EU-ASEAN Virtual Capacity Building Workshops

e-Commerce regulations (workshop A2)Monday, 1 June 2021

Expert presenter: Domagoj Jurjevic, Chair: Paul Foley

1. Overview and objectivesThe EU breaks down online barriers so that people may enjoy full access to all goods and services offered online by businesses in the EU. Ending unjustified cross-border barriers, facilitating cheaper cross-border parcel deliveries, protection of online customer rights and promoting cross border access to online content are cornerstones of the Digital Single Market.

In this workshop we will: give an overview of the main elements of the e-Commerce

regulation, describe how the EU has made it easier and safer for European consumers to shop online

no matter where they are in the EU.

2. The Overview of the main elements of the e-Commerce Regulation

2.1. e-Commerce DirectiveThe e-Commerce Directive (2000/31/EC) is the foundational legal framework for online services in the EU. It was adopted in 2000 and sets up an Internal Market framework for online services. Its aim is to remove obstacles to cross-border online services in the EU internal market and provide legal certainty for businesses and consumers.

The Directive establishes harmonised basic rules for e-commerce covering issues such as: transparency and information requirements for online service providers towards consumers commercial communications electronic contracts and limitations of liability of intermediary service providers

It also enhances administrative cooperation between the Member States, and the role of self-regulation (the drawing up of voluntary codes of conduct).

The EU is focused on defining an appropriate e-commerce framework and preventing unfair discrimination against consumers and businesses who access content or buy goods and services online within the EU.

2.1.1. The main elements of the e-Commerce Directive Basic rules for e-Commerce

The Directive sets out basic requirements on mandatory consumer information, steps to follow in online contracting and rules on commercial communications (e.g. online advertisements and unsolicited commercial communications).

The Internal Market Clause

The internal market clause in article 3 of the e-Commerce Directive is one of the key principles of the e-Commerce Directive. This article establishes the country of origin principle, also referred to as the Single

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Market clause, which ensures the freedom to provide online services across the Single Market. It ensures that providers of online services are subject to the law of the Member State in which they are established and not the law of the Member States where the service is accessible. Member States in which the online service provider provides its services must therefore refrain from applying national legislation.

Liability of Intermediaries

The Directive exempts intermediaries from liability for the content they manage if they fulfil certain conditions. Service providers hosting illegal content need to remove it or disable access to it as fast as possible once they are aware of the illegal nature it. The liability exemption only covers services who play a neutral, merely technical and passive role towards the hosted content. Member States cannot force any general content monitoring obligation on intermediaries.

2.1.2. Services covered by the e-Commerce DirectiveThe regulation applies to information society services. An information society service is defined as "any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service". The provisions of the e-Commerce Directive thus apply to certain activities or services and not to a specific category of providers. In this context, an information society service includes a broad range of online services, e.g. providing transmission of information via communication networks, online hosting, providing access to a communication network, etc.

Examples of services covered by the Recital 18 of the Directive include: online information services online selling of products and services online advertising professional services entertainment services and basic intermediary services, including services provided free of

charge to the recipient (e.g. funded by advertising)

2.2. The Digital Services Act

2.2.1. The background of the proposalThe current EU legal framework regulating digital services is underpinned, first and foremost, by the e-Commerce Directive. The Digital Services Act is without prejudice to the e-Commerce Directive, and builds on the provisions laid down therein, notably on the internal market principle set out in Article 3.

As regards the effectiveness of the e-Commerce Directive, the evaluation shows that while the e-Commerce Directive has provided an important incentive for the growth of the internal market for digital services, and enabled entry and scaling up of new providers of such services, the initial objectives have not been fully achieved. In particular, the dynamic growth of the digital economy and the appearance of new types of service providers raises certain new challenges, dealt with differently by Member States, where the initial set of objectives need to be clarified. In addition, these developments put an additional strain on achieving already existing objectives as the increased legal fragmentation shows.

