7 Electronic commerce in the Single Market
| (25113)
15459/03
COM(03) 702
| Commission Report — "First report on the application of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (Directive on electronic commerce)"
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| Legal base | — |
| Document originated | 21 November 2003
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| Deposited in Parliament | 3 December 2003
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| Department | Trade and Industry
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| Basis of consideration | EM of 19 December 2003
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but further information requested
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Introduction
7.1 The aim of the E-Commerce Directive[16]
is to remove legal obstacles and to provide business and consumers
with legal certainty in the conduct of electronic commerce in
the Single Market. It is intended to provide a light and flexible
legal framework for e-commerce, containing only provisions which
are strictly necessary to ensure the proper functioning of the
Single Market. It covers a wide range of on-line services, from
specialised news services and on-line selling of products to financial
services, such as on-line banking. It applies "horizontally"
across all areas of law which touch on the provision of these
services.
The Commission's report
7.2 The Commission's report is the first assessment of the
transposition and application of the Directive and its impact.
It is based on the Commission's own experience and feedback from
Member States, industry, professional organisations, consumer
organisations, and other interested bodies. The report concludes
that although the Directive is still relatively new, the impact
on e-commerce so far has been substantial and positive.
7.3 The report assesses how the key provisions of
the Directive have worked in practice:
- Internal Market.
Contrary to expectations, the derogations within the Internal
Market article have not been frequently used. Only five formal
notifications have been received. All come from the same Member
State [the UK] and concern the fraudulent use of premium rate
numbers;
- Electronic Contracting.
The Directive contains three provisions on electronic contracts,
the most important of which is the obligation on Member States
to ensure that their legal system allows for contracts to be concluded
electronically (Article 9(1)). Most Member States have introduced
into their legislation a horizontal provision stipulating that
contracts concluded by electronic means have the same legal validity
as contracts concluded by traditional means;
- Liability of Internet Intermediaries.
The Directive limits the liability of Internet intermediaries
providing services consisting of mere conduit, hosting and caching.
The limitations are established in a horizontal manner, meaning
that they apply to liability, both civil and criminal, for all
types of unlawful activities by third parties. The Directive
does not affect the liability of persons who are at the source
of the content; nor does it affect the liability of intermediaries
in cases where they have actual knowledge of unlawful content
but fail to act upon it. The Commission reports that these limitations
have in general been correctly implemented by Member States.
Many Member States opted to transpose Articles 12-14 almost literally.
The Commission has identified one or two possible cases of Member
States not implementing the limitation of liability of Internet
intermediaries correctly, but it is still analysing them. From
the feedback it has received, it appears that the approach taken
in the Directive has widespread support, but it will continue
to monitor new developments rigorously.
- Codes of Conduct.
The Commission acknowledges that the take-up of codes of conduct
and trust-mark schemes has slowed down since an initial boom in
2000. It appeals to businesses and consumer organisations, as
well as Member States, to continue to support and promote these
activities;
- Alternative Dispute Resolution (ADR).
The Commission also asks Member States to allow for and encourage
the development of mechanisms for out-of-court dispute settlement
by electronic means.
7.4 The deadline for Member States to transpose the
Directive into national legislation was 17 January 2002, 18 months
after its entry into force on 17 July 2000. However, there were
some delays in transposition, mainly due to the "horizontal"
nature of the Directive. Many Member States needed time to ensure
wide national consultation of interested parties. France, the
Netherlands and Portugal had still not fully transposed the Directive,
but work was well advanced and they were expected to have done
so by the end of 2003.
7.5 Meanwhile the Commission proposed to continue
with an Action Plan to:
- monitor implementation;
- improve co-operation between Member States, ensuring
a continuous exchange of information between the Commission and
the Member States and between the Member States themselves;
- raise awareness amongst businesses and citizens.
As far as business-to-business e-commerce was concerned, an online
information system managed by a network of 'Euro Info Centres'
was due to become operational in early 2004. It would be extended
to the Accession and Candidate countries;
- monitor new regulations introduced in Member
States to ensure that these do not distort competition or give
rise to "regulatory fragmentation";
- strengthen international cooperation to develop
international rules on subjects such as liability of Internet
intermediaries, procedures for removing illegal content, electronic
contracts and out-of-court dispute resolution.
