Product Safety Regulation EU 2023/988 – What wholesalers need to know now
What does the Product Safety Regulation 2024 (GPSR) mean for B2B wholesalers?
In B2B wholesale, the challenges are often as diverse as the product portfolio. With more than 20,000 items in stock and thousands of customers served every day, wholesalers in Germany are under enormous pressure.
Another factor is hard to ignore: the EU’s new product safety regulation, Regulation (EU) 2023/988, which comes into force on 13 December 2024. While many are wondering to what extent this is relevant for their business, the following applies: ignorance is no defense against punishment.
But what exactly is behind this directive? Which products are affected? And what do you need to do to be on the safe side legally? This article explains what you need to know and why action is better than waiting. Please do not take my articles as legal advice but as friendly information of general interest.
The new standard also covers software.
To which products does the regulation apply?
Firstly, do not panic. There is nothing new in EU product regulations, just some additions and changes. Secondly, if you are based in the EU, these new regulations are generally good news for you as they level the playing field with distributors outside the EU.
The Product Safety Regulation applies to all products that can reach consumers directly or indirectly. This includes traditional consumer products such as electrical appliances or toys and digital products such as software. That means that we first had to check whether and to what extent the new regulation also affects our software. At this point, thanks to our customers for the alarm clock.
The regulation does not cover products that are intended exclusively for commercial use (e.g., construction machinery or production systems). Some other products, such as medicines, food, and animal feed, are also excluded from the scope of the Product Safety Regulation. In addition, special regulations apply to EU-harmonised products (e.g., toys).
It is interesting to note that digital services that support a product in its function, such as software updates, have also been included in the scope of the application. That is an essential step towards doing justice to the reality of modern networked appliances. Fabian Fechner, representative of Miele AG from the EU Office, a German manufacturer of household and commercial appliances based in Gütersloh, emphasized that even the incomplete submission of documents in the process could lead to companies losing the process based on a presumption alone, even though there is no product defect.
According to Fechner, there is also a risk that plaintiffs will research internal company documents, and it is questionable whether the protection of business documents works in practice. The obligation to permanently monitor software and the commitment to update, for which different deadlines apply depending on the product, also posed enormous and cost-intensive challenges for companies. The topic is no walk-in-the-park for specialized wholesalers either.
What do specialist wholesalers have to declare about their products?
Wholesalers are affected, even if they are only or predominantly active in over-the-counter retail. Yes, this is the case. The Product Safety Regulation imposes obligations on retailers and does not differentiate between retailers operating only in brick-and-mortar stores or online. Particular attention must be paid to situations in which you, as a B2B wholesaler, sell sporadically to end consumers.
One of the most important requirements of the regulation is transparency. If you are drawn into the liability chain (a B2B customer of yours, an electrician, causes an accident with a product purchased from you – the end consumer wants to know if the product was installed safely), they could turn to you.
As a distributor, you are responsible for holding and passing on the following information about all your products. As mentioned above, most of these points are not new, but it is worth having a look:
1. Safety and warning notices are clearly visible and in an understandable language.
2. Manufacturer’s details are fully visible, including name, address, and e-mail contact.
3. Products are clearly labeled, for example, with type or serial numbers.
In the case of imported products, a representative based in the EU must be named who assumes responsibility – you? Important: Online offers must also contain this information. References to external links or documents are not sufficient. As mentioned above, this could be good news for online retailers. The new rules clearly level the playing field with, for example, Chinese retailers.
Which products are covered by the Product Safety Regulation?
The Product Safety Regulation (EU) 2023/988 applies to all products intended for consumers in the European Union, regardless of whether they are offered through traditional trade channels or online. That includes, in particular:
1. physical consumer goods such as household appliances, electronics, toys and sporting goods. PPE is certainly also included.
2. products with digital components such as smart home devices, wearables, or software linked to hardware
3. imported products that are imported from outside the EU and could affect consumer safety
4. products with digital functionality that require regular updates or online services to ensure their safety or performance.
