clarify 
that  material  loss156  resulting  from  damage  to  digital  property  (such  as  digital  content 
wiped from a hard drive) is also compensable.  

Circular: Same as option 1a.  

3rd-country  products:  Under  this  option,  in  the  absence  of  an  EU-based  producer  or 
importer, and where a non-EU producer has not appointed an authorised representative, a 
victim of harm would be able to seek compensation from a fulfilment service provider157. 
Although  there  is  no  precedent  for  holding  fulfilment  service  providers  liable  for 
defective products, this option would provide an extra safeguard compared to option 1a,  
justified  by  the  fact  that  the  Market  Surveillance  Regulation  and  proposed  GPSR  do 
envisage  responsibilities  for  fulfilment  service  providers  in  those  cases  where  an 
authorised representative has not been appointed. 

Option  1c  –  Inclusion  of  software  in  its  own  right,  new  types  of  damage  and 
adaptations for circular economy 

155  The  appointment  of  an  authorised  representatives  (a  natural  or  legal  person  who  has  a  written  mandate  from  a 
manufacturer to act on its behalf) is regulated in Regulation (EU) 2019/1020 on market surveillance, Art. 4(2)(c) and 
Art. 3(12) and in the proposed GPSR, Art. 15. 
156 e.g. the cost of restoring destroyed music or video files or software programs. This would not cover non-material 
losses such as emotional harm resulting from, say, the loss of family photos. 
157 “Any natural or legal person offering, in the course of commercial activity, at least two of the following services: 
warehousing,  packaging,  addressing  and  dispatching…and  any  other  postal  services  or  freight  transport  services”: 
Article 3(11) of Regulation (EU) 2019/1020 on market surveillance. 

32 

 
                                                      
This option includes measures envisaged under option 1b. 

Digital:  This  option  would  build  on  option  1b  and  would  involve  a  more  significant 
expansion  in  the  types  of  damage  covered.  Not  only  safety-relevant  software  would  be 
recognised  as  a  product  in  its  own  right,  but  also  software  with  fundamental  rights 
implications,  which  would  in  particular  be  relevant  for  AI  systems  (such  as 
discriminatory recruitment software). The types of damage that are compensable would 
be  expanded  to  include  material  and  non-material  damage  flowing  from  fundamental 
rights infringements: data protection breaches, privacy infringements or discrimination. 

Circular: Same as option 1a. 

3rd-country products: Same as option 1b. 

5.2.2.  Policy  options  to  reduce  disproportionate  obstacles  to  getting 

compensation 

In policy options  2a and 2b, measures to  ease the burden of proof have  been packaged 
together with measures to reduce restrictions on making claims according to the level of 
ambition of the potential intervention. However, for full transparency of the assessment, 
the  specific  impacts  related  to  measures  restricting  on  making  claims  are  spelled  out 
separately in section 6.  

Option 2a  –Easing the burden of proof and reducing  disproportionate restrictions 
to making claims, while ensuring a fair balance of interests 

Easing  the  burden  of  proof:  Under  this  option,  a)  the  revised  PLD  would  harmonise 
rules  on  when  producers  are  obliged  to  disclose  necessary  technical  information  to  the 
injured  person  in  court  (e.g.  clinical  trials  data  concerning  a  drug  or  data  logs  from  an 
autonomous  vehicle).  The  obligation  would  be  limited  to  proportionate  disclosure  and 
would protect confidential information. In addition, b) the revised PLD would harmonise 
rules on easing the burden of proof: defectiveness/causality would be presumed by courts 
on certain conditions (e.g. the product did not comply with safety standards, if it clearly 
malfunctioned  or  if  it  is  disproportionately  difficult  to  prove  liability  due  to  technical 
complexity158).  The  producer  would  have  the  opportunity  to  rebut  any  presumption.  In 
addition, c) the development risk defence, which exempts producers from liability when 
a product’s defective nature was not discoverable according to state-of-the-art knowledge 
at the moment it was put into circulation, would be adapted to take account of producer 
control beyond that moment: for example, if a producer has provided a software update 
for  an  AI-enabled  robot,  then  that  should  be  the  moment  taken  into  account  when 
applying the defence.  

Restrictions on making claims: The EUR 500 threshold for property damage would be 
removed.  The  10-year  period  of  producer  liability  would  be  extended  to  15  years,  but 
only  for  latent  personal  injury159,  meaning  injury  that  existed  but  did  not  become 
apparent in the first 10 years. The 3-year limit for starting legal proceedings would not be 
changed.  

158  A  balance  would  need  to  be  struck  between  setting  clear  conditions  and  allowing  flexibility  for  courts  to  take 
account of all facts of the case before it. 
159 Law Insider, Latent Injury Definition. 

33 

 
                                                      
Option 2b – Reversing the burden of proof 

Reversing the burden of proof: Under this option, a) in the event of harm caused by a 
product, it would be for the producer to prove the product was not defective and did not 
cause the harm. In addition b) the development risk defence would be removed, meaning 
that producers  would be liable when a product  was defective,  even if the defectiveness 
was  not  discoverable  according  to  state-of-the-art  knowledge.  Elements  a)  and  b)  were 
combined as a coherent  higher-intervention alternative to  option 2a, in  light  of the fact 
that both stakeholders in favour of the option and those against saw the two elements as 
interconnected.  

Restrictions  on  making  claims:  As  in  option  2a,  the  EUR  500  threshold  would  be 
removed. But the time limits would be extended more generously than under option 2a: 
the  10-year  period  of  producer  liability  would  be  extended  for  all  personal  injury,  not 
only  latent  personal  injury;  and  the  3-year  limit  would  be  extended  to  5  years  to  give 
victims of harm more time to start legal proceedings. 

5.3.  Options discarded at an early stage 

Several other potential policy options were discarded at an early stage. 

Guidance  only:  Although  an  overall  majority  of  all  respondents  to  the  public 
consultation  were  in  favour  of  legislative  change  to  adapt  the  PLD  to  the  digital  and 
circular  economy,  65%  of  businesses  or  business  associations  were  opposed160.  A 
number  of  them  called  for  guidance  instead161.  Guidance  would,  however,  require 
consensus  by  all  stakeholders  and  would  therefore  be  limited  to  minimum  changes.  In 
2018 the Commission  set  up the Expert Group on liability and new technologies (PLD 
formation)162 to develop such guidance. However, experts had conflicting interpretations 
of  the  current  text  of  the  PLD,  particularly  on  the  extent  to  which  software  and  digital 
elements are within scope, how to deal updates or other product changes and the extent to 
which presumptions could be used to ease the burden of proof. As a result, no consensus 
could  be  reached163  and  the  guidance  was  not  completed.  Substantive  changes,  such  as 
recognising software as a product in its own right,  changes to time limits and the EUR 
500  threshold,  would  in  any  event  not  be  possible  through  guidance.  Despite  being 
discarded,  given  there  was  stakeholder  support  for  guidance,  the  assessment  of  this 
option is presented in Annex 6. 

Repeal  of  the  PLD:  The  Evaluation  of  the  PLD  concluded  that  the  PLD  provides  EU 
added  value  and  no  stakeholder  suggested  repealing  it.  Repeal  would  mean  that  each 
Member  State  would  design  their  own  national  rules  on  producers’  liability  for  harm 
caused by defective products. A majority of businesses agree that the level playing field 
achieved would not be possible with individual Member State action. In addition, almost 
all  consumer  associations  considered  that  the  protection  of  consumers  achieved  would 
not be feasible with only national action. The vast majority of public authorities and civil 

160 56% overall (excluding members of the public) (92 out of 168) in favour of legislative change; 75% of members of 
the public (93 out of 123) in favour of legislation change; 65% of businesses or business associations (71 out of 110) 
prefer no legislative change. 
161 For example, responses to the public consultation by Business Europe, Orgalim, Digital Europe, AmCham EU. 
162 Register of Commission expert groups and other similar entities (europa.eu). 
163 See also minutes of Expert Group on Liability and New Technologies (PLD formation) of 18 February 2019 and 5 
November 2019. 

34 

 
                                                      
society  representatives deem  that the Directive added value to  the EU legal framework 
and policies164. 

Converting  the  PLD  into  a  regulation:  Given  that  the  PLD’s  liability  rules  interact 
closely  with  national  civil  codes  and  are  deeply  embedded  into  diverse  national  legal 
systems, the option of converting the PLD into  a regulation was discarded. A  directive 
allows  more  flexibility  to  seamlessly  embed  the  PLD’s  rules  into  national  systems. 
Neither the evaluation nor the impact assessment study identified additional benefits of a 
regulation. There is also no stakeholder support for converting the PLD into a regulation. 

Sector- or technology-specific approach to easing the burden of proof: The measures 
on easing the burden of proof (PO2a and PO2b) could have been applied only to certain 
specific  product  types  identified  as  creating  difficulties  to  prove  liability.  The  PLD 
evaluation  identified  pharmaceuticals  as  such  a  product  type,  and  the  expert  group  on 
liability and new technologies identified AI-enabled products and other emerging digital 
technologies  like  IoT products  as problematic165.  Indeed, a French patients’ association 
called  for  stricter  rules  for  pharmaceuticals  products166  and  several  NGOs  called  for 
stricter  rules  for  harm  caused  by  AI  systems167.  However,  most  stakeholders  expressed 
support for a product liability regime that applies neutrally to all product types. This was 
reflected  in  the  public  consultation:  while  very  clear  majorities  of  respondents  did 
identify AI-enabled products, IoT products and pharmaceuticals as examples of products 
for which it is difficult to prove liability, 77% of respondents168 also replied that it was 
(to  a  moderate,  large  or  very  large  extent)  technical  complexity,  as  a  product 
characteristic in general, that made it difficult to prove liability. Focussing on pre-defined 
sectors or technologies would be too rigid an approach, leading to  over-inclusion, since 
not all products in a given category are highly complex (e.g. an AI-enabled toothbrush) 
and under-inclusion, since technical complexity can be a feature of many other different 
products  types  (e.g.  chemicals,  machinery).  It  risks  not  being  future  proof  and  unfairly 
benefitting some victims of harm and not others169.  

Lowering  the  EUR  500  threshold:  Stakeholders  were  either  in  favour  of  keeping  the 
threshold  for  damage  to  consumer  property  unchanged170  or  removing  it  altogether171, 
although  one  industry  association  asked  for  the  option  of  lowering  the  threshold  to  be 
examined172.  That  option  was  discarded,  because  the  same  internal  market  objections 
would  apply:  any  other  fixed  EU-wide  threshold  would  impact  consumers  more 
significantly  in  Member  States  where  consumer  goods  are  cheaper  (i.e.  where  more 
consumer property falls below the threshold). 

Extending  the  10-year  limit  to  20  years:  Holding  producers  liable  for  up  to  20  years 
after  they  put  a  product  into  circulation  was  considered.  BEUC,  the  consumer 

164 Evaluation of Product Liability Directive, SWD(2018)157, p. 69. 
165  Expert  Group on  Liability  and New  Technologies  (2019),  Report  on  Liability  for  artificial  intelligence  and  other 
emerging digital technologies 
166 Response of France Assos Santé to the public consultation. 
167 Responses of The Future Society and of Irish Council for Civil Liberties to the public consultation. 
168 N-268. 
169 Bernhard A. Koch in Essays in honour of Helmut Koziol, Jan Sramek Verlag 2020, p. 82. 
170 Position papers of BVMed; EFPIA; Eurochambres; Siemens; ZDH; ZVEI in response to the public consultation. 
171 Responses of AEBS; Austrian Bundesarbeitskammer; German Federal Government; The future society to the public 
consultation. 
172  Comment  made  by  Federation  of  the  European  Sporting  Goods  Industry  (FESI)  at  the  PLD  Workshop  of  14 
December 2021. 

35 

 
                                                      
organisation, called for this, while a French patient organisation called for the limit to be 
removed altogether173. However, industry stakeholders and insurers were opposed to any 
change. This longer extension was discarded in favour of a shorter extension with a view 
to striking a fair balance between all stakeholders.  

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

The  following  assessment  provides  a  qualitative  analysis  of  the  impacts  generated  by 
each  policy  option,  based  on  the  evidence  gathered  from  multiple  sources.  Whenever 
possible, it also provides a quantitative analysis of benefits and costs relating to the main 
economic  and  social  impacts.  The  cost/benefits  analysis,  however,  is  not  fully 
comprehensive  due  to  significant  data  gaps  and  limitations.  The  quantification  of  costs 
and benefits is based on a number of assumptions coming from stakeholder feedback and 
expert knowledge of the contractor. The aim of  this assessment is  to  provide  ranges of 
the  magnitude  of  potential  impacts  generated  by  each  policy  option,  rather  than  exact 
monetisation174. 

Policy options mainly involve a re-attribution of costs between stakeholders, either from 
victims to the producers whose defective products caused the costs, or between economic 
operators by enlarging the notion of “producer”175.  

The main measurable benefit for consumers is the amount of compensation to be paid 
to injured parties. The analysis assesses the impacts of the policy options on the annual 
number of in-court cases (estimated between 209 and 452 across the EU27) and out–of-
court cases (1,255 and 3,165) based on product liability rules In line with the 2018 PLD 
evaluation, the share of successful cases (for injured parties) over total cases is estimated 
to  be  60%,  for  both  in-court  and  out-of-court  cases.  The  measures  proposed  by  each 
policy  option  might  affect  the  proportion  of  cases  brought  under  the  PLD  and/or  the 
success rate of claims. This increase, multiplied by the average compensation pay-outs, 
will provide ranges for the estimates on the benefits for consumers. 

The main indirect costs generated by the PLD are liability insurance costs attributable to 
strict liability under the PLD as well as legal costs that producers and consumers have to 
bear in the case of a product liability claim, whether in-court or out-of-court. 

The large majority of economic operators that faces any additional claims as a result of a 
policy option would not face increased compensation costs vis-à-vis victims, but would 
rather face a marginal increase in their insurance premiums176. The minority of economic 
operators without product liability insurance  and that face  any  additional claims would, 
on  the  other  hand,  face  increased  compensation  costs  vis-à-vis  victims.  In  the  analysis, 
the cost of liability insurance is assessed and quantified as a cost for producers, whereas 
compensation  costs  are  assessed  as  a  benefit  for  victims.  Compensation  costs  are  not 
assessed  as  costs  for  producers,  because  adding  them  to  the  increased  cost  of  liability 
insurance  premiums  would  have  led  to  double  counting  and  no  data  was  available  to 
make estimates about which producers have insurance and which do not. To assume that 

173 BEUC (2020). Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-
024 - 07/05/2020; Response to inception impact assessment of Réseau D.E.S. (Victimes du Valproate de sodium). 
174 More details on data gaps and limitation are presented in Annex 4.   
175  Baseline  scenario  presented  in  section  2.1.  Annex  4  provides  details  over  assumptions  as  well  as  the  estimation 
methodology used to assess the impacts of policy options.  
176 Evaluation of Product Liability Directive, SWD(2018)157: 79% of producers. 

36 

 
                                                      
the  21%  of  producers  without  insurance  are  spread  across  all  manufacturing  sectors 
would entail a high risk of overestimating costs for producers, since interviews with the 
insurance  industry  suggest  that  the  21%  represents  mainly  producers  of  lower-risk 
products that are rarely subject to compensation claims. In contrast, producers of the sorts 
of products  covered by  options 1a, 1b and 1c  (e.g.  autonomous vehicles, robots) or for 
which  the  burden  of  proof  is  currently  challenging  (e.g.  complex  products  like 
pharmaceuticals or Internet of Things devices) are more likely to have liability insurance 
at  present,  since  there  is  a  higher  risk  of  those  products  being  subject  to  compensation 
claims. It is acknowledged that not assessing compensation costs as a cost for producers 
may lead to a small underestimation of costs. 

There  are  no  relevant  administrative  costs  under  the  PLD  in  contrast  to  much  product 
safety  legislation,  as  there  are  no  specific  obligations  or  information  requirements  for 
economic operators. There will be one-off familiarisation costs for economic operators 
not previously covered as producers under the PLD, which are minimal. 

The  estimates  were  developed  on  the  basis  of  interviews  with  experts.  They  were 
validated during the Stakeholder workshop in December 2021. 

6.1. 

Policy  option  1a  –  Adaptations  for  products  with  digital  elements  and 
circular economy 

Economic impacts 

a.  Impacts on economic operators  

Under  PO1a,  the  liability  exposure  of  manufacturers  of  products  with  digital  elements 
would  increase.  Explicitly  making  providers  of  software,  updates  and  digital  services 
“producers”  would  also  slightly  increase  their  liability  exposure,  although  victims  are 
likely  to  seek  compensation  from  the  manufacturer  of  the  overall  product177.  Because 
PO1a could create an incentive to provide security updates to avoid liability, this could 
indirectly  generate  software  development  costs.  Stakeholders  most  impacted  are 
manufacturers of IoT or AI-enabled products, such as robots, connected and autonomous 
vehicles, machinery and domestic appliances.  

78%  (122  out  of  155)  of  respondents  to  the  public  consultation,  excluding  citizens, 
agreed  or  strongly  agreed  that  software  controlling  how  a  product  works  should  be 
included  in  the  scope  of  the  PLD.  Another  66%  (102  out  of  154)  agreed  or  strongly 
agreed  that  software  upgrades  and  updates  should  be  included.178  EU  and  non-EU 
citizens showed even stronger agreement, with over 90% (117 out of 122) replying that 
consumers should get compensation if damaged is caused by defective software or digital 
services  that  control  how  a  product  works  and  software  upgrades/updates.  See  annex  2 
for details. 

Explicitly  clarifying  that  economic  operators  who  make  substantial  modifications  to  a 
product and place it back on the market are also “producers” would slightly increase their 
liability  exposure.  Sectors  likely  to  be  impacted  are  electrical  and  electronic  as  well  as 

177 Very few cases are brought against component manufacturers (average of 3 court cases per year, see Evaluation, p. 
14), so only a minor impact is expected under PO1a on insurance premiums for software producers. 
178  Further disaggregation  shows  that  consumers’  associations  were  fully  in  favour  of  including  software  controlling 
how  a  product  works  in  the  scope  of  the  PLD  (87%  strongly  agreed  and  13%  agreed),  compared  to  the 
industry/business (where 22% strongly agreed and 46% agreed). 

37 

 
                                                      
medical  equipment  and  machinery  sectors.  As  is  the  case  today,  if  a  victim  sought 
compensation from the original manufacturer, the latter would be able to escape liability 
by  proving  the  defect  emerged  after  he  put  the  product  into  circulation.  Equally,  if  a 
remanufacturer  or  refurbisher  were  held  liable,  but  the  original  manufacturer  were 
ultimately  responsible  for  the  defect,  they  could  make  a  recourse  claim  against  the 
original manufacturer179 to recoup the costs of compensating the victim.  

including 

representatives 

Business  associations, 
refurbishment  and 
remanufacturing  industries,  supported  extending  liability  only  to  cases  where  a 
"substantial  modification"  was  undertaken180.  This  would  be  in  line  with  recent 
legislation and legislative proposals181, according to which an economic operator making 
the  modification  places  a  new  product  on  the  market,  and  therefore  assumes 
responsibility for the safety of the product or part of a product.  

from 

the 

Finally,  under  PO1a,  “authorised  representatives”182  would  be  exposed  to  product 
liability in cases where there is no EU-based importer.  

In  terms  of  indirect  costs,  annual  product  liability  insurance  costs  are  assumed  to 
increase183  by  3%  for  producers  of  products  with  digital  elements,  producers  of  digital 
elements themselves as well as for refurbishers and remanufacturers184.  

Authorised  representatives  would  have  an  incentive  to  take  out  product  liability 
insurance,  in  case  they  do  not  already,  to  cover  their  liability  exposure185.  Product 
liability insurance costs are assumed to increase by 15%. As is the case for importers, it 
is expected that this cost would be passed on to the non-EU producers they represent, as 
part of the cost of their service186.  

Taking  all  this  into  account,  under  PO1a  the  total  annual  product  liability  insurance 
costs are  assessed  to  increase incrementally  compared to the baseline,  with  an increase 
ranging  between  1.21  and  2.41  EUR  million.  These  increases  in  product  liability 
insurance costs are extra revenues for the insurance companies. 

b.  Impacts on SMEs 

The  views  of  SMEs  expressed  in  the  course  of  consultation  activities187  did  not 
particularly  diverge  from  the  overall  views  of  business  respondents.  The  impact 
assessment study did, however, conclude that clearer liability rules, particularly regarding 

179 Article 5 of Directive 85/374/EEC, N.B. rules on recourse are governed by national law. 
180  Responses  of  Business  Europe,  France  Assureurs  and  the  French  Business  Confederation  (Medef)  to  the  public 
consultation, and comments of Conseil Européen de Remanufacture at Stakeholder Workshop of 13 December 2021. 
181 Concept of full and partial refurbishment is included in the Medical Devices Regulation 2017 and the concept of a 
substantial  modification  is  included  in  proposed  AI  Act,  GPSR  and  Machinery  Regulation,  as  well  as  in  the 
Commission’s Blue Guide on the implementation of product safety legislation, 2016/C 272/01, 26.7.2016, p. 15 to 17. 
182 See footnote in section 5.2.1. 
183 Insurance firms are expected to pass on the increased risk of litigation through higher insurance costs.  
184 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 
185  As  for  other  economic  operators  already  concerned  by  the  PLD,  it  is  assumed  that  80%  have  liability  insurance 
already. 
186 Confirmed in interview with authorised representative in the context of the impact assessment study. 
187 13 SMEs (businesses) and two SME associations (European Digital SME Alliance and Allied for 
Startups) responded to the public consultation. 

38 

 
                                                      
software  and  refurbished  products,  would  particularly  benefit  SMEs,  which  have  fewer 
resources than larger companies to devote to understanding unclear rules188. 

On the other hand, the 2018 evaluation found that 31% of small enterprises do not have 
liability insurance, whereas among medium and large firms the figure is only 15%. Thus, 
SMEs could be more exposed than larger firms to compensation pay-outs not covered by 
insurance.  Also,  higher  product  liability  insurance  costs  might  affect  SMEs  more  than 
larger  companies,  as  SMEs  have  less  ability  to  absorb  the  costs  and  might  have  less 
favourable insurance conditions.  

c.  Impacts on the internal market and competitiveness  

PO1a  would  increase  regulatory  clarity  and  close  liability  gaps  by  making  explicit  that 
software and digital services necessary for a tangible product to operate are included in 
the  scope  of  the  PLD  as  component  parts  of  those  tangible  products.  It  would  create  a 
more level playing field among market operators, because not only producers of tangible 
parts but also producers of intangible parts would be potentially liable. Ensuring no-fault 
liability applies to updates and failure to update would, thanks to the deterrent effect of 
no-fault liability, also incentivise final producers and software developers to place safer 
software on the market and to invest in safety-relevant cybersecurity beyond the moment 
a product is put into circulation. 

By clarifying that remanufacturers and refurbishers may be liable, but only for substantial 
modifications, PO1a would reduce liability gaps, create legal certainty and contribute to 
the broader EU policy objectives of the Circular Economy Action Plan189. 

PO1a would also promote a more level playing field between EU and non-EU producers 
by making the latter’s authorised representative liable, who are then expected to pass the 
costs  on  to  the  non-EU  producer  in  their  service  fees.  It  should  be  noted  that  one 
authorised representative interviewed raised the prospect that non-EU producers might in 
turn  raise  the  price  of  their  products  and  that  some  might  be  unwilling  to  pay  higher 
authorised  representative  fees  to  cover  the  liability  cost,  and  decide  not  to  offer  their 
product on the internal  market at all190. On the other hand, PO1a would ensure that the 
deterrent  effect  of  no-fault  liability,  which  encourages  producers  to  place  only  safe 
products on the market, indirectly reaches non-EU producers too, which would reinforce 
ongoing efforts to improve the safety of products imported directly online191. 

d.  Impacts on the judicial system and legal costs 

Whereas,  based  on  the  current  text  of  the  PLD,  courts  may  have  applied  fault-based 
liability rules to  software updates and digital  services, PO1a would make clear that the 
PLD’s no-fault regime applies. There should only a very small increase in overall cases 
(either  in-court  or  out-of-court)  for  producers  of  products  with  digital  elements, 
producers  of  digital  elements  (assumed  1%  increase,  reflecting  future-proofing  as 

188 CSES with Wavestone, CSIL (2022), Impact assessment study on the revision of Product Liability 
Directive, section 2.3.1. 
189 https://ec.europa.eu/environment/strategy/circular-economy-action-plan_en. 
190 It is not possible to quantify these risks, as they would vary considerably depending on the type of product. 
191 See impact assessment on the proposed GPSR, SWD(2021)168, p. 15. 

39 

 
                                                      
software-related  cases  are  likely  to  increase)192.  However,  it  is  foreseen  that  a  greater 
proportion of cases would be now brought under the PLD. Those court cases should be 
shorter,  because  the  victim  only  has  to  prove  the  product’s  defectiveness  and  not  the 
producer’s  fault.  Thus,  a  2%193  legal  cost  reduction  is  assumed  for  software  producers 
and related victims of harm194.  

