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Photo of Niels M. Andersen Niels M. Andersen Partner +45 72273406

On 4 June 2020 the Danish parliament passed legislation making it possible to block online retailers who fail to comply with Danish product safety rules. The new legislation is a Danish act on market surveillance and compliance of products that supplements EU Regulation 2019/1020 on market surveillance and compliance of products.

The aim of the Act is to strengthen the protection of Danish consumers and other end-users from unsafe and illegal products, including consumers shopping online and via global platforms.

The Act creates a new, strong framework for enforcement of product safety and compliance requirements across a range of product areas, including toys, childcare products, fireworks, electrical appliances, machines, etc. The Act provides an option to block the websites of online retailers if they continuously sell dangerous products on their platforms. The new legislation also allows larger penalties than previously.

The Act becomes effective on 1 July 2020. However, the sanctions for non-compliance with some of the obligations under EU Regulation 2019/2010 do not become effective until 16 July 2021.

The Act supplements EU Regulation 2019/1020 on market surveillance and compliance of products. For reference, please read our previous article regarding adoption of the EU Regulation.

According to the Ministry of Industry, Business and Financial Affairs (Erhvervsministeriet), the current market surveillance rules do not suffice, taking into account the development of global e-commerce in recent years. This means that today it is too easy, especially for businesses and platforms outside the EU, to bypass the rules and expose users to risks. It also means that the vast majority of Danish companies that actually comply with the rules are exposed to unfair competition.

The Act makes it more difficult to circumvent the product compliance rules. In line with the EU Regulation, the Act extends the authorities' surveillance powers, including new statutory basis for surveillance under hidden identity and blocking access to online interfaces selling dangerous products.

Further, the Act introduces stricter consequences for not following the rules, for instance by increasing the penalties and the recommended level of fines with specific focus on repeated offences.

The Act collects the general provisions on market surveillance of products under the authority of the Danish Safety Technology Authority (Sikkerhedsstyrelsen) into one main act (including rules on harmonised, non-harmonised and nationally regulated products). Unlike today, where surveillance powers and penalties vary from product to product, the government wants to harmonise market surveillance for the benefit of user safety and corporate legal protection.

Extended enforcement powers and increased sanctions
The Safety Technology Authority is appointed as the national accreditation body (i.e. the liaison office) and supervisory/enforcement authority.

The Safety Technology Authority will supervise compliance with the Act and enforce sanctions (subject to court requirements).

The Act extends the supervising powers of the authorities in continuation of the EU Regulation.

The Act provides a new legal basis for surveillance under "hidden identity" ("mystery shopping"). In practice, surveillance under hidden identity (mystery shopping) is a new supervising remedy for the Safety Technology Authority that generally has not been used by Danish authorities before.

The Safety Technology Authority may order (by way of an enforcement notice) the owner of a website to modify or remove content referring to products that do not comply with the Act, rules laid down by the Act or regulations within the scope of the Act.

Further, the Act makes it possible to block access to online interfaces that sell dangerous products.

The website may be blocked if an enforcement notice has not been complied with or the website repeatedly has sold or provided a platform for the sale of products presenting a serious risk.

This provision implements article 14(4)(k)(i) of the EU Regulation; however, the provision of the Danish Act goes further than the Regulation, extending the application beyond a serious risk, to products that do not comply with the requirements of the Act.

The provision may be used against web shops and e-commerce sites that mediate the sale of products and/or establish contact between the buyer and the seller.

The Act also introduces stricter consequences for non-compliance by increasing the penalties and the recommended levels of fines, with specific focus on repeated offences.

Non-compliance is sanctionable by fines, and under aggravated circumstances the sanction may increase to a two-year prison sentence.

There are no maximum fines, but it has been suggested in the legislative material that the minimum fines should generally be DKK 50,000 (equal to USD 7,550) for small companies. However, significantly larger fines may be expected for large companies.

Bech-Bruun's comments
Operators must ensure that the products traded or made available on the Danish market comply with the provisions set out in the Act (including rules on harmonised, non-harmonised and nationally regulated products).

We expect that the authorities will be ready to apply their extended powers when the Act takes effect, and companies that sell products to the Danish market should thus be ready to meet the requirements of the Act.

Our experts are ready to advise on implications and interpretation of the new Act.