The EU Digital Single Market: breaking down barriers to cross-border e-commerce

On 6 May 2015 the European Commission published its “Digital Single Market Strategy for Europe”. The Commission’s proposals are aimed at producing a true digital single market, one with – in President Juncker’s optimistic words – “pan-continental telecoms networks, digital services that cross borders and a wave of innovative European start-ups”.

Read what this means for cross-border e-commerce below.

The EU Digital Single Market Strategy is an area we will continue to monitor closely. Click here to read our latest updates and keep up to date with the developments as they happen.

Proposed legislation and consumer protection

The Commission is determined to break down a number of obstacles it perceives to be preventing cross-border e-commerce. One of the key areas it has identified is the consumer protection and contract law differences that exist between Member States, holding the firm view that this inhibits both consumers and smaller businesses from engaging in cross-border trade. Potentially having to deal with 28 different consumer protection and contract laws presents – in the Commission’s eyes – a major obstacle to benefiting from the opportunities that cross-border e-commerce can offer. And for any online business that has tried to expand across the EU, these are issues that no doubt hold true.

Although the EU Consumer Rights Directive has already harmonised consumers’ online contractual information and cancellation rights, the Commission’s focus is to now go further and establish a “common set of rules” across Member States. The problem is that these aren’t uniform at present, especially when it comes to remedies for defective purchases, and for digital content purchases in particular there are no specific EU rules at all, and few national ones. (The UK falls within the exception, and consumers will soon have digital content rights under the Consumer Rights Act which comes into force in October 2015. So it will be interesting to see how this UK-specific regulation fits in with, or perhaps drives, the Commission’s harmonisation approach going forward).

The Commission previously put forward a ‘Common European Sales Law’ legislative proposal in 2011, but now intends to revise this by the end of 2015 to include tackling two key cross-border e-commerce areas:

• harmonised EU rules for digital content purchases; and
• allowing businesses to rely on their national laws based on a focussed set of key EU mandatory contractual rights for domestic and cross-border online sales of goods.

Consumer protection is the final piece in the cross-border puzzle to make the new rules more effective. The Commission has identified a need for a more rapid, agile and consistent enforcement environment, and has therefore proposed a review of the Regulation on Consumer Protection Cooperation with a focus on clarifying and developing enforcement authorities’ powers, and improving the co-ordination of their market monitoring activities and alert mechanisms.

Parcel delivery

In addition to the measures around cross-border e-commerce discussed above, the Commission wants to ensure the availability of affordable, high-quality cross-border delivery services. Its view is that the absence of such services is a practical issue that hinders cross-border e-commerce. To tackle this, the Commission has set out various measures it will undertake:

• an industry self-regulatory exercise will report to the Commission in June 2015, concentrating on quality, interoperability aspects like ‘track and trace’ and speed of delivery (but not price); and
• a complementary measures initiative in 2016 which focuses on improving price transparency and enhanced regulatory oversight to ensure well-functioning delivery. If the initiative does not work within 2 years though, the Commission will re-assess what may be needed.

The Commission’s initiatives would seem ultimately to benefit businesses and consumers alike, especially considering the economic advantages that the Commission believes its measures will unlock. Although some of the concepts have existed for some time, the Commission now seems to have a renewed determination that will drive things forward especially in the e-commerce sphere.

“Any initiative by the Commission to simplify cross-border digital content purchases for both consumers and businesses across the 28 Member States can only be welcome in the Digital Age and is certainly good news for businesses, especially tech start-ups. However, if the contemplated harmonisation of contract laws and consumer protection rules aims to keep up with the best national standards of protection, and enforcement, from which consumers benefit today in some Member States, there is a risk of an economic backlash impact, at least in the initial implementation phase, for existing national businesses in those Member States with lower standards who will need to meet new compliance requirements”. Beatrice Delmas-Linel, Partner, Osborne Clarke, Paris