On the other hand, making authorised representatives liable would potentially lead to an 
increase  of  1%  in  the  annual  number  of  in-court  and  out-of-court  cases.  Victims  who 
could not have claimed compensation under the current PLD, and who may well not have 
had any enforceable claim against any wrongdoer under national rules, would be entitled 
to make a claim under PO1a. 

Taking  all  this  into  account,  under  PO1a  the  total  annual  legal  costs  are  assessed  to 
slightly  increase  incrementally  compared  to  the  baseline,  with  an  increase  ranging 
between 0.41 to 1.02 EUR million.  

Social impacts 

a.  Impacts on consumers 

PO1a would benefit consumers and indeed any person harmed by a defective product, as 
they  would  have  a  clear  route  to  compensation  without  having  to  prove  fault:  i)  where 
defects  relating  to  software  or  digital  services  emerged  after  the  product  was  put  into 
circulation195, ii) in the case of defective refurbished or remanufactured products; iii) in 
the  case  of  defective  products  purchased  directly  from  third-country  producers.  In  line 
with the impacts on the judicial system described above, the greater proportion of cases 
brought under the PLD  would mean  greater  chances of  getting compensation  thanks to 
not  having  to  prove  fault.  The  deterrent  effect  of  no-fault  liability  can  be  expected  to 
have  a  positive  impact  on  product  safety  and  therefore  consumer  protection  –  this  is 
further reflected under ‘impacts on internal market and competitiveness’ above196. PO1a 
would not affect the average compensation pay-outs to victims.  

Taking all this into account, under PO1a the total annual compensation paid to victims 
is assessed to increase incrementally compared to the baseline, with an increase ranging 
between 0.07 to 14.47 EUR million197.  

b.  Impacts on employment and fundamental rights  

No impacts on employment or fundamental rights were identified under PO1a.  

Environmental impacts 

192 It is generally accepted that software either embedded or crucial to the operation of a product is already included 
within scope; that software developers are already liable under other grounds of liability and that software rarely causes 
physical damage except in certain circumstances. 
193 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 
194 Legal costs that producers and claimants have to bear in case of a product liability claim (whether in court or out-of-
court). 
195 BEUC, the consumer organisation, considered it essential to widen the notion of product to ensure that consumers 
can get compensation under the PLD when software or a digital service renders a product defective. Product Liability 
2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-024-07/05/2020, p. 13). 
196  See  that  section  also  for  further  impacts  on  consumer  protection  of  making  authorised representatives  potentially 
liable. 
197 Annex 4 provides details on the assumptions and analytical methodology used for these estimations.  

40 

 
                                                      
Measures relating to the circular economy are expected to have a positive environmental 
impact, since clearer liability rules should help promote circular business models which 
would  in  turn  improve  product  sustainability  and  reduce  waste.  Firstly,  clarifying  that 
economic  operators  who  substantially  modify  products  are  producers  under  the  PLD 
would  address  original  equipment  manufacturers’  fear  of  being  held  liable  for  changes 
outside  of  their  control  and  would  therefore  help  promote  the  independent  refurbishing 
sector198. Secondly, from the consumer’s perspective a refurbisher/remanufacturer is the 
same as the producer of a new product, as both are expected to have been in control of 
the  safety  features  of  the  product  before  distributing  it.  Giving  consumers  the  same 
protection  should  promote  trust  in  such  products.  These  benefits  to  the  sector  and  the 
knock-on  benefits  for  the  environment  are  expected  to  outweigh  the  small  increase  in 
annual liability insurance premiums associated with no-fault liability. This increase will 
be small, because refurbishers/remanufacturers are already liable for fault or negligence 
under  national  rules,  and  would  qualify  as  producers  under  the  PLD  only  if  the 
modification they make is substantial enough to warrant treating it like a new product, in 
line  with  product  safety  rules.  The  measures  are  consistent  with  the  Union’s  climate-
neutral objectives set out in the European Climate Law199. Environmental impacts are the 
same in PO1b and PO1c too. 

6.2. 

Policy option 1b – Inclusion of safety-relevant software in its own right 
and adaptations for circular economy 

Economic impacts 

a.  Impacts on economic operators 

PO1b would have the same impacts in respect of circular economy aspects and products 
with  digital  elements  as  PO1a.  But  under  PO1b  software  producers  would  be  more 
exposed  to  liability  because  of  the  inclusion  in  scope  of  add-on  software  that  is  not 
necessary  for  a  tangible  product  to  operate,  and  where  the  manufacturer  of  the  overall 
tangible  product  may  be  able  to  use  the  later-defect  defence,  and  of  safety-relevant 
standalone software.  

In terms of the sector affected, the number of software companies in Europe  producing 
either component or standalone software is over one million200. While most “standalone” 
software will rarely cause physical injury201, defective medical device software could do 
so,  and  defective  apps  could  cause  potentially  damage  the  device  on  which  they  are 
downloaded.  

Representatives  of  the  medical  device  sector  considered  that  since  medical  device 
software  is  regulated  as  a  product,  PO1b  would  be  in  line  with  the  Medical  Devices 
Regulation202, and therefore provide more legal certainty. Representatives of the software 

198 Impact assessment study on the revision of Product Liability Directive, p. 46. 
199 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the 
framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 
(‘European Climate Law’), OJ L 243, 9.7.2021, p.1.  
200  Source:  Bold  data;  Note  that  providers  of  open-source  software  would  be  unaffected  as  the  PLD  applies  only  to 
products put into circulation for economic purposes in the course of business activity (Art. 7(c) of PLD). 
201  Pointed out,  inter  alia,  by  Siemens  in  their  position paper  in  response  to  the  public  consultation,  Civil  liability  – 
adapting liability rules to the digital age and artificial intelligence. 
202 Position papers of Bundesverband Medizintechnologie in response to the public consultation, p. 2; Regulation (EU) 
2017/745 on medical devices. 

41 

 
                                                      
industry itself were hesitant about treating software as a product in its  own right, partly 
for  fear  of  over-inclusion  of  software  that  does  not  cause  physical  harm  or  where  the 
service  element  is  more  important  than  the  software,  for  example  a  facial-recognition 
systems  used  in  a  bank  or  an  AI-system  used  to  generate  consumer  credit  ratings203. 
However, these would not be covered under PO1b as they are not relevant to safety. They 
were  nevertheless  open  to  treating  software  that  has  the  potential  to  cause  harm  as  a 
product, even if some stakeholders believed this was possible to achieve by guidelines204. 
As  discussed  in  section  5.3  and  annex  6,  however,  guidelines  would  not  provide  legal 
certainty. 

Clarifying  that  material  loss  resulting  from  damage  to  digital  property  is  also 
compensable  as  property  damage  would  impact  producers  of  electronic  devices,  in 
particular  data  storage  devices  and  hard  drives,  and  software  producers.  Although 
damage  to  such  digital  property  may  currently  be  covered  by  liability  insurance205,  it 
usually  requires  physical  damage  of  the  data  storage  device  first  in  order  to  be 
recoverable.  In  the  public  consultation,  60%  of  respondents  agreed  or  strongly  agreed 
that  producers  should  be  liable  for  “damage  to  data”  (87%  among  consumer 
representatives and citizens; only 18% among industry representatives)206.  

Finally, under PO1b, fulfilment service providers207 would be potentially liable under the 
PLD  in  cases  where  there  is  no  EU-based  producer,  importer  or  authorised 
representative. These cases are expected to be less common, as in a majority of cases an 
authorised  representative  will  be  appointed,  although  it  is  not  possible  to  quantify  this 
given  that  the  Market  Surveillance  Regulation  started  to  apply  only  in  July  2021. 
Fulfilment  service  providers  are  often  the  fulfilment  branch  of  an  online  marketplace 
(e.g. Amazon has over 40 fulfilment centres in Europe), or have contracts with producers 
directly208.  In  Europe,  the  market  size  of  warehousing  and  storage  businesses,  two 
activities  that  fulfilment  service  provider  may  carry  out,  is  estimated  to  be  EUR  54 
billion209.  Analogously  with  authorised  representatives  under  PO1a,  third-country 
producers could expect to face an increase in the cost of fulfilment services to cover this 
exposure liability.  

In terms of indirect costs, PO1b builds on PO1a but the annual product liability insurance 
costs for software producers would increase by 10%,210 to cover the wider scope of the 
measures  (inclusion  of  add-on  software,  standalone  software  with  safety  relevance). 
Effects on as well as for refurbishers and remanufacturers would remain as in PO1a. The 
annual  product  liability  insurance  costs  are  assumed  to  increase  by  1-2%  for 
manufacturers  of  electronic  devices  (including  PCs,  laptops,  IoT  products  and  external 
data storage devices) to cover digital property in the notion of property damage.  

203 Response of Microsoft to inception impact assessment, p. 3. 
204 Response of Google to inception impact assessment, p. 3. 
205 Position paper of Insurance Europe in response to public consultation, p. 2. 
206  N.B.  The  question  was  phrased  broadly  and  may  have  been  understood  as  including  loss  of  personal  data  or  of 
digital assets more generally. The option considered in this impact assessment is more narrowly defined and concerns 
the treatment of digital content as property. 
207  The  contractors  of  the  support  study  were  unable  to  interview  any  fulfilment  service  providers,  despite  repeated 
attempts. 
208  CSES  with  Wavestone,  CSIL  (2022),  Impact  assessment  study  on  the  revision  of  Product  Liability  Directive, 
section 4.3.3.3. 
209 Companies holding the largest market share in Europe include Deutsche Post AG, XPO Logistics, Inc., Kuehne + 
Nagel International AG and A.P. Moller – Maersk A/S. Source: IbisWorld. 
210 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 

42 

 
                                                      
Compared to PO1a, fulfilment service providers would also have an incentive to take out 
product  liability  insurance,  if  they  do  not  do  so  already211.  Product  liability  insurance 
costs for these economic operators are assumed to increase by 5%.  

Taking  all  this  into  account,  under  PO1b  the  total  annual  product  liability  insurance 
costs are  assessed  to  increase incrementally  compared to  the baseline, with  an increase 
estimated in the range between 4.35 and 8.69 EUR million212.  

b.  Impacts on SMEs 

Same as PO1a. 

c.  Impacts on the internal market and competitiveness 

PO1b would, in comparison to PO1a, further incentivise the placing of safer software on 
the  market,  by  covering  3rd-party  software  that  influences  but  is  not  necessary  for  a 
tangible product,  and  safety-relevant  standalone software. This  broader scope would be 
better in line with existing and proposed product safety legislation (see section  2.2.1.1). 
PO1b would also provide regulatory certainty about the availability of compensation for 
damage to digital property and could incentivise producers to improve the reliability of 
hard  drives  and  other  data  storage  devices.  Increasing  regulatory  clarity  and  closing 
liability gaps will benefit innovation.  

PO1b  would  ensure  that  the  deterrent  effect  of  no-fault  liability,  which  encourages 
producers to  place only  safe products  on the market,  reaches  non-EU producers also  in 
cases where no authorised representative has been appointed. Including fulfilment service 
providers  as  liable  persons  in  such  cases  is  expected  to  reinforce  the  impacts  of  PO1a, 
with costs similarly passed on to non-EU producers in service fees.  

d.  Impacts on the judicial system and legal costs 

PO1b would have additional impacts compared to PO1a.  

For software producers and related victims of harm, PO1b would reduce the annual legal 
costs  by  4%213,  due  to  the  broader  application  of  no-fault  liability,  meaning  shorter 
proceedings,  while  increasing  the  number  of  in-court  and  out-of-court  cases  by  around 
2%.This  small  increase  in  cases  is  expected  to  largely  cancel  out  the  small  decrease  in 
legal costs.  

PO1b would also lead to an increase of around 6% in the number of in-court and out-of-
court  cases  related  to  manufacturers  of  electronic  devices.  Finally,  fulfilment  service 
providers liable would potentially lead to an increase of 1% in the annual number of in-
court and out-of-court cases.  

Taking  all  this  into  account,  under  PO1b  the  total  annual  legal  costs  are  assessed  to 
slightly increase incrementally compared to the baseline, with an increase between 1.12 
and 2.75 EUR million. 

211  As  for  other  economic  operators  already  concerned  by  the  PLD,  it  is  assumed  that  80%  have  liability  insurance 
already. 
212 As for PO1a, these increases in product liability insurance costs are extra revenues for the insurance companies. 
213 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 

43 

 
                                                      
Social impacts 

a.  Impacts on consumers 

Consumer  benefits  would  be  greater  under  PO1b  than  PO1a.  BEUC,  the  consumer 
organisation,  has  stressed  that  recognising  software  as  a  product  in  its  own  right  is 
essential, since software can be purchased separately from producers beyond the control 
of  hardware  producers214.  Consumers  would  also  benefit  from  the  possibility  of 
compensation  for  material  losses  resulting  from  damage  to  digital  property  (digital 
content on a data-storage device).  

Finally, consumers would benefit from the greater possibility to get compensation when 
defective 3rd-country products cause harm, due to fulfilment service providers becoming 
potentially liable when an authorised representative has not been appointed. It should be 
noted  that  several  stakeholders215  called  for  providers  of  online  marketplaces,  which 
merely  intermediate  sales  between  non-EU  sellers  and  EU  consumers,  to  shoulder  no-
fault  liability  rather  than  authorised  representatives  or  fulfilment  service  providers.  But 
this would be inconsistent with the conditional liability exemption of online marketplaces 
under the eCommerce Directive and proposed Digital Services Act (see annex 5).  

In line with the impacts on the judicial system described above, PO1b would increase the 
annual  number  of  in-court  and  out-of-court  cases  under  the  PLD  in  the  EU27,  and  the 
increase  in  cases  brought  under  the  PLD  would  mean  greater  chances  of  getting 
compensation thanks to not having to prove fault. As for PO1a, the measure would not 
affect the average compensation pay-outs to victims.  

Taking all this into account, under PO1b the total annual compensation paid to victims 
is assessed to increase incrementally compared to the baseline, with an increase between 
0.15 and 22.13 EUR million216.  

b.  Impacts on employment and fundamental rights  

No impacts on employment or fundamental rights were identified under PO1b.  

6.3. 

Policy  option  1c  –  Inclusion  of  software  in  its  own  right,  new  types  of 
damage and adaptations for circular economy 

Economic impacts 

a.  Impacts on economic operators  

PO1c  would  build  on  option  1b  and  significantly  expand  the  types  of  compensable 
damage  to  include  material  and  non-material  damage  flowing  from  fundamental 
rights  infringements (data protection breaches, privacy infringements or discrimination) 
rather  than  only  safety-related  harm  (personal  injury,  property  damage).  This  would 
principally  impact  producers  of  IoT  products  in  respect  of  privacy  and  AI  systems  in 
respect  of  discrimination.  In  the  public  consultation  87%  of  consumer  associations  and 
NGOs were in  favour of compensating losses  flowing from  breaches of data protection 

214 BEUC (2020), Product Liability 2.0 - How to make EU rules fit for consumers in the digital age. BEUC-X-2020-
024 - 07/05/2020, p. 13. 
215 Response of BEUC and Toy Industries of Europe to the public consultation. 
216 Annex 4 provides details on the assumptions and analytical methodology used for these estimations.  

44 

 
                                                      
requirements.  BEUC,  the  consumer  organisation,  supported  it  as  a  way  of  encouraging 
compliance  with  the  GPDR’s  privacy-by-design  rules217.  Business  associations  and 
companies, however, were opposed (57% against; 18% in favour. In position papers the 
vast  majority218  of  business  associations  expressed  strong  opposition  to  compensating 
such harm under the PLD, arguing that such harm could already be compensated under 
the  GDPR  itself  and  that  imposing  no-fault  liability  for  harm  that  is  difficult  to  define 
and quantify was disproportionate.  

No specific question on discrimination was asked in the public consultation, but several 
stakeholders raised it in position papers. Legal academics recognised that discrimination 
risks in the context of AI are real but that such risks would be more coherently addressed 
under non-discrimination law than product liability law219. Consumer organisations also 
did not advocate for the inclusion of compensation for discrimination under the PLD.  

On the broader question of whether non-material damage should be compensated under 
the PLD if it did not arise as a result of personal injury, consumer organisations and an 
NGO were in favour220, arguing that this would improve access to justice. However, most 
industry respondents and insurers considered that this would expose producers to liability 
costs  that  were  difficult  to  predict,  and  therefore  difficult  to  insure,  because  of  the 
subjective nature of non-material damage like emotional harm221. 

Annual product liability insurance costs are assessed to increase for software producers 
by 15%222. Effects on as well as for refurbishers and remanufacturers would remain as in 
PO1a  and  PO1b.Annual  product  liability  costs  are  assumed  to  increase  by  2-3%  for 
producers of IoT products, including providers of AI systems, due to inclusion of damage 
flowing  from  fundamental  rights  infringements.  Assumptions  for  refurbishers  and 
remanufacturers as well as authorised representatives and fulfilment service providers are 
as in PO1b. 

Under  PO1c,  total  annual  product  liability  insurance  costs  are  assessed  to  increase 
incrementally compared  to  the baseline,  with  an increase between  6.55 and 13.10 EUR 
million EUR million223.  

b.  Impacts on SMEs 

Same as PO1a. 

c.  Impacts on the internal market and competitiveness  

Extending  the  PLD  to  include  immaterial  damage  such  as  emotional  harm  may  lead  to 
positive  harmonisation  effects  in  the  internal  market,  as  national  authorities  currently 
compensate immaterial damage across the EU in different ways. However, compensating 

217  BEUC  (2020),  Product  Liability  2.0  -  How  to  make  EU  rules  fit  for  consumers  in  the  digital  age,  p.  13;  the 
comment also encompasses “data protection by design” rules. 
218  Austrian  Federal  Economic  Chamber;  Business  Europe;  BVMed  (German  Medical  Technology  Association); 
EFPIA  (European  Federation  of  Pharmaceutical  Industries  and  Associations);  EUROCHAMBRES;  French  Business 
Confederation;  Google;  GSMA;  Siemens;  Siemens  Healthineers;  ZVEI  (German  Electro  and  Digital  Industry 
Association). 
219 Responses of European Law Institute and Irish Council for Civil Liberties to the public consultation. 
220 ADAPTA; BEUC; The Future Society; Verbraucherzentrale Bundesverband. 
221 For example, responses of EUROCHAMBRES, Business Europe and Insurance Europe to the public consultation. 
222 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 
223  As  for  PO1a  and  PO1b,  these  increases  in  product  liability  insurance  costs  are  extra  revenues  for  the  insurance 
companies. 

45 

 
                                                      
damages for personal data breaches under the PLD would create overlap with the GDPR. 
Also,  industry  stakeholders  (especially  representatives  in  the  digital,  tech  and  software 
industries)  expressed  their  concerns  that  liability  for  the  harms  considered  under  PO1c 
could harm innovation and the competitiveness of the tech and software industry. 

d.  Impacts on the judicial system and legal costs 

For software producers and related victims of harm, PO1c would reduce the annual legal 
costs by 6%224 due to the even broader application of no-fault liability compared to PO1a 
and  PO1b,  meaning  shorter  proceedings.  On  the  other  hand,  however,  PO1c  would 
increase the number of in-court and out-of-court cases of around 3.5%.  

Similarly,  PO1c  would  also  increase  by  16%  the  number  of  in-court  and  out-of-court 
cases  due  to  inclusion  of  damage  flowing  from  fundamental  rights  infringements, 
relevant for producers of IoT products and providers of AI systems. Effects derived from 
making  authorised  representatives  and  fulfilment  service  providers  liable  would  be  the 
same as in PO1b.  

Taking  all  this  into  account,  under  PO1c  the  total  annual  legal  costs  are  assessed  to 
increase incrementally compared to the baseline, with an increase between 1.83 and 4.50 
EUR million. 

Social impacts 

a.  Impacts on consumers 

PO1c would enhance consumer protection as they could get compensation for immaterial 
damages, such as emotional  harm, and  for losses caused by discrimination and privacy 
breaches.  In  the  apparently  limited  cases  of  data  protection  infringements  in  which  the 
GDPR  does  not  apply  (see  section  2.2.1.1),  the  PLD  could  provide  compensation. 
Consumers could also stand to get compensation for losses caused by discriminatory AI 
systems,  such  as  recruitment  or  credit-rating  software.  However,  a  negative  impact  on 
innovation,  as  referred  to  under  Economic  Impacts  above,  would  also  have  negative 
consequences for consumers in terms of potentially higher prices and reduced  access to 
innovative products. 

In line with the impacts on the judicial system described above, PO1c would increase the 
annual  number  of  in-court  and  out-of-court  cases  under  the  PLD  in  the  EU27225.  The 
measure would not affect the average compensation pay-outs to victims.  

Taking  all  this  into  account,  under  PO1c  the  total  annual  compensations  paid  to 
victims are assessed to increase incrementally compared to the baseline, with an increase 
between 0.17 and 47.70 EUR million226.  

b.  Impacts on employment and fundamental rights  

Adequate  provisions  against  discrimination  and  privacy  breaches  within  the  PLD  may 
contribute to protecting human dignity and personal data protection across the EU, but it 

224 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 
225 New harms introduced under PO1c would be included in the PLD as a new category of harm alongside personal 
injury and property damage. 
226 Annex 4 provides details on the assumptions and analytical methodology used for these estimations.  

46 

 
                                                      
is  not  possible  to  quantify  this.  There  are  no  foreseen  impacts  to  employment  under 
PO1c.  

6.4. 

Policy  option  2.a  –  Easing  the  burden  of  proof  and  reducing 
disproportionate restrictions to make claims 

Economic impacts 

a.  Impacts on producers 

The  obligation  on  producers  to  disclose  necessary  technical  information  to  injured 
persons in court will have a limited impact, given that nearly all Member States already 
have disclosure rules (see section 2.2.2.1). Industry stakeholders were generally open to 
having more uniform, pan-European rules on information disclosures for this reason, so 
long as a claimant’s request was justified and intellectual property rights were adequately 
protected227.  

Easing  the  burden  of  proof  in  a  harmonised  way  by  setting  conditions  for 
defectiveness/causality  to  be  presumed  would  have  a  limited  impact  on  producers, 
because  national  courts  already  have  tools  at  their  disposal  to  ease  the  burden  of  proof 
where  it  is  too  heavy.  Indeed  industry  stakeholders  do  not  dispute  the  role  of 
presumptions to ease the burden of proof in complex cases, they just believe it should be 
left  to  national  systems228.  Making  the  rules  explicit  in  the  text  of  the  PLD  could, 
however, potentially give consumers greater confidence to make compensation claims in 
more  complex  cases,  in  which  the  producer  would  have  to  play  a  more  active  role  to 
demonstrate the product was safe.  

The  adaptation  of  the  development  risk  defence  under  PO2a  would  be  the  logical 
corollary of the change to the later-defect defence under PO1a, under which producers of 
products like robots or autonomous vehicles continue to be liable for defects that emerge 
after the product was put into circulation owing to their ongoing control over the product. 
There would therefore be no additional impact compared to PO1a.  

The  removal  of  the  EUR  500  threshold  could  potentially  concern  any  producer  of  a 
product  capable  of  causing  property  damage.  The  threshold  was  introduced  to  avoid 
excessive  litigation,  but  litigation,  including  for  property  damage,  has  remained 
altogether  low  under  the  PLD.  Nevertheless,  the  removal  could  lead  to  more 
compensation pay-outs, and therefore a slight increase in annual insurance premiums, as 
producers would prefer to settle small claims rather than  dispute them in a costly court 
case229.  

Industry stakeholders did not expect any significant impacts but rather saw the threshold 
as one element of the balance of producer-consumer interests that they did  not  want  to 
change. 

227  Responses  of  Siemens  Healthineers,  Bundesverband  Medizintechnologie,  Confederation  of  European  Security 
Services, to the public consultation.  
228  E.g.  responses  of  Business  Europe,  of  European  Federation  of  Pharmaceutical  Industries  and  Associations,  of 
Insurance Europe, and of Google to the public consultation. 
229 Both consumers and industry prefer out-of-court settlements for smaller claims, given the high cost of court cases; 
confirmed inter alia by European Justice Forum (2021), Input to EU Commission on Review of PLD. 

47 

 
                                                      
The  extension  of  the  10-year  liability  period  to  15  years  concerns  only  producers  of 
products capable of causing latent personal injury,  in particular products  that can affect 
the  human  body  internally,  such  as  pharmaceuticals,  chemicals  and  construction 
materials like asbestos230. Nevertheless, for concerned producers, the extended exposure 
to liability could potentially mean a very small increase in the volume of legal cases and 
therefore a small increase in insurance premiums.  

Annual product liability insurance costs are assumed to increase by 4%231 for producers 
of more complex products such as pharmaceuticals, IoT and AI-enabled products, due to 
information requirements and more uniform conditions for easing the burden of proof. 

