Documents considered by the Committee on 14th October 2015 - European Scrutiny Contents

4 Digital Single Market Strategy for Europe

Committee's assessment Politically important
Committee's decisionNot cleared from scrutiny; further information requested; drawn to the attention of the Business, Innovation and Skills Committee and the Culture, Media and Sport Committee
Document detailsCommission Communication: A Digital Single Market Strategy for Europe
Legal base
DepartmentBusiness, Innovation and Skills
Document Numbers(36836), 8672/15 + ADD 1, COM(15) 192

Summary and Committee's conclusions

4.1 In May, the Commission published its strategy for establishing a European digital single market (Digital Single Market Strategy). Its completion represents the second of ten political priorities identified under President Juncker's ten point plan aiming to create jobs and growth across the EU.

4.2 The Digital Single Market Strategy proposes a mix of legislative and non-legislative initiatives to be tabled by the end of 2016. The initiatives are centred on three 'pillars':

·  Improving access to digital goods and services across the EU for consumers and businesses, by removing barriers to e-commerce;

·  Creating the conditions and a level playing field for digital networks and services to prosper, through effective rules and frameworks; and

·  Maximising the growth potential of the EU digital economy, by encouraging the flow of data and take-up of digital technologies, as well as inclusiveness and skills.

4.3 The Minister of State for Culture and the Digital Economy, Mr Edward Vaizey, endorses the Commission's Digital Single Market Strategy as it supports growth, employment and productivity and reflects UK economic interests. He stresses the importance of ensuring that forthcoming proposals are based on clear evidence and are in line with the better regulation agenda.

4.4 A well-functioning Digital Single Market is vital to ensuring the long-term competitiveness of the UK and EU. The initiatives outlined by the Commission are rightly aimed at removing barriers to trade in digital goods and services, establishing the rules and frameworks necessary for digital networks to thrive, and encouraging the dissemination and take up of digital products.

4.5 While we are disappointed that the Minister's original Explanatory Memorandum lacked sufficient detail on the Government's position, we welcome the supplementary information provided by the Minister on 10 July on the Government's intended approach to considering individual dossiers. We nevertheless ask the Minister to provide a clearer indication of the Government's priorities in developing the Digital Single Market.

4.6 In addition, we consider the cross-cutting nature of the Digital Single Market — encompassing competition policy, consumer protection, data privacy, trade and network regulation — presents challenges, as well as opportunities. In particular, there will be inevitable trade-offs on each of, and between, the various initiatives — for example, between dossiers promoting consumer protection and data privacy versus those encouraging the free flow of data. In that context, and related to our question on the Government's priorities, we ask the Minister to explain how trade-offs are being considered — both at a UK and EU level.

4.7 Given the fast-moving nature of most digital markets, it is vital that innovation in the digital space is not pre-empted or stifled by policy makers. We therefore welcome the Government's focus on better regulation. In scrutinising individual measures put forward by the Commission, we will pay particular attention to whether the policy proposals are evidence based, necessary and proportionate.

4.8 We agree that the relationship between the EU's Digital Single Market Strategy and its external facing digital strategy — through international digital trade negotiations — is complicated. We would welcome the Minister's assessment of how the recent Schrems judgment,[ 44] which has the effect of restricting data transfers to the USA, impacts the Digital Single Market and the TTIP negotiations.

4.9 Given the Minister's intention to "make as much progress as we can on this agenda as swiftly as possible", and the forthcoming raft of measures on the Digital Single Market over the next 12 to 15 months, we ask him to provide regular updates on developments, focusing on the extent to which the initiatives brought forward by the Commission reflect the Government's priorities.

4.10 Pending the information and updates we have requested, we retain this Communication under scrutiny and draw it to the attention of the Business, Innovation and Skills Committee and the Culture, Media and Sport Committee.

Full details of the document: Commission Communication: A Digital Single Market Strategy for Europe: (36836), 8672/15 + ADD 1, COM(15) 192.


4.11 The Commission recognises that the completion of a genuine Digital Single Market provides considerable opportunities for growth in the EU. In July 2014, President of the European Commission, Jean-Claude Juncker, identified it as the second priority in his "Agenda for Jobs, Growth, Fairness and Democratic Change". He pledged to take "ambitious legislative steps" within the first six months of his Presidency to move the project forward.

4.12 The structure of the Juncker Commission reflects the importance of the Digital Single Market. Andrus Ansip, one of the six Vice Presidents of the Commission, is directly responsible for delivering the strategy, which includes steering and co-ordinating the work of 12 other Commissioners.

4.13 The European Commission estimates that the creation of a genuine Digital Single Market could add an additional €415 billion (£304 billion) to EU GDP.

The Commission Communication

4.14 The Communication sets out the Commission's strategy for boosting the digital single market, arguing that it can be a spur for jobs, growth, competition, investment and innovation. The strategy contains a mix of legislative and non-legislative proposals which are divided into three pillars.

4.15 The first pillar is "Better access for consumers and business to online goods and services across Europe". It is intended to expand consumer choice and make it easier for businesses to trade across national borders, and includes initiatives to:

·  Simplify digital commerce for consumers and businesses by harmonising EU rules for online purchases, allowing the application of the trader's national law within a set of EU contractual rights applicable to domestic and cross-border sales, and reviewing existing rules with a view to strengthening the enforcement of consumer laws;

·  Increase price transparency and regulatory oversight of the delivery of goods;

·  Deal with unjustified "geoblocking" — that is, the restriction of access to digital content based on the user's geographical location;

·  Reform the copyright regime to improve the portability of online media content across borders, allow the sale of content across borders, promote easier use of copyright content across borders through the harmonisation of copyright exemptions and clarify the rules on the activities of intermediaries in relation to copyright content; and

·  Reduce VAT-related business burdens by extending the single registration and payment for cross-border services to online sale of goods (known as the VAT Mini One Stop Shop), introducing an EU-wide VAT threshold to help small, start-up e-commerce businesses, allowing a single audit of cross-border businesses for VAT purposes and removing the VAT exemption for the importation of small consignments from suppliers in third countries.

4.16 The second pillar is "Creating the right conditions and a level playing field for advanced digital networks and innovative services". The purpose of this is to improve digital networks and services within the EU, and includes initiatives to:

·  Reform telecoms rules to create a consistent approach to spectrum policy and management, deal with regulatory fragmentation to allow efficient network and service providers to achieve economies of scale and promote investment in high-speed broadband networks;

·  Review the Audiovisual Media Services Directive, particularly in relation to the promotion of European works, the protection of minors and rules on advertising;

·  Examine and assess the role of online platforms to look at transparency in the collection and process of information, data usage, conditions for the use of copyright-protected content, the ability of individuals and businesses to move from one platform to another and illegal content; and

·  Reinforce the security of personal data.

4.17 The third pillar is "Maximising the growth potential of our European Digital Economy". This aims to increase the adoption of digital technology by businesses across the EU, and to make it easier to interact with the public sector and reduce the burdens on business. It intends to do this by:

·  Improving free movement of data, addressing unjustified restrictions on the location of data for storage and launching a European cloud;

·  Supporting interoperability between devices and systems;

·  Adapting national education and training systems to meet the increasing demands for digital skills; and

·  Improving online public services such as the interconnection of business registries, and introducing a 'once only' principle for submitting data to public administrations.

The Minister's Explanatory Memorandum of 15 June 2015

4.18 The Minister welcomes the Commission's Digital Single Market Strategy, stating that "it is an area in which the EU can add value in supporting growth, employment and productivity".

4.19 The Government stresses the importance of reducing the regulatory burden on businesses to make it easier for new businesses to start up and for existing businesses to grow.

4.20 In particular, the Government places particular emphasis on better regulation and evidence-based policy making. It supports the Commission's decision to take a "cautious approach" to online platforms and to analyse the market situation and the evidence before taking action.

The Minister's letter of 10 July 2015

4.21 The Minister supplements the information contained in the Explanatory Memorandum in relation to the Government's position as follows:

"UK position

"The Commission's Digital Single Market package will support growth and employment, whilst also providing better access to digital products for consumers and encouraging the take up of digital technologies in EU businesses. As such it reflects UK economic interests and the UK Government endorses it. However this does not sign us up to the full detail of the Commission's individual proposals.

"We will need to continue to pay close attention to the more detailed policy proposals which the Commission will present over the next 18 months ensuring they are evidence based and that we influence early to protect UK interests.

