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New EU Product Safety Rules and online marketplaces: Five things to get it right

· April 12, 2022

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The European Commission has proposed specific obligations for online marketplaces in its new General Product Safety Regulation (GPSR). EU lawmakers will want to get this proposal right as e-Commerce is becoming ever more important for European consumers and for traditional businesses seeking to sell online. An entire 110 European unicorns were marketplaces last year. 

Here are five things EU lawmakers will want to get right in the GPSR:

Consider hybrid business models 

The term “online marketplaces” covers a very broad and diverse set of companies. What they do have in common is that they facilitate commerce without accessing the products sold via their websites. Some businesses do operate hybrid models meaning that in addition to their marketplace activities they also, for example, act as a manufacturer. Such economic activities are already covered by other obligations of the new rules. Therefore, the GPSR should only set up specific obligations for online marketplaces.

Make orders and notices efficient

Accurate information is crucial for online marketplaces to meet the short time frames proposed in the GPSR proposal to react to orders and notices. However, currently, 98% of product notifications published on the EU Safety Gate lack some details required to enable speedy removals and recalls. This ranges from inaccurate descriptions to incorrect pictures or indeed no pictures at all. Safeguards, such as suspending deadlines in case of inaccuracies, can prevent detrimental outcomes such as the preventive removal of safe products.

Carefully open interfaces

The GPSR grants market surveillance authorities access to marketplaces’ interfaces for product safety purposes. The nature of this access needs to be clarified. Opening online marketplaces’ interfaces for authorities’ tools or data scraping is particularly concerning. Both tools are too vague and minimise the technical obstacles (e.g. security breaches). We’ll want to avoid a situation where new consumer protection rules end up undermining the protection of business-sensitive information and the privacy and personal data of traders and consumers alike.

Keep the heterogeneity of sellers in mind 

Sellers are a diverse group that range in size from the micro all the way up to large, multinational companies (e.g. from a grandmother selling knittings to Nike). Sellers sell an ever-increasing number of products. Demanding an unrealistic amount of information, to allow the traceability of sellers, could prevent at least the smaller sellers from using online marketplaces. The GPSR should be careful to not overwhelm sellers, especially SMEs, from selling online. 

Keep the level playing field between online and offline channels

EU lawmakers have repeatedly said that the same rules should apply online as well as offline. Presumably, the GPSR should not create different rules for online and offline companies. Yet, it does require online marketplaces to ask for batch numbers for all the products they sell when that’s not the case for brick and mortar shops.

There is an achievable balance to be struck between ensuring consumer safety online and sustaining a thriving online marketplace economy. By focusing on what online marketplaces can realistically do, lawmakers can ensure that the GPSR will end up benefitting European consumers and businesses alike.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.