Documents considered by the Committee on 8 February 2017 Contents

2Digital Single Market: Cross-border portability of online content

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; further information requested; but scrutiny waiver granted; drawn to the attention of the Business, Energy and Industrial Strategy Committee and the Exiting the European Union Committee

Document details

Proposal for a Regulation on ensuring the cross-border portability of online content services in the internal market

Legal base

114 TFEU; ordinary legislative procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Number

(37394), 15302/15 + ADDs 1–2, COM(15) 627

Summary and Committee’s conclusions

2.1People are increasingly accessing online content services through portable devices (such as tablets and smartphones). As a result, demand for access to content on the move, including cross-border, is rapidly growing.

2.2At present, subscribers to online content may find that their access to such services is effectively blocked when travelling abroad due to copyright or licence restrictions. In December 2015, the Commission proposed a draft Regulation (hereafter ‘the Regulation’) intended to enable EU consumers who have purchased or legitimately subscribed to online content services in their home Member State access to that service when ‘temporarily present’ in another Member State. It is one of a series of legislative proposals aimed at implementing the Commission’s wider Digital Single Market Strategy to increase cross-border e-commerce.

2.3Following the agreement of a General Approach in Council and the first reading position adopted by the European Parliament’s Legal Affairs Committee (JURI), the Minister of State for Universities, Science, Research and Innovation (Joseph Johnson) now writes to update the Committee on progress in trilogues.

2.4The Maltese Presidency has produced a compromise text that seeks to bring together the Council and Parliament texts. The Minister states that the compromise text addresses the core issues raised in previous correspondence. The definitions of ‘residence’ and ‘temporary presence’ have been tightened in order to ensure that portability is “a targeted, temporary service” as originally intended. The text also clarifies the mechanisms by which service providers can verify a user’s Members State of residence to the Minister’s satisfaction.

2.5The Minister concludes that the compromise text “represents a sensible middle ground between the Council and Parliament texts”. While there may be some final clarifications to the text, he states that it “is likely that it will form the basis of an agreement” and requests scrutiny clearance of the Portability Regulation “in order that it can be adopted in trilogue in early February”.

2.6Regarding Brexit, the Minister does not add to his predecessor’s analysis, merely noting that “my officials will ensure that these issues are considered alongside other similar issues, such as the recent agreement on mobile roaming charges, as negotiations on the UK’s departure from the EU progress”. In light of the Prime Minister’s recent speech on the government’s negotiating objectives for leaving the EU, which indicated the Government’s preference for a comprehensive Free Trade Agreement as the basis of future UK-EU trade in services, the Committee requests further information concerning these implications.

2.7We thank the Minister for his summary of progress in trilogues regarding the Portability Regulation. We note the Minister’s view that the compromise text produced by the Presidency “represents an appropriate compromise between the Council and Parliament texts” and will “meet the needs of copyright owners, online service providers and consumers, in line with the Government’s negotiating objectives”.

2.8On the basis that the final text agreed in trilogues does not deviate in substance from that of the compromise text that has been shared with us, we are willing to grant the Minister a scrutiny waiver to vote for the Regulation at the relevant meeting of Council. However, we will not clear the document from scrutiny until we have received further clarification of the implications of the UK leaving the EU for this issue.

Brexit implications

2.9On Brexit, we note the Minister’s observations that:

Further Brexit questions

2.10Following the Prime Minister’s speech indicating that the UK envisages a comprehensive Free Trade Agreement as the basis of future services trade between the UK and the EU, we request further clarification on a number of Brexit-related points:7

2.11We would be grateful for a response to the above questions by the 15 March, as well as a short update on the conclusion of the legislative process in relation to this document, including any significant changes to the compromise text. In the meantime, we retain this proposal under scrutiny and draw the Minister’s letter and our conclusions to the attention of the Business, Energy and Industrial Strategy Committee and the Exiting the European Union Committee.

Full details of the documents

Proposal for a Regulation on ensuring the cross-border portability of online content services in the internal market: (37394), 15302/15 + ADDs 1–2, COM(15) 627.

Background

2.12The detail of the draft Regulation, the Government’s position on it and correspondence with the Committee can be found in the Committee’s previous reports on this subject, which are listed at the end of this chapter.

The Minister’s letter of 31 January 2017

2.13The Minister of State for Universities, Science, Research and Innovation (Joseph Johnson) writes to update the Committee on progress in informal trilogues and seeks final scrutiny clearance for the Portability Regulation.

2.14The Minister states that the Maltese Presidency has produced a compromise text that seeks to bring together the Council and Parliamentary texts. The legal text is marked as limité, and its contents cannot be made public; however, the Minister provides a broad-brush account of its main provisions, which, in his view, address the issues raised by Baroness Neville Rolfe in her previous letter:

2.15The Minister concludes that, overall, the compromise text “represents an appropriate compromise between the Council and Parliament texts”. While there “may be some final clarifications to the text” the Minister considers it likely that it will form the basis of an agreement and requests that the Committee clear the Regulation from scrutiny “in order that it can be adopted in trilogue in early February”.

