Online Marketplace Loopholes Pose Economic Risks In The EU

The rapid expansion of e-commerce has generated significant efficiency gains and consumer benefits across Europe, but it has also exposed structural weaknesses in the EU’s regulatory framework.

A coalition of 64 organisations, ranging from NGOs to industry associations has warned that persistent loopholes in online trade are undermining the integrity of the single market, creating market distortions, and eroding the EU’s capacity to enforce safety and sustainability standards.

At the heart of the problem lies the treatment of online marketplaces under EU law. Platforms that facilitate cross-border trade are not classified as “economic operators” and thus bear limited legal responsibility for verifying product compliance. This exemption allows third-country sellers to place goods directly on the EU market without the checks required of domestic producers or importers.

The result is an uneven playing field: compliant European businesses shoulder the costs of product safety, environmental standards and extended producer responsibility (EPR) schemes, while non-EU sellers gain price advantages by sidestepping these obligations.

The economic implications are far-reaching. According to the European Commission, 4.6 billion low-value parcels valued under €150 entered the EU in a single year, representing a surge in direct-to-consumer imports. Many of these products are non-compliant, distorting competition in sectors such as electronics, toys and household goods.

Mystery shopper exercises have revealed failure rates as high as 80–100% for certain categories purchased from third-party sellers. Such figures indicate not only consumer safety risks but also a systemic regulatory gap that undermines legitimate businesses investing in compliance.

The coalition’s proposals are designed to rebalance incentives and restore market fairness. Chief among them is the establishment of a mandatory EU-based operator responsible for every product sold within the Union, including packaging compliance. Recognising online marketplaces as economic operators would align their obligations with those of importers and distributors, ensuring that no product enters the EU market without a responsible entity.

This would also internalise the compliance costs currently avoided by non-EU sellers, addressing the problem of “free-riding” in EPR systems. Studies estimate that free riders account for 5–10% of the online electronics market, representing up to 920,000 tonnes of goods annually that escape producer responsibility schemes.

The coalition further calls for customs reform, particularly the abolition of the de minimis rule for parcels under €150. This threshold, originally intended to streamline low-value trade, has become a major loophole exploited by overseas sellers. It encourages the fragmentation of shipments to avoid duties and oversight, thereby inflating parcel volumes and overwhelming customs capacity. Eliminating this exemption and implementing the “deemed importer” concept in the Union Customs Code would reassign accountability for compliance, reinforcing the principle that all market participants must adhere to the same standards.

The economic rationale extends beyond consumer protection. By tightening rules and enforcement, the EU can level the playing field for compliant businesses, safeguard jobs in regulated industries and ensure that investment in sustainable and safe production is not undercut by cheaper, non-compliant imports.

Germany’s recent example demonstrates the potential impact: when verification requirements were introduced for electronic goods under WEEE regulations, the number of registrations more than doubled in a single year, proving that stronger obligations can rapidly improve compliance.

For policymakers, the stakes are high. If loopholes remain, the EU risks not only consumer harm but also significant fiscal losses in customs revenues and EPR contributions. Moreover, the credibility of the internal market as a regulatory space, where standards are uniform and enforced would be weakened. As peak shopping seasons approach, with surges in imports from third countries, the coalition’s warning underscores the need for timely legislative action.

From an economic standpoint, closing the loopholes is not a regulatory burden but a corrective measure to restore market equilibrium. By ensuring that all sellers, regardless of location, face the same compliance obligations, the EU can strengthen consumer trust, uphold environmental commitments and prevent unfair competition.

The call from industry and civil society is clear: without decisive reform, the benefits of digital trade risk being overshadowed by systemic market failures.