Moreover, total product liability insurance costs are assumed to increase by 3-4% due to 
the  insurers’  exposure  to  risk  increases  with  the  extension  of  the  liability  period  and 
damage threshold232. 

Under  PO2a,  total  annual  product  liability  insurance  costs  are  assessed  to  increase 
incrementally  compared  to  the  baseline,  with  an  increase  ranging  between  14.35  and 
28.71 EUR million233. 

b.  Impacts on the internal market and competitiveness 

Setting out explicitly obligations for producers to disclose information and the conditions 
for easing the burden of proof through presumptions would create greater legal certainty 
and  achieve  a  more  equal  level  of  consumer  protection  across  the  EU.  The  burden  of 
proof  would  be  more  fairly  shared  between  injured  parties  and  producers  in  cases 
involving  more  complex  products.  Removing  the  EUR  500  threshold  would  promote 
more uniform consumer protection in the internal market, given the  unequal impact the 
threshold  has  in  light  of  the  wide  disparities  in  price  levels  between  Member  States  of 
consumer property, while still preserving innovation that could be hampered by more far-
reaching  measures,  especially  in  innovative  sectors  like  pharmaceuticals  and  AI,  and 
undermine the uptake of new technologies.  

c.  Impacts on the judicial system and legal costs  

Since  disclosure  rules  and  alleviations  of  the  burden  of  proof  are  familiar  to  almost  all 
Member  States,  there  should  be  no  particular  impact  on  the  justice  system.  The  use  of 
presumptions is expected to make court cases shorter, as more onus would be placed on 
the party with greater understanding of the product: the producer. 

PO2a would reduce the annual legal costs by 10%234 for more complex products such as 
pharmaceutical,  IoT  and  AI-enabled  products,  due  to  shorter  proceedings  as  a  result  of 
better access to information for claimants and presumptions while increasing the number 
of proceedings, both  in  court and out  of court,  by  5%, due to  changes  in the burden of 
proof. Moreover, PO2a  would also  increase the  overall number of  cases  by 2%, due to 
the reduced restrictions in making claims.  

230 See section 2.1.2.2. 
231 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 
232 Furthermore, producers of digital products and elements  would be affected by the adaptation of the development 
risk defence. But because the adaptation is linked to PO1a, no additional increase is expected. 
233  As  for  previous  policy  options,  these  increases  in  product  liability  insurance  costs  are  extra  revenues  for  the 
insurance companies. 
234 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 

48 

 
                                                      
The increase in relation to the removal of the EUR 500 threshold is expected to concern 
only  out-of-court  rather  than  in-court  proceedings.  However,  class  actions235  would 
theoretically  become  possible  after  removing  the  threshold,  but  these  are  expected  to 
remain  a  very  rare  occurrence  in  relation  to  property  damage  (class  actions  would  be 
more common in relation to personal injuries). 

Under  PO2a,  total  annual  legal  costs  are  assessed  to  slightly  increase  incrementally 
compared to the baseline, with an increase between 0.41 and 1.02 EUR million. 

Social impacts 

a.  Consumer protection and access to justice 

Harmonised  disclosure  of  necessary  information  and  harmonised  application  of 
presumptions would ensure a more uniform level of consumer protection. As products 
become more and more complex, guaranteed access to information would help to lessen 
the asymmetry of information, particularly in the area of digital technologies, such as AI, 
where digitally logged information could help reveal how a product (e.g. a robot) caused 
the harm.  

The  policy  option  would  be  in  line  with  principles  the  ECJ  has  already  endorsed, 
recognising the need to ease the burden of proof in complex cases. The greater visibility 
of  the  possibility  to  ease  the  burden  of  proof  could  improve  consumer  confidence  and 
trust in more complex products.  

The removal of the EUR 500 threshold would mean that the PLD protects consumers no 
matter  what  the  value  of  property  damage  caused  by  a  defective  product.  Even  though 
there are unlikely to  be additional court cases for lower-value claims, the removal may 
incentivise producers to settle smaller claims by negotiation or out-of-court settlement.  

The extension of the 10-year liability period to 15 years would improve the prospects of 
victims  of  latent  personal  injury  getting  compensation  when  the  harm  takes  longer  to 
manifest  itself.  Although  it  will  benefit  few  victims,  given  the  rarity  of  latent  personal 
injury, it will help those victims considerably.  

PO2a  would  slightly  increase  the  overall  annual  number  of  in-court  and  out-of-court 
cases  under  the  PLD  in  the  EU27  by  2%236  due  to  reducing  restrictions  on  making 
claims,  but,  more  significantly,  would  increase  by  7%  the  number  of  claims  for  more 
complex  products,  such  as  pharmaceuticals,  IoT  and  AI-enabled  products,  that 
successfully lead to compensation due to information disclosures and the more uniform 
use of presumptions. The measure would not affect the average compensation pay-outs to 
victims.  

Under  PO2a,  the  total  annual  compensations  paid  to  victims  are  assessed  to  increase 
incrementally compared to the baseline, with an increase ranging between 0.20 and 43.54 
EUR million.  

b.  Impacts on employment and fundamental rights  

235  e.g.  under  Directive  (EU)  2020/1828  on  representative  actions  for  the  protection  of  the  collective  interests  of 
consumers. 
236 Annex 4 provides details on the assumptions and analytical methodology used for these estimations.  

49 

 
                                                      
Reducing  restrictions  on  making  claims  and  easing  the  burden  of  proof  in  the  case  of 
complex products would strengthen the right to an effective remedy, a right guaranteed 
under  Article  47  of  the  EU  Charter  of  fundamental  rights.  PO2a  should  not  have  any 
impact on employment. 

6.5. 

Policy option 2b – Reversing the burden of proof 

Economic impacts 

a.  Impacts on producers 

Reversing the burden of proof, therefore requiring the producer to prove the product in 
question was  not  defective and did  not  cause the harm suffered, would  go  significantly 
beyond option 2a and beyond what national courts are currently allowed to do under the 
PLD. This option would in principle affect all producers. 

In the public consultation, a full reversal of the burden of proof for technically complex 
products  was  only  first-ranked  by  5%  of  respondents  and  second-ranked  by  32%237, 
considerably less than for option 2a. BEUC, the consumer organisation, has argued that a 
reversal  of  the  burden  of  proof,  especially  needed  for  complex  products,  is  needed  to 
remove  the  difficulties  consumers  face  in  proving  defectiveness  and  the  causal  link 
between  defect  and  damage238.  Only  22%  of  business  and  industry  associations  ranked 
this  option  first  or  second.239  Industry  position  papers  indicated  strong  opposition  to  a 
reversal of the burden of proof, on the grounds that the burden of proof is rightly borne 
by the claimant as a counterbalance to no-fault liability being imposed on producers, and 
that it could expose companies to unnecessary, frivolous and even abusive litigation240.  

Removing the development risk defence would in principle impact all producers, but in 
particular those operating in highly innovative sectors where undiscoverable risks might 
emerge  after  a  product  is  put  into  circulation,  such  as  in  the  pharmaceuticals  or  AI 
sectors. 57% of  consumer associations, NGOs and citizens were in  favour of removing 
the  defence,  whereas  87%  of  industry  associations  were  in  favour  of  keeping  it.241 
Insurance Europe argued that removing the defence would deter technological innovation 
and  hinder  economic  development,  while  EFPIA  insisted  it  would  place  excessive 
burdens on producers242.  

The impacts of removing the EUR 500 threshold would be the same as under PO2a, but 
extending  the  10-year  liability  period  to  15  years  in  all  cases  of  personal  injury  and 
lengthening the 3-year period for starting legal proceedings to 5 years would increase all 
producers’ liability exposure.  

Annual  product  liability  insurance  costs  are  assumed  to  increase  by  6-8%243  for  all 
producers due to the reversal of the burden of proof and by 5-6% due to the removal of 
the development risk defence and due to the incremental changes to the liability period 
and time limit. 

237 9 out of 168, and 53 out of 168 respectively. 
238 Response of BEUC to public consultation. 
239 24 out of 110 
240 Response of EFPIA, pharmaceutical association, to public consultation. 
241 15 out of 26, and 57 out of 65 respectively 
242 Response of EFPIA, pharmaceutical association, to public consultation. 
243 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 

50 

 
                                                      
Under  PO2b,  total  annual  product  liability  insurance  costs  are  assessed  to  increase 
incrementally compared to the baseline, with an increase between 41.73 and 83.46 EUR 
million244. 

b.  Impacts on the internal market and competitiveness 

Industry  stakeholders  argued  that  reversing  the  burden  of  proof  and  removing  the 
development risk defence would be disproportionate, hampering innovation, especially in 
innovative  sectors  like  pharmaceuticals  and  AI,  and  undermine  the  uptake  of  new 
technologies245. 

c.  Impacts on the judicial system and legal costs  

PO2b  would  increase  the  number  of  proceedings,  both  in  court  and  out  of  court,  by 
10%246,  due  to  the  reversal  of  the  burden  of  proof  and  by  5%  due  to  the  reduced 
restrictions in making claims.  

Under  PO2b,  total  annual  legal  costs  are  assessed  to  slightly  increase  incrementally 
compared to the baseline, with an increase between 6.90 and 16.96 EUR million. 

Social impacts 

a.  Consumer protection and access to justice 

Reversing the burden of proof would facilitate the position of the consumer significantly, 
as they would only have to prove a product caused damage and then the burden of proof 
would  pass  to  the  producer.  Consumers  would  be  reassured  that  in  case  of  a  product 
causing harm, it would be up to the producer to demonstrate that their product was not 
defective and had not caused damage. On the other hand, any hampering of innovation, 
identified  under  Economic  Impacts  above,  would  have  negative  consequences  for 
consumers  in  terms  of  potentially  higher  prices  and  reduced  access  to  innovative 
products.  The  position  of  consumers  would  also  be  improved  by  extending  producers’ 
liability to 15 years for any personal injury claim and by giving victims of harm 5 years 
to start legal proceedings. 

PO2a would increase the overall annual number of in-court and out-of-court cases under 
the PLD in the EU27 by 5%247 due to reducing restrictions on making claims, but, more 
significantly,  would  increase  by  12%  the  number  of  claims  that  successfully  lead  to 
compensation due to the reversal of the burden of proof. The measure would not affect 
the average compensation pay-outs to victims.  

Under PO2b, the  total  annual  compensations paid to victims  are  assessed  to  increase 
incrementally  compared  to  the  baseline,  with  an  increase  ranging  between  0.99  and 
217.70 EUR million.  

b.  Impacts on employment and fundamental rights  

PO2b should not have any impact on employment or fundamental rights. 

244  As  for  previous  policy  options,  these  increases  in  product  liability  insurance  costs  are  extra  revenues  for  the 
insurance companies. 
245 For example response of Business Europe to public consultation, p. 4. 
246 Annex 4 provides details on the assumptions and analytical methodology used for these estimations. 
247 Annex 4 provides details on the assumptions and analytical methodology used for these estimations.  

51 

 
                                                      
Environmental impacts 

A  reversal  of  the  burden  of  proof  could  potentially  facilitate  the  development  of  safer 
complex products that are less likely to malfunction, and therefore to be replaced.  

7.  HOW DO THE OPTIONS COMPARE? 

7.1.  Effectiveness of the proposed policy options 

The  following  tables  present  the  effectiveness  of  the  proposed  options  against  the 
relevant specific objectives. 

Table 3: Effectiveness of policy options to adapt the PLD to the digital age and circular 
economy 

Objective 1: Adapt PLD 
to reflect nature and risks 
of products in the digital 
age 

Baseline 
PO1a 
PO1b 
PO1c 

++ 
+++ 
++ 

Objective 2: Adapt the PLD 
to reflect the nature of 
products in the circular 
economy 
0 
++ 
++ 
++ 

Objective 3: Ensure there 
is always an EU-based 
liable person for defective 
products bought in the EU 

++ 
+++ 
+++ 

Legend: - not effective; + limited effectiveness; ++ effective; +++ very effective 

Net 
effect 

++ 
+++ 
++ 

PO1b would, in comparison to PO1a, further incentivise the placing of safer software on 
the  market,  by  covering  3rd-party  software  that  influences  but  is  not  necessary  for  a 
tangible  product,  and  safety-relevant  standalone  software.  PO1b  would  also  provide 
regulatory certainty about the availability of compensation for damage to digital property 
and could  incentivise producers to  improve the reliability of hard drives and other data 
storage  devices.  Increasing  regulatory  clarity  and  closing  liability  gaps  will  benefit 
innovation.  PO1b  would  ensure  that  the  deterrent  effect  of  no-fault  liability,  which 
encourages  producers  to  place  only  safe  products  on  the  market,  reaches  non-EU 
producers also in cases where no authorised representative has been appointed.  

By  extending  the  PLD  to  include  immaterial  damage,  option  1c  may  lead  to  positive 
harmonisation effects in the internal market, as national authorities currently compensate 
immaterial damage across the EU in different ways. However, compensating damages for 
personal data breaches and discrimination under the PLD would create overlap with the 
GDPR  and  non-discrimination 
(especially 
law.  Also, 
representatives in the digital, tech and software industries) expressed their concerns that 
liability  for  the  harms  considered  under  PO1c  could  harm  innovation  and  the 
competitiveness of the tech and software industry. 

stakeholders 

industry 

Table 4: Effectiveness of policy options to reduce disproportionate obstacles to getting 
compensation 

Ease the burden of proof in the case of 
complex products and clarify liability for 
undiscoverable defects, while ensuring 
fair balance between producers and 
consumers 

Ease restrictions on making 
claims, while ensuring fair 
balance between producers and 
consumers 

Net effect 

Baseline 
PO2a 
PO2b 

+++ 
++ 

+++ 
++ 

+++ 
++ 

0 

Legend: - not effective; + limited effectiveness; ++ effective; +++ very effective 

52 

 
 
 
 
By  reversing  the  burden  of  proof,  Option  2b  would  alleviate  the  difficulties  that 
consumers  face.  However,  especially  if  taken  together  with  the  removal  of  the 
development  risk  defence, 
thus 
undermining a fair balance of interests between consumers and producers. Reversing the 
burden  of  proof  and  removing  the  development  risk  defence  would  also  have  negative 
impact on innovation. 

this  measure  would  overly  favour  consumers, 

By easing the burden of proof in the case of complex products, option 2a would achieve a 
fairer balance of interests between injured parties and producers. Option 2a would create 
greater legal certainty and achieve a more equal level of consumer protection across the 
EU,  while  still  preserving  innovation  that  could  be  hampered  by  further-reaching 
measures,  especially  in  innovative  sectors  like  pharmaceuticals  and  AI,  and  could 
undermine the uptake of new technologies. 

7.2. 

Impacts of policy options 

The following table summarises the costs and benefits, for each policy option, quantified 
and presented in section 6.  

Table 5: Costs & Benefits summary table (EUR million annual) 

Incremental benefits compared 
to baseline 

Incremental costs compared to baseline 

Incremental annual compensation 
paid to victims(*) 

Incremental annual product 
liability insurance costs  

Incremental annual legal 
costs 

Low end 

High end 

Low end 

High end 

Low end 

High end 

PO1a 

PO1b 

PO1c 

PO2a 

0.07 

0.15 

0.17 

0.20 

14.47 

22.13  

47.70  

43.54  

1.21 

4.35 

6.55 

14.35 

2.41 

8.69 

13.10 

28.71 

0.99 

PO2b 

83.46 
217.70  
Summary of incremental costs per policy options. See annex 4 for details. 
(*) In most cases covered by insurance 

41.73 

0.41 

1.12  

1.83 

0.41 

6.90 

1.02  

2.75 

4.50  

1.02 

16.96  

As  explained  in  section  6,  the  cost/benefits  analysis  is  not  fully  comprehensive  due  to 
significant data gaps and limitations. The aim of the assessment is to provide  ranges of 
the  magnitude  of  potential  impacts  generated  by  each  policy  option,  rather  than  exact 
the  quantitative  and  qualitative 
monetisation.  The  following 
assessments,  presented  in  section  6,  on  the  potential  effects  of  policy  options  to 
producers,  consumers,  internal  market,  and  competitiveness  as  well  as  on  the 
environment.  

table  summarises 

Table 6: Summary of Economic, social and environmental impacts 

Economic impact 

Social impact 

Environmental impact 

PO1a 
PO1b 
PO1c 
PO2a 
PO2b 

++ 
+++ 
- 
+- 
-- 

++ 
++ 
+++ 
++ 
+++ 

53 

++ 
++ 
++ 
NA 
NA 

 
 
 
 
 
Legend:  +-  no  /  neutral  impact;  +  minor  positive  impact;  ++  positive  impact;  +++  significant  positive 
impact; - minor negative impact; -- negative impact; --- significant negative impact, NA – not applicable 

The scale of the negative economic impacts will increase with the level of intervention. 
In contrast, however, the policy options with high levels of intervention are anticipated to 
have potentially significant positive social impacts on consumer protection.  

Options  1a  and  1b  would  have  slight  negative  impacts  on  the  insurance  costs 
counterbalanced by strong positive impacts in terms of internal market, competitiveness 
and  innovation  as  well  as  positive  impacts  in  the  functioning  of  the  circular  economy. 
They would also have strong positive impacts on consumer protection. Option 1c would 
enhance  consumer  protection  due  to  greater  harmonised  coverage  but  with  a  risk  of 
hindering innovation by including non-material damage into the compensable damages. 

Option 2a would have some implications for the internal market (e.g. greater uniformity 
in  use  of  presumptions  and  in  information  disclosures)  and  only  minor  impacts  on 
competitiveness  and  innovation.  However,  it  would  have  strong  positive  impacts  on 
consumer protection. 

Under  policy  option  2b,  a  notable  negative  economic  impact  is  to  be  expected,  with  a 
potential increase in costs for producers due to various reasons (e.g. higher legal costs for 
defendants  if  the  burden  of  proof  were  to  be  reversed,  higher  numbers  of  claims  and 
compensation  pay-outs).  Option  2b  would  have  a  significant  positive  impact  on 
consumer protection.  

Policy  options  face  greater  opposition  from  industry  as  the  level  of  intervention 
increases, while receiving greater support from consumers. 

Table 7: Stakeholder support 

Stakeholder support 

MS 

Industry 

Consumers 

PO1a 
PO1b 
PO1c 
PO2a 
PO2b 
Legend: +- no support; + limited support; ++ support; +++ strong support 

++ 
++ 
+- 
+ 
+- 

++ 
++ 
+ 
++ 
+ 

+ 
++ 
+++ 
++ 
+++ 

In particular, industry stakeholders voiced strong opposition to the reversal of the burden 
of  proof  in  policy  option  2b  (in  the  interview  programme,  targeted  and  public 
consultations).  The  main  concern  was  that  the  delicate  balance  between  consumer 
protection and producers accepting the principle  of no-fault liability whilst  maintaining 
innovation  and  competitiveness  would  be  undermined  if  the  burden  of  proof  were 
reversed. Balanced against this, there was less industry opposition to policy option 2a in 
respect of  clarifying the  circumstances in  which  presumptions  can be used and making 
necessary  technical  information  available  to  injured  parties.  Member  States  expressed 
clear  support  for  revising  the  PLD  in  the  dedicated  Member  State  workshop  held  in 
February 2022 and in the responses to the public consultation, but only several Member 
States expressed clear views on specific policy options248. 

248 See annex 2 for details. 

54 

 
 
                                                      
7.3. 

Summary of policy options assessment 

The table below summarises the assessment presented so far, providing an overview of 
the effectiveness, efficiency and coherence with the EU law for each of the policy option 
analysed.  

Table 8: Summary table 

Effectiveness 

Efficiency 

Coherence with EU law 

PO1a 
PO1b 
PO1c 
PO2a 
PO2b 
Legend:  +-  no  /  neutral  impact;  +  minor  positive  impact;  ++  positive  impact;  +++  significant  positive 
impact; - minor negative impact; -- negative impact; --- significant negative impact 

+++ 
+++ 
++ 
+++ 
+++ 

++ 
+++ 
++ 
+++ 
++ 

++ 
++ 
+ 
+ 
+- 

The  proposed  measures  are  considered  to  generally  be  coherent  with  wider  EU  policy 
and regulatory developments, with the exception of 1c, which would risk duplicating Art. 
82  of  the  GDPR  in  respect  of  data  protection  and  privacy  infringements,  and  risk 
overlapping with non-discrimination law.  

8.  PREFERRED OPTION 

Based on the comparative assessment of policy options above, the preferred combination 
of policy options consists of PO1b to address problem 1 and PO2a to address problem 2. 
They scored well across a range of criteria (positive economic, social and environmental 
impacts, effectiveness, efficiency and coherence). 

As regards the policy options to adapt the PLD to the digital and circular economy, while 
PO1a  would  make  the  PLD  work  better  for  products  with  digital  elements,  it  is  less 
effective  as  it  would  not  fully  adapt  the  PLD  to  the  digital  age,  because  it  would  not 
address liability for safety-relevant software supplied separately from a tangible product 
nor deliver legal  certainty  with  regard to  compensation for digital  property. Consumers 
should  not  enjoy  less  protection  in  such  cases,  and  an  economic  operator’s  liability 
should not depend on the tangibility of what they put into circulation if it causes harm. 
Option  PO1b  also  scored  well  with  regard  to  economic,  social  and  environmental 
impacts. PO1c, on the other hand scores lower because, while it would afford consumers 
greater  protection,  it  would  go  too  far  by  opening  producers  up  to  no-fault  liability  for 
new  harms  (privacy,  discrimination,  emotional  harm)  that  could  be  more  appropriately 
addressed under other legal frameworks not based on no-fault liability. PO1b strikes the 
right balance in adapting the PLD to the digital age, it achieves the objective of reflecting 
the nature of products in the circular economy, and it would ensure the liability of an EU-
based responsible person for defective products, in line with market surveillance rules. 

As  regards  the  policy  options  to  reduce  disproportionate  obstacles  to  getting 
compensation,  PO2b’s  reversal  of  the  burden  of  proof  would  expose  producers  to 
significantly  higher  liability  risks,  by  requiring  them  to  prove  their  products  were  safe. 
This  and  removing  the  development  risk  defence  could  hinder  innovation,  to  the 
detriment of both industry (in particular SMEs, which would less easily absorb additional 
costs) and consumers. PO2a scores more highly than PO2b in terms of effectiveness and 
efficiency.  Information  disclosures  and  more  uniform  use  of  presumptions  should  help 
consumers prove liability where complex products are involved, but in a way that seeks 

55 

 
 
to restore the balance between producer and consumer interests. PO2a also seeks balance 
by  reducing  restrictions  on  making  claims  in  a  focussed  and  proportionate  way,  by 
ensuring  victims  are  not  worse  off  just  because  the  value  of  property  damage  suffered 
was below a threshold or because personal injuries emerged after a long period of time.  

Although PO1b and PO2a each address a distinct problem, they have synergistic impacts. 
The  objective  of  adapting  liability  rules  to  the  digital  age  in  PO1b  is  reinforced  by 
ensuring  under  PO2a  that  consumers  are  able  to  get  compensation  for  harm  caused  by 
complex digital products, among others. Similarly, the fair balance between producer and 
consumer interests, which is at the heart of PO2a, is reinforced by the choice of PO1b, in 
that that option does not over-burden producers with liability for privacy infringements, 
discrimination  and  non-material  harm.  The  costs  and  benefits  as  assessed  will  be 
cumulative.  The  preferred  option  will  contribute  to  SDG  3  due  to  its  positive  social 
impacts  on  victims’  health  and  well-being,  to  SDG  9  by  providing  legal  certainty  for 
businesses  to  innovate  and  to  SDG  12  by  enhancing  product  safety  when  substantial 
modifications are made.  

In terms of net impacts on different stakeholder groups: 

  Producers  with  liability  insurance  may  face  an  increase  in  liability  insurance 
premiums.  If  they  are  found  liable  for  harm  caused  by  a  defective  product,  the 
liability  insurance  would  cover  the  compensation  and  legal  costs.  Producers 
without  a  liability  insurance  would  face  direct  compensation  costs  to  victims 
(costs  not  considered  in  the  analysis,  see  section  6),  and  legal  costs  if  the  case 
goes to court. 

  Insurance  companies  may  have  to  bear  higher  compensation  costs,  but  they 
would  off-set  that  cost  by  marginally  raising  insurance  premiums,  leading  to 
higher  revenues.  Their  net  income  is  therefore  assumed  to  remain  stable  over 
time. 

  People  who  suffer  damage  will  receive  compensation  pay-outs  if  they  prove 

liability. They are assumed to bear legal costs if they do not win the case. 

Table 9: Costs & Benefits of preferred option (EUR million annual) 

Incremental benefits 
compared to baseline 

Incremental costs compared to baseline 

Incremental annual 
compensation paid to victims(*) 

Incremental annual product 
liability insurance costs  

Incremental annual legal 
costs 

Low end 

High end 

Low end 

High end 

Low end 

High end 

0.15 

PO1b + 
PO2a 
Summary of incremental costs per policy options. See annex 4 for details. 
(*) In most cases covered by insurance 

22.13  

8.69 

4.35 

1.12  

2.75 

The  preferred  option  is  coherent  with,  although  independent  of,  the  preferred  option 
under  the  AI  liability  impact  assessment.  The  revised  PLD  will  continue  to  provide  a 
system  for  compensating  harm  caused  by  any  defective  product,  but  will  do  so  more 
effectively for digital  and complex products than is currently the case, including for all 
AI-enabled  products.  The  measures  envisaged  in  the  AI  impact  assessment  (such  as 
alleviating  the  burden  of  proof  in  fault-based  claims)  concern  only  high-risk  or  highly 

56 

 
 
 
 
autonomous/opaque AI systems, and products/services that use them, and those measures 
will apply only to national fault-based claims and not to claims brought under the PLD. 
A more effective PLD will provide victims with a straightforward route to compensation 
without having  to  prove fault,  which should  reduce the number of cases brought  under 
national fault-based rules. However, when victims do use national fault-based rules, the 
measures  envisaged  in  the  AI  impact  assessment  will  help  them.  Victims  will  do  this 
mainly when they seek compensation from persons other than the producer – in particular 
users  of  AI  systems  (e.g.  companies  providing  cleaning  or  security  services  using  AI-
enabled robots) – or when seeking compensation from the producer but for damage not 
covered  by  the  PLD,  like  non-material  damage  or  discrimination  (e.g.,  discrimination 
damages for biased recruitment software).  

The  impacts  of  both  preferred  options  are  therefore  consistent,  since  they  will  help 
victims  with  different  claims  for  different  types  of  damage  against  different  liable 
persons. The preferred options use similar tools (access to information, adaptations of the 
burden  of  proof).  With  respect  to  AI  systems,  the  preferred  options  should,  in  their 
combination, ensure that victims of damage caused by AI-systems have the same level of 
protection compared to damage caused by traditional products, no matter which route to 
compensation is taken. 

8.1.  REFIT (simplification and improved efficiency) 

The evaluation of the PLD found the current administrative burden to be very low, as it 
consists only in a one-off obligation on Member States to inform the Commission in the 
event that they wish to derogate from the development risk defence in Article 7(e). The 
evaluation  of  the  PLD  concluded  there  was  no  scope  for  simplification249.  As  the  PLD 
does  not  result  in  any  direct  compliance  costs  or  administrative  costs  for  economic 
operators  or  consumers,  no  quantifiable  efficiency  gains  could  be  identified.  Economic 
operators  would,  however,  benefit  from  more  legal  certainty  and  more  coherent 
interpretation  of  liability  rules  in  the  internal  market.  Consumers  would  benefit  from 
more equal level of consumer protection. 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

The  Commission  will  monitor  the  implementation  and  application  of,  and  compliance 
with,  the  revised  provisions  of  the  PLD  according  to  the  preferred  option.  This  will  be 
done  consistently  with  the  monitoring  of  any  legislative  instrument  resulting  from  the 
impact assessment on AI liability. A Commission Expert Group would be set up with all 
relevant  stakeholders  and  Member  States  to  analyse  the  implementation  of  the  revised 
PLD in all Member States. The Commission would prepare an implementation report 3 
years after transposition of the revised PLD, and conduct an evaluation after 5 years. 

While  it  is  challenging  to  isolate  the  impacts  of  the  PLD  on  the  functioning  of  the 
internal  market  and  the  level  of  consumer  protection,  due  to  its  very  broad  scope,  its 
synergistic  effects  with  product  safety  rules,  the  availability  of  other  routes  to 
compensation and the lack of robust data on its use, indicators for monitoring the impacts 
of the preferred option have been identified They are not based on hard data but rather 

249  European  Commission  (2018).  Evaluation  of  Council  Directive  85/374/EEC  on  the  approximation  of  laws, 
regulations and administrative provisions of the Member States concerning liability for defective products, p.39. 

57 

 
                                                      
the reported cases of use of the PLD and perception of affected stakeholders – see annex 
9. 

58 

 
 
Annex 1: Procedural information 

1.  LEAD DG, DECIDE PLANNING/CWP REFERENCES 

Lead DG: DG Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) 

Directorate: Directorate G – Ecosystems II: Tourism & Proximity 

This impact assessment is part of the initiative with the Decide reference PLAN 
2020/9848, entitled “Adapting liability rules to the digital age and Artificial 
Intelligence”. 

2.  ORGANISATION AND TIMING 

The inception impact assessment consultation period ran from 30 June to 28 July 2021. 

The public consultation period ran from 18 October 2021 to 10 January 2022. 

An inter-service steering group was convened and chaired by the Secretariat-General and the 
last meeting on the final draft impact assessment report was held on 18 February 2022. The 
following Directorates-General participated: SG, LS, JUST, GROW, CNECT, JRC, SANTE, 
EMPL, COMP, FISMA, AGRI, ECFIN, ENV, TRADE. 

3.  CONSULTATION OF THE RSB 

The RSB was consulted in an upstream meeting on 2 June 2021. This impact assessment 
was submitted to the RSB on 4 March 2022. The meeting with the RSB took place on 6 
April 2022. 

The RSB issued its opinion on 8 April 2022, following which this impact assessment was 
revised as follows: 

RSB recommendations 

Revision made 

1)  The report should better explain the scope of the 

-  Clarification in section 2.2.1.2 that repairers are not 

problem, in particular why it does not cover repaired 
products. It should clarify why the product/service 
overlap with the parallel initiative on artificial 
intelligence liability is not problematic. 

2)  The report should clarify the baseline assumptions. It 
should explain better to what extent the reduction of 
number of liability cases resulting from the expected 
product safety improvements are included in the 
baseline and be clear how this affects the size of the 
remaining problem. Given the significance of the 
expected reduction of product-related accidents, 
further efforts should be undertaken to produce a 
more realistic assessment and description of the 
dynamic baseline. 

producers within the meaning of the PLD. 

-  Clarification that there is no problematic overlap with 

AI liability in section 1.2.5 and section 8 

Better explanation in 5.1 of impacts of product safety 
improvements, in particular that: 
-  Improvements seek both to reduce product-related 
harm in real terms but also to avoid a future rise in 
harm from novel risks. 

-  The range of case numbers takes this into account, 

even if it is not directly quantifiable. 

-  Annex 4 provides further explanation on the baseline 

assumptions. 

59 

 
 
 
3)  The report should be clear on the uncertainties 

related to the baseline estimates. It should explain 
how representative and robust the baseline figures 
extrapolated from a limited data source (one Member 
State) are. It should explain better to what extent the 
legal database from the Netherlands can serve as a 
realistic reference basis for extrapolation to all EU-
27 Member States 

4)  The report should show that the selected options 
contain all relevant combinations of measures. It 
should not discard measures based on the views of 
only one stakeholder group. 

5)  The report should clarify what the costs to businesses 
include and how the quantitative estimates were 
calculated. Given that the direct compensation costs 
borne by businesses having no liability insurance 
coverage are not quantified due to data limitations, it 
should acknowledge the risk that the presented 
estimates result in a likely underestimation of the 
costs. 

-  The baseline estimates on the number of cases have 
been reviewed. The baseline figures are based on 
databases from 5 Member States instead of only one. 
-  The limitations of the database and extrapolation are 

explained in Annex 4.   

-  The estimates of costs and benefits have been 

recalculated using the revised baseline figures.  

-  The introduction to section 5.2 explains the 

development of the combinations and the descriptions 
of options explain better the rationale behind the 
combinations. 

-  The introduction to section 5.2 also explains that for 

greater transparency on the impact of different 
elements within each option, the costs and benefits 
(increase of insurance premiums and compensations 
for victims) related to each measure are shown 
separately in section 6 of the impact assessment 

-  Clarification that discarded measures were based not 
on one stakeholder group but on the need for a fair 
balance among different groups. 

-  Clearer justification of the approach to assessing direct 

compensation costs added in the introduction to 
section 6. 

-  Clarification of the costs for businesses and the 
methodology for estimates added in Annex 4. 

6)  The report should present the overall net impact of 

-  Better explanation of the impacts of the preferred 

the preferred option taking into account all transfers 
between different stakeholder groups. In addition, it 
should clarify and complete the distributional 
analysis of the impacts on the different stakeholder 
groups. In particular, it should analyse the impacts on 
producers (both with and without liability insurance) 
and on insurance companies. Given the high SME 
relevance of the initiative, the report should further 
develop the analysis of the effects on SMEs, 
including the extent to which they might be faced 
with direct compensation costs, due to a lack of 
(adequate) insurance coverage. 

7)  The report should better justify why the transfer of 
product liability from the original manufacturer to 
refurbishers and remanufacturers would not 
negatively affect the development of the circular 
economy. 

8)  The report should be clear to what extent the 

analytical assumptions and results (in both the 
baseline and impact analyses) have been validated by 
experts and stakeholders. More generally, the report 
should deal better with uncertainty, for instance by 
considering sensitivity analysis when assessing the 
scale of the (remaining) problem and comparing the 
options in terms of costs and benefits. 

option per stakeholder group in section 8 and Annex 3. 
-  SME relevance reflected in section 6 (SME impacts of 

PO 1a), in Annex 2 (1st section), section 8 on the 
preferred option. All evidence is presented together in 
the SME test in new Annex 10. 

Better justification give in section 6.2 under 
Environmental Impacts. 

Annex 4 includes detailed explanation of the 
methodology and how different results have been 
validated by experts and stakeholders. The clarification 
concerning the validation of options and estimates by 
stakeholders also added in introductions to sections 5 
and 6.  

Baseline assumptions have been reviewed (see point 3) 
and are based on ranges, providing different scenarios 
depending on the assumptions on the number of PLD 
cases and on the average compensations paid out to 
victims. 
Net impacts of different options have been more clearly 

60 

 
 
 
 
 
explained for the relevant stakeholder groups. 

4.  EVIDENCE, SOURCES AND QUALITY 

The Evaluation250 of the Product Liability Directive identified the key areas for the 
revision. It was supported by a study by an external contractor251.  

This impact assessment is also supported by a study undertaken by another external 
contractor252, who carried out dozens of interviews, analysed data from public and 
targeted consultations and complemented this through desk research and case studies.  

The  impact  assessment  provides  qualitative  information  regarding  the  positive  and 
negative  impacts  generated  by  each  PO,  reporting  the  main  information  on  the  sectors 
and  economic  operators  mostly  affected  by  the  proposed  changed.  This  qualitative 
analysis is based on the evidence gathered through interviews and desk research. 

Whenever  possible,  economic,  social  and  environmental  impacts  were  assessed 
quantitatively. Because of the wide scope of the PLD, the costs and benefits generated by 
this Directive are also extremely vast, we outline approximate quantitative estimates for 
the  main  quantifiable  benefits  (compensation  pay-outs  to  victims)  and  main  costs 
(namely, product liability insurance costs; and legal costs). 

Data needed for the analysis has been obtained from multiple sources, chosen as reliable 
as possible253. Relevant limitations of data generated important challenges in the 
quantification of costs and benefits. Challenges encountered: 

 

Insufficient information and data are currently available on likely future trends for 
all product groups to translate these into a full quantitative analysis.  

  A general lack of granular information on the economic and social impacts of the 

PLD as it currently stands. 

  Uncertainty  as  to  whether  technological  innovation  and  digitalisation  will 

increase the number of product liability legal cases. 

  Data on the number of affected economic operators in the value chain is difficult 

to generate. 

  The  costs  of  strict  product  liability  insurance  premium  borne  by  economic 

operators can vary significantly. 

Thus, it was not feasible to conduct a comprehensive quantification of costs and benefits 
for both the baseline scenario and different policy options. 

250 Evaluation of Product Liability Directive, SWD(2018)157. 
251 EY, Technopolis, VVA (2018), Study accompanying Evaluation of Product Liability Directive. 
252 CSES with Wavestone, CSIL (2022), Impact assessment study on the revision of Product Liability Directive. 
253 See Annex 4  

61 

 
  
 
 
                                                      
62 

 
 
 
Annex 2: Stakeholder consultation  

1.  CONSULTATION STRATEGY  

The objectives of the consultation were to collect evidence and views from a broad range 
of  stakeholders,  on  the  identified  problems  and  the  potential  solutions  concerning  the 
PLD.  The  activities  included  a  12-week  dedicated  public  consultation  concluded  in 
January  2022,  two  Stakeholder  Workshops  held  on  23  June  and  13  December  2021,  a 
workshop  with  Member  States  held  in  1  February  2022  and  feedback  collected  in 
response of the Commission’s inception impact assessment. Also, as part of the impact 
assessment  study,  an  external  contractor  organised  interviews  with  80  relevant 
stakeholders  and  an  online  targeted  consultation  between  July  and  November  2021. 
Consulted stakeholders included EU and national consumer associations and civil society 
organisations;  industry  associations;  economic  operators;  insurance  associations;  legal 
firms; academic experts; citizens; and national authorities. The only stakeholder category 
it was not possible to reach was fulfilment service providers. Feedback from SMEs was 
also fairly limited, despite disseminating the targeted and public consultations to the EU 
SME  associations  network  and  through  the  Enterprise  Europe  Network254,  but  the 
feedback did not diverge particularly from the views of business respondents overall. 

2. 

INCEPTION IMPACT ASSESSMENT (IIA) 

The  Inception  Impact  Assessment  for  this  initiative  was  launched  in  2021,  with  a 
feedback  period  running  from  30  June  to  28  July  2021.  There  were  a  total  of  34 
responses,  of  which  11  from  business  associations,  11  from  company/business 
organisations,  6  from  non-governmental  organisations,  2  from  EU  citizens,  2  from 
consumer  organisations,  and  1  each  from  academic/research  institution  and  public 
authority. Responses from industry revealed different interpretations of the scope of the 
PLD, particularly in respect of the coverage of software within the definition of product. 
It  was  widely  acknowledged  that  some  such  notions  required  careful  clarification,  but 
industry respondents were skeptical of any fundamental revision, urging limited revision 
or guidelines. Industries also stressed that refurbishers should be considered as producers 
given  the  fact  that  they  alter  existing  products  making  them  de  facto  new  products.  In 
addition, there was almost unanimous opposition among industry groups to harmonising 
the entitlement to compensation for non-material damages under the PLD.  

3.  STAKEHOLDER WORKSHOPS 

  The  Stakeholder  Workshop  on  23  June  2021  brought  together  approximately  60 
representatives  of  EU-level  consumer,  patient,  business  and  industry  organisations, 
legal practitioners, legal academics and Member State authorities. The objective of the 
workshop  was  to  present  the  state  of  play  on  the  impact  assessment  work  and  to 
discuss ways to adapt the PLD to the digital age and circular economy and to address 
obstacles  to  obtaining  compensation  under  the  PLD.  Consumer  and  patient  groups 
considered the identified problems to be significant and a revision of the PLD needed. 
Specific  concerns  were,  for  instance,  raised  on  the  10-year  time  limit,  considered  as 
too  short  for  some  pharmaceutical  harm,  since  adverse  effects  might  manifest 

254 13 SMEs (businesses) and two SME associations (European Digital SME Alliance and Allied for 
Startups) responded to the public consultation. 

63 

 
                                                      
themselves  many  years  after  treatment.  Conversely,  business  stakeholders  that  took 
the floor tended to be more skeptical of the need for legislative change, and called for 
legal  uncertainty  to  be  addressed  through  guidelines.  Experts’  views,  for  instance, 
differed on whether the problem could be addressed with a flexible horizontal solution 
or  whether  some  products  should  be  subject 
to  differentiated  rules  (e.g. 
pharmaceuticals, AI or IoT). 

  The Stakeholder Workshop on 13 December 2021 brought together mostly the same 
stakeholders. The purpose of the workshop was to inform stakeholders of the impact 
assessment  work  and  get  feedback  on  the  policy  options  under  consideration.  In 
December,  similar  reflections  to  the  previous  June's  session  were  highlighted. 
Consumer  and  patient  representatives  further  stressed  that  harmonising  the  use  of 
presumptions  would  not  be  adequate  to  assist  consumers  and  that  a  reversal  of  the 
burden  of  proof  was  required,  particularly  for  complex  products.  One  French 
association representing victims of pharmaceutical harm called for the requirement to 
prove  a  defect  to  be  dropped  in  cases  of  pharmaceutical  harm  and  noted  that 
presumptions would not help reduce the cost of technical expertise.  

  The  Member  State  Workshop  on  1  February  2022  brought  together  Member  State 
ministries responsible for  the PLD. Only seven  Member States expressed views. All 
were in favour of bringing software within the scope of the PLD, although views were 
not  precise  on  what  types  of  software  to  include.  There  was  general  agreement  that 
fundamental  rights  risks  should  not  be  addressed  in  the  PLD,  that  those  who 
substantially modify products should be treated as producers and that any changes to 
make  authorised  representatives  or  fulfilment  service  providers  liable  for  defect 
products should take into account the Market Surveillance Regulation and the ongoing 
negotiations  on  the  General  Product  Safety  Regulation.  Views  were  mixed  on  the 
options to reduce obstacles to getting compensation: two  large Member States urged 
for caution when considering the burden of proof, whereas two small Member States 
called  for  a  reversal  of  the  burden  of  proof  in  some  cases.  More  Member  States 
favoured removing the EUR 500 threshold and extending the 10-year liability period 
than keeping them as they are. The Commission also presented the initial results of the 
public consultation launched between October 2021 and January 2022.  

4.  PUBLIC CONSULTATION 

The  consultation  was  open  during  12  weeks  between  18  October  2021  and  10  January 
2022, via the EU Survey online system in 24 EU languages, and received 291 answers. A 
total  of  65  position  papers  were  attached  by  stakeholders  to  the  consultation.  An 
additional seven position papers were received by email. 

4.1.  Respondents by Stakeholder category 

A  total  of  291  individuals  and  organisations  from  all  over  the  EU  Member  States  and 
non-EU countries took part in the consultation.  

64 

 
 
I am giving my contribution as: (n-291)

1%

5%

3%2%

6%

42%

3%

Academic/research institution
Business association
Company/business organisation
Consumer organisation
EU citizen
Non-EU citizen
Non-governmental organisation (NGO)
Other
Public authority
Trade union

21%

17%

The most common type of respondent was individual EU citizens, which accounted for 
41.9% of responses (122). This was followed in second and third place by business and 
industry  associations  (60  responses)  and  individual  companies/businesses  respectively 
(50  responses).  The  next  most  frequent  type  of  respondent  were  Non-Governmental 
Organisations  (NGOs), 
including  victims’  associations,  16;  Academics/research 
institutions, 15; and Consumer Organisations, 10. In addition, 9 of respondents declared 
listed  ‘Other’  as  their  category,  while  other  respondents  included  public  authorities  (5 
responses)  and  trade  unions  (3  responses).  Only  one  Non-EU  citizen  gave  his/her 
contribution to the consultation. 

The  combined  response  from  industry  and  business  associations  and  from  individual 
enterprises  meant  that  industry  accounted  for  110  of  the  total  291  responses  (37.8%). 
However,  considering  the  organisational  responses,  whereas  industry  and  business 
associations  accounted  for  60  responses,  those  representing  the  interests  of  consumers 
and  injured  parties,  i.e.  NGOs  (which  included  access  to  justice  and  victims’  rights 
associations) and consumer associations accounted for 26 responses.  

4.2. 

 Respondents by country of origin 

Approximately 93.5% of all responses came from EU Member States, which is equal to 
272 respondents. The largest group of respondents came from Germany which accounted 
for more than a third of  all responses (108, or 37.1%), with  respondents  from Belgium 
and France in second and third place, with 46 (or 15,8%) and 36 (or 12,4%) respondents, 
respectively. Other Member States that provided a reasonable share of respondents were 
Italy  (14  or  4.8%  of  the  total),  followed  by  Austria  (12  or  4.1%),  Netherlands  (9,  or 
3.1%), Finland (8 or 2.7%), Poland (8 or 2.7%) and Spain (7 or 2.4%). 19 respondents 
(or  6.5%)  came  from  non-EU  countries,  which  included  8  respondents  from  the  US 
(2.7%), 4 from the UK (1.4%) and 2 from Canada (0.7%).  

65 

 
 
 
4.3.  The Directive and the problems this initiative aims to address 

As  regards  questions  1  to  7  of  Section  I  of  the  questionnaire,  128  out  291  respondents 
(thus 44%) replied to have detailed knowledge of the Directive, its objectives, rules and 
application.  

Among individual members of the public, 50 out of 133 replied to have suffered damage 
due  to  a  defective  product,  of  which  44%  (or  22)  reporting  to  have  suffered  personal 
injury  or  death  and  another  42%  (or  21)  property  damage.  In  particular,  62%  of 
respondents  who  suffered  damaged  reported  defection  related  to  “Vehicles;  Machinery 
and  mechanical  appliances  or  parts  thereof;  Electrical  equipment;  Digital  consumer 
products”,  while  the  remaining  38%  report  to  have  suffered  a  damage  because  of 
Pharmaceutical  products  (16  out  of  19  of  these  replies  concerned  one  specific 
pharmaceutical  product  in  one  specific  country).  Out  of  the  50  respondents,  15  replied 
that they had sought compensation.  

4.4.  Adapting the Directive to the digital age and circular economy 

  Intangible items: software and digital services 

This section of the consultation focused on the need to adapt the Directive to the digital 
age  and,  in  particular,  on  the  role  that  digital  content  such  as  software,  algorithms  and 
data  should  play  in  the  safe  functioning  of  many  products.  Respondents  were  asked  to 
agree  or  disagree  with  a  list  of  statements,  proposing  simplified  answer  options  for 
individual members of the public. 

Replies by all respondents except members of the public: 

Do you agree or disagree that consumers should get compensation under the Directive if 
the following intangible items are defective and cause physical/property damage? (n-
155)

Software that controls how a product operates (e.g. a car’s engine control 
system, a robot’s operating system)

Software embedded in a tangible product at the moment the tangible product is
placed on the market

Software upgrades and updates (e.g. to deliver new functionalities or fix a
security flaw)

Digital services that control how a product operates (e.g. cloud-based service for
operating smart thermostat)

Software made available separately via download for use on a tangible product
(e.g. domestic robot) that has already been placed on the market

Bespoke software (e.g. software customised to control the production line in a
factory)

Data capable of influencing how a product operates (e.g. training data for an
autonomous vehicle)

Software that provides only guidance or advice to an end user (e.g. software
that interprets medical imaging and provides diagnoses)

Software that is used on a device but does not drive the device (e.g. a gaming
app on a computer or other device)

43%

42%

36%

33%

32%

31%

35%

36%

4%

5%

3%

5%

4%

1%

10%

12%

30%

8%

12%

5%

9%

22%

24%

11%

11%

12%

10%

10%

14%

8%

11%

25%

5%

14%

10%

15%

27%

18%

10%

16%

17%

12%

22%

20%

19%

10%

19%

14%

16%

22%

10%

21%

14%

13%

Data that comprises only information (e.g. a digital map, a menu)

14%

13%

9%

27%

21%

16%

Software that provides immediate decision-triggering information (e.g. blood
glucose meter)

12%

30%

11%

15%

12%

20%

Strongly agree

Agree

Neutral

Disagree

Strongly disagree

No opinion

66 

 
 
All respondents (excluding members of the public), mainly agree that consumers should 
get  compensation under the Directive when intangible products are defective and cause 
physical/property  damage.  In  particular  in  the  case  of:  software  that  controls  how  a 
product works (78% or 122 out of 155)255; software upgrades and updates (66% or 102 
out of 154)256; software supplied separately to use on a product (56% or 87 out of 155) 
257; digital services that controls how a product work (55% or 85 out of 154)258. Fewer 
than half were in favour of including data or information per se.  

The analysis of the position papers showed that, when responding whether software and 
other  intangible  items  should  be  included  in  the  scope  of  the  Directive,  chambers  of 
commerce,  big  software  companies,  and  industry  representatives  mostly  supported  the 
position  of  keeping  digital  content  out  of  the  scope  of  the  PLD.  Some  stakeholders 
insisted that such inclusion would fail to take into account the specific characteristics of 
software  and  AI  systems259;  some  that  it  would  harm  innovation  and  prevent 
development260;  some  that  any  possible  damage  would  not  in  any  case  undermine 
people’s health or property261.  

On  the  contrary,  consumer  and  labour  organizations,  academic  institutions,  and  some 
business  associations262  were  more  inclined  to  prefer  a  revision  of  the  Directive  that 
would also encompass intangible items in its scope.  

