COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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

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  EN 

   EUROPEAN COMMISSION  Brussels, 28.9.2022  SWD(2022) 315 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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) 316 final} - {SWD(2022) 317 final}  
 
 
Subsidiarity Grid 

1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

Article 114 TFEU, according to which the EU may adopt measures for the approximation of 
the provisions laid down by law, regulation or administrative action in Member States which 
have as their object the establishment and functioning of the single market. 

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

In the case of internal market legislation, the Union’s competence is shared (Article 4 TFEU). 

Subsidiarity does not apply for policy areas where the Union has exclusive competence as defined 
in Article 3 TFEU1. It is the specific legal basis which determines whether the proposal falls under 
the subsidiarity control mechanism. Article 4 TFEU2 sets out the areas where competence is shared 
between the Union and the Member States. Article 6 TFEU3 sets out the areas for which the Unions 
has competence only to support the actions of the Member States. 

2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 24: 

-  Has there been a wide consultation before proposing the act? 
- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

The Commission consulted a broad range of stakeholders, including EU and national consumer 
associations and civil society organisations, industry associations, businesses, insurance 
associations, legal firms, academic experts, members of the public, and national authorities. 
The consultation activities included an inception impact assessment5, a 12-week dedicated 
public consultation to which 291 responses were submitted, stakeholder workshops, a 
workshop with Member States, as well as a targeted consultation and interviews with 
stakeholders carried out by an independent consultant. 

The explanatory memorandum and the impact assessment (chapter 3) contain a section on 
the principle of subsidiarity – see question 2.2 below for more detail.  

2.2 Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the conformity with the 
principle of subsidiarity? 

The 2018 evaluation of the Product Liability Directive concluded that the added value of 
having EU product liability rules to complement EU product safety rules was uncontested6. 
Indeed rules on compensating people harmed by defective products reinforce EU product 

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E003&from=EN  
2 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E004&from=EN  
3 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E006:EN:HTML  
4 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  
5 
6 

Civil liability – adapting liability rules to the digital age and artificial intelligence (europa.eu).  
Evaluation of Product Liability Directive, SWD(2018)157, p. 60. 

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safety rules. Both sets of rules pursue the same policy goal of a functioning internal market for 
goods that ensures a high level of consumer protection and they both also require 
modernisation. 

Without a uniform set of rules for compensating people harmed by defective products, 
manufacturers would be faced with 27 different sets of rules. This would lead to different 
levels of consumer protection and distorted competition among businesses from different 
Member States.  

2.3 Based on the answers to the questions below, can the objectives of the proposed action be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

The current Product Liability Directive harmonised product liability rules in the EU to 
ensure a level playing field between businesses and a common level of consumer 
protection. The proposed action aims to ensure this uniform set of rules is adapted to 
products in the digital age and circular economy, and will provide legal certainty and 
support the internal market. If Member States acted alone, businesses would be faced 
with 27 different sets of rules. 

(a)  Are there significant/appreciable transnational/cross-border aspects to the problems 

being tackled? Have these been quantified? 

Products manufactured in one Member State can be placed on the market in any other 
Member State – the internal market in goods is by definition transnational. Without a 
uniform set of rules for compensating people harmed by defective products that is 
updated to reflect the nature and risks of products in the digital age and circular economy 
(e.g. taking into account AI-enabled products, cybersecurity risks and remanufactured 
products), manufacturers would be faced with 27 different sets of rules. This would create 
barriers, a lack of level playing field between businesses and divergent levels of consumer 
protection. It is not possible to quantify the cross-border aspects given that the Product 
Liability Directive covers potentially millions of different products. 

(b)  Would national action or the absence of the EU level action conflict with core objectives of 

the Treaty7 or significantly damage the interests of other Member States? 

National action or the absence of EU level action would create a significant gap in the 
internal market, meaning no level playing field between businesses and divergent levels of 
safety as further described under point (a) above.  

(c)  To what extent do Member States have the ability or possibility to enact appropriate 

measures? 

Given that the Product Liability Directive harmonises product liability rules in the EU, 
Member States are not permitted to enact measures in this area. National courts’ role is to 
interpret the Directive, but because of unclear provisions (e.g. the extent to which 
software is covered as a product under the Directive), these interpretations are divergent, 
undermining the internal market. 

(d)  How does the problem and its causes (e.g. negative externalities, spill-over effects) vary 

across the national, regional and local levels of the EU? 

7 https://europa.eu/european-union/about-eu/eu-in-brief_en  

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There is no particular variation across the national, regional and local levels of the EU. 

(e)  Is the problem widespread across the EU or limited to a few Member States? 

Products are manufactured and marketed in all Member States and the problems are not 
specific to one Member State or another. 

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

As referred to under point (c) above, it is not possible for Member States to enact 
measures to achieve the proposal’s objectives. 

(g)  How do the views/preferred courses of action of national, regional and local authorities 

differ across the EU? 

Neither the Product Liability Directive nor its proposed revision impacts regional or local 
authorities. In a workshop with Member States in early 2022, all Member States that 
expressed a view were in favour of adapting the Directive to the digital age and circular 
economy. Views on the appropriate level of consumer protection varied to some degree. 

2.4 Based on the answer to the questions below, can the objectives of the proposed action be 

better achieved at Union level by reason of scale or effects of that action (EU added value)? 

