on market surveillance and compliance of products for Logistic Companies
A. Norm Addressees
Norm addressees of the regulation (EU) 2019/1020 (hereinafter: “regulation”) are economic operators according to Art. 3 (13).
Economic operators are
- a manufacturer (definition in Article 3 (8)) established in the EU (Article 4 Section 2. (a)),
- an importer established within the EU (definition in Art. 3 (9)), if the manufacturer is not established in the EU (Article 4 Section 2. (b)),
- an authorized representative established within the EU, who has received a written mandate from the manufacturer (definition in Art. 3 (12)) (Art. 4 Section 2. (c)).
- and “fulfilment service provider” established in the EU with respect to the products it handles, if no other economic operator mentioned in points (a), (b) and (c) is established in the EU (definition in Article 3 (11)) (Art. 4 Section 2. (d)).
B. The Term “fulfilment service provider”
The term “fulfilment service provider” is defined in Article 3 (11). According to the Regulation the term “fulfilment service provider” means:
“any natural or legal person offering, in the course of commercial activity, at least two of the following services: warehousing, packaging, addressing and dispatching, without having ownership of the products involved, excluding postal services as defined in point 1 of Article 2 of Directive 97/67/EC of the European Parliament and of the Council (31), parcel delivery services as defined in point 2 of Article 2 of Regulation (EU) 2018/644 of the European Parliament and of the Council (32), and any other postal services or freight transport services” (Art. 3 (11)).
C. Obligations of Economic Operators
The obligations of the economic operators are described in Article 4 Section 3. and Article 4 Section 4. and Article 7 Section 1:
The economic operators have the obligation
- to verify that the EU declaration of conformity or the declaration of performance and technical documentation have been drawn up,
- the obligation to keep the declarations of conformity or declaration of performance at the disposal of market surveillance authorities (Article 4 Section 2. (a)),
- the obligation to provide the market surveillance authority with all information and documentation necessary to demonstrate the conformity of the product upon reasoned request (Article 4 Section 2. (b)),
- the obligation to inform the market surveillance authority when having the reason to believe that a product in question presents a risk (Article 4 Section 2. (c)),
- the obligation to cooperate with the market surveillance authorities according to Article 4 Section 2. (d).
- An economic operator needs to provide certain information on the product or on the packaging (Article 4 Section 4.)
D. Consequences for Logistic Companies
I. Fulfillment
In case of classic fulfillment service, a Logistic Company is an economic operator according to Article 4 2. (d) “with respect to the products it handeles”, if no other economic operator mentioned in points (a), (b) and (c) is established in the EU. Therefore, Logistic Companies need to safeguard that for all goods subject to the fulfillment services an economic operator according to Article 4 2. (a), (b) or (c) exist. Especially, importers based in the EU (Art. 3 (9)) or representatives based in the EU (Art. 3 (12)) concerning the products subject to the fulfillment services (Art. 3 (12)) are practical highly relevant.
In addition, Logistic Companies need to be able to prove that an importer or representative for each product/SKU exist. The Logistic Company needs to collect the contractual documents about having an importer based in EU (Art. 3 (9)) or representative based in EU (Art. 3 (12)) for each product/SKU. It needs to be checked, if the documents match the products/SKU and the documents need to be available when requested. The contracts between the manufacturer (definition in Article 3 (8)) and importer or manufacturer and authorized representative should be in English (and not in Chinese) as otherwise we need to translate every time we need to prove that the Logistic Company is not the economic operator.
It may be very difficult to trace back who the contractual partner of the Logistic Company concerning a specific product is. The original shipment label of the Logistic Company is not provided often in case of complaints (no shipment number is provided). Often in cases of complaints the seller’s nickname, the seller’s name and product details are provided only. The warehouse of the respective seller account may show the warehouse as location. In this case it might be very difficult to prove that the Logistic Company is not an economic operator under the regulation as it may be difficult to find the respective documents in the Logistic Companies IT system.
To avoid any misunderstanding about Logistic Companies ’s role, it is important that all products and product packages are marked with the name and address of the EU based importer (definition in Art. 3 (9)) or representative (definition in Art. 3 (12)) as required legally. Otherwise the Logistic Company might be under pressure to prove that the Logistic Company is not economic operator according to Article 4 Section 2. (d).
A further problem is that data of importers or representatives are misused by ecommerce sellers sometimes. If the Logistic Companies customer (the ecommerce seller) provides a fake contract with an importer (definition in Art. 3 (9)) or representative (definition in Art. 3 (12)) and there is no other economic operator, the Logistic Company will be considered as economic operator (cf. Art. 4 Section 2. (d)).
II. Direct Shipments
According to the definition of the term “fulfilment service provider” (Article 3 (11)) the direct shipment providers may considered as “fulfilment service provider”: This is the case, if at least two of the following services is provided: warehousing, packaging, addressing and dispatching (Art. 3 (11)). If the addressing of shipments (re-labeling) and dispatching happens at the warehouses of the Logistic Company, direct shipment fall in the scope of the definition of Art. 3 (11). Therefore, the Logistic Company is considered as economic operator according to Article 4 Section 2. (d). Therefore, the definition of “fulfilment service provider” may reach beyond what is understood as fulfillment in ecommerce commonly.
In addition, it is not visible for market surveillance authorities that the product was send directly from China to customers in the EU. A label indicating the Logistic Company as return address may raise the impression that Logistic Companies acted as “fulfilment service provider” according to Article 3 (11).
III. Return Services
In case of Return Services the ecommerce seller mentions a warehouse address as a return address. In this context it can be raised the impression that the Logistic Company is responsible for the fulfillment and is an economic operator according to Article 4 Section 2. (d). But the Logistic Company may not be able to trace products back and to identify the respective Logistic Companies customer and may not be able to identify the kind service the customer booked. In this case the Logistic Company would not be able to defend against allegations of the market surveillance authorities to be an economic operator.
E. Entry into Force
The relevant regulations for fulfillment service providers will come into force from July 16th. 2021 (Article 44).
F. Conclusion
Logistic Companies need to safeguard that for all goods subject to the fulfillment services an economic operator according to Article 4 Section 2. (a), (b) or (c) exists and the Logistic Companies need to store the respective documents to prove that another economic operator is authorized. The products and packages should be labelled with an economic operator as required by the law.
Platform operators (electronic marketplaces) take drastic steps to avoid being considered as economic operator. Without an representative located in EU overseas sellers are banned from selling on platforms. That helps Logistic Companies to ensure compliance. The Platform operators have the function of gatekeepers. Similar is the situation concerning the German Packaging Law (Verpackungsgesetz) from July 1st. 2022 on.
Dr. Jörg Brettschneider, Rechtsanwalt