Also,  big  digital  industries263  and  some  actors  mostly  representing  the  interests  of 
producers  or  industries264  were  skeptical  of  the  need  for  a  legislative  revision  of  the 
Directive,  preferring  to  leave  the  subject  unchanged.  Among  those  companies  and 
business associations, some expressed a preference to develop guidelines at the European 
level  for  interpreting  the  current  rules.  Furthermore,  some  stakeholders265  stressed  how 
the general product safety and liability rules should remain technologically neutral. Case-
law can adequately address the identified challenges, such as complexity or opacity, and 
it is only in individual cases that special rules for specific products or uses in particularly 
dangerous areas may be necessary266.  

Replies by members of the public: 

255 Out of 78%, 57% (or 70) were business organisations while 44% (or 52) were non-business respondents. 
256 Out of 66%, 25% (or 39) were business respondents and 75% (or 115) were non-business respondents. 
257 Out of 56%, 43% (or 37) were business respondents while 57% (or 50) were non-business respondents. 
258 Out of 55%, 39% (or 33) were business respondents and 61% (or 52) were non-business respondents. 
259 Avast Software and American Chamber of Commerce in Europe. 
260 Software & Information Industry Association (SIIA). 
261 Siemens. 
262 German Medical Technology Association; European Association of Automotive suppliers; European Federation of 
Pharmaceutical Industries and Associations; EuroSmart. 
263 Bitkom; Bosch; BVMed; Google; Siemens; Siemens Healthineers. 
264 American Chamber of Commerce; CCIA Europe; Czech Confederation of Industry; GSMA. 
265 American Chamber of Commerce; Austrian Federal Economic Chamber; Google; ZVEI (Electrical Industry)  
266 ZVEI (Electrical Industry). 

67 

 
                                                      
Do you agree or disagree that consumers should get compensation under the 
Directive if the following intangible items are defective and cause physical /property 
damage? (n-122)

Software that controls how the product operates (e.g. a car’s engine 
control system, a robot’s operating system)

Software embedded in a tangible product at the moment the
tangible product is placed on the market

Digital services that control how the product operates (e.g. cloud-
based service for operating smart thermostat)

Software upgrades and updates (e.g. to deliver new functionalities
or fix a security flaw)

Software made available separately via download for use on a
tangible product (e.g. domestic robot) that has already been…

Software that is used on a device but does not drive the device (e.g.
a gaming app on a computer or other device)

88%

84%

79%

76%

1%

9%

2%

1%

12%

2%

2%

2%

14%

4%

2%

1%

21%

2%

1%

66%

22%

6%

3%
2%

46%

24%

14%

8%

4%3%

Strongly agree

Agree

Neutral

Disagree

Strongly disagree

No opinion

Members of the public show even stronger agreement, with 90% replying that consumers 
should get compensation if damaged by defective software or digital services that control 
how a product works and software upgrades/updates. 

  Online marketplaces and products coming from outside the EU 

Nowadays, online marketplaces enable consumers to buy products from outside the EU 
without  there  being  an  importer.  Around  64%  of  all  respondents  (or  179  out  of  280) 
agree  or  strongly  agree  that  the  Directive  needs  to  ensure  consumer  protection  if 
defective products cause damage bought  through online marketplaces where there is no 
EU-based  producer  or  importer.267  While  non-business  respondents  accounted  for  83% 
(or 148 out of 179), business respondents represented only 17% (or 31). 

In contrast, there was greater disagreement among respondents (45% (or 126 out of 280) 
either disagreed or disagreed strongly) on whether the PLD needs to be adapted to ensure 
consumer  protection  if  damage  is  caused  by  defective  products  bought  through  online 
marketplaces where there is no EU-based producer or importer, while only 29% (or 81) 
were favourable. 

  New risks and new kinds of damage 

Respondents were asked to agree or disagree with a set of statements to better understand 
their  position  concerning  new  risks  and  kinds  of  damages  that  the  digital  technologies 
might bring.  

  70%  of  respondents  (or  196  out  of  280)  agree  or  strongly  agree  that  producers 
should  be  liable  for  failing  to  provide  security  updates.  At  a  disaggregated 
level,  notable  differences  were  noticed  between  the  positions  of  business  and 
consumers.  While  only  31%  of  business  associations  and  industries  agreed  or 

267  Ahead  of  the  question,  we  provided  some  information  on  the  current  legislative  framework  plus  on  the  new 
proposal  for  a  Digital  Services  Act.  However,  because  of  the  complexity  of  the  issue,  there  is  the  possibility  that 
replied where not fully informed and can thus be biased.  

68 

 
 
                                                      
strongly  agreed  with  the  statement,  93%  of  consumer  associations,  NGOs  and 
citizens agreed or strongly agreed. 

  60% (or 168) agree or strongly agree that producers should be liable for damage 
to  data.  There  were  significant  variations  in  the  perspectives  of  businesses  and 
consumers,  with  only  18%  of  business  and  industry-focused  stakeholders 
agreeing  or  strongly  agreeing,  compared  to  87% of  consumer  representative 
associations and citizens. 

  59% (or 165) that producers should be liable for data protection infringements. 
There  was  a  significant  difference  in  viewpoints  between  business  and 
consumers. Whereas only  18% of businesses (individual  producers and industry 
associations)  agreed  or  strongly  agreed,  86% of  consumer  stakeholders  and 
individuals agreed or strongly agreed. 

  Only around 50% of respondents agree or strongly agree that the Directive should 

cover new risks and kinds of damages that the digital technologies might bring. 

  Adapting the Directive to the circular economy 

In the  context  of  circular economy  business  models,  changes to  products  after they  are 
placed  on  the  market  are  increasingly  common.  Respondents  were  asked  to  agree  or 
disagree  on  a  set  of  statements  to  better  understand  who  should  be  strictly  liable  when 
repaired, refurbished or remanufactured products were defective and caused damage. 

Do you agree or disagree with the following statements? (n-275)

The manufacturer of a defective spare part added to a
product (e.g. to a washing machine) during a repair should
be strictly liable for damage caused by that spare part

Companies that refurbish a product (e.g. restoring
functionality of a used smartphone) and place it back on the
market should be strictly liable for defects causing damage

Companies that remanufacture a product (e.g. restoring
vehicle components to original as-new condition) and place
it back on the market should be strictly liable for defects
causing damage

44%

32%

10%

7%

1%

7%

24%

36%

17%

13%

3%

7%

29%

41%

14%

10%

2%

6%

Strongly agree

Agree

Neutral

Disagree

Strongly disagree

No opinion

Over  60%  of  all  respondents  (or  164  out  of  273)  agree  or  strongly  agree  that  the 
Directive  should  also  cover  defective  refurbished  or  remanufactured  products  and 
defective spare parts that cause damage. 

When asked if companies that refurbish a product and place it back on the market should 
be  strictly  liable  for  defects  causing  damage,  individual  citizens  and  consumer 
association  were  more  inclined  to  strongly  agree  with  strict  liability  being  applied  to 
refurbishers, remanufacturers and the producers of defective spare parts being added to a 
product  during  repairs.  In  contrast,  businesses  were  significantly  more  likely  to  either 
disagreeing or having no opinion on this.  

69 

 
 
It can be concluded that there was wide support overall for making changes to update the 
PLD with respect to the circular economy, and to integrate economic operators such as 
repairers,  refurbishers  and  remanufacture,  but  with  variations  in  the  extent  of  support 
between  different  types  of  stakeholders  with  businesses  being  tendentially  more 
sceptical. 

Business  Europe, France Assureurs and the French Business Confederation (Medef), in 
their position papers, supported the concept of "substantial modification," in which case 
the economic operator making the modification assumes responsibility for the safety of 
the  product  or  part  of  a  product  as  new  risks  may  arise.  These  stakeholders  also 
emphasized the importance of better defining "substantial modification" in the Directive. 
Business  Europe  further  noted  the  importance  of  ensuring  that  such  definition  would 
comply with  the Machinery Regulation, the Artificial  Intelligence Act,  and the General 
Product Safety Regulation. 

More  generally,  regarding  the  issues  of  extending  the  definition  of  a  producer,  some 
industry  stakeholders  in  the  stakeholder  consultations  were  against  the  possibility  of 
extending  it  with  respect  to  economic  actors  relevant  to  the  circular  economy  (e.g. 
refurbishers, remanufacturers), on the basis that they perceived the existing Directive as 
generally  working  well  as  it  stands  (e.g.  ORGALIM).  However,  other  industry 
associations  (industry  associations  representing  refurbishers  and  remanufacturers,  and 
CLEPA,  the  association  representing  automotive  components  suppliers)  supported  the 
principle  that  all  economic  operators  who  derive  an  economic  benefit  from  production 
should  assume  their  fair  share  of  responsibility,  liability  and  risks,  on  a  proportionate 
basis.  

Circular economy  associations and individual producers were in  favour  of updating the 
PLD  to  reflect  the  important  role  played  by  circular  economy  economic  operators  in 
some  industry  sectors  (e.g.  medical  devices).  Moreover,  it  was  pointed  out  that  in  the 
case of circular products, when damage is  incurred due to  refurbished medical  devices, 
the framework already sets provisions stipulating that manufacturer’s responsibilities are 
to be assumed by a person in charge of reprocessing a device, liability being one of those 
responsibilities under the MDR/IVDR. This allows for the identification of a responsible 
party  and  seek  redress  in  case  of  damage  (e.g.  mentioned  by  COCIC  medical  devices 
industry association and individual producers such as Siemens Healthineers). The need to 
ensure  alignment  in  the  PLD  as  a  horizontal  supporting  piece  of  legislation  was 
emphasised. 

  Policy options for adapting the Directive to the digital and circular economy 

the 

legislative  change, 

Regarding 
respondents  have  opposite  views,  with 
academic/research  institutions,  consumer  organisations,  NGOs  and  four  out  of  five 
government  ministries  supporting  it  while  business  associations  and  company/business 
organisation  opposing  it.  Among  the  government  ministries,  Austria,  Estonia,  Finland 
and Czech Republic support the legislative change, while Bulgaria is against it.  

Overall, 56% (or 94 out of 168) of respondents (excluding EU and Non-EU citizens) are 
in favour of legislative change. Out of this: 

o  62% (or 58) are in favour of treating digital content/software as a product in 

its own right;  

70 

 
o  38% (or 36) are in favour of only covering digital content as a component of a 

tangible product. 

Among private respondents, 75% (or 93 out of 123) replied that the EU should revise the 
Directive to address the challenges posed by the digital and circular economy. 

4.5.  Reducing obstacles to making claims and getting compensation 

The Evaluation of the Directive found that in some cases consumers faced or could face 
significant  difficulties  in  claiming  and  getting  compensation  for  damage  caused  by 
defective products. 

  Reducing obstacles to getting compensation 

Respondents  point  to  difficulties  in  proving  defectiveness  and  causality  in  the  event  of 
damage due to the technical complexity of certain products. In particular, they pointed to 
moderate, large and very large difficulties in case of: AI-enabled products (77% or 206 
out of 268), technically complex products (77% or 206 out of 268), IoT products (72% or 
193 out of 268) and pharmaceuticals (65% or 175 out of 270). Consumer organizations, 
non-governmental  organizations,  and  citizens  were  all  in  agreement  when  it  came  to 
emphasizing such challenges, with 95%, on average, pointing to moderate, large, or very 
large difficulties  for  each  of  these  items.  Business  organizations  and  industries,  on  the 
other  hand,  were 
identify  such  a  problem,  with  38%,  on 
average, acknowledging such challenges in demonstrating defectiveness and causality in 
the event of damage caused by the aforementioned products. 

likely 

less 

to 

The  digital  security  industry  (Eurosmart)  has  argued,  in  its  position  paper,  that  the 
Directive  should  be  aligned  with  new  form  of  damages  such  as  loss  of  data,  while 
software developers, given their role in terms of security and safety, should be considered 
as  producers.  According  to  the  game  developer  federation  (EGDF),  potential  loss  or 
damages compensated by a price decrease should be only limited to any economic loss. 

The vast majority268 of digital industries and business associations representing industry 
interests,  who  contributed  position  papers,  expressed  strong  opposition  to  harmonising 
compensation also in the case the use of technology cause an immaterial damage. On the 
contrary,  an  American  digital  company  (ACM)  and  other  actors  representing  an 
academic  institution  and  consumer  associations269  advocated  for  the  inclusion  of 
immaterial  harm  among  the  damages  covered  by  the  revised  Directive.  The  Austrian 
Chamber  of  Labour  further  stated  that  all  enterprises  participating  in  the  value  chain 
should be held jointly and severally liable, and suggested that affected people be assigned 
to a "single point of contact". 

The  German  Federal  Government  argued  that  immaterial  damage  should  be  left  to 
Member  States,  while  it  would  be  important,  when  revising  the  Directive,  to  consider 
damage to digital property, such as loss of data that results in economic loss. BVMed, on 
the other hand, supports the argument that data breaches or loss are already sufficiently 

268  Austrian  Federal  Economic  Chamber;  Business  Europe;  BVMed  (German  Medical  Technology  Association); 
EFPIA  (European  Federation  of  Pharmaceutical  Industries  and  Associations);  EUROCHAMBRES;  French  Business 
Confederation;  Google;  GSMA  (interest  of  the  mobile  operators  worldwide);  Siemens;  Siemens  Healthineers;  ZVEI 
(German Electro and Digital Industry Association). And also, the European Law Institute. 
269 ADAPTA; BEUC; The Future Society; Verbraucherzentrale Bundesverband. 

71 

 
                                                      
covered  by  Article  82  of  the  General  Data  Protection  Regulation  (GDPR)  and  that 
environmental damages is be governed by special environmental laws.  

  The development risk defence (DRD) 

Respondents  with  detailed  knowledge  of  the  PLD  (excluding  members  of  the  public) 
were consulted on the possibility for producers to use the development risk defence with 
the following results: 

When should producers be able to use the ‘development risk defence’? (n-113)

The defence should not be available for any AI products

18%

10%

11%

15%

40%

6%

The defence should not be available for AI products that
continue to learn and adapt while in operation

The defence should not be available for products designed to
be influenced by other interconnected products or services
(e.g. complex IoT systems)

24%

15%

5%

17%

28%

11%

14%

19%

6%

21%

35%

5%

The defence should be removed

11%

8%

8%

21%

47%

5%

The defence should remain available without any change

46%

10%

5%

14%

22%

3%

Strongly agree

Agree

Neutral

Disagree

Strongly disagree

No opinion

On the possibility of removing DRD from the Directive, overall 51% (or 57 out of 112) 
of respondents disagreed or strongly disagreed and among those, the vast majority were 
business and industries. The position papers revealed why industry was generally in favor 
of maintaining the development risk defence. For example, Insurance Europe argued that 
removing existing defence mechanisms would deter technological innovation and hinder 
economic development, as they are needed to help EU producers remain competitive in 
the  international  market.  Similarly,  the  European  Pharmaceutical  Industry  Association 
(EFPIA) determined that development risk defence is critical in ensuring that producers 
are not penalized for factors beyond their control, especially in fast-paced technological 
changes  and  innovation  markets  with  accelerated  renewal  cycles  and  frequent  product 
upgrades. Removing the development risk defence would "put unreasonable obligations 
on producers to constantly inspect, validate, and approve future product versions."  

Regarding the possibility of keeping the DRD unchanged, this was supported by industry 
but not by consumers or their representative associations. Overall, 56% (or 63 out of 113) 
of respondents expressed there should be no change. Out of this 56%, the vast majority of 
respondents were business or industries while consumer associations, NGOs and citizens 
strongly favoured the revision of the DRD.  

Of  the  possible  changes  suggested  in  the  questionnaire,  the  one  that  received  most 
support (39% of respondents (or 44 out of 112) agreed or strongly agreed) was denying 
the defence for AI products that continue to learn and adapt while in operation. However, 
it  is  important  to  flag  that  this  question  was  only  asked  to  respondents  with  a  detailed 
knowledge  of  the  PLD,  58%  of  which  were  from  business  associations  and/or 
company/business organisations.  

72 

 
 
  Making claims 

Finally,  respondents  were  asked  for  their  opinion  on  whether  the  following  features  of 
the Directive create obstacles to consumers making compensation claims: 

To what extent do the following features of the Directive create obstacles to 
consumers making compensation claims? (n-274)

Consumers can claim compensation only for damage to
property intended and used for private purposes

Consumers can claim compensation only for damage to
property worth more than EUR 500

19%

11%

15%

14%

27%

14%

20%

16%

19%

13%

23%

10%

Consumers have to start legal proceedings within 3 years of
becoming aware of the damage

14%

10%

13%

20%

35%

8%

Producers are released from liability for property damage
10 years after placing the product on the market

10%

14%

19%

20%

27%

10%

Producers are released from liability for death/personal
injury 10 years after placing the product on the market

19%

13%

19%

15%

24%

10%

To a very large extent

To a large extent

To a small extent

Not at all

To a moderate extent

Don't know/no answer

Overall, 55% (or 147 out of 269) of respondents indicated that the EUR 500 thresholds 
for  damage  to  property  creates  obstacles  to  consumers  making  compensation  claims  to 
either a moderate, large or very large extent. While non-business respondents accounted 
for  89%  (or  131),  business  stakeholders  represented  the  remaining  11%  (or  19). 
Furthermore,  51%  (or  140  out  of  274)  of  respondents  indicated  that  the  10  years-time 
limit  for  death/personal  injury  creates  obstacles  to  consumers  making  compensation 
claims  to  either  a  moderate,  large  or  very  large  extent.  Out  of  this  51%,  89%  (or  125) 
were non-business respondents, while 11% (or 15) were business respondents.  

Concerning  the  possibility  of  removing  the  EUR  500  threshold,  industry  feedback  as 
evidenced by some of the position papers, was  mostly negative. One example included 
the  view  of  the  EFPIA  association,  which  found  there  was  still  a  need  to  maintain  the 
€500 minimum threshold for damage to launch a claim, in order to avoid litigation in an 
excessive number of cases. However, BEUC in its position paper argued the threshold to 
be  inadequate  because  firstly,  it  excludes  a  large  range  of  immaterial  damages  such  as 
data destruction, and second, because the threshold is arbitrary.  

Concerning  the  potential  impediment  that  producers  are  released  from  liability  for 
property damage 10 years after placing a product on the market, this was not among the 
POs considered. While there are some items where personal injury may occur as a result 
of damage that is only identified later (e.g., latent health injuries), this is not the case for 
property  damage  where  the  harm  is  discovered  within  the  current  maximum  time 
requirement  of  10  years.  Only  10%  (or  27  out  of  274)  believed  this  was  a  major 
impediment, 14% (or 38) thought it was a major impediment, and 19% (or 53) thought it 
was a moderate impediment. This compared to 20% (or 55) who stated only to a limited 
extent and 27% (or 74) who stated not at all. The remaining 10% (or 27) stated that they 
do not know. 

73 

 
 
Finally,  when  it  came  to  the  potential  impediment  that  producers  are  relieved  from 
liability  10  years  after  placing  a  product  on  the  market,  only  10%  (or  26  out  of  271) 
thought  it  was  an  impediment  to  a  very  large  extent,  14%  %  (or  38)  thought  it  was  an 
impediment to a large extent, and 19% (or 52) thought it was a moderate impediment.270 
This  compares  to  20%  (or  55)  who  said  only  to  a  limited  extent  and  27%  (or  73)  who 
said not at all. The pharmaceutical industry EFPIA, in its position paper, was against to 
any  extension  of  the  10-year  timeframe  noting  that  it  might  lead  to  concerns  with  data 
processing  and  retention  methods.  The  Austrian  Chamber  of  Commerce,  on  the  other 
hand,  concluded  that  such  an  expansion  would  be  required  to  respond  to  technological 
growth, since the negative implications of some digital applications would only get more 
severe.  

  Policy  Options  for  reducing  obstacles  to  making  claims  and  getting 

compensation 

Respondents  showed  opposite  views  regarding  their  support  to  a  legislative  change  for 
reducing  obstacles  to  making  claims  and  getting  compensation.  On  one  side,  business 
associations,  company/business  organisations  as  well  as  the  Bulgarian  Ministry  for  the 
Economy  against  a  legislative  change,  while  academic/research  institutions,  consumer 
organisations,  NGOs  as  well  as  four  government  ministries  (Austria,  Estonia,  Finland 
and Czech Republic), supporting the legislative change.  

Overall, 53% (or 89 out of 168) of all respondents (except members of the public) were 
in  favour  of  legislative  change.  75%  (or  67)  of  respondents  (except  members  of  the 
public) agreed with alleviating the burden of proof for technically complex products by 
obliging  the  producer  to  disclose  technical  information  and  by  allowing  courts  to  infer 
that  a  product  is  defective  or  caused  the  damage  under  certain  circumstances  (they 
indicated it as being either their preferred option or second best option).  

Among members of the public, 78% (96 out of 123) replied that the EU should revise the 
Directive  to  address  obstacles  to  making  claims  and  getting  compensation  under  the 
Directive. 

5.  TARGETED CONSULTATION 

The  online  consultation  was  launched  by  the  external  consultant  on  30  July  2021  and 
closed on 8 November 2021, and received 93 responses. However, among those 93, only 
36  participants  completed  the  survey  fully,  while  other  57  partially  finalised  the 
questionnaire, only answering selected questions.  

Out  of  the  total  93  responses,  42  were  from  industry  association  (45%).  Among  the 
additional  stakeholder  groups  contributing  to  the  responses  (both  fully  complete  and 
incomplete), 14 were Consumer/Victims’ organisations (15%), 14 were Insurance firms 
(15%),  7  were  legal  firms  (8%),  6  were  academic  and  legal  researchers  (6%),  6 
considered  themselves  as  other  (6%),  3  were  economic  operators  (3%)  and  one  was 
national/notifying authority.  

270  Out  of  those  who  answered  that  it  was  an  impediment  to  a  very  large,  large  and  moderate  extend  business 
respondent accounted respectively only for 4% (or 1 out of 26), 5% (or 2 out of 38) and 19% (or 10 out of 52).On the 
other hand, business respondents accounted for 24% (or 13 out of 55) and 81% (or 59 out of 73) among those who said 
only to a limited extent and not at all. 

74 

 
                                                      
The  proposed  questionnaire  was  consistent  with  the  questions  presented  as  part  of  the 
European Commission's public consultation. Overall, despite the low rate of participation 
to this consultation, the examination of the findings revealed a high degree of agreement 
with the outcome of the public consultation. 

6. 

INTERVIEWS CONDUCTED BY EXTERNAL CONTRACTOR 

80 stakeholders were interviewed in the interview programme, considerably exceeding 
the  target  of  30-50  interviews.  Interviews  were  carried  out  with  relevant  stakeholders 
e.g.,  industry  associations  (representing  large  firms  and  SMEs),  producers,  consumer 
associations  and  /  victims’  associations,  product  liability  lawyers  (working  with  both 
victims  /  complainants  and  producers)  legal  academics,  and  product  liability  insurance 
specialists. 

Additional  interviews  were  carried  out  to  ensure  that  additional  stakeholder  categories 
were  consulted  (e.g.  online  marketplaces,  authorised  representatives).  This  also 
compensated for the somewhat disappointing response to the targeted survey. However, 
despite  making  contact,  it  was  not  possible  to  interview  Fulfilment  Service  Providers 
(FSPs).  

75 

 
 
 
Annex 3: Who is affected and how? 

1.  PRACTICAL IMPLICATIONS OF THE INITIATIVE 

The  preferred  policy  package  would  lead  to  policy  objectives  relating  to  strengthening 
regulatory certainty and enhancing consumer protection.  The PLD’s legislative revision 
would also contribute towards the achievement of other EU policy objectives in strategic 
areas for the future of the EU economy, such as the digital, circular and green economies. 

Impacts on producers 

The preferred POs will strengthen regulatory certainty for producers by extending strict 
liability to software and digital services necessary to make a product work and to safety-
relevant  software,  and  to  products  and  actors  in  the  circular  economy,  as  well  as  by 
including digital property within the concept of property damage. 

Producers  in  all  sectors  would  be  affected  by  a  more  common  approach  to  disclosure 
rules and presumptions across the EU-27. However, this would be mitigated by the fact 
that the great majority of MS already have disclosure rules  and mechanisms to ease the 
burden of proof in one form or another.  

In  terms  of  costs,  producers  with  liability  insurance  may  face  an  increase  in  liability 
insurance premiums. If they are found liable for harm caused by a defective product, the 
liability  insurance  would  cover  the  compensation  and  legal  costs.  Producers  without  a 
liability insurance would face direct compensation costs to victims (costs not considered 
in the analysis, see annex 4 for more details), and legal costs if the case goes to court. 

Impacts on insurance companies 

Insurance companies may have to bear higher compensation costs, but they would off-set 
that cost by marginally raising insurance premiums, leading to higher revenues. Their net 
income is therefore assumed to remain stable over time. 

Impacts on consumers 

The  main  impact  on  consumers  is  that  individuals  who  suffer  harm  will  receive 
compensation  pay-outs  if  they  prove  liability.  They  are  assumed  to  bear  legal  costs  if 
they  do  not  win  the  case.  In  particular,  the  preferred  POs  will  strengthen  consumer 
protection  in  cases  where  products  with  digital  elements  or  software  in  its  own  right 
causes harm, and it will contribute to cybersecurity protection by creating incentives for 
producers to provide security updates to keep products safe. It will ensure that damage or 
destruction of consumers’ digital property can also be compensated within the notion of 
property  damage.  Similarly,  they  will  strengthen  consumer  protection  in  cases  where 
substantially modified products  cause harm due to defects.  The preferred  POs will also 
broaden the pool of liable persons from whom to seek compensation, in particular in the 
case of third-country products. 

The  preferred  POs  will  strengthened  access  to  justice  for  consumers  experiencing 
property  damage  and  latent  health  injuries,  reducing  at  the  same  time  information 
asymmetries for consumers in respect of complex products. 

76 

 
The  preferred  POs  will  finally  ease  of  the  burden  of  proof  for  consumers  if  there  are 
clearly grounds to infer that a product was defective. 

National authorities and judiciaries  

National  authorities  in  each  MS  responsible  for  the  PLD  would  need  to  ensure  timely 
transposition of the revised PLD following its adoption at EU level. National authorities 
would also need to  

  Review national tort laws and procedural laws setting out disclosures rules in product 
liability (civil) cases to ensure that there are not too many obstacles to injured parties 
making requests for technical information disclosures (with a particular emphasis on 
complex products, but in some MS, the rules are generally problematic and outdated).  

  Review  national  legal  rules  on  presumptions  and  ensure  that  these  are  clear  in  the 
transposition  of  the  revised  PLD  into  national  implementing  legislation.  Also  in 
parallel review evidentiary requirements at national level in relation to the burden of 
proof  in  order  to  ensure  that  clarifications  regarding  the  circumstances  in  which 
presumptions can be used under the PLD are reflected in national legislation (e.g. civil 
law codes, national tort laws in which the PLD has been transposed). 

Regarding national courts and judiciaries:  

  Ensure  that  national  courts  are  well-informed  and  trained  in  relation  to  the  specific 
circumstances in which the burden of proof may be alleviated (such as technically and 
technologically complex products), given that for most product defects, the burden of 
proof will continue to lie with the injured party). 

  This  would  overcome  a  seeming  reluctance  and  cautiousness  by  national  courts  that 

already allow presumptions to actually make use of them.  

2.  SUMMARY OF COSTS AND BENEFITS 

Description 

Improved well-being 
(Protection of injured 
persons) 

Harmonisation of rules for 
injured persons and 
businesses 

Higher liability insurance 
premiums  

I. Overview of Benefits (total for all provisions) – Preferred Option 

Amount 

Direct benefits 

Comments 

Total amount not quantifiable but benefits 
generated by measures affecting the digital and 
circular economy, compensable damage, burden 
of proof, restrictions on making claims, as well as 
by ensuring the presence of an EU-based liable 
person. 

Total amount not quantifiable but benefits 
generated by measures affecting the digital and 
circular economy, compensable damage, burden 
of proof, as well as by ensuring the presence of 
an EU-based liable person. 

Total amount not quantifiable but benefits to 
insurance companies generated by the different 
measures proposed in the policy options. 

Indirect benefits 

Consumers 

Producers and consumers 

Insurance companies 

Support to competitiveness 
in the single market (market 
efficiency) 

Total amount not quantifiable but benefits 
generated by measures affecting the digital and 
circular economy, compensable damage, as well 

Producers 

77 

 
as by ensuring the presence of an EU-based liable 
person. 

(1) Estimates are relative to the baseline for the preferred option as a whole (i.e. the impact of individual actions/obligations 
of the preferred option are aggregated together). 

78 

 
 
 
 
II. Overview of costs – Preferred option 

Citizens/Consumers  

Businesses 

Administrations 

One-off 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

Not 
relevant  

 [pay-outs to 
consumers/victims 
0.34 – 65.67 EUR 
million annually] 

Not 
relevant  

Not relevant 

Not 
relevant 

Not relevant  

Not 
relevant  

Not relevant 

Not 
relevant  

18.70 – 37.40 EUR 
million annually 

Not 
relevant 

Not relevant  

Not 
relevant 

Not 
relevant  

0.61 – 1.51 EUR 
million annually 
[assuming 
consumers will pay 
40% of legal costs] 

Not 
relevant 

0.92 – 2.26 EUR 
million annually 
[assuming 
producers will pay 
60% of legal costs]  

Increased 
litigation leading 
to higher costs of 
justice 
administration 

No other incremental costs for 
consumers would be 
generated by the preferred 
option, compared to the 
baseline scenario. 

Costs of 
familiarisa
tion with 
new 
provisions 

Not 
relevant 

Not relevant 

Costs related to the ‘one in, one out’ approach 

Given the low administrative costs, the ‘one in, one out’ approach is not applicable to this 
initiative 

Benefit: Consumer 
protection 
(compensation pay-
outs to 
consumers/victims) 

Indirect cost 
related to liability 
insurance  

Legal costs 

Other costs 

Action (a)  

Direct adjustment 
costs  

Total 

Indirect adjustment 
costs 

Administrative 
costs (for 
offsetting) 

(1) Estimates (gross values) to be provided with respect to the baseline; (2) costs are provided for each 
identifiable action/obligation of the preferred option otherwise for all retained options when no preferred 
option is specified. 

3.  RELEVANT SUSTAINABLE DEVELOPMENT GOALS 

III. Overview of relevant Sustainable Development Goals – Preferred Option(s) 
Relevant SDG 

Expected progress towards the Goal 

Comments 

SDG no. 3 – healthy lives 
and well being 

Promote safe products and compensate victims of 
harm, it will have positive social impacts on 
victims’ health and well-being 

SDG no. 9 – foster 
innovation 

Provide legal certainty for businesses to innovate  

SDG no. 12 – responsible 
consumption and production 

Make people responsible for product safety when 
they make substantial modifications 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 4: Analytical methods 

1.  DATA GAPS AND LIMITATIONS 

There is a lack of data on the number of injuries and deaths caused by defective products 
in  Europe  and  no  common  injury  database  with  meaningful  information  to  support 
product safety work is in force in the EU271. In the literature, it has been noted that while 
the  amount  of  information  available  and  potentially  of  use  for  product  safety  is 
considerable  in  some  EU  countries,  its  usability  at  EU  level  is  difficult  due  to  high 
fragmentation of the data sources, the diversity of data collection methods and increasing 
data  protection  concerns272.  This  was  confirmed  through  contacts  with  relevant 
stakeholders, who stated that the collection of data about unsafe products and defective 
products  in  future  could  be  useful  for  product  safety  policy,  market  surveillance  and 
enforcement purposes, but as such, no such data is currently being collected. 

Data  is  instead  collected  on  the  number  of  injuries  and  deaths  generally  through  the 
European Injury Database (EU-IDB). Whilst this database includes some data on injuries 
that  involved  products,  this  covers  all  types  of  accidents,  and  not  product  defects  (i.e. 
injuries caused by falling off a ladder, but not whether any injuries have been caused by 
the ladder proving to be a defective product as defined under the PLD).  

The  evaluation  of  the  General  Product  Safety  Directive273  conducted  on  behalf  of  the 
European Commission in 2021, making use of EuroSafe data, estimated product-related 
injuries  related  to  a  sub-set  of  product  groups  (not  coinciding  with  the  overall  PLD 
scope) to be about 11 million injuries each year on average. In addition, based on WHO 
data from the WHO Mortality Database274, the study estimates 8,632 fatalities per year. 
A significant limitation of this database is the impossibility of determining how many of 
these are due to defective products, which are the fatalities that should be looked at when 
assessing  costs  and  benefits  related  to  the  PLD.  Counting  all  product-related  injuries 
would  result  in  a  major overestimation  of  impacts.  On  the  other  hand,  these  figures  do 
not include, among others, pharmaceutical products or medical devices, which according 
to  the  2018  PLD  evaluation  are  among  the  most  relevant  products  in  terms  of  liability 
claims, nor food  and beverages, sectors also  covered under the Directive. The EU-IDB 
data is thus useful in demonstrating that the problem of injuries and accidents (including 
those  relating  to  products)  is  significant  in  the  EU  but  cannot  be  used  in  this  specific 
analysis.  

Finally,  there  is  no  data  available  concerning  damages  to  property  caused  by  defective 
products. 

Challenges in the quantification of costs and benefits 

  Relating  to  the  general  problem  of  reliable  baseline  data,  which  is  either  absent 
altogether or based on survey data from the 2018 evaluation, but not actual data 

271 Geiss, O. et al. (2016), Injury and accident data collection efforts in Europe in support of consumer product safety 
policy. 
272  Radovnikovic,  A.  et  al.  (2020),  Assessment  of  the  opportunities  for  increasing  the  availability  of  EU  data  on 
consumer product related injuries. 
273 Civic Consulting (2021), Study to support the preparation of an evaluation of the General Product Safety Directive 
as well as of an impact assessment on its potential revision. 
274 https://www.who.int/data/data-collection-tools/who-mortality-database 

80 

 
                                                      
(e.g. number of injuries and deaths due to defective products, number of out-of-
court cases falling under the PLD, % of firms with product liability insurance). 

 

Insufficient information and data are currently available on likely future trends in 
market  size  and  structure  for  all  product  groups  to  translate  these  into  a  full 
quantitative analysis.  

  A general lack of granular information on the economic and social impacts of the 
PLD  as  it  currently  stands.  Uncertainty  as  to  whether  technological  innovation 
and digitalisation will increase the number of product liability legal cases, as there 
have been very low numbers of legal cases to date relating to new technologies, 
software and digital elements. 

  Uncertainty  about  the impact  of the ongoing  revision of product safety  rules  on 
reducing the incidence of defective products and therefore reducing the number of 
product liability cases.  

  Uncertainty  about  the  impact  of  the  PLD’s  deterrent  effect  (which  encourages 
producers to place only safe products on the market) on reducing the incidence of 
defective products and therefore reducing the number of product liability cases.  

  Data on the number of affected economic operators in the value chain is difficult 
to generate, as the PLD covers all sectors and all product groups (although some 
policy  packages  and  measures  within  these  will  impact  some  sectors  more  than 
others). 

  The  costs  for  strict  liability  for  defective  products  borne  by  economic  operators 
can vary significantly, as the number of compensation claims, the type of damage 
and the amount of compensation costs vary between sectors and different product 
types275. 

Thus, it was not feasible to conduct a comprehensive quantification of costs and benefits 
for  the  baseline  scenario  and  different  policy  options.  The  aim  of  the  assessment  is  to 
provide  ranges  of  the  magnitude  of  potential  impacts  generated  by  each  policy  option, 
rather than exact monetisation.  

The quantifications of costs and benefits are based on a number of assumptions made in 
the  study  supporting  this  IA  coming  from  stakeholder  feedback  and  evidence  gathered 
through  interviews  and  desk  research.  The  underlying  assumptions  were  also  presented 
to,  and  discussed  with,  a  wider  group  of  stakeholders  during  the  study-validation 
workshop and were not challenged. 

The following sections will present the main assumptions of the analysis. Further details 
and  comprehensive  explanations  and  justifications  can  be  found  in  the  study 
accompanying this IA276. 

275  For  instance,  whereas  damage  leading  to  personal  injury  caused  by  pharmaceuticals  and  medical  devices  could 
cause damage running into hundreds of thousands (or even millions) of EUR, given the longer-term impact on human 
health, ability to work etc. other products may cause minor injury and the claims be relatively small.  
276 CSES, Wavestone, CSIL (2022), Impact assessment study on the revision of Product Liability Directive 

81 

 
                                                      
2.  GROSS VALUE ADDED OF INDUSTRIES UNDER THE SCOPE OF THE PLD  

To approximate the size of the market covered within the scope of the PLD, data on the 
Gross Value Added (GVA) of a selection of industries has been extracted from Eurostat. 
Seventeen industries (based on the statistical classification of economic activities in the 
European Community – NACE Rev. 2) have been included in the query277. 

This  approximation  of  the  market  size  of  the  industries  under  the  PLD  scope  covers 
almost  the  entire  manufacturing  sector  as  defined  in  the  NACE  classification  (with  the 
single exclusion of C33 – Repair and installation of machinery and equipment). Based on 
this  approximation,  the  total  GVA  of  the  industries  under  the  PLD  scope  amounted  to 
over  2,250  billion  EUR  in  2019.  With  GVA  of  356  billion  EUR,  Computer 
programming, consultancy, and information service activities represent the industry with 
the  largest  gross  value  added  (16%  of  the  total)278  in  the  PLD  scope,  followed  by  the 
manufacture  of  food  products,  beverages  and  tobacco  products  (C10-C12),  with  251 
billion  EUR  (11%).  Manufacture  of  basic  pharmaceutical  products  and  pharmaceutical 
preparations (C21) accounts for 4%. Sometimes the NACE code classification does not 
correspond  wholly  to  PLD  scope,  for  instance,  software  falls  within  the  NACE  on 
computer  programming,  but  consultancy  and  information  services  is  outside  the  PLD’s 
scope. 

3.  NUMBER OF LEGAL CASES AND COMPENSATION CLAIMS  

According to the 2018 evaluation study, in the reporting period (2000-2016), there were 
only 798 court cases based on product liability rules in EU27, with 50-60 cases per year. 
Around 60 claims based on product liability rules per years in EU27 as a whole, covering 
deaths, personal injuries and property damages. The evaluation study acknowledged that 
this was likely an underestimate279. 

Data from selected Member States concerning the number of judgments on EU product 
liability law published in recent years confirm that the figure of product liability cases in 
the  EU27  per  year  is  considerably  higher  than  was  reported  in  the  evaluation  study. 
Considering  only  Austria,  France,  Germany,  the  Netherlands  and  Spain,  the  number  of 
cases per year between 2018 and 2021 has a range of between 28 and 47280. Moreover, 
only  the  legal  database  from  the  Netherlands  and  Spain  can  be  considered  to  be 
sufficiently  comprehensive,  as  they  also  include  many  cases  from  both  low-instance 
courts and high-instance courts, while legal databases from France, Germany and Austria 

277  Manufacture  of  food  products;  beverages  and  tobacco  products  (C10-C12);  Manufacture  of  textiles,  wearing 
apparel, leather and related products (C13-C15); Manufacture of  wood, paper, printing and  reproduction (C16-C18); 
Manufacture of coke and refined petroleum products (C19); Manufacture of chemicals and chemical products (C20); 
Manufacture  of  basic  pharmaceutical  products  and  pharmaceutical  preparations  (C21);  Manufacture  of  rubber  and 
plastic products (C22); Manufacture of other non-metallic mineral products (C23); Manufacture of basic metals (C24); 
Manufacture  of  fabricated  metal  products,  except  machinery  and  equipment  (C25);  Manufacture  of  computer, 
electronic  and  optical  products  (C26);  Manufacture  of  electrical  equipment  (C27);  Manufacture  of  machinery  and 
equipment n.e.c. (C28); Manufacture of motor vehicles, trailers and semi-trailers (C29); Manufacture of other transport 
equipment  (C30);  Manufacture  of  furniture;  other  manufacturing  (C31-C32);  Computer  programming,  consultancy, 
and information service activities (J62-J63). 
278 Consultancy and information service activities are included in sectors J62-J63. They cannot be disaggregated from 
value added of the total sector. 
279 Evaluation of Product Liability Directive, SWD(2018)157, p. 23.  
280 CSES, Wavestone, CSIL (2022). 

82 

 
                                                      
tend  to  reflect  only  higher-level  court  judgements281.  To  make  use  of  data  from  these 
three Member States, the results of the respective database extractions have been scaled 
up to estimate a total number of both low-instance and high-instance court cases282.  

To scale up the number of cases to the EU27 level, the population size has been used as a 
proxy. While it is recognised that there are also other relevant factors that influence the 
number  of  cases  in  each  country  (such  as  differences  in  national  legal  systems,  the 
national  transposition  of  the  Directive,  and  the  availability  of  alternative  routes  to 
compensation  in  national  tort  law283),  population  size  is  a  variable  that  has  an  indirect 
influence  on  the  number  of  cases.  Moreover,  cross-checking  the  data  provided  in  the 
2018 evaluation reveals that, in aggregated terms, population size is a relatively reliable 
proxy.  

The corresponding annual number of court cases at EU27 level can then be estimated 
in the range between 209 and 452284. Despite the considerable differences in legal and 
dispute  culture  and  court  systems  across  EU27  Member  States,  this  range  seems 
consistent with the upwards trend observed in the 2018 evaluation. 

For  the  purpose  of  cost  quantification,  independent  experts  considered  20%  of  annual 
legal cases under the PLD to be related to deaths; 40% related to personal injuries; 40% 
related to property damage. Whilst it was not possible to obtain disaggregated data based 
on  the  2018  evaluation,  this  has  been  estimated  based  on  desk  research  and  interview 
feedback285.  

The  evaluation  study  also  found  that,  for  the  2000-2016  period,  most  liability  claims 
were  settled  out  of  court,  with  46%  settled  in  direct  negotiation,  32%  in  court,  15% 
through  alternative  dispute  settlement  mechanisms  and  a  residual  7%  solved  through 
other means, such as the insurance of the responsible party286. In other words, court cases 
were  assumed  to  represent  only  one  third  of  the  total  compensation  claims  based  on 
product liability rules.  

The  IA  study  checked  this  assumption  with  industry  associations  and  product  liability 
lawyers, however, and found that there may be as many as 6-7 times the number of cases 
settled out-of-court compared with cases that actually go to court.287 This is because it is 
very costly to  go through a court case, and from a producer perspective,  as the PLD is 
based on strict liability, there is a high risk they could lose the case given they are liable 
regardless  of  fault.  The  number  of  compensation  claims  ending  up  in  a  court  case 
depends on national legal systems and the existence of alternative mechanisms to reach a 
settlement, namely through direct contact between producers and claimants and the role 
of Alternative Dispute Resolution (ADR). For instance, in France, there are more than 80 
ADRs  nationally  (only  some  of  which  may  deal  with  defective  products),  and  it  is 
common  to  resolve  claims  through  ADRs.  In  Ireland,  there  were  many  claims  for 

281 The Austrian database is very selective, listing mainly cases from the Supreme Court; the German database is rather 
selective, with mostly cases from higher courts; the French database is very selective, with mainly cases from the Cour 
de Cassation (the highest court) or courts of appeal. 
282  Independent  experts  considered  that  high  instance  court  cases  in  France,  Germany  and  Austria  likely  represent 
around 10% of the total number of court cases (CSES, Wavestone, CSIL (2022). 
283 For example, in Germany it is more common not to use the PLD but to rely on tort law. 
284 Extrapolation based on the number of inhabitants per country. 
285 CSES, Wavestone, CSIL (2022). 
286 Evaluation of Product Liability Directive, SWD(2018)157, p. 13. 
287 CSES, Wavestone, CSIL (2022). 

83 

 
                                                      
compensation involving hip replacement defects and an ADR  was specifically set up to 
address these. 

Moreover,  it  is  difficult  to  get  any  information  on  cases  resolved  directly  between 
producers’ lawyers and claimants and/ or their legal representatives as the agreements are 
confidential,  subject  to  non-disclosure  agreements and the producer wants to  avoid  any 
reputational damage. 

Assuming that out-of-court proceedings overall account  for six to  seven times as  many 
claims cases as in-court proceedings, it is estimated a range between 1,255 and 3,165 for 
cases settled out of court per year across the EU-27. 

The  number  of  cases  based  on  product  liability  rules  will  likely  be  impacted  by  the 
ongoing  product  safety-related  legislative  proposals,  even  though  it  is  not  possible  to 
accurately  quantify  these  impacts.  Ongoing  product  safety-related  legislative  proposals 
will in part suppress a future rise in accidents caused by novel risks, but might also, to a 
small  extent,  reduce  accidents  in  real  terms  by  improving  the  safety  of  products,  inter 
alia,  by  addressing  products  from  outside  the  EU,  reinforcing  market  surveillance  and 
reducing exposure to, say, chemicals in toys etc.  

The  expected  modest  reduction  in  product-related  harm  as  a  result  of  ongoing  product 
safety-related  legislative  proposals  has  been  factored  into  the  baseline  scenario,  in 
particular by making conservative assumptions for the lower range of both in-court and 
out-of-court cases.  

Finally,  the  2018  evaluation  study  found  that  60%  (476  out  of  798)  of  claims  for 
defective products were successful for injured parties from 2000 to 2016 and that there 
was  no  particular  difference  in  the  level  of  success  of  injured  parties  if  the  case  was 
settled  in  court  rather  than  out  of  court.  The  other  cases  were  decided  in  favour  of 
producers.  The  analysis  considered  a  success  rate  of  60%  for  the  baseline  scenario, 
differently affected by the policy options analysed (as further explained in section 4.1 of 
this annex).  

4.  COST AND BENEFIT ANALYSIS 

The  cost-benefit  assessment  follows  the  guidance  for  the  categorisation  of  costs  in  the 
Better Regulation guidelines, which identify direct, indirect, enforcement/legal costs. 

There  are  no  relevant  administrative  costs  under  the  PLD  in  contrast  to  much  product 
safety  legislation,  as  there  are  no  specific  obligations  or  information  requirements  for 
economic operators. There will be one-off familiarisation costs for economic operators 
not previously covered as producers under the PLD, which are minimal. 

Policy options mainly involve a re-attribution of costs between stakeholders, either from 
victims to the producers whose defective products caused the costs, or between economic 
operators by enlarging the notion of “producer”.  

The cost-benefit analysis mainly considers the effects of the proposed policy options on 
the following actors:  

84 

 
  The main impact  on consumers is  that individuals who suffer harm will receive 
compensation  pay-outs  if  they  prove  liability.  They  are  assumed  to  bear  legal 
costs if they do not win the case. 

 

In  terms  of  costs,  producers  with  liability  insurance  may  face  an  increase  in 
liability  insurance  premiums.  If  they  are  found  liable  for  harm  caused  by  a 
defective product, the liability insurance would cover the compensation and legal 
costs.  Producers  without  a  liability  insurance  would  face  direct  compensation 
costs to victims (costs not considered in the analysis), and legal costs if the case 
goes to court. 

 

Insurance companies may have to bear higher compensation costs, but they would 
off-set  that  cost  by  marginally  raising  insurance  premiums,  leading  to  higher 
revenues. Their net income is therefore assumed to remain stable over time. 

4.1.  ASSESSMENT  OF  THE  BENEFITS  ATTRIBUTABLE  TO  STRICT  LIABILITY  UNDER  THE 

PLD 

The  main  measurable  benefit  for  consumers  is  the  compensation  they  receive  if  they 
successfully  prove  the  liability  of  the  producer.  Regardless  the  number  of  claims,  only 
successful  cases  are  considered  for  the  assessment  of  victims’  compensation.  This 
success  rate  is  assumed  to  be  60%  for  in-court  and  out-of-court  cases  based  on  the 
findings of the Evaluation.  

The  number  of  successful  cases,  multiplied  by  the  average  compensation  pay-outs, 
will provide ranges for the estimates on the economic benefits for consumers. 

The  measures  proposed  by  each  policy  option  might  affect  the  number  of  successful 
cases, i.e. cases for which consumers are recognised as victims and receive compensation 
pay-outs for the damage suffered, by affecting:  

 

 

the  actual  number  of  cases  brought  under  the  PLD.  All  the  policy  options 
considered  are  assumed  to  increase  that  number  compared  to  the  baseline 
scenario288.  

the success rate of claims. Only policy options 2a and 2b are assumed to increase 
the success rate of claims compared to the baseline scenario289.  

The  independent  experts  considered  that  the  measures  of  the  different  policy  options 
would have no effects on the average compensation pay-outs, since the ranges used for 
the baseline scenario were already extremely wide:  

  The  limited  data  available  from  selected  countries  suggests  a  range  between 

20,000 and 1,500,000 EUR for compensation paid for deaths.  

288 Any change in the number of cases brought under the PLD will affect both the calculations for the economic pay-
outs for victims, as well as the legal costs faced by the party losing the case. 
289 The success rate will only affect the calculation of the victims’ pay-outs with no effects on the calculation of the 
total legal costs: for a given number of cases, the success rate indicates the likelihood of success for victims to win the 
case 

85 

 
 
                                                      
  The  compensation  paid  for  personal  injuries  varies  from  1,500  to  700,000 

EUR290.  

  Finally, property damage is estimated in a range between 5,000-25,000 EUR. 

Evidence collected291 through stakeholder consultation for the IA study 2021-22 confirms 
the  2018  evaluation’s  finding  that  the  financial  size  of  compensation  pay-outs  varies 
widely depending on the Member State, the product and sector, the nature and extent of 
the damage, as well as on the circumstances of individual cases.  

The  table  below  summarises  the  assumptions  used  to  calculate  the  impacts  for  each 
policy  option.  In  particular,  for  each  policy  options,  the  table  shows  the  estimated 
increase in the number of successful legal cases (in court and out of court) for the three 
types of damage covered under the PLD: death, personal injury, property damage292.  