The Product Liability Directive is a longstanding EU law from 1985. It works well on the 
whole, but is not adapted to the digital age and circular economy. Without a uniform set 
of rules for compensating people harmed by defective digital products or products in the 
circular economy, manufacturers would be faced with 27 different sets of rules. This 
would lead to different levels of consumer protection and distorted competition among 
businesses from different Member States. The revision of the Product Liability Directive 
can only be done at EU level. 

(a)  Are there clear benefits from EU level action?  

The evaluation of the Product Liability Directive in 2018, carried out as part of the 
Commission’s regulatory fitness and performance (REFIT) programme, concluded that the 
Directive was, on the whole, an effective and relevant instrument. However, the Directive 
also had several shortcomings, which the proposal aims to address. The benefits are: 
ensuring liability rules reflect the nature and risks of products in the digital age and circular 
economy; ensuring it is possible to obtain compensation when products are bought 
directly from manufacturers outside the EU; ease the burden of proof in complex cases; 
and ensuring legal certainty by better aligning the Product Liability Directive with the new 
legislative framework created by Decision 768/2008/EC8 and with product safety rules, 
and by codifying product liability case law. 

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level 

(larger benefits per unit cost)? Will the functioning of the internal market be improved? 

8 

Decision No 768/2008/EC of the European Parliament and of the Council of 9 July 2008 on a 
common framework for the marketing of products, and repealing Council Decision 
93/465/EEC (OJ L 218, 13.08.2008, p. 82).  

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There are economies of scale for businesses, since they will face the same product liability 
rules all over the EU. 

(c)  What are the benefits in replacing different national policies and rules with a more 

homogenous policy approach? 

The Product Liability Directive replaced different national rules in 1985. The benefits are a 
level playing field for businesses and a high and consistent level of consumer protection. 

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States 
and the local and regional authorities (beyond the costs and benefits of acting at national, 
regional and local levels)? 

The Product Liability Directive leaves intact all other national rules concerning other types 
of liability, such as liability based on fault, warranty or contract. 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

One of the key objectives it to improve legal clarity, since the current Product Liability 
Directive was adopted nearly 40 years ago and does not provide clear liability rules for 
defective products in the digital age and circular economy. 

3.  Proportionality: How the EU should act 

3.1  Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal and a statement allowing appraisal of the compliance of the proposal with the 
principle of proportionality? 

Several policy options were considered in the preparation of the proposed action. The 
repeal of the Product Liability Directive or issuing only guidance would not have achieved 
the objectives of legal certainty and a level playing field between businesses. Converting 
the Directive into a regulation was considered disproportionate, given the close 
interaction of product liability rules with national legal systems. Equally, extending the 
scope of the regime to cover harm to fundamental rights was considered 
disproportionate. The revision of the Directive to clarify its scope, definitions and the way 
it operates for products in the digital age and circular economy was considered 
proportionate and not exceeding what was necessary to achieve the objectives. 

3.2 Based on the answers to the questions below and information available from any impact 
assessment, the explanatory memorandum or other sources, is the proposed action an 
appropriate way to achieve the intended objectives? 

The proposed action is limited to the essential aspects of the liability regime for defective 
products and the choice of instrument, a directive, will allow Member States the flexibility 
needed to embed the rules into their national legal systems. The costs of the proposed 
action are offset by the benefits and are commensurate with the objectives to be 
achieved. 

(a)  Is the initiative limited to those aspects that Member States cannot achieve satisfactorily 

on their own, and where the Union can do better? 

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The proposed action sets out the essential aspects of the liability regime, such as the types 
of product and damage covered, and which economic operators can be held liable. Other 
aspects, such as how to introduce a compensation claim, are left to Member States. 

(b)  Is the form of Union action (choice of instrument) justified, as simple as possible, and 
coherent with the satisfactory achievement of, and ensuring compliance with the 
objectives pursued (e.g. choice between regulation, (framework) directive, 
recommendation, or alternative regulatory methods such as co-legislation, etc.)? 

Given that the Product Liability Directive’s liability rules interact closely with national civil 
codes and are deeply embedded into diverse national legal systems, the option of 
converting the current Product Liability Directive into a regulation was discarded as 
disproportionate. A directive achieves the policy objectives effectively and allows flexibility 
to seamlessly embed the rules into national systems. 

(c)  Does the Union action leave as much scope for national decision as possible while 

achieving satisfactorily the objectives set? (e.g. is it possible to limit the European action to 
minimum standards or use a less stringent policy instrument or approach?) 

In order to achieve the internal market objective and give businesses legal certainty, the 
Product Liability Directive is a maximum harmonisation instrument and does not allow 
Member States to adopt more, or less, stringent provisions at national level if those 
provisions are within the scope of the Directive. However, the proposed action leaves 
intact other routes to compensation that injured people have at national level (such as 
compensation on the basis of contract, warranty or fault). 

(d)  Does the initiative create financial or administrative cost for the Union, national 

governments, regional or local authorities, economic operators or citizens? Are these costs 
commensurate with the objective to be achieved? 

The initiative does not create administrative costs. The initiative creates financial costs for 
certain economic operators (such as producers of software products or the authorised 
representatives of non-EU manufacturers), in the form of compensation pay-outs or 
liability insurance. But these costs would otherwise have been carried by other economic 
operators (such as producers of hardware products) or by citizens themselves (for 
example, if they failed to get compensation because the manufacturer was established 
outside the EU).  

The changes to the Product Liability Directive are the minimum necessary to achieve the 
objectives, and the costs are commensurate with those objectives. 

(e)  While respecting the Union law, have special circumstances applying in individual Member 

States been taken into account? 

No special circumstances apply to any individual Member State in the frame of this 
initiative have been identified.  

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