Select Committee on European Union Written Evidence

Memorandum by Energis Communications Ltd

  1.  What needs to be done to create confidence and stimulate e-commerce?


1.1  The internal market principle and the consumer protection dichotomy is probably one of the most challenging issues we face in the Information Society. It is in the interest of UK Plc to ensure that both consumers and businesses have the confidence to use e-commerce without fear of material loss or harm through interference to their rights as an individual or a business. Energis is committed to finding this solution with all stakeholders.

  1.2  Section 10, "Trust", of the PIU report deals with the significance of trust as a barrier to participate in e-commerce and puts forward a number of recommendations to overcome that barrier. In particular, Energis believes that Recommendation 10.2, ie the use of hallmarks and the development of an Internet dispute arbitration service, will create confidence and stimulate e-commerce.

  1.3  Consumers want a brand (symbol, hallmark etc.) that they can trust—a simple hallmark to guarantee that a supplier meets a certain standard. They are not looking for a legislative solution. For businesses, especially SMEs which may not have a well-known brand, the hallmark could be used to promote trust and its services. This solution creates a "win-win" situation for both parties. However, it cannot be over emphasised that the use of hallmarks would only succeed if it is backed by clearly defined standards. A mechanism for policing its standards is also a prerequisite. To this end, Energis is encouraged by the DTI's proactive involvement with the Alliance for Electronic Business.

  1.4  With regards to Internet dispute arbitration service, Energis is supportive of the development of electronic out-of-court dispute settlement schemes. For example, the development of an alternative dispute resolution (ADR) mechanism that could be linked to existing EU Member State ADR schemes through a network could ensure a satisfactory outcome for both consumers and businesses. This type of online system could allow disputes to be resolved by the ADR in the country of origin of the business, while ensuring consumers access to the ADR from their own Member State.


  1.5  For the UK to become the world's best environment for electronic trading, businesses, especially SMEs, need a clear understanding of their obligations arising from EU legislation. Energis is concerned that the requirements arising from a number of directives may be confusing to both businesses and consumers. For example, both the Directive on the Protection of Consumers in Respect of Distance Contracts ("Distance Selling Directive") and the proposed directive "on certain legal aspects of Information Society services, in particular electronic commerce, in the Internal Market" have a similar, yet diverging, provision on general information to be provided.[81] Energis believes that it is imperative that the implementation of the two directives does not lead to inconsistent requirements. Moreover, to ensure that businesses comply with the relevant regulations and consumers are given the protection they need, the message to both consumers and businesses must be consistent, simple and clear.

  1.6  The Government needs to recognise that these businesses cannot afford to implement similar yet diverging requirements on a piecemeal basis. Complex variations in requirements will inevitably lead to non-compliance and, as a result, consumers will lose confidence in e-commerce and new media services. Energis therefore urges the Government to take a holistic approach when dealing with directives with recurring themes. Perhaps the Government could draft guidelines on the whole legislative framework.

2.  Does the European Commission's draft Action Plan "e-Europe: An Information Society for All" offer a realistic means of promoting e-commerce in the EU?

  2.1  e-Europe is a political initiative and as such the scope of the action plan is significantly greater than e-commerce. It encompasses a whole host of initiatives in the Information Society ranging from education in a digital environment to intelligent transport. A prerequisite to the success of any of these initiatives is the harmonisation by full implementation across all Member States of the 1998 telecommunications liberalisation package.

  2.2  The e-Europe initiative is an ambitious project with ambitious target deadlines. However, it is vague and in particular, fails to address the issue of financial engagement (eg industry or government funding). Given that it is a political initiative, it is understandable that the paper discusses a number of social policy issues. It must not, however, be a foregone conclusion that any of these initiatives will be funded by the industry, ie the enabling parties, as a universal service. In order to promote e-commerce in the EU, we believe that social policy issues should be segregated from competitive market issues. The development ofe-commerce needs to be market driven.

  2.3  Section Two (Cheaper Internet access) and Section Three (Acceleration of e-commerce) offer realistic means of promoting e-commerce in the EU. In particular, we agree that the unbundling of the local loop (ie access) and the significant reduction in short distance leased lines tariffs (ie interconnection) are imperative should we want a competitive environment for electronic trading. We also agree with the Commission that regulation of e-commerce should be limited because of the speed of change and the implications of global change. To keep up with the rapid pace of change, the role of self-regulation and co-regulation ought to be increased.

3.  Will codes of conduct and co-regulation provide sufficient protection? Is there a case for intervention by national governments and the EU?

  3.1  Energis believes that the development of e-commerce should be market driven. However, given the range of issues e-commerce and the Internet encompass, we acknowledge that legislation is necessary in certain areas. For example, codes of conduct or co-regulation would have been inappropriate to ensure that electronic signatures are legally recognised. The global and fast-moving nature of the Information Society suggests, however, that any legislation introduced must be "light-touched". To this end, we believe the Government has taken the right approach in the introduction of the Electronic Communications Bill.

  3.2  In this fast moving industry, the benefits of codes of conduct and co-regulation cannot be over emphasised. A prime example of this is the use of hallmarks as mentioned earlier in the paper. Codes of conduct and co-regulation are useful tools to protect consumer interests and promote consumer confidence while not placing undue burdens on e-businesses. In this respect, we believe quite a lot of the requirements arising from the Distance Selling Directive should be implemented as codes of conduct or co-regulation.

4.  Do the institutions of national governments, on the one hand, and the European Commission, the Council of Ministers and the European Parliament, on the other, function with sufficient flexibility and coherence to promote the EU's objectives in the field of e-commerce?

  4.1  Energis believes the key issue is timing. We are very concerned that some of the directives on the horizon will be obsolete by the time they come into effect. For example, although e-commerce is within the scope of the Distance Selling Directive, it is quite clear that technology such as WAP (Wireless Application Protocol) was not anticipated when it was drafted. Initiatives such as TrustUK did not exist either. Energis fully understands the Government's responsibility to implement this Directive. However, one could argue that many of the obligations no longer remain appropriate because technology has moved on or the issues have already been proactively addressed by codes of conduct or co-regulation.

5.  Should existing EU institutional structures be changed or new ones created, to improve policy development and co-ordination?

  5.1  This issue is currently being reviewed as part of the Commission's 1999 Communications Review. As such, Energis has yet to finalise its views on the matter. However, it is worth noting a comment by Commissioner Liikanen. Last December he was invited to the European Parliament's Industry Committee where he was asked whether there should be a task force on telecommunications and e-commerce, with representatives of the three institutions (Commission, Council and Parliament). Commissioner Liikanen replied by urging the Committee to try the new "e-Europe initiative". However, he also acknowledged that telecoms and e-commerce matters are handled in a piecemeal fashion by the various Directorate General, which all want a piece of the action.

  5.2  The potential need for convergence of regulatory and legislative bodies is not restricted to the EU. As such, Energis looks forward to the Communications White Paper and its recommendations.

6.  How can structural change be brought about fast enough to accommodate to the growth of e-commerce?

  6.1  Again, since this issue is currently being reviewed as part of the Commission's 1999 Communications Review, we will not comment on this occasion.

March 2000

81   Article 5 of the Proposed Directive on electronic commerce and Article 4 of the Distance Selling Directive. Back

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