Brussels, 21st November 2003
e-commerce: EU law boosting emerging sector
With 54% of European internet users expected to shop online by 20061, the successful application of the Electronic Commerce Directive, adopted in 2000, will be increasingly vital to the EU economy, concludes a European Commission report published today. According to the report, the Directive, by applying to e-commerce the Internal Market principle of the freedom to provide services, is already "having a substantial and positive effect". The report emphasises that, given continuing technological innovations and the rapid growth of e-commerce, the Commission will need to keep a close eye on the application of the Directive. It will work with Member States to improve both information to businesses and citizens and the exchange of information among national and European authorities. The global nature of the Internet means that the Commission will also need to strengthen dialogue with international partners so that worldwide rules can be drawn up where necessary.
Internal Market Commissioner Frits Bolkestein said: "The EU's Directive is helping e-commerce to take off in the Internal Market by ensuring that Europe's e-commerce entrepreneurs can take full advantage of a domestic market of more than 370 million consumers. Real online success stories are emerging. But things change rapidly in this sector, so we cannot sit back. We now need to make sure that the Directive continues to work well over the next few years, in an enlarged European Union."
Implementation of the Directive
The Commission's report concludes that the Internal Market objectives of the Directive have been met and that it has provided a sound legal framework for information society services in the Internal Market. It has also led to modernisation of existing national legislation, for example in contract law, to ensure the full validity of online transactions.
The deadline for Member States to implement the Directive into national law was 17 January 2002. The Directive has now been implemented in 12 Member States. In the remaining three (France, the Netherlands and Portugal) work appears to be well advanced. Five of the ten future Member States have already written the Directive into national law.
A revision of the Directive would be premature. Instead, the Commission will now focus on ensuring that the Directive is correctly applied and on collecting feedback and practical experience from business and consumers alike. These efforts will include continuous monitoring of the application of the Directive in both current and future Member States.
An important tool in ensuring that national rules incompatible with the Directive are not adopted will be the notification procedure under Directive 98/34/EC, under which the Member States give prior notification of any draft national regulations governing on-line services (see IP/03/739). In addition, on 17 November 2003 the Council approved EU accession to Council of Europe Convention 180, the first truly international system (open to more than 50 countries, including the US, Japan and Canada) of regulatory dialogue on information society services (see IP/03/955).
Other action will include:
Online gambling, which is currently outside the scope of the Directive, is a new area in which action may be required because of significant Internal Market problems - see for example Case C-243/01s of the European Court of Justice (ECJ press release CJE/03/98), concerning criminal proceedings in Italy against persons collecting Internet bets on behalf of a bookmaker legally licensed in the UK. The Commission will examine the need for and scope of a possible new EU initiative. In addition, the Commission is examining a number of complaints it has received concerning cross-border gambling activities.
What does the Electronic Commerce Directive do?
The Electronic Commerce Directive, adopted in 2000 (see IP/00/442), sets up an Internal Market framework for electronic commerce, which provides legal certainty for business and consumers. It aims to ensure that Information Society services benefit from the Internal Market principles of freedom to provide services and freedom of establishment and so can be provided throughout the EU if they comply with the law in their home Member State.
The Directive establishes harmonised rules on issues such as the information online service providers must provide to users (for example postal address and other contact details), commercial communications, electronic contracts and limitations of liability of intermediary service providers.
The Directive's Internal Market clause means that information society services are, in principle, subject to the law of the Member State in which the service provider is established. In turn, the Member State in which the service is received cannot restrict incoming services except in strictly limited circumstances and subject to a specific procedure laid down in the Directive.
The Directive covers all Information Society services, both business to business and business to consumer, and services provided free to the recipient (for example funded by advertising or sponsorship revenue). Examples of online sectors and activities covered include shopping, newspapers, databases, financial services, professional services (such as lawyers, doctors, accountants, estate agents), entertainment services, direct marketing and advertising and internet intermediary services.
Scale of electronic commerce in the EU
There are estimated to be 185 million European internet users and Internet penetration among both business and consumers is growing rapidly.
Currently e-commerce represents only about 1-2 % of retail sales in the EU, but the prospects for growth are promising. Online Christmas shopping in 2002 saw an increase of 86% over the previous year and total business to consumer e-commerce is expected to increase from €10 billion in 2000 to €70 billion in 2003.
It is estimated that 54% of European internet users will shop online by 2006.2
But information society services are not limited to mere buying and selling of goods and services online. The internet has also become a powerful tool for business and consumers to obtain information and compare offers.
The full text of the Commission's report is available at: