Legislative amendments reform and harmonize market surveillance in Finland
On 18 February 2022, the Finnish Parliament accepted Government Proposal 139/2021, which introduces certain amendments to market surveillance legislation in Finland. In this article, we summarize the main amendments arising from the new legislation and their implications.
The amendments will broaden the scope of application of the general market surveillance legislation to include eight new product groups and also confer certain new powers on the competent authorities. The amendments will be most relevant for products that are either marketed online or from countries outside the EU.
The Finnish market surveillance legislation is being amended to meet the requirements arising from Regulation (EU) 2019/1020 of the European Parliament and of the Council on market surveillance and compliance of products and amending Directive 2004/42/EC and Regulations (EC) No 765/2008 and (EU) No 305/2011, which entered into force on 16 July 2021.
The Regulation constitutes part of the wider efforts aiming at strengthening the existing EU product safety and consumer protection legislation, and seeks to reduce the number of unsafe products on the EU market. The scope of application of the Regulation extends across various industries relevant for the protection of the public interest (such as health, safety and consumer and environmental protection). It provides a uniform framework for general market surveillance and surveillance of the external borders, as well as for powers of national market surveillance authorities.
While the Regulation is directly applicable in all EU member states, the enactment of certain supplementary national legislation has been necessary in Finland to ensure consistency. Given that the Regulation entered into force more than six months ago, and the proposed amendments are expected to enter into force within the next few months, the national legislative procedure is obviously lagging behind somewhat.
Generally speaking, market surveillance legislation in Finland is industry-specific and, therefore, somewhat decentralized. The Finnish Act on the Market Surveillance of Certain Products 1137/2016 (the Market Surveillance Act), which entered into force on 1 January 2017, is an exception in this regard. It is a general piece of legislation applicable to the industries to which it relates and is applied in combination with industry-specific legislation.
The Market Surveillance Act contains general provisions concerning market surveillance, such as provisions governing the powers of competent authorities, the means of surveillance, and principles guiding such surveillance.
The amendments arising from the Regulation are included mainly in the Market Surveillance Act. As market surveillance in Finland is already at a good level, the amendments currently being introduced are considered to have a limited effect on businesses. However, the amendments are relevant for products marketed online and from non-EU countries. Furthermore, the amendments concerning the scope for action of market surveillance authorities will have indirect effects on all economic operators.
Key amendments to the Market Surveillance Act
New products and competent market surveillance authorities
The scope of the Market Surveillance Act will be extended to cover the following product groups: recreational craft, radio equipment, ship equipment, energy-related products, electrical and electronic equipment containing dangerous substances, chemicals, cosmetic products, and tobacco products. Some necessary formal amendments will also be introduced in industry-specific legislation.
As the scope of application of the Market Surveillance Act is broadened, the competencies of surveillance authorities will also be extended correspondingly. The Finnish Transport and Communications Agency (Traficom) will be responsible for recreational craft, radio equipment and ship equipment, while the Finnish Safety and Chemicals Agency (Tukes) will be responsible for energy-related products, electrical and electronic equipment containing dangerous substances, chemicals and cosmetic products.
The Finnish Medicines Agency shares certain surveillance obligations with Tukes as regards electrical and electronic equipment containing dangerous substances, while the Customs Authority acts as the market surveillance authority together with Tukes as regards chemicals and cosmetic products. The National Supervisory Authority for Welfare and Health (Valvira) together with municipalities will act as the surveillance authority for tobacco products.
New definition of economic operators
The new legislation amends the definition of an “economic operator” to correspond with the definition set out in the Regulation. The amended provision of the Market Surveillance Act contains an explicit reference to the definition set out in Article 4 of the Regulation, according to which (i) a manufacturer; (ii) an importer; (iii) an authorized representative; or (iv) a fulfillment service provider, where no other economic operator referred to in points (i) – (iii) is established in the EU, are considered economic operators within the meaning of the Regulation. Products subject to the Regulation may be placed on the EU market only if an economic operator responsible for the product is established within the EU.
The amendment of the definition of an “economic operator” is necessary to ensure that the market surveillance authorities will be able to enforce the obligations set forth in the Regulation against all relevant economic operators. These obligations relate to e.g. conformity declaration, provision of information to authorities on possible risks associated with products, and cooperation with market surveillance authorities.
Undercover purchases as a new means of surveillance
The amended Market Surveillance Act confers the power on market surveillance authorities to make purchases using an undercover identity. The precondition for such purchases is that the purchase is indispensable for ascertaining whether the relevant product is compliant with the rules.
If the product is found to be non-compliant in a significant manner, the surveillance authority can order the economic operator to reimburse the costs associated with the purchase, testing and examination of the product. The surveillance authority must inform the economic operator that it is using an undercover identity as soon as possible without jeopardizing the objectives of the purchase.
New measures in the online environment
The amended Market Surveillance Act also confers certain new powers on surveillance authorities in the online environment. The surveillance authority is entitled to obtain from the economic operator information necessary to verify the ownership of online interfaces.
Where a product is found to pose a serious risk to the public interest, the surveillance authority can then order product-related content to be removed from the online interface, assuming this is indispensable to eliminate the risk. Under similar preconditions, the authority may also order the service provider (such as hosting-, Internet- or platform service providers or telecommunications companies) to clearly inform the end user of the risks associated with the product in connection with access to the website.
Failure to comply with the above obligations relating to the removal of content or informing the end user of possible risks may lead to the imposition of further measures. Namely, the market surveillance authority may order the service provider to prevent or restrict access to the online interface or to remove the interface.
Alternatively, the domain name can be decommissioned or registered in the authority’s name. It is good to note that these powers are intended to be used in a restrictive manner and as a last resort to eliminate potential product-related risks.
The market surveillance authority takes the above measures on the basis of an administrative decision that can be appealed in accordance with administrative legislation. Before making its decision, the authority must give the relevant economic operator or service provider an opportunity to be heard. Furthermore, in urgent cases, the decision can be issued as an interim order that remains in force until the actual decision is issued.
The opportunity to be heard can be compromised in cases where an interim order is issued if so required due to the urgency of the matter.
Orders for corrective procedural measures
Under the current Market Surveillance Act, the surveillance authority can issue an order for corrective measures to be taken if a product or its documentation are not in compliance with the relevant rules or if a product or its documentation are not at a request provided to the authority for surveillance purposes.
The amended Market Surveillance Act broadens the scope of the provision by conferring the power on the authority to order corrective measures in cases where it finds that procedures relating to the product are not in compliance with the rules.
Such procedures include the distributor’s obligation to inform the manufacturer or importer of risks associated with a product, or the economic operator’s statutory obligation to inform competent authorities of other EU member states (in which the product has been launched) of risks associated with the product.
While market surveillance legislation is of relevance for economic operators, it is good to be mindful that it constitutes only one component of product safety and consumer legislation, whereas liability for regulatory compliance of products lies with the economic operators themselves.
Since authorities have limited resources to be allocated to market surveillance, surveillance can be conducted only on a random, spot check basis, and focused on certain characteristics of a product only. Thus, a pre-launch conformity assessment as well as rights and obligations stemming from general consumer protection and product safety legislation continue to pave the way for a more stringent product and consumer regulatory framework.
Article written by Partner Mikael Segercrantz, Senior Associate Elina Saxlin-Hautamäki and Associate Trainee Melina Johansson.