Management asks what the company is liable for

The first exposure is regulatory. Where a product is liable to compromise health or safety or does not conform to the applicable legislation, market surveillance authorities require the relevant economic operator to take appropriate and proportionate corrective action within a period they specify (Regulation (EU) 2019/1020, Article 16(1) and (2)). The action can include bringing the product into compliance, preventing it from being made available, withdrawing or recalling it and alerting the public, or destroying it (Article 16(3)). If the operator fails to act, the authorities ensure that the product is withdrawn or recalled or that its sale is prohibited or restricted, and inform the public (Article 16(5)). Their powers include requiring documents, unannounced inspections, acquiring samples under a cover identity and imposing penalties (Article 14(4)).^[1]

Money follows in two ways. Member States may authorise their authorities to reclaim from the economic operator the totality of the costs of their activities with respect to a non-compliance, including testing, storage and measures taken (Article 15). And Member States lay down penalties for infringements of the harmonisation legislation listed in Annex II to Regulation (EU) 2019/1020 and of the General Product Safety Regulation (EU) 2023/988; both acts require the penalties to be effective, proportionate and dissuasive, and neither sets an amount (Regulation (EU) 2019/1020, Article 41; GPSR Article 44).^[1][2]

The second exposure is the cost of a recall. Where a manufacturer has reason to believe that a product it placed on the market is dangerous, it must immediately take corrective measures, including withdrawal or recall as appropriate (GPSR Article 9(8)). In a recall, the responsible operator offers the consumer an effective, cost-free and timely remedy: the choice between at least two of repair, replacement and a refund at least equal to the price paid, unless only one is possible or the others would be disproportionate (Article 37(1) and (2)). The consumer does not bear the cost of shipping or returning the product (Article 37(5)).^[2]

The third exposure is civil liability for damage. Under the Product Liability Directive (EU) 2024/2853, which applies to products placed on the market or put into service from 9 December 2026, a natural person who suffers damage caused by a defective product is entitled to compensation (Articles 2(1) and 5). The manufacturer is liable; where the manufacturer is outside the Union, so are the importer and the authorised representative, and failing those the fulfilment service provider (Article 8(1)). A company that substantially modifies a product is treated as its manufacturer (Article 8(2)), and where no liable operator established in the Union can be identified, a distributor becomes liable if it fails to identify such an operator or its own supplier within one month of a request (Article 8(3)). Liability cannot be excluded by contract towards the injured person (Article 15). Products placed on the market before that date remain under Directive 85/374/EEC (Article 21).^[3]