A draft of the European Product Act has been leaked ahead of the European Commission’s expected formal proposal on October 6, 2026. The legislation aims to consolidate existing market surveillance rules into a single, directly applicable regulation, signaling a dramatic escalation in how the EU polices cross-border ecommerce.

Marketplaces Face De Facto Authorized Representative Liability

Under the proposed framework, online marketplaces that fail to verify a product’s compliance records before allowing it to be listed can become the product’s de facto authorized representative. Before permitting a product targeting EU end-users onto their platform, a marketplace must verify that the product has a valid digital product passport or product responsibility record.

If a marketplace fails these verification steps and the product reaches the market without an EU-established economic operator responsible for it, the platform assumes all associated legal obligations.

Furthermore, if a market surveillance authority orders the removal of a listing, the marketplace must act within two working days, report the action taken within a further four days, and prevent the product from reappearing under a different listing. This transforms platforms from passive intermediaries into active gatekeepers of product safety.

The European Commission Bypasses National Authorities With Direct Enforcement

Historically, product compliance enforcement has been fragmented across individual Member States. The new draft grants the European Commission direct investigation and enforcement powers over non-compliant products entering the EU from third countries. This applies when a product presents a risk, is likely to be distributed widely, and no Member State has opened an investigation following a Commission notification.

The Commission can require corrective action, prohibit further distribution, order recalls, and even require internet service providers to remove content. Crucially, the draft contemplates the use of European Commission webcrawlers to automatically identify non-compliant product listings, issuing automated takedown notices through existing digital services frameworks.

Evidence gathered by one national authority can also be shared and used by authorities in other Member States, ensuring that a compliance issue in one jurisdiction rapidly escalates across the entire bloc.

Six Percent Global Turnover Penalties Redefine Regulatory Risk

The financial stakes of non-compliance are being raised to unprecedented levels. Member States will be required to set financial penalties for infringements by economic operators, notified bodies, and online marketplaces ranging from 1 percent to 6 percent of the operator’s annual worldwide turnover in the preceding financial year.

A separate minimum penalty of at least 1 percent of annual worldwide turnover applies specifically for supplying incorrect, incomplete, or misleading information. Additionally, periodic penalty payments must be at least 5 percent of average daily worldwide turnover.

When the Commission exercises its own direct enforcement powers, it can impose penalties of up to 6 percent of annual worldwide turnover, which will sit alongside, rather than substitute for, national penalties. This creates a terrifying scenario of parallel, compounding financial liability for businesses with pan-European distribution.

Digital Product Passports Become A Pre-Market Mandatory Gatekeeper

The legislation establishes a horizontal digital product passport framework that applies wherever sector-specific legislation requires it. Manufacturers must generally create and register the digital product passport before placing the product on the market and retain both the passport and technical documentation for ten years.

For products offered online before the specific item or batch is known, sellers must provide a clearly identified reference digital product passport and ensure access to the final version before delivery.

Even post-sale software updates that constitute a substantial modification will require a new, linked passport. This turns the digital product passport from a theoretical sustainability tool into a hard, pre-market compliance gatekeeper that will be actively monitored by automated enforcement systems.

Our Take

Regulatory Friction is Being Deliberately Engineered to Price Non-Compliant Imports Out of the European Market

The leaked European Product Act is not a subtle adjustment to existing rules; it is a foundational rewrite of ecommerce liability in the European Union.

By threatening marketplaces with authorized representative liability and backing it up with six percent global turnover penalties, the Commission is effectively forcing platforms to become the primary enforcers of product safety.

For cross-border sellers and third-party marketplaces, the cost of compliance will skyrocket. Brands that rely on fragmented, opaque supply chains will find themselves legally and financially exposed, making robust, verifiable product data the most critical asset in European ecommerce.