Table 9: Changes in variables for the calculation of the benefit under the different policy options, 
compared to baseline 

Number of legal cases 
under the PLD in the 
EU27 per year, related to 
deaths 

Number of legal cases 
under the PLD in the 
EU27 per year, related to 
personal injuries 

Number of legal cases under 
the PLD in the EU27 per 
year, related to damages to 
property (>500 EUR)  

 1% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 1% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 1% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 1.5% increase for 

 1.5% increase for 

 1.5% increase for 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  
 1% increase for expanding 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  
 1% increase for expanding 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  
 1% increase for expanding 

liability to Authorised 
Representatives 

liability to Authorised 
Representatives 

liability to Authorised 
Representatives 

 1% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 1.5% increase for 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  

 1.5% increase for 

expanding liability to 
Authorised 
Representatives and 
Fulfilment Service 
Providers 

 2% for software developers, 
i.e. 10% of industry under 
PLD scope 

 1.5% increase for 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  

 1.5% increase for 

expanding liability to 
Authorised Representatives 
and Fulfilment Service 
Providers 

 2% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 1.5% increase for 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope 

 15% increase for 

manufacturers of electronic 
devices, i.e. 16% of industry 
under PLD scope 

 2% increase for expanding 

liability to Authorised 
Representatives and 
Fulfilment Service Providers 

PO1a 

PO1b 

PO1c 

 1% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 4% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

 4% increase for software 
developers, i.e. 10% of 
industry under PLD scope 

290 This very wide range reflects the fact that the nature of the injury varies widely, whether this causes a temporary 
physical injury or more long-lasting damage leading to permanent disability. 
291 Data was collected from Germany, Greece and Baltic States. Fort further details, please refer to: CSES, Wavestone, 
CSIL  (2022),  Impact  assessment  study  on  the  revision  of  Product  Liability  Directive  for  justifications  over  the 
assumptions used to calculate compensation costs, product liability costs and legal costs. 
292  For  justifications  on  the  assumptions  summarised  in  the  table,  please  refer  to  CSES,  Wavestone,  CSIL  (2022), 
Impact assessment study on the revision of Product Liability Directive. 

86 

 
 
                                                      
 1.5% increase for 

 1.5% increase for 

 1.5% increase for 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope 

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  

remanufacturers and 
refurbishers, i.e. 2% of 
industry under PLD scope  

 1.5% increase for 

 15% increase for 

 25% increase for 

expanding liability to 
Authorised 
Representatives and 
Fulfilment Service 
Providers 

manufacturers of electronic 
devices, i.e. 16% of 
industry under PLD scope 

manufacturers of electronic 
devices, i.e. 16% of industry 
under PLD scope 

 1.5% increase for 

 2% increase for expanding 

expanding liability to 
Authorised Representatives 
and Fulfilment Service 
Providers 

liability to Authorised 
Representatives and 
Fulfilment Service Providers 

 7% increase for easing the 

 7% increase for easing the 

burden of proof for 
complex products, i.e. 
manufacturers of 
electronic devices 
counting for 16% of 
industry under PLD scope 
+ pharmaceutical products 
and pharmaceutical 
preparations counting for 
4% of industry under PLD 
scope 

burden of proof for 
complex products, i.e. 
manufacturers of electronic 
devices counting for 16% 
of industry under PLD 
scope + pharmaceutical 
products and 
pharmaceutical 
preparations counting for 
4% of industry under PLD 
scope 

 2% increase for reducing 
restrictions in making 
claims 

 2% increase for reducing 
restrictions in making 
claims 

 12% increase for reversing 
the burden of proof for all 
products 

 12% increase for reversing 
the burden of proof for all 
products 

 5% increase for further 
reducing restrictions in 
making claims 

 5% increase for further 
reducing restrictions in 
making claims 

 7% increase for easing the 

burden of proof for complex 
products, i.e. manufacturers of 
electronic devices counting for 
16% of industry under PLD 
scope + pharmaceutical 
products and pharmaceutical 
preparations counting for 4% 
of industry under PLD scope 

  2% increase for reducing 

restrictions in making claims 

 12% increase for reversing the 

burden of proof for all 
products 

 5% increase for further 
reducing restrictions in 
making claims 

PO2a 

PO2b 

Source: CSES, Wavestone, CSIL (2022) 

The  increase  number  of  successful  cases  multiplied  by  the  average  compensation  pay-
outs  provide  the  incremental  benefits,  i.e.  increase  in  the  compensation  pay-outs  to 
victims, compared to the baseline scenario. Results are shown in the following table293.  

Table 10: Annual benefit of consumers’ protection (increased compensation) under the different policy 
packages (EUR million) 

Incremental benefit compared to 
baseline (low) 
0.07 

Incremental benefit compared to 
baseline (high) 
14.47  

0.15 

0.17 

0.20 

0.99 

22.13  

47.70  

43.54  

217.70  

PO1a 

PO1b 

PO1c 

PO2a 

PO2b 

Compensation paid to victims, thus benefits for consumers, increases with the increase of 
the level of intervention of the policy options. 

293 Since the baseline scenario is defined using ranges for the annual number of court cases at EU27 level, the table 
below also presents the incremental benefits using low and high values. 

87 

 
 
 
                                                      
4.2.  ASSESSMENT OF THE COSTS ATTRIBUTABLE TO STRICT LIABILITY UNDER THE PLD 

The  main  quantified  indirect  costs  generated  by  the  PLD  are  liability  insurance  costs 
attributable  to  strict  liability  under  the  PLD  as  well  as  legal  costs  that  producers  and 
consumers have to bear in the case of a product liability claim, whether in-court or out-
of-court. 

Compensation costs are not assessed as costs for producers, because adding them to the 
increased cost of liability insurance premiums would have led to double counting.  

The large majority of economic operators are covered by liability insurance294 and would 
therefore  not  bear direct compensation costs vis-à-vis  victims in  the event of a product 
liability  claim,  whether  in-court  or  out-of-court,  since  this  would  be  covered  by  their 
insurers.  They  could,  however,  face  a  marginal  increase  in  their  insurance  premiums. 
That  is  why  direct  compensations  costs  for  companies  are  not  included  in  the  cost 
estimates, while insurance premium increases are included. 

Economic  operators  without  a  liability  insurance  would,  on  the  other  hand,  face  direct 
compensation costs, which could be included in the cost calculations. However, there is 
no  information  or  data  to  make  robust  estimates  on  which  economic  operators  have 
insurance and which do not. The 2018 evaluation stated that around 80% of producers in 
the entire manufacturing sector have product liability insurance, but provides no further 
information or breakdowns on the remaining 20%.  

Assuming this 20% to be equally spread across all manufacturing sectors would entail a 
high risk of overestimating costs: interviews with the insurance industry suggest that this 
20%  represents  mainly  producers  of  lower-risk  products:  products,  in  other  words,  that 
are not usually the subject of compensation claims (e.g. clothing, for which only 11 cases 
were reported between 2000 and 2016).  

In contrast, the producers of the sorts of products for which the scope is being extended 
(e.g.  autonomous  vehicles,  robots)  or  for  which  the  burden  of  proof  is  currently 
challenging  (e.g.  complex  products  like  pharmaceuticals  or  Internet  of  Things  devices) 
are more likely to have liability insurance at present, since there is a higher risk of those 
products  being  subject  to  compensation  claims.  Thus  adding  direct  compensation  pay-
outs to liability insurance premiums could generate double counting.  

It  is  acknowledged  that  not  assessing  compensation  costs  as  a  cost  for  producers  may 
lead to a small underestimation of costs. 

4.2.1.  PRODUCT LIABILITY INSURANCE COSTS  

The  liability  insurance  costs  are  defined  as  insurance  premiums  related  specifically  to 
strict  liability.  Usually  economic  operators  have  general  product  liability  insurance 
policies, covering a number of different types of liability, not only strictly liability (e.g. 
contractual, extra-contractual, including fault-based liability where national rules exist). 

294 Evaluation of Product Liability Directive, SWD(2018)157: 79% of producers. 

88 

 
  
                                                      
Therefore,  only  a  percentage  of  total  product  liability  insurance  costs  (estimated  at  1-
2%295) relates to strict liability.  

The  total  amount  of  liability  insurance  costs  in  the  EU27  in  2021  was  in  the  range 
between 333 million EUR – 667 million EUR. Thus, applying the 1-2%, it was estimated 
that the direct premiums of general product liability insurance in the EU27 in 2021 was 
to be 37.94 billion USD, or 33.38 billion EUR (adopting a conversion rate of 1 USD = 
0.88 EUR)296. 

The measures proposed in the policy options will affect the  direct premiums of general 
product  liability  insurance  in  the  EU27  in  2021,  depending  on  the  magnitude  of  the 
measure and the market  share of the  economic operators potentially affected.  The table 
below  summarises  the  assumptions  used  to  calculate  these  impacts297,  providing  the 
percentage increase in the direct premiums of general product liability insurance for the 
relevant producers. 

Table 11: Estimated changes in variables for the calculation of the insurance cost under the different 
policy packages, compared to baseline 

PO1A 

PO1B 

PO1C 

PO2A 

PO2B 

 3% increase for 

 10% increase for 

 15% increase for 

software 
developers, i.e. 
10% of industry 
under PLD scope 

 3% increase for 
remanufacturers 
and refurbishers, 
i.e. 2% of 
industry under 
PLD scope  

 15% increase for 

Authorised 
Representatives, 
i.e. 0.01% of 
industry under 
PLD scope 

software 
developers, i.e. 
10% of industry 
under PLD scope 

 3% increase for 
remanufacturers 
and refurbishers, 
i.e. 2% of 
industry under 
PLD scope  

 1.5% increase for 
manufacturers of 
electronic 
devices, i.e. 16% 
of industry under 
PLD scope 

software 
developers, i.e. 
10% of industry 
under PLD scope 

 3% increase for 
remanufacturers 
and refurbishers, 
i.e. 2% of 
industry under 
PLD scope  

 2.5% increase for 
manufacturers of 
electronic 
devices, i.e. 16% 
of industry under 
PLD scope 

 15% increase for 

 15% increase for 

Authorised 
Representatives, 
i.e. 0.01% of 
industry under 
PLD scope 

 5% increase for 

Fulfilment 
Service Providers, 
i.e. 0.01% of 
industry under 
PLD scope 

Authorised 
Representatives, 
i.e. 0.01% of 
industry under 
PLD scope 
5% increase for 
Fulfilment Service 
Providers, i.e. 
0.01% of industry 
under PLD scope 

 7% increase for 
total insurance 
costs for 
reversing the 
burden of proof 
for all products 
 5% increase for 
total insurance 
costs for further 
reducing 
restrictions in 
making claims 

 4% increase for 
reversing the 
burden of proof 
for complex 
products 
producers, i.e. 
manufacturers of 
electronic devices 
counting for 16% 
of industry under 
PLD scope + 
pharmaceutical 
products and 
pharmaceutical 
preparations 
counting for 4% 
of industry under 
PLD scope 

 3.5% increase for 
total insurance 
costs for reducing 
restrictions in 
making claims 

295  Desk  research  based  on  data  collection  from  EU  and  national  insurance  associations.  Moreover,  in  the  2018 
evaluation  and  in  some  of  the  earlier  PLD  application  reports  between  1995  and  2018,  various  commentary  and 
percentage estimates as to the increase in product liability insurance costs since the Directive was adopted have been 
provided. See: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52000DC0893&from=GA  
296 Desk research based on data from SwissRe on general product liability insurance policies. 
297  For  justifications  on  the  assumptions  summarised  in  the  table,  please  refer  to  CSES,  Wavestone,  CSIL  (2022), 
Impact assessment study on the revision of Product Liability Directive. 

89 

 
                                                      
Source: CSES, Wavestone, CSIL (2022) 

Thus, direct premiums of general product liability insurance in the EU27 will be affected 
by the different measures proposed by each policy option. The table below summarises 
the  incremental  changes  compared  to  the  baseline  scenario,  providing  the  incremental 
costs using low and high values.  

Table 12: Annual insurance cost under the different policy packages (EUR million) 

Incremental costs compared to 
baseline (low)  

Incremental costs compared to 
baseline (high)  

PO1a 

PO1b 

PO1c 

PO2a 

PO2b 

1.21 

4.35 

6.55 

14.35 

41.73 

2.41 

8.69 

13.10 

28.71 

83.46 

4.2.2.  LEGAL COSTS  

The legal cost relates to the costs that producers and consumers have to bear in case of a 
product  liability  claim  (whether  out-of-court  or  through  a  judicial  proceeding).  In 
principle, in case of in-court settlement, the total legal cost consists of all costs related to 
judicial  proceedings  (lawyers’  fees,  bailiffs’  fees,  court  fees).  In  case  of  out-of-court 
settlement,  it  consists  of  lawyers’,  mediators’  and  arbitrators’  fees.  However,  due  to  a 
lack  of  data  and  the  fact  that  legal  costs  are  reported  to  be  the  main  cost  among  legal 
costs, the analysis focuses on legal fees only298. 

To estimate this cost in case of in-court settlement, the sum of judicial proceedings and 
out-of-court settlements is multiplied by the average lawyers’ fees.  

There is  considerable variance in  the  legal costs involving compensation claims falling 
under the PLD, depending on: (1) the product and its complexity299 (2) the circumstances 
of the case and (3) the  Member State concerned and the prevailing differences in legal 
costs (e.g. legal fees in central and Eastern Europe tend to be considerably below those in 
Western Europe). 

The data and information collected about legal costs for court proceeding shows a very 
wide range of costs from 500 to 40,000 EUR. The legal cost per out-of-court proceeding 
across Europe is estimated in the range of 500 to 25,000 EUR300. 

The  number  of  proceedings  and  lawyers’  fees  are  subject  respectively  to  the  following 
two  impacts  generated  by  the  policy  options:  i)  a  shift  from  other  grounds  of  liability 

298  Experts’  fees  are  not  included  under  legal  costs,  as  they  have  been  conceptualised  under  the  cost  linked  to  the 
burden of proof, not quantified. 
299  The  application  reports  under  the  PLD  illustrated  that  the  costs  for  legal  cases  for  pharmaceutical  products  and 
medical devices are highly complex and cost many times more than for most other products. 
300  CSES,  Wavestone,  CSIL  (2022),  Impact  assessment  study  on  the  revision  of  Product  Liability  Directive  for 
justifications over the assumptions used to calculate compensation costs, product liability costs and legal costs. 

90 

 
 
 
                                                      
(e.g. national fault-based liability) to the PLD; ii) less expensive cases (e.g. strict liability 
cases are expected to be shorter and cheaper, as fault does not have to be proven; also, 
presuming defectiveness in very complex cases is expected to speed up the procedure by 
putting the onus on the better informed party). 

It may also be noted that some policy options are expected to lead to  an increase in the 
number  of  legal  cases,  both  in  court  and  out  of  court  (e.g.  through  the  inclusion  of 
immaterial harm under the PLD coverage, or through reduced restrictions). 

The table below summarises the assumptions used to calculate these impacts301. 

Table 13: Changes generated by Policy Options in relation to legal cost 

Changes generated by Policy Option in relation to legal cost 

Less expensive cases 

Increase in the number of cases under the 
PLD 

PO1a 

 -2% cost reduction for software 

 1% increase in the number of legal cases 

developers and related consumers, 
i.e. 10% of industry under PLD 
scope 

for software developers and related 
consumers, i.e. 10% of industry under 
PLD scope 

 1% increase in the number of legal cases 
for expanding liability to Authorised 
Representatives 

PO1b 

 -4% cost reduction for software 

 1.8% increase in the number of legal 

developers and related consumers, 
i.e. 10% of industry under PLD 
scope 

cases for software developers and related 
consumers, i.e. 10% of industry under 
PLD scope 

 6% increase in the number of legal cases 
for manufacturers of electronic devices, 
i.e. 16% of industry under PLD scope 
 2% increase in the number of legal cases 
for expanding liability to Authorised 
Representatives and Fulfilment Service 
Providers 

PO1c 

 -6% cost reduction for software 

 3.4% increase in the number of legal 

developers and related consumers, 
i.e. 10% of industry under PLD 
scope 

cases for software developers and related 
consumers, i.e. 10% of industry under 
PLD scope 

 16% increase in the number of legal 
cases for manufacturers of electronic 
devices, i.e. 16% of industry under PLD 
scope 

 2% increase in the number of legal cases 
for expanding liability to Authorised 
Representatives and Fulfilment Service 
Providers 

PO2a 

 -10% cost reduction for easing the 

 5% increase in the number of legal cases 

burden of proof for complex 
products producers, i.e. 
manufacturers of electronic 

for easing the burden of proof for 
complex products producers, i.e. 
manufacturers of electronic devices 

301  For  justifications  on  the  assumptions  summarised  in  the  table,  please  refer  to  CSES,  Wavestone,  CSIL  (2022), 
Impact assessment study on the revision of Product Liability Directive. 

91 

 
 
 
 
                                                      
Changes generated by Policy Option in relation to legal cost 

Less expensive cases 

devices counting for 16% of 
industry under PLD scope + 
pharmaceutical products and 
pharmaceutical preparations 
counting for 4% of industry under 
PLD scope 

PO2b 

Increase in the number of cases under the 
PLD 
counting for 16% of industry under PLD 
scope + pharmaceutical products and 
pharmaceutical preparations counting for 
4% of industry under PLD scope 

 2% increase in the number of legal cases 
for all products for reducing restriction 
in making claims 

 10 % increase in the number of legal 

cases for easing the burden of proof for 
all products 

 5% increase in the number of legal cases 
for all products for reducing restriction 
in making claims 

Source: CSES, Wavestone, CSIL (2022) 

Total legal costs under the PLD differ according to the proposed measures in each of the 
policy  section.  The  table  below  summarises  the  incremental  changes  compared  to  the 
baseline scenario, providing the incremental costs using low and high values.  

Table 14: Annual legal costs compensation under the different policy packages (EUR million) 

Incremental cost compared to baseline 
(low estimate) 
0.41 

Incremental cost compared to 
baseline (high estimate) 
1.02  

1.12 

1.83 

0.41 

6.90  

2.75 

4.50  

1.02  

16.96  

PO1a 

PO1b 

PO1c 

PO2a 

PO2b 

The  following  summarised  the  quantified  benefits  and  costs  of  the  different  policy 
options.  

These  values  should  not  be  seen  as  a  comprehensive  quantification  of  the  costs  and 
benefits  for  each  of  the  policy  option  analysed  but  rather  they  aim  at  providing  the 
magnitude of the potential impacts generated by each policy option. 

Table 15: Costs & Benefits summary table (EUR million annual) 

Incremental benefits compared 
to baseline 

Incremental costs compared to baseline 

Incremental annual 
compensation paid to victims(*) 

Incremental annual product 
liability insurance costs  

Incremental annual legal 
costs 

Low end 

High end 

Low end 

High end 

Low end 

High end 

PO1a 

PO1b 

PO1c 

0.07 

0.15 

0.17 

14.47 

22.13 

47.70 

2.41 

8.69 

13.10 

0.41 

1.12 

1.83 

1.02 

2.75 

4.50 

1.21 

4.35 

6.55 

92 

 
 
 
 
 
 
 
 
Incremental benefits compared 
to baseline 

Incremental costs compared to baseline 

Incremental annual 
compensation paid to victims(*) 

Incremental annual product 
liability insurance costs  

Incremental annual legal 
costs 

Low end 

High end 

Low end 

High end 

Low end 

High end 

PO2a 

PO2b 

0.20 

0.99 

43.54 

217.70 

14.35 

41.73 

28.71 

83.46 

0.41 

6.90 

1.02 

16.96 

93 

 
 
 
 
 
 
 
 
 
Annex 5 – Matters to be clarified in the context of revising the 
Product Liability Directive 

There  are  a  number  of  matters  that  call  for  clarification  in  the  context  of  revising  the 
PLD, but which do not form part of the problem definition in the main report. 

Compensable damage: psychological damage as personal injury 

Section  2.2.1.1  “Liability  rules  not  adapted  for  products  in  the  digital  age”  includes 
discussion of what types of compensable damage should be covered by the PLD. In this 
context, there is evidence that new digital technologies can have a psychological impact 
on users, such as anxiety and loss of sleep302. Medically diagnosed psychological damage 
is generally accepted as falling under the concept of “personal injury”, while just stress or 
anxiety is not303, and this should be clarified in the revision.  

Compensable damage: damage to property intended or used for professional purposes 

The  PLD  provides  for  compensation  for  damage  to  property  intended  for  and  actually 
used for private purposes. In the public consultation conducted for the  2018 evaluation, 
83% of respondents stated that it was sometimes difficult to distinguish between private 
and  professional  use  of  property304.  This  is  all  the  more  so  in  the  context  of  modern 
working  practices  where  goods  like  home  office  equipment  or  computers  may  be  used 
both  for  private  and  professional  purposes.  This  distinction  should  be  clarified  in  the 
revision. 

Liability of providers of online marketplaces depending on role in supply chain 

Section 2.2.1.3 “No liable person under the PLD when consumer purchases product from 
a  3rd  country  directly”  concerns  situations  in  which  there  is  no  EU-based  producer  or 
importer from whom to seek compensation for harm caused by a defective product. Such 
products  are  typically  bought  via  an  online  marketplace,  the  provider  of  which 
intermediates the sale between the non-EU trader and the EU-consumer.  

Providers  of  online  marketplaces  are  subject  to  a  conditional  liability  exemption  under 
the eCommerce Directive and proposal for a Digital Services Act305, by virtue of being a 
provider of an online platform, which is a type of information society service. Providers 
of  online  marketplaces  are  therefore  not  liable  for  the  products  or  services  whose  sale 
they intermediate. Nonetheless, the provider cannot rely on the exemption from liability 

302 Dresp-Langley B. Children's Health in the Digital Age. Int J Environ Res Public Health. 2020 May 6;17(9):3240. 
doi: 10.3390/ijerph17093240. PMID: 32384728; PMCID: PMC7246471.  
303  Duncan  Fairgrieve,  Product  Liability,  3rd  edition,  p.  267;  Christiane  Wendehorst,  Study  on  Safety  and  Liability 
Related Aspects of Software, p. 80; Interview with Pan-European Organisation of Personal Injury Lawyers. 
304 EY, Technopolis, VVA (2018), Study accompanying Evaluation of Product Liability Directive, p. 33. 
305  Article  14(1) of  Directive  2000/31/EC  of  the  European Parliament  and  of  the  Council  of  8  June 2000 on  certain 
legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on 
electronic commerce’) and Article 5(1) of Proposal for a Regulation of the European Parliament and of the Council on 
a Single Market For Digital Services (Digital Services Act) and amending Directive 2000/31/EC 

94 

 
 
                                                      
if it was aware of facts or circumstances on the basis of which it should have realised that 
the products or services for sale in question were unlawful and, in the event of it being so 
aware,  failed  to  act  expeditiously  in  accordance  with  Article  14(1)(b)  of  Directive 
2000/31 and Article 5(1)(b) of the proposal for a Digital Services Act.  

In  addition  to  the  well-established  liability  exemptions,  the  proposal  for  a  Digital 
Services Act includes clarifications to the liability regime for consumer protection: 

 

the liability exemption does not apply when the content uploader acts under the 
authority or control of the service provider (Article 5(2)); 

  online marketplaces do not benefit from the liability exemption when they present 
products  to  consumers  in  a  way  that  confuses  them  as  to  whether  it  is  the 
marketplace or a third-party seller offering the products (Article 5(3)). 

These clarifications allow to enhance consumer protection, while stimulating innovation, 
and  ensuring  continuity  with  the  existing  case  law306,  which  has  given  the  sector  legal 
certainty and predictability. 

Since liability under the PLD is triggered by harm caused by the inherent defectiveness 
of a product and not by the actions or omissions of an economic operator (since liability 
is irrespective of fault), it is under national fault-based rules that consumers could seek 
compensation in cases where the liability exemption of providers of online marketplaces 
does not apply. 

However,  it  should  be  clarified  in  the  revision  of  the  PLD  that  a  provider  of  an  online 
marketplace  may  also  provide  services  other  than  intermediation  services  and  may 
thereby  play  a  role  in  the  supply  chain  for  a  given  product  that  would  attract  liability 
under the PLD:  

- 

- 

- 

If  a  provider  of  an  online  marketplace  manufacturers  a  product  or  attaches  its 
trademark to it, it is the producer and can be liable as such under the PLD; 
If  a  provider  of  an  online  marketplace  imports  a  product,  it  is  the  importer  and 
can be liable as such under the PLD; 
If a provider of an online marketplace itself sells the product, it is (in the language 
of  the  PLD)  the  “supplier”,  and  could  be  held  liable  unless  it  identifies  the 
producer. 