7.6 The Commission says that it now needs to collect
information on how the new framework for e-commerce is working
in practice. To this end, it has launched an open consultation
on legal problems encountered by companies doing e-business, with
a view to identifying any remaining practical barriers or new
legal problems.
The Government's view
7.7 The Minister for Energy, e-Commerce and Postal
Services at the Department of Trade and Industry (Mr Stephen Timms)
comments:
"The Commission's positive report on the first
year and a half of the Directive is encouraging and broadly reflects
the UK's own experience since implementation. The UK split implementation
into two sectors:
i. General e-commerce services, which were
co-ordinated by DTI; and
ii. Financial e-services, which were co-ordinated
by HM Treasury.
"The Treasury and DTI implementing Regulations
were laid on 31 July and were brought into force in stages by
the 23 October 2002.
"Internal Market. One of the key areas
of the Directive is the internal market section. The general
country of origin approach has been broadly welcomed in the UK.
At the same time the five notifications of use of the derogations
have all come from the UK (from the Independent Committee for
Supervision and Standards of Telephone Information Services (ICSTIS),
who regulate the use of premium rate telephone numbers). No other
UK enforcement authority has so far invoked a derogation. There
are separate provisions under which the Office of Fair Trading
and others can seek enforcement action from their opposite numbers
in the rest of Europe in certain consumer protection cases.
"Electronic Contracting. In implementing
the Directive the UK did not transpose Article 9(1) as we believed
that the great majority of relevant statutory references (e.g.
requirements for writing or signature) are already capable of
being fulfilled by electronic communications. There are a few
exceptions to this view i.e. all contracts that create or transfer
real estate property rights and all contracts relating to the
imposition and operation of export controls of goods and technology
insofar as the items controlled are not outside the scope of the
Treaty by virtue of Article 296. We in the UK are committed to
tackling any cases that do emerge under the Electronic Communications
Act 2002 or other suitable legislation.
"Codes of Conduct. UK experience has
been mixed. In 2000 the Alliance for Electronic Business (AEB,
which includes the CBI) and the Consumer Association launched
TrustUK as an umbrella body to approve codes for retail e-commerce.
In January 2003 the Consumer Association's closed its Which?Web
Trader scheme, and TrustUK now covers three codes: those of the
Association of British Travel Agents (ABTA), the Direct Marketing
Association (DMA) and Safebuy.
"The Enterprise Act 2002 empowered the Office
of Fair Trading (OFT) to approve codes of practice. These codes
will cover the whole range of operations of business sectors and
OFT's core criteria have been designed to cover both offline and
online activities.
"Alternative Dispute Resolution (ADR). The
UK is a firm supporter of ADR as a low cost, user-friendly way
of settling disputes. The UK has played a leading role in the
development of European Extra-Judicial Network (EEJ-Net), launched
in May 2000, which gives access to ADR schemes in other Member
States through a network of national clearing houses. DTI has
committed £380,000 to date to enable Citizen's Advice to
set up and run the UK clearing house. DTI is responsible for
nominating to the Commission UK 'ADR' bodies for participation
in EEJ-Net.
"In September 2003, DTI's Consumer and Competition
Policy Directorate commissioned the National Consumer Council
to research the availability and use of consumer alternative dispute
resolution in the UK. A report will be published in January 2004.
The information will help DTI develop its policy on consumer
redress and to fulfil its commitments, to development of EEJ-Net."
7.8 The Minister adds that the report is being circulated
to bodies with an interest in e-commerce issues in the UK for
their comments.
Conclusion
7.9 The Commission consulted unusually widely
when drafting this complex and extremely broad-ranging Directive.
The representations it received and took into account appear
to have enabled it to achieve a successful result.
7.10 We now clear the document but we ask the
Minister to let us know the outcome of the Commission's analysis
of the two possible cases of incorrect implementation in respect
of limited liability and the result of the Government's consultation
with interested parties in the UK.
16 Directive 2000/31/EC. Back
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