Commissioner Bolkestein welcomes political agreement on electronic commerce Directive
European Commission - IP/99/952 08/12/1999
Brussels, 8 December 1999
Commissioner Bolkestein welcomes political agreement on electronic commerce Directive
Internal Market Commissioner Frits Bolkestein has welcomed the political agreement reached on 7 December by the Council of Ministers on a common position for the proposed Electronic Commerce Directive. The Directive would ensure that Information Society services benefited from the Internal Market principles of free movement of services and freedom of establishment and could be provided throughout the European Union (EU) if they complied with the law in their home Member State. The proposed Directive would establish specific harmonised rules only in those areas strictly necessary to ensure that businesses and citizens could supply and receive Information Society services throughout the EU, irrespective of frontiers. These areas include definition of where operators are established, transparency obligations for operators, transparency requirements for commercial communications, conclusion and validity of electronic contracts, liability of Internet intermediaries, on-line dispute settlement and the role of national authorities. In other areas the Directive would build on existing EU instruments which provide for harmonisation or mutual recognition of national laws.
"I am delighted that both the Parliament and the Council have been able to reach preliminary agreement on this proposal after just one year", commented Commissioner Bolkestein. "This rapid progress reflects recognition of the urgent need for a clearly defined legal framework based on Internal Market principles to allow electronic commerce to develop its enormous potential for economic growth, investment in innovation and job creation in Europe. The Internal Market provides an ideal basic framework for the free movement of services and mutual recognition of each others' rules and supervision. At the same time, e-commerce brings a whole new dimension to the Internal Market, notably in terms of making cross-border trade a practical option both for companies, irrespective of their size or location, and for consumers. Most new jobs are created by small firms in the service sector and it is precisely these firms that have most to gain from e-commerce."
The global electronic commerce market is growing extremely fast and could be worth $ 1.4 trillion by the year 2003 (source: Forrester Research). In Europe, electronic commerce is already worth €17 billion and is expected to reach €340 billion by 2003.
The proposed Directive was presented in November 1998 (see IP/98/999 and amended in August 1999 (see IP/99/652) in the light of the European Parliament's Opinion (delivered in May 1999). The proposal covers all Information Society services, both business to business and business to consumer, and services provided free of charge to the recipient e.g. funded by advertising or sponsorship revenue and services allowing for on-line electronic transactions such as interactive tele-shopping of goods and services and on-line shopping malls.
Examples of sectors and activities covered include on-line newspapers, on-line databases, on-line financial services, on-line professional services (such as lawyers, doctors, accountants, estate agents), on-line entertainment services such as video on demand, on-line direct marketing and advertising and services providing access to the World Wide Web.
The proposed Directive would apply only to service providers established within the EU and not those established outside. However, the proposed Directive takes particular care to avoid incompatibility and inconsistency with legal developments in other parts of the world so as to avoid obstacles to global electronic commerce. Moreover, in some areas the proposed Directive provides for solutions that may serve as a model at international level, thus reinforcing Europe's influence on the development of an international legal framework.
The proposed Directive would define the place of establishment as the place where an operator actually pursues an economic activity through a fixed establishment, irrespective of where web-sites or servers are situated or where the operator may have a mail box. This definition is in line with the principles established by the EC Treaty and the case law of the European Court of Justice. Such a definition would remove current legal uncertainty and ensure that operators could not evade supervision, as they would be subject to supervision in the Member State where they were established. The proposed Directive would prohibit Member States from imposing special authorisation schemes for Information Society services which are not applied to the same services provided by other means. It would also require Member States to oblige Information Society service providers to make available to customers and competent authorities in an easily accessible and permanent form basic information concerning their activities (name, address, e-mail address, trade register number, professional authorisation and membership of professional bodies where applicable, VAT number).
The proposal would oblige Member States to remove any prohibitions or restrictions on the use of electronic contracts. In addition, the proposal would ensure legal security by imposing certain information requirements for the conclusion of electronic contracts in particular in order to help consumers to avoid technical errors. These provisions would complement the recently adopted Directive on electronic signatures (see IP/99/915).
Liability of intermediaries
To eliminate existing legal uncertainties and to avoid divergent approaches between Member State, the Directive would establish an exemption from liability for intermediaries where they play a passive role as a "mere conduit" of information from third parties and limit service providers' liability for other "intermediary" activities such as the storage of information. The Directive strikes a careful balance between the different interests involved in order to stimulate co-operation between different parties and so reduce the risk of illegal activity on-line.
The proposal defines commercial communications (such as advertising and direct marketing) and makes them subject to certain transparency requirements to ensure consumer confidence and fair trading. So that consumers may react more readily to harmful intrusion, the proposal would require that commercial communications by e-mail were clearly identifiable. In addition, for regulated professions (such as lawyers or accountants), the proposal lays down the general principle that the on-line provision of services is permitted and that national rules on advertising shall not prevent professions from operating Web-sites. However, these would have to respect certain rules of professional ethics which should be reflected in codes of conduct to be drawn up by professional associations.
The proposal would seek to strengthen mechanisms to ensure that existing EU and national legislation was enforced. This would include encouraging the development of codes of conduct at EU level, stimulating administrative co-operation between Member States and facilitating the setting up of effective, alternative cross-border on-line dispute settlement systems. The proposal would also require Member States to provide for fast, efficient legal redress appropriate to the on-line environment and to ensure that sanctions for violations of the rules established under the Directive were effective, proportionate and dissuasive.
The Directive would clarify that the Internal Market principle of mutual recognition of national laws and the principle of control in the country of origin must be applied to Information Society services. This would ensure that such services provided from another Member State were not restricted for reasons falling within the scope of the proposal. The proposed Directive would not interfere with the application of the Brussels Convention on jurisdiction, recognition and enforcement of judgements in civil and commercial matters and the Rome Convention on the law applicable to contractual obligations in consumer contracts or with the freedom of the parties to choose the law applicable to their contract.
On a case by case basis, Member States would be allowed under the Directive to impose restrictions on Information Society services supplied from another Member State if necessary to protect the public interest on grounds of protection of minors, the fight against hatred on grounds of race, sex, religion or nationality, including offences to human dignity concerning individual persons, public health or security and consumer protection including the protection of investors. However, such restrictions would have to be proportionate to their stated objective. Moreover, such restrictions could only be imposed (except in cases of urgency and in cases of court actions) after:
In cases of urgency and in cases of court actions, including preliminary proceeding and criminal investigations, the reasons for the restrictions (and the urgency) would have to be notified in the shortest possible time to the Commission and to the Member State of the service provider. Where the Commission considered proposed or actual restrictions were not justified, Member States would be required to refrain from imposing them or urgently put an end to them.
Once the Common Position is formally adopted without discussion at a forthcoming Council meeting, it will be sent to the European Parliament for its second reading under the co-decision procedure foreseen by Article 251 of the EC Treaty.