"Guiding Principles

"The UK's approach to the individual dossiers in the Digital Single Market will focus on:

·  "Expanding consumer experiences: including increased choice and lower prices through e-commerce; better access to creative content from a range of providers; and participation in the sharing economy.

·  "Empowering citizens: ensuring that individuals have trust and confidence in how their data will be used, as well as in the consumer protection regime.

·  "Encouraging innovation: We should support an approach that is light-touch and flexible enough to respond to rapid technological changes; in particular, we do not want regulation to close down innovation and the potential of fast-moving technologies such as big data and cloud computing. We should champion technological neutrality.

·  "Ensuring better regulation: We should ensure that any new measures do not impose disproportionate regulatory burdens on business and we should support the removal of existing burdensome regulatory barriers.

·  "Supporting digital disruption: We should recognise that changes in technology will create winners and losers. We should not use regulation to shield companies from the effects of legal, more popular competitors.

·  "Supporting digital start-ups to become 'scale ups': We should focus our efforts on supporting businesses to expand, and not introduce regulations that make it difficult for them to grow.

·  "Supporting creativity: We should seek to ensure that any proposals brought forward support creativity and innovation, investment in creative content and the appropriate remuneration of creators. We will need to continue to work closely with the creative industries to ensure that their concerns are understood and that appropriate safeguards are considered where evidence supports them.

·  "Supporting an evidence-based approach to policy making: The Commission has recently launched a Competition Sector Inquiry focussing on the application of Competition law in e-commerce, and will launch later this year a comprehensive assessment of the role of platforms. We should oppose any attempt to pre-empt the outcomes of these investigations.

·  "Protecting the public: We should seek to ensure that any proposals brought forward do not unnecessarily undermine the ability of the police, security services and other law enforcement agencies to protect the public and safeguard national security.

·  "Trade: The digital opportunity is a global one. Our overarching level of ambition for the DSM negotiations should be reflected in our approach to international digital trade negotiations, particularly the Trade in Service Agreement (TiSA) and the EU-US Free Trade Agreement (formerly known as TTIP). We will need to be tactical to take account of the sensitivities within the EU and ensure that any policy positions adopted on the DSM do not unduly affect our ability to develop a high level international framework for digital trade through these agreements."

4.22 The Minister makes it clear that the Government wishes to make progress as swiftly as possible on the Digital Single Market agenda and undertakes to provide further updates as more information from the Commission is brought forward.

The House of Lords EU Committee

4.23 In separate correspondence with the House of Lords EU Committee, the Minister expanded on the Government's position in a number of areas, explaining:

·  The Government has contributed to the Commission's comprehensive assessment of the role of online platforms by sharing with the Commission the Competition and Market Authority's two recent reports—on Online Reviews and Endorsements, and the Commercial Use of Consumer Data—to help build its evidence base.

·  The Government in principle believes that better coordination of spectrum allocation is more efficient, would tackle regulatory fragmentation and increase competition to allow economies of scale; however, it is cautious on the issue of how best to achieve this. It argues that, while the Commission may play an important facilitating role in achieving harmonisation, a mandated approach may fail to take into account specific conditions within Member States and ultimately lead to a worse outcome.

·  Changes to the consumer protection framework are one of the most important parts of the Commission's package. The Government identified a number of key questions, including whether harmonisation would lead to different sets of consumer rights for on- and off-line sales, and what evidence existed to justify changes.

·  On geo-blocking, the Government supports reforms intended to enable content portability within the single market, but accepts that it is in some cases justified, for example for compliance with local laws or to enforce copyright.

·  There has been engagement with SMEs and start-ups, and with consumer groups. The Government indicated that the former group had prioritised a reduction of barriers to e-commerce and the implementation of the "think small first" principle in framing legislative proposals so as to encourage innovation and technological advances, while consumers had highlighted increased competition and choice, effective consumer protection and transparency on the use of consumer data.

4.24 On 17 September 2015, the House of Lords EU Internal Market Sub-Committee launched an inquiry into Online Platforms and the EU Digital Single Market.

Previous Committee Reports


44   US-EU Data Sharing: Case C-362/14: Maximillian Schrems v Data Protection Commissioner. Back

previous page contents next page

© Parliamentary copyright 2015
Prepared 14 October 2015