The market release notion and its significance post-Brexit

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As is well-known, the much-awaited agreement between the European Union and the United Kingdom was reached on Christmas Eve. Whilst it regulated all goods passing through the customs border between the European Union and the United Kingdom in detail (it will thus be of fundamental importance to determine whether a product is European and/or British in origin), nothing further emerged regarding the UK's regulations regarding CE marked products.

This necessarily implied the end of the ‘single market and the need for anyone doing business in the United Kingdom with CE marked products to “regularise” their products in such a way as to comply with the “new” British standards’. CE marked products will need to be regularised:

before 31 December 2020 or before 31 December 2021 for CE marked products fulfilling all British safety, quality and performance requirements.

In this respect note that the deadline for almost all CE marked products is 31 December 2021, not 31 December 2020. In fact, as the UK has only just left the EU many of the European regulatory norms as regards safety, quality and performance are still applicable in Britain (in any event checks on compliance between the two regulatory systems will be performed on the basis of the individual, concrete CE product norms).

But what is the exact moment to assess whether the applicable deadline is 31 December 2020 or 2021?

The deadline which traders must know is the ‘market release’ date as was made clear in the previous withdrawal agreement signed by the parties in October 2019.

Let us now see what this is and what it is for.

Why is it important to understand if a product has been released onto the market?

Knowing a CE product's market release date will be crucial to understanding whether importing it into the UK requires compliance with the new British regulatory norms (on this point it is important to specify that, from 31 December onwards ‘the customs norms introduced in the recent Brexit agreement apply’. In fact where it can be demonstrated that a CE product was released onto the market prior to 31 December 2020 or 2021 (if it fulfils the requisites) no regularisation will be required as set out in Art. 41, section 1 of the October 2019 withdrawal agreement (without prejudice to the new requirements for trader registration and product type).

Practically speaking a familiarity with these rules benefits traders in the following ways, enabling them to:

obtain a guarantee that products already being sold in the UK or intended to be sold prior to 31 December 2020 or 2021 can be legitimately sold and used in Britain;
avoid fines from the relevant authorities resulting from a mistaken belief that a product released on the market complies with European norms alone prior to 31 December 2020 or 2021 (this might, for example, occur in the event of checks on goods after the expiry date if the British authorities consider that a product’s presence in the UK is illegal on the grounds of it having been released onto the market after the permitted date);
manage their warehouse stocks of previously made products appropriately (perhaps equipped with the documentation required for European standards alone) and avoid having to reconvert their entire stock to British standards (think of having to change all labelling, marking, symbols and certain technical documentation wording);
plan the production and printing of the product documents to their own advantage until the 31 December 2020 or 2021 deadline, identifying the goods not requiring regularisation carefully.

What is meant by market release?

Identifying the market release phase requires consideration of three definitions in the previously cited withdrawal agreement in article 40, points a), b) and c) and examining them in the following order:

b) market release: the first time a product is made available on the EU or UK market;

a) making available on the market: the supply of a product for distribution, consumption and use for trading purposes, either for profit or free of charge;

c) supplying a product for distribution, consumption or use: an existing and individually available product which is subject to written or verbal agreement after manufacture between two actual individuals or legal entities or for ownership transfer, other property right or ownership of the product in question or that is subject to an offer to one or more physical or legal entities for the purposes of stipulating this agreement.

Two very important rules can be drawn from these definitions:

the market release concept does not relate to the brand, type and category of product but rather an individual existing and identifiable product unit (this excludes not yet manufactured products which cannot be identified individually);
an offer or agreement transferring ownership or possession of the individual product unit is sufficient (it is thus clear that acceptance of those intending to buy the product is not required as a straightforward offer is sufficient).

This has is also clear from the UK Government Guidelines and in the Notice to stakeholders Withdrawal of the United Kingdom and EU rules in the field of industrial products sent on 13 March 202 by the European Commission to the various EU departments.

In addition to confirming the two above mentioned rules, both British and European Union clarifications introduced a further important rule:

the material consignment of the product is not required, as an offer or transfer agreement is sufficient.

In the light of the above-cited rules, it is clear that a product’s manufacturer can sell an individual product unit complying with European norms alone on the condition that an offer or ownership/possession transfer agreement was formalized prior to 31/12/2020 or 31/12/2021.

The international contract types generating this transfer effect are:

a sales contract (but also barter or valuation contract);
a service contract (also commonly called a ‘supply’ or ‘distribution’ contract)

In the event of checks, who is responsible for demonstrating that the product’s market release took place prior to 31/12/2021?

On this point article 42 of the withdrawal agreement reads:

It is the responsibility of the trader taking advantage of article 41, section 1 for a specific duty, to demonstrate, on the basis of any relevant documentation, that the product was released onto the European Union or United Kingdom market prior to the end of the transition period.

In the event of checks on goods by the relevant authorities, it is thus the trader’s, not the authorities’ responsibility to demonstrate that market release took place prior to 31/12/2020 (or 31/12/2021 if the product is CE marked).

How to demonstrate that market release took place prior to 23/12/2020?

As article 42 of the above-mentioned withdrawal agreement makes clear, traders can use any ‘relevant document’ to demonstrate the market release date of the individual product unit. However, the agreement does not specify which documents might serve this purpose.

On this point, the UK Government Guidelines have clarified that any relevant document can serve as proof of market release, including:

a sales contract showing that the products had already been made and satisfy legal requirements;
an invoice;
transport documents for distribution purposes.

Essentially offers, contracts, invoices and any other documents can serve this purpose.

However, offers, contracts and invoices rarely cite individual product units (showing series and/or lot numbers, for example) and generally specify the number of products required of product types, brands and category. This would effectively prevent traders from demonstrating market release prior to 31/12/2020 (or 31/12/2021 for CE-marked products).

In order to avoid this eventuality, we recommend that certain precautions are taken:

cite the individual product unit’s series or lot number in offers, contracts and invoices (however the agreement was reached);
keep all internal company documents enabling exact market release dates for individual production units to be proven up to date including, where products are imported or exported, those presented to the customs authorities or issued by these.