Following its proposal of creating liability rules specifically for AI-enabled products and services, the European Commission on 28 September also published its proposal for revising the Product Liability Directive. The existing Product Liability Directive has constituted a cornerstone of the Single Market since its adoption in 1985. However, with the digital and green transitions pushing through with their appertaining great economic and societal benefits, there is an increasing need for updating the existing product liability rules to make them fit for the digital age and the circular economy, including for the ‘new’ types of goods that to a greater extent come to shape the future economy of Europe. Ecommerce Europe welcomes the Commission’s proposal, as we believe it could create greater legal certainty for European businesses, but is also cautious about potential unintended consequences of the proposed changes that could be burdensome for the retail sector.
Over the last decades, the ways in which products are produced, distributed, and operated have changed considerably. Meanwhile, rules on product safety and market surveillance have gradually been updated to fit the transforming landscape of commerce within Europe. Consequently, the Commission considered that the original, and now decades-old, definitions and concepts within the product liability directive are outdated and no longer well-suited to tackle products in the modern digital and circular economy. Additionally, they find that the existing liability rules have shortcomings when it comes to the burden of proof, since consumers may find it challenging to prove that a product was defective and that this defect caused the damage, particularly in complex case involving e.g., smart products, AI-enabled products, as well as pharmaceutical products. For businesses, this concretely means that they will no longer only be obliged to compensate consumers that have been injured by defective products, as the existing product liability rules dictate. Instead, the new proposal for a revised Product Liability Directive adds provisions requiring businesses to disclose evidential information that a claimant would need to prove their case in court, however including a safeguard for the protection of trade secrets.
The Commission’s proposal of updating the existing Product Liability Directive furthermore introduces provisions ensuring that there should always be a business or legal representative based in the EU that can be held liable for defective products bought directly from manufacturers outside the EU. This specific element of the new Directive has been introduced due to the growing tendency among consumers to purchase products directly from non-EU countries without there being a manufacturer or importer based in the EU.
Finally, the new Directive also lays down updated rules for businesses operating through circular business models. Ecommerce Europe underlines that circular business models should be incentivised by facilitating and simplifying procedures. Unfortunately, there are often still significant limitations that businesses face, both from EU and national legislation. We therefore urge policymakers to provide legal certainty on the application to second-hand products and ensure the obligations are relative to the role and possibilities of these businesses in the supply chain.
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