Strictly regulated areas such as pharmaceuticals, medical devices, food and feed, and products intended exclusively for professional use are excluded from the regulation, unless they may indirectly affect consumers.
Please find the link below if you need more detailed information or specific examples from the regulations.
What does this mean for wholesalers?
The majority of wholesalers in Germany are probably already complying with the product regulations. However, wholesalers should check now because the Product Safety Regulation (EU) 2023/988 introduces some changes in responsibility and liability for products that reach consumers. The regulation also extends the chain of liability. It now includes software and modifications to products. That means wholesalers can be held liable if they distribute defective products, regardless of whether they are manufacturers. This applies in particular to goods imported from third countries.
The Product Safety Regulation will not only increase compliance requirements but also redefine the liability chains. Anyone who places products on the market in the EU is potentially liable if a product is defective and causes damage. This becomes particularly critical if manufacturer information is missing, safety defects are not recognized in good time, or consumers are not adequately informed.
Non-compliance with the regulations can result in high fines. If product defects or recalls occur, there is also a risk of reputational damage. These risks can significantly damage the trust of customers and partners.
The regulation clearly states that wholesalers must actively check whether the products they sell are safe. Early action minimizes the risk of lawsuits or insurance problems in the event of damage. The penalties for infringements are severe, ranging from warnings to high fines. Even more serious, however, is the potential reputational damage that can result from recalls or lawsuits.
Market players who implement the regulation early can secure a competitive advantage by positioning themselves as trustworthy partners. Hesitation, on the other hand, can lead to customers and partners preferring to work with better-prepared competitors.
By acting proactively, wholesalers can minimize legal and financial risks and strengthen the trust of customers and business partners.
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Practical tips for wholesalers
As a B2B wholesaler, what should you consider about the Product Safety Regulation EU 2023/988?
First and foremost, it is essential to identify products or product groups with the most significant risks. These could be:
– Products that you also sell to B2C customers.
– Products that you purchase outside the EU.
– Products that you or your wholesale organization label yourself.
You are probably already on the safe side with most products in the short term, and you would be able to provide the required information in an emergency. But also think about the future. We suspect that change is coming, and more and more of your customers will be looking for simplicity and transparency in the future. Your customers will be more likely to buy from a wholesale company that offers simple and transparent safety information directly for download. That’s why we recommend you start today:
1. Check your portfolio: Ensure that all the required information is available on your products. For imported products, ensure that the manufacturer fulfills all legal requirements.
2. Optimize your processes: Set up internal systems for continuous product monitoring. That allows potential safety defects to be recognized and rectified early.
3. Train your team: Inform your employees about the new requirements, particularly in purchasing, sales, and quality control.
4. Cooperation with suppliers: Ensure that your suppliers are also prepared for the new regulation. Adapt your contracts if necessary.
5. Use technology: Software solutions for data analysis can help you optimize your product portfolio based on known product lines (and customers?) to minimize future risks and costs.
6. It’s better to have insurance and not need it than to need insurance and not have it. It may also be time to think about and review that cover.
A look into the future – what else?
EU Regulation 2023/988 is not a footnote but a turning point in product safety. As a father of three and a European consumer, I am very happy about more safety. As a friend and partner of wholesalers, companies, and component manufacturers, I feel the pressure. For specialized wholesalers, this means that those who are prepared can profit. Those who hesitate risk unnecessary complications.
The Product Safety Regulation clearly shows where the journey is heading: more transparency, more responsibility, and more consumer protection. For wholesalers, this is an opportunity to position themselves as reliable partners and secure long-term competitive advantages. But decisive action is needed now.
If you have any questions or need support with implementation, please contact your partners, associations, and experts.
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Further Read:
Produkthaftung – wen betrifft es und was ist zu beachten. Ratgeber – IHK München & Oberbayern