306 C-324/09, L’Oréal SA and Others v eBay International AG and Others. 

95 

 
 
                                                      
Annex 6: Viability of non-binding guidance 

Issuing  non-binding  guidance  was  discarded  as  a  policy  option  (see  section  5.3).  This 
annex assesses in more detail the extent to which non-binding guidance would be capable 
of achieving the specific objectives set for the revision of the PLD.  

  SO 1: Adapt PLD to reflect nature and risks of products in the digital age 

Discussions  in  the  Expert  Group  on  liability  and  new  technologies  (PLD  formation) 
about  how  the  current  text  of  the  PLD  should  be  interpreted  in  the  context  of  digital 
technologies were inconclusive. Members of the Expert Group argued variously that only 
software  physically  embedded  at  the  time  the  tangible  product  was  put  into  circulation 
was  covered,  but  not  any  subsequently  downloaded  software  (e.g.  updates/upgrades); 
some  insisted  that  software,  even  if  provided  separately  from  a  tangible  product,  was 
already  covered;  some  insisted  software  developers  themselves  currently  qualified  as 
producers; some argued the opposite. Since guidance would require broad consensus by 
stakeholders, it would only be possible to adopt a narrow interpretation: 

-  Guidance  could  confirm  that  product  manufacturers  are  liable  for  the  software 
they  embed  in  their  product  before  putting  it  into  circulation.  However,  this 
would not address the problem driver identified: that software can also be added 
to  products  after  they  are  put  into  circulation,  either  as  updates/upgrades  to 
existing software or as new software, and may be added outside of the control of 
the  product  manufacturer.  It  would  also  mean  that  software  manufacturers 
themselves would escape no-fault liability. Victims of harm caused by defective 
software  other  than  software  embedded  at  the  time  a  product  was  put  into 
circulation would have to prove the fault of the product or software manufacturer 
in  order  to  get  compensation.  These  unaddressed  problems  might  eventually  be 
resolved by an ECJ preliminary ruling, if a relevant case were referred to it. 

-  Guidance  could  confirm  that  a  cybersecurity  vulnerability  present  at  the  time  a 
product  is  put  into circulation  is  capable of being classed as a defect. However, 
this  would  not  address  the  problem  driver  identified:  that  cybersecurity 
vulnerabilities are dynamic in nature and can emerge after a product was put into 
circulation. 

-  Guidance would not be able to extend the types of compensable damages under 

the PLD. 

  SO 2: Adapt PLD to reflect nature of products in the circular economy 

The measures envisaged in this impact assessment in respect of the circular economy are 
limited. Guidance could provide some clarity by drawing an analogy with the concept of 
“substantial  modification”  in  the  area  of  product  safety  legislation.  The  Commission’s 

96 

 
 
 
 
“Blue  Guide”  on  the  implementation  of  EU  product  safety  legislation  says  that  an 
economic operator who makes important changes to or who overhauls a product should 
be  seen  as  putting  a  new  product  into  circulation  and  should  be  responsible  for  safety 
compliance307.  This  concept  of  “substantial  modification”  has  been  integrated  into 
legislation  and  legislative  proposals  in  recent  years308  and  the  Medical  Devices 
Regulation  explicitly  includes  economic  operators  who  fully  refurbish  devices  in  its 
definition of manufacturer309. There was no consensus in the Expert Group, however, on 
drawing this analogy, since the text of the PLD itself is silent on the notion of substantial 
modification.  Revision  of  the  PLD  itself  in  this  regard  would  provide  more  legal 
certainty. 

  SO  3:  Ensure  there  is  always  an  EU-based  liable  person  for  defective 

products bought in the EU  

Guidance  would  be  suitable  for  clarifying  that  online  marketplaces  are  to  be  treated  as 
producers,  importers  or  suppliers  when  they  fulfil  that  particular  role  in  respect  of  the 
product in question. Guidance could also confirm that  providers of online marketplaces 
cannot be liable under the PLD when they play a mere intermediary role. 

Since  the  PLD  only  considers  producers,  importers  and  suppliers  as  potentially  liable 
persons,  guidance  would  not  be  sufficient  to  make  new  economic  actors  (authorised 
representatives, fulfilment service providers) liable.  

  SO 4: Ease the burden of proof in the case of complex products and clarify 
liability  for  undiscoverable  defects,  while  ensuring  fair  balance  between 
producers and consumers  

Guidance  could  provide  a  useful  summary  of  ECJ  rulings  concerning  the  burden  of 
proof,  which  could  help  ensure  a  more  coherent  approach  to  the  issue  among  national 
courts. However, guidance would not be able to guarantee access to information in court 
that the claimant needs to prove liability, nor would it provide clarity on the conditions 
and limits of easing the burden of proof in the case of complex products. 

  SO  5:  Ease  restrictions  on  making  claims,  while  ensuring  fair  balance 

between producers and consumers  

It  would  not  be  possible  to  make  changes  to  the  EUR  500  threshold  or  time  limits 
through non-binding guidance. The problem would remain unresolved. 

307  Commission  Notice—  'The  ‘Blue  Guide’  on  the  implementation  of  EU  products  rules  2016',  2016/C  272/01, 
26.7.2016, p. 15 to 17. 
308 Proposal for a Regulation of the European Parliament and of the Council on machinery products, COM(2021) 202 
final, https://ec.europa.eu/docsroom/documents/45508; proposal for a Regulation on General Product Safety (GPSR), 
https://ec.europa.eu/info/sites/default/files/proposal_for_a_regulation_on_general_product_safety.pdf. 
309 Regulation (EU) 2017/745 of the European Parliament and of the Council on medical devices, Art. 2(1)(30). 

97 

 
 
 
 
                                                      
Annex 7: Further details of legal context 

Interplay of PLD with other liability regimes 

The interplay of the PLD with national fault-based liability rules is fully explained in the 
main body of the impact assessment. Here are additional details concerning other liability 
rules: 

Contractual liability: The Sale of Goods Act310 makes sellers liable to the consumer for 
lack  of  conformity.  The  Digital  Content  and  Services  Directive311  gives  consumers  the 
right  to  remedy,  i.e.  replacement,  repair  or  reimbursement,  when  digital  content  or  a 
digital  service  does  not  work  properly.  The  PLD  concerns  extra-contractual  liability  of 
producers  for  injuries/damage  caused  by  a  lack  of  safety  –  a  complementary  tool  to 
ensure consumer protection. However, these Directives have already been modernised to 
protect consumers’ contractual rights in the context of digital goods, which the PLD has 
not. 

Liability  for  infringements  of  data  protection  law:  The  General  Data  Protection 
Regulation  (GDPR)312  aims  to  give  people  more  control  over  their  personal  data  and 
makes  controllers  and  processors  liable  for  damage  caused  by  data  processing  which 
infringes the GDPR. Any person who has suffered material or non-material damage as a 
direct  result  of  an  infringement  of  the  GDPR  has  a  right  to  compensation  under  the 
GDPR. Product  manufacturers may be liable under the GDPR if they act as  controllers 
(i.e.  if  they  determine  the  purposes  and  means  of  the  processing  of  personal  data)  or 
processors (i.e. if they process  personal  data  on behalf of the controller). The GDPR is 
complementary  with  the  current  PLD,  which  provides  compensation  only  for  death, 
personal injury and damage to consumer property.  

Liability for environmental damage: The Environmental Liability Directive313 establishes 
a  framework  to  prevent  and  remedy  environmental  damage  based  on  the  polluter  pays 
principle. It deals with pure ecological damage such as damage to protected species and 
natural habitats as distinct from damage to privately owned property, which is covered by 
the PLD. 

1.1.1.  Interplay of PLD with other EU legislation 

Product safety framework 

EU  product  safety  legislation  aims  to  ensure  that  only  safe  products  are  placed  on  the 
internal market. Manufacturers (producers) are responsible for the safety of their product. 
All products placed on the internal market are subject to safety rules, set under either:  

310 Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods.  
311  Directive  (EU)  2019/770  on  certain  aspects  concerning  contracts  for  the  supply  of  digital  content  and  digital 
services. 
312 Regulation (EU) 2016/679 of the European Parliament and of the Council on the protection of natural persons with 
regard to the processing of personal data and on the free movement of such data (GDPR). 
313 Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability 
with regard to the prevention and remedying of environmental damage. 

98 

 
 
                                                      
  Sectoral  safety  legislation,  which  sets  EU-wide  essential  health  and  safety 
requirements that the products need to meet. This covers, for example, machinery, 
pharmaceutical  products,  toys,  electrical  and  electronic  goods,  radio  equipment, 
cosmetics, chemicals, medical devices, food and feed.  

  The  General  Product  Safety  Directive  (GPSD)314,  which  requires  all  consumer 
products  that  do  not  fall  under  sectoral  legislation  to  be  safe,  and  which  the 
Commission has proposed to replace with a regulation315.  

Safety  rules  are  enforced  by  market  surveillance  established  under  the  Market 
Surveillance  Regulation316  and  the  General  Product  Safety  Directive,  which  ensure 
consumer protection by stopping non-compliant products circulating or by bringing them 
into  compliance.  Product  safety  legislation  does  not  contain  specific  provisions  on 
liability  of  manufacturers,  but  make  reference  to  the  fact  that  the  PLD  applies  when  a 
defective  product  causes  damage.  Product  safety  and  product  liability  are  therefore 
complementary  mechanisms  for  achieving  a  functioning  single  market  for  goods  that 
ensures  high  levels  of  safety.  The  2018  Evaluation  concluded  that  the  PLD  was  fully 
coherent  with  the  product  safety  framework,  but  that  ongoing  coherence  needed  to  be 
assessed  in  light  of  plans  to  update  safety  legislation  to  meet  the  challenges  of  digital 
technologies317 - see section 1.2.4. 

Safety  and  Health  at  work:  a  series  of  Directives318  establish  rules  to  ensure  the  safety 
and  health  of  workers  in  the  context  of  using  work  equipment319,  as  well  as  against 
chemical  agents,  physical  hazards,  biological  agents,  as  well  as  other  risks.  These 
Directives concern obligations of employers to ensure safety but are without prejudice to 
the  PLD,  which  concerns  the  liability  of  producers  for  defects  inherent  to  the  products 
themselves. 

Cybersecurity: The Cybersecurity Act320 establishes a voluntary, EU-wide certification 
framework  for  digital  products,  services  and  processes, 
to  mitigate 
cybersecurity  risks.  In  addition,  the  recently  adopted  delegated  act321  under  the  Radio 
Equipment Directive322 will oblige manufacturers of IoT products to make their devices 
cybersecure  by  including  features  to  guarantee  the  protection  of  personal  data  and 
privacy. This  legislation is  relevant  to  the safety and security of products, but  does not 
regulate  the  liability  of  producers.  In  addition,  the  Commission  is  preparing  a  Cyber-

intended 

314 Council Directive 87/357/EEC and Directive 2001/95/EC of the European Parliament and of the Council 
315  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  General  Product  Safety  (GPSR), 
COM(2021)346 final. 
316 Regulation (EU) 2019/1020 on market surveillance  
317 European Commission. (2018). Evaluation of Council Directive 85/374/EEC of 25 July 1985 on the approximation 
of the laws, regulations and administrative provisions of the Member States concerning liability for defective, p. 49. 
318  European  directives  on  safety  and  health  at  work  |  Safety  and  health  at  work  EU-OSHA  (europa.eu)  European 
Framework Directive on Safety and Health at Work (Directive 89/391 EEC). 
319  Directive  2009/104/EC  of  the  European  Parliament  and  of  the  Council  of  16  September  2009  concerning  the 
minimum safety and health requirements for the use of work equipment by workers at work. 
320  Regulation  (EU)  2019/881  of  the  European  Parliament  and  of  the  Council  of  17  April  2019  on  ENISA  (the 
European  Union  Agency  for  Cybersecurity)  and  on  information  and  communications  technology  cybersecurity 
certification and repealing Regulation (EU) No 526/2013 (Cybersecurity Act) (Text with EEA relevance), OJ L 151, 
7.6.2019, pp. 15-69.  
321 Commission Delegated Regulation (EU) 2022/30 of 29 October 2021 supplementing Directive 2014/53/EU of the 
European  Parliament  and  of  the  Council  with  regard  to  the  application  of  the  essential  requirements  referred  to  in 
Article 3(3), points (d), (e) and (f), of that Directive 
322 Radio Equipment Directive 2014/53/EU, Article 3(3)(e) and Article 3(3)(f). 

99 

 
                                                      
resilience  Act323,  which  would  build  on  existing  rules  to  encourage  manufacturers  and 
software  developers  to  mitigate  cybersecurity  risks,  but  does  not  envisage  rules  on 
liability.  Under  the  current  PLD  a  product  that  causes  harm  due  to  a  cybersecurity 
vulnerability  can  be  found  defective,  but  only  if  the  vulnerability  was  present  at  the 
moment it was placed on the market.  

1.1.2.  Interplay with ongoing initiatives 

The  proposed  Machinery  Regulation324  and  proposed  General  Product  Safety 
Regulation325 (GPSR) aim, in their respective fields, to address the risks of digitalisation 
in  the  area  of  product  safety.  This  includes  safety  risks  posed  by  software  updates  and 
downloads, interconnected products and the evolving functionalities of products enabled 
with AI and other digital technologies. The concern that the PLD will become out of step 
with modernised product safety rules is addressed in the problem section. 

The  proposed  Digital  Services  Act326  (DSA)  sets  out  rules  for  online  intermediary 
services,  including  online  marketplaces.  The  DSA  imposes  obligations  on  online 
marketplaces  to  tackle  illegal  products  online,  such  as  collecting  information  on  the 
identity of traders using their services. The proposal for a GPSR also imposes obligations 
on  them  to  tackle  the  sale  of  unsafe  products  online.  While  online  marketplaces  are 
relevant  for product  safety, they  are covered by  a conditional liability exemption  under 
the  e-commerce  Directive327  and  the  DSA  when  they  play  a  mere  intermediary  role. 
When  a  provider  of  an  online  marketplace  does  not  provide  intermediary  services,  but 
plays  another  role  in  the  supply  chain,  such  as  producer  or  importer  of  a  product,  they 
can in principle be held liable under the PLD if the product is defective and causes harm.  

Circular  economy  action  plan/Sustainable  Products  policy  framework:  The  Circular 
Economy  Action  Plan  2020328  announced  a  sustainable  products  policy  framework 
intended  to  provide  high-quality,  functional  and  safe  products,  which  are  efficient  and 
affordable,  last  longer  and  are  designed  for  reuse,  repair,  remanufacturing  and  high-
quality  recycling.  The  Action  Plan  does  not  contemplate  measures  on  liability  for 
defective products.  

323 How a European Cyber Resilience Act will help protect Europe | European Commission (europa.eu). 
324 Proposal for a Regulation of the European Parliament and of the Council on machinery products,  
 COM(2021) 202 final. 
325  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  General  Product  Safety  (GPSR), 
COM(2021)346 final. 
326 Proposal for a Regulation of the European Parliament and of the Council on a Single Market For Digital Services 
(Digital Services Act) and amending Directive 2000/31/EC, COM(2020) 825 final. 
327  Directive  2000/31/EC  of  the  European Parliament  and  of  the  Council  of  8  June  2000  on  certain  legal  aspects  of 
information  society  services,  in  particular  electronic  commerce,  in  the  Internal  Market  ('Directive  on  electronic 
commerce'). 
328 Circular economy action plan, March 2020. 
https://ec.europa.eu/environment/strategy/circular-economy-action-plan_en. 

100 

 
 
 
                                                      
Annex 8: Products that may carry risks but are not defective 

The PLD provides a single set of rules for all types of products and regulates the liability 
of  producers  for  products  that  do  not  provide  the  level  of  safety  the  general  public  are 
entitled to expect (i.e. that are defective). Because the notion of defectiveness is linked to 
entitled expectations, it is very difficult to get compensation in cases where a victim of 
harm was informed of the risks involved in using a product beforehand – in such a case it 
is difficult to prove that a person is entitled to expect those risks not to materialise. This 
situation  particularly  arises  in  the  context  of  health  products,  like  pharmaceuticals  and 
medical  devices,  which  work  as  specified  on  the  information  leaflet,  but  nevertheless 
entail a risk of adverse reactions. 

Two  French  patient  associations329  have  argued  that  the  concept  of  defect  is 
fundamentally  unsuitable  for  pharmaceuticals,  and  that  producers  should  be  subject  to 
no-fault liability whenever their products cause harm, irrespective of defectiveness. The 
support study  for this  impact  assessment,  however, did  not  find further support for this 
viewpoint  among  stakeholders,  although  pharmaceuticals  were  certainly  identified  as  a 
product  whose  defectiveness  can  be  difficult  to  prove  due  to  complexity  –  this  issue is 
addressed  in  policy  options  2a  and  2b  in  the  main  report.  The  pharmaceutical  industry 
has  argued  that  unbalanced  liability  rules  would  hamper  innovation,  considering  the 
significant investment needed to bring a new pharmaceutical product to market330. They 
also  pointed  to  the  existing  obligations  on  pharmaceutical  companies  to  ensure,  report 
and  monitor  product  safety,  including  the  authorisation  requirement  of  those  products 
before they are placed on the market.   

Indeed,  the  EU  has  a  robust  legislative  framework  in  place  to  ensure  the  safety  of 
pharmaceutical products, which includes stringent requirements before a product can be 
placed  on  the  market  and  stringent  rules  on  monitoring  the  ongoing  safety  of  products 
once  on  the  market.  EU  law  requires  each  marketing  authorisation  holder,  national 
competent  authority  and  the  European  Medicines  Agency  (EMA)  to  operate  a 
pharmacovigilance system.  The overall EU pharmacovigilance system operates through 
cooperation  between  the  EU  Member  States,  EMA  and  the  European  Commission.  In 
this  context,  marketing  authorisation  holders  have  to  justify  market  withdrawals  and 
indicate whether they are based on safety grounds or not. Medicines regulators have the 
tools to withdraw medicinal products from the market in case the benefit/risk is no longer 
positive.  Furthermore,  the  EU  legislation  on  pharmaceuticals  sets  requirements  on 
information to patients and healthcare professionals.  

The  Pharmaceutical  Strategy  2020331  announced  a  review  of  pharmaceuticals 
legislation332  to  ensure  the  quality  and  safety  of  medicines,  while  boosting  the  sector’s 

329  Responses  to  public  consultation  and  to  inception  impact  assessment  of  France  Assos  Santé  and  Réseau  D.E.S. 
(Victimes du Valproate de sodium).  
330 On average USD 2,56 billion and 12-13 years: response to public consultation of EFPIA, European Federation of 
Pharmaceutical Industries and Associations. 
331 A pharmaceutical strategy for Europe (europa.eu).  
332 Revision of the EU general pharmaceuticals legislation (europa.eu).  

101 

 
 
                                                      
global  competitiveness.  It  also  emphasised  the  need  to  stimulate  innovation  in  areas  of 
unmet medical needs (e.g. neurodegenerative and rare diseases and paediatric cancers).  

It is important to note that when it comes to harm suffered due to pharmaceuticals that 
are not defective, all Member States cover basic losses through national health systems or 
social  security  schemes.  To  cover  further  losses,  some  Member  States  have  created 
insurance schemes for pharmaceuticals, in particular in Sweden, Finland and Norway333, 
under which victims of harm may get compensation if the pharmaceutical product caused 
the harm, without any need to prove fault or defectiveness. Almost half of Member States 
have  also  created  compensation  funds  for  harm  caused  specifically  by  vaccines, 
including  COVID-19  vaccines,  which  have  the  particular  characteristic  of  having  very 
high benefits for society, despite also causing grave harm to some individuals334.  

Since  the  PLD  constitutes  a  liability  regime  based  on  product  defects  and  not  an 
insurance scheme or compensation fund, these national measures fall outside of its scope 
of the PLD and are therefore compatible with it. 

333 Duncan Fairgrieve, Product Liability, 3rd edition, p. 274. 
334  E.  Rajneri,  J-S.  Borghetti,  D.  Fairgrieve,  P.  Rott,  Remedies  for  Damages  Caused  by  Vaccines:  A  Comparative 
Study of Four European Legal Systems, European Review of Private Law 1-2018 [57-96]. 

102 

 
 
 
                                                      
Annex  9  –  Indicators  for  monitoring  impacts  of  preferred 
option 

The following table supplements section 9 of the main report by identifying indicators for 
evaluating  the  impacts  of  the  preferred  option,  ordered  according  to  the  specific 
objectives set out in this impact assessment.  

Objectives 

Indicators 

to  ensure 

Continue 
the 
functioning  of  the  internal 
market,  free  movement  of 
undistorted 
goods 
competition 
between 
market operators 

and 

Adapt PLD to reflect nature 
and risks of products in the 
digital age 

Adapt the PLD to reflect 
the nature of products in the 
circular economy 
Ensure there is always an 
EU-based liable person for 
defective products bought 
in the EU 

Ease the burden of proof in 
the case of complex 
products and clarify 
liability for undiscoverable 
defects, while ensuring fair 
balance between producers 
and consumers 

Ease restrictions on making 
claims, while ensuring fair 
balance between producers 
and consumers 

Uniformity of transposition of the PLD in the 
Member States 

Perceived increased legal certainty and reduced 
legal fragmentation 

Changes in level of liability insurance premiums 
attributable to PLD  
Number of court cases335 concerning digital 
products based on the PLD in particular claims 
against software producers 
Number of reported safety problems with 
products due to the lack of security updates of 
software  
Perceived increase in legal certainty among 
stakeholders 

Ability of consumers to get compensation from 
authorised representatives/fulfilment service 
providers (number of cases)  
Number of claims rejected due to the lack of 
liable person for 3rd country products  
- ability of claimants to obtain necessary 
information in court 
-frequency of use by courts of presumptions 
provided for in PLD  
- reduction in perceived difficulties for victims 
claiming compensation 

Sources of 
information 
Transposition 
checks 
Study/ 
consultation 
of 
stakeholders 

Study/ desk 
research/ MS 
reporting  

Study/ desk 
research/ MS 
reporting 
Study/ desk 
research/ / 
MS reporting 

Study/ MS 
reporting 
/consultation 
of 
stakeholders 

- perceived balance between producers and 
consumers interests 
- number of claims for damages below 500 EUR 
- number of claims in the period between 10 15 
years after putting the product in circulation (for 
latent personal injury) 

Study/ MS 
reporting 

335 It should be noted that while the existence of court cases would give an indication that the PLD can be successfully 
applied to products in the digital age, the deterrent function of product liability actually aims to increase safety and so 
reduce product harm and therefore reduce the number of claims and court cases. 

103 

 
 
 
 
 
 
 
 
 
                                                      
Annex 10 – SME Test – summary of results 

(1) Preliminary assessment of businesses likely to be affected  

SMEs are among the businesses that are affected by the Directive 
and its revision. That may be in their role as manufacturers or as 
importers, authorised representatives and, to a lesser extent, as 
fulfilment service providers or distributors.  

(See sections 6 and 8, as well 
as Annex 2 and 3 and the 
supporting impact assessment 
study) 

By way of example, 95% of medical equipment manufacturers and 
99% of toy manufacturers are SMEs. 

(2) Consultation with SMEs representatives 

The targeted and public consultations were disseminated through the 
EU SME associations network and through the Enterprise Europe 
Network. 

(See section 6.1.a and Annex 
2) 

13 SMEs (businesses) and two SME associations (European Digital 
SME Alliance and Allied for Startups) responded to the public 
consultation, but none to the targeted consultation. 

(3) Measurement of the impact on SMEs 

The views of SMEs expressed in the course of consultation activities 
did not particularly diverge from the overall views of business 
respondents.  

(See sections 6.1.b) 

The impact assessment study did, however, conclude that clearer 
liability rules, particularly regarding software and refurbished 
products, would particularly benefit SMEs, which have fewer 
resources than larger companies to devote to understanding unclear 
rules336. 

On the other hand, the 2018 evaluation found that 31% of small 
enterprises do not have liability insurance, whereas among medium 
and large firms the figure is only 15%. Thus, SMEs could be more 
exposed than larger firms to compensation pay-outs not covered by 
insurance. Also, higher product liability insurance costs might affect 
SMEs more than larger companies, as SMEs have less ability to 

336 CSES with Wavestone, CSIL (2022), Impact assessment study on the revision of Product Liability 
Directive, section 2.3.1. 

104 

 
 
 
                                                      
absorb the costs and might have less favourable insurance 
conditions. 

4) Assess alternative options and mitigating measures 

The preferred policy option was selected with a view to achieving a 
fair balance of interests between industry and consumers, in 
particular avoiding measures that could make it difficult for SMEs to 
innovate or could create additional costs that might be more difficult 
for SMEs to absorb. 

(See section 8) 

Specific mitigation measures for SMEs as part of the revised PLD 
would not be appropriate, because proper compensation for persons 
injured by defective products cannot be made dependent on the size 
of the liable company. Consumers do not know when purchasing a 
product whether it was manufactured by a large company or an 
SME. It would also distort competition between market players if 
companies selling similar products faced different liability rules.  

105