E-commerce proposal causes liability jitters

This article is part of our special report ICT: Fuelling the economy.

Proposals to double the volume of e-commerce in Europe by 2015 – laid out in a communication published yesterday (11 January) – are set to cause a tussle over the liability of online traders.

The communication – launched by Commissioners Michel Barnier (Internal Market) Neelie Kroes (Digital Agenda) and John Dalli (Health and Consumer Policy) – contains the action plan aiming to boost e-commerce from its current levels of 3.4% of total retail sales (3% of the EU GDP) to 7%.

It outlines proposals to increase access to online sales for consumers, make online payments and delivery of goods easier, increase price transparency and consumer protection, protect against fraud and beef up high-speed networks.

The most controversial issue, however, relates to the liability of internet service providers for faulty or fraudulent content.

Liability of online trades under scrutiny

Currently such providers are protected from liability so long as they act to remove offending products or advertisements when they have knowledge of the problem.

The Commission intends to beef up protections, however, and will adopt an initiative on the so-called ‘notice and action’ procedures this year.

James Waterworth, president of the European Digital Media Association (EDiMA), an alliance of some of the largest internet and new media companies, welcomed the move to unlock the growth potential of the single market. But he told EURACTIV it should only be done “while ensuring that the cornerstones of the current environment, for example the liability regime for online intermediaries, remain in place.”

However, Monique Goyens, director-general of BEUC consumer organisation, said the ‘notice and action’ procedure for illegal content must be very carefully framed.

“We have seen that efforts to criminalise consumers are a waste of time," she said. "Europeans have clearly shown that more legal choice, with the chance to confidently and safely pay, is where the future lies.”

A €310-billion business

Kroes said €6 trillion changes hands annually through global e-commerce, "but in Europe we are lagging behind. Of the  200 million Europeans who buy over the internet – faced with different national rules – fewer than one-quarter do so across national borders.”

Copenhagen Economics, an economics think tank, has released a new study saying that online intermediary activities in the EU contributed around €310 billion to European GDP based on 2009 data.

The think tank said the sum consisted of a direct GDP contribution of online intermediaries of €160 billion, and an indirect impact of €150 billion through ripple effects on other firms and sectors.

The report said that year-on-year growth in e-commerce has seen a steep upward trend.

“We’re very hopeful that this is a stride towards a more competitive and future-proof European digital economy. But such EU efforts will stand or fall based on whether they adequately consolidate consumers’ basic rights and tackle their concerns,”said Monique Goyens, the director-general of consumer organisation BEUC.

“We also need a clampdown on existing and emerging unfair commercial practices on the internet," she said. "Only in doing so will the EU boost consumer confidence in shopping across national borders so that we can enjoy a more vibrant digital single marketplace.” 

“A large part of Europe’s digital economy is made up of online intermediaries,” said  Martin H. Thelle, a partner at Copenhagen Economics. “In our view, European policymakers made a wise choice when they enshrined liability limitations for online platforms in the E-Commerce Directive and it seems they are making another smart move by further strengthening the current regime.”

“Both documents show that the Commission services have gained a fairly clear picture of the problematic areas which need to be addressed and the suggested actions aimed at facilitating e-commerce transactions deserve to be supported by our industry,” said Susanne Czech, Secretary General of European Multi-channel and Online Trade Association (EMOTA)

“However, we will pay close attention to the way in which these actions are formulated as well intended initiatives may result in a new burden for businesses if they lose sight of online traders’ legitimate interest in profitable business.”

Growth in EU cross-border e-commerce continued "at a sluggish pace",  according to a recent European Commission consumer survey, indicating that much remains to be done if the bloc is to meet more robust targets for 2020.

The target for the proportion of consumers who shop online across borders is 20% by 2020, as enshrined in its 'Digital Agenda' for boosting the online economy.

Some 36% of EU consumers shopped online from national sellers in 2010 compared to 34% in 2009, says the 5th edition of the Consumer Conditions Scoreboard, revealing minor growth in the popularity of domestic e-commerce

  • 2013: Commission to organise a stakeholder conference on e-commerce and to propose various actions under the communication
  • European Digital Media Association (EDiMA)Website
  • European Multi-channel and Online Trade Association (EMOTA)Press Release

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