2.16On Brexit, the Minister does not add to the detailed analysis provided in his predecessor’s letter of 27 September 2016, only noting that “my officials will ensure that these issues are considered alongside other similar issues, such as the recent agreement on mobile roaming charges, as negotiations on the UK’s departure from the EU progress”. Given the Prime Minister’s recent announcement of the Government’s negotiating objectives it may be appropriate to ask for further information regarding the implications of Brexit for this file.9

The Minister’s letter of 21 December 2016

2.17The Minister of State for Energy and Intellectual Property (Baroness Neville Rolfe) wrote to update the Committee on progress on the passage of the Portability Regulation. On 30 November the European Parliament’s Legal Affairs Committee (JURI) adopted its first reading position on the Regulation and indicated that informal trilogue discussions had commenced between the institutions and would continue into 2017.

2.18The Minister noted that the Legal Affairs Committee’s text was an improvement on the Commission proposal, but added that there were “a number of areas where the Parliament’s approach differs from the Council text”. Key differences highlighted by the Minister included:

The Minister’s letter of 27 September 2016

2.19The Minister (Baroness Neville-Rolfe) wrote to update the Committee on the progress of the file in the European Parliament, where the Regulation remained in Committee stage. The Minister noted that a draft report led by JURI (Legal Affairs Committee) was released to MEPs in August, and was largely positive about the shape of the Regulation, and that CULT (Culture and Education Committee) and IMCO (Internal Market Committee) had also submitted reports on the Regulation.

2.20Summarising these reports, the Minister noted that MEPs continued to debate “the level of protection that should be mandated by the verification requirements” and whether the proposed list was adequate. She reported that the Government felt that the Council text provided adequate protection in this respect, but that there had subsequently “been a push from rightholders to ensure that a combination of criteria are used in order to ensure robust protection of content.” The Minister added that there had also been discussion around ensuring that the language of the Regulation “unambiguously notes the importance of the principle of territoriality in copyright markets”. The Minister said that these aspects of the proposals were likely to be debated in trilogues.

Brexit implications

2.21The Minister responded to a number the Committee’s questions regarding the implications of Brexit for the dossier, making the following points:

2.22The Regulation will apply to the UK before it leaves the EU—The Regulation will come into force six months after it is adopted, which means that the UK is “likely to be subject to its regulations for a period”, before it leaves the EU. This means that UK consumers will, for a period, be able to access audiovisual media subscriptions when travelling within the EU.

2.23The Regulation will continue to impact UK businesses post-Brexit—The Minister noted that, even after the UK has left the EU, “the Regulation will continue to have implications for the offerings provided by British content creators and service providers”. The Minister concludes that it “remains crucial that the final Regulation is both workable for UK businesses and of value to consumers”.

2.24Post-Brexit, the UK will not be able to deliver portability through domestic legislation alone—The Minister explains that “the legal nature of the Regulation, and its cross-border effect” means that “it would not be possible for the UK to domestically legislate for portable services, as the Regulation unifies the legal basis in each Member State which allows portability to be provided”. As such, “the UK would not be able to legislate in an extraterritorial fashion to mimic these provisions”. The Minister concludes that the Regulation’s “continued operation would very much depend on the shape of the UK’s future relationship with the EU”.

2.25The private sector may in some cases be able to achieve the same outcomes—The Minister states that “in the absence of the Regulation, it would be for rights holders and service providers to provide licensing solutions to allow their content to be used in each Member State of the EU in a portable fashion”. She adds, “As the Portability Regulation becomes ‘business as usual’ throughout the UK and the EU, and as consumers increasingly expect it as a feature of a service, it may well be that increasing numbers of businesses around the world adopt commercial practices that allow for portability, even where it is not provided for in legislation”.

2.26With regard to negotiations between the UK and the EU, the Minister stated that “the Government will be taking into account the above considerations during the course of the portability negotiations, and during the forthcoming negotiations on [the] UK’s exit from the EU”.

Previous Committee Reports

Sixth Report HC 71-vi (2016–17), chapter 3 (13 July 2016); First Report HC 71-i (2016–17), chapter 1 (19 May 2016); Twenty-ninth Report HC 342-xxviii (2015–16), chapter 1 (20 April 2016); Twenty-fifth Report HC 342-xxiv (2015–16), chapter 2 (9 March 2016); Eighteenth Report 342-xvii (2015–16), chapter 3 (13 January 2016).


8 In addition to mandating portability, the Regulation removes these specific obstacles to portability by (i) rendering unenforcable any provisions in contracts contrary to this obligation and (ii) introducing a ‘legal fiction’ or country-of-origin principle which states that the provision, access to and use of online content in another Member State, including copyright and related rights, are deemed to occur in the subscriber’s home State.




10 February 2017