2.2.2. The main elements of the Digital Services ActBuilding on the key principles set out in the e-Commerce Directive, which remain valid today, the Digital Services Act seeks to ensure the best conditions for the provision of innovative digital services in the internal market, to contribute to online safety and the protection of fundamental rights, and to set a robust and durable governance structure for the effective supervision of providers of intermediary services.

The European Commission is committed to fostering an environment in which online platforms can thrive and where users are treated fairly. Online platforms, such as search engines, marketplaces, and social

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media, are a key part of the digital economy. Already, over one million EU businesses sell goods or digital services via online platforms. European citizens use them on a daily basis to search for information, buy products, and stay in touch with friends and family.

However, online platforms still need regulating. EU businesses big or small should be able to thrive online. Meanwhile, users should be able to enjoy the benefits of online platforms without fear of manipulative algorithms or illegal goods and content.

The Commission is committed to three main areas of action: breaking down online barriers, allowing full access to goods and services across the EU; ending unjustified cross-border barriers; making it easier and safer to shop online no matter where you are in the EU.

To achieve this, the Commission has proposed the Digital Services Act (DSA) and the Digital Markets Act (DMA). These acts seek to ensure European citizens can be confident in their safety online and businesses can thrive in the digital world. The Digital Services Act (DSA), proposed by the Commission, builds on the e-Commerce Directive to address new challenges online. While the e-Commerce Directive remains the cornerstone of digital regulation, much has changed since its adoption 20 years ago. The DSA will address these changes and the challenges that have come with them, particularly in relation to online intermediaries.

The Commission has adopted a proposal for a Digital Services Act (DSA). Together with a Digital Markets Act, this proposal will create a safer and more open digital space for all users and ensure a level playing field for businesses. The new rules are proportionate, foster innovation, growth and competitiveness, and facilitate the scaling up of smaller platforms, SMEs and start-ups. The responsibilities of users, platforms, and public authorities are rebalanced according to European values, placing citizens at the centre.

The DSA has three specific goals: to protect consumers and their fundamental rights online more effectively; to establish a powerful transparency and accountability framework for online platforms; to foster innovation, growth and competitiveness within the single market.

The Digital Services Act includes rules for online intermediary services, which millions of Europeans use every day. The obligations of different online players match their role, size and impact in the online ecosystem. Following providers are covered:

Intermediary services offering network infrastructure: Internet access providers, domain name registrars, including also:

Hosting services such as cloud and webhosting services, including also: Online platforms bringing together sellers and consumers such as online marketplaces,

app stores, collaborative economy platforms and social media platforms. Very large online platforms pose particular risks in the dissemination of illegal content

and societal harms. Specific rules are foreseen for platforms reaching more than 10% of 450 million consumers in Europe.

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In brief, the following are the key goals of the Digital Services Act. For citizens

o More choice, lower priceso Less exposure to illegal contento Better protection of fundamental rights

For providers of digital serviceso Legal certainty, harmonisation of ruleso Easier to start-up and scale-up in Europe

For business users of digital serviceso More choice, lower priceso Access to EU-wide markets through platformso Level-playing field against providers of illegal content

For society at largeo Greater democratic control and oversight over systemic platformso Mitigation of systemic risks, such as manipulation or disinformation

The European Parliament and Member States will discuss the Commission’s proposal according the ordinary legislative procedure. Once adopted, the new rules will be directly applicable across the EU.

3. How the EU has made it easier and safer for European consumers to shop online no matter where they are in the EU

3.1. DSM StrategyExtract from the Political Guidelines for the next European Commission – A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change (15 July 2014) by Jean-Claude Juncker, Former European Commission President.

“I believe that we must make much better use of the great opportunities offered by digital technologies, which know no borders….”

“We can ensure that consumers can access services, music, movies and sports events on their electronic devices wherever they are in Europe and regardless of borders.”

“By creating a connected digital single market, we can generate up to EUR 250 billion of additional growth in Europe in the course of the mandate of the next Commission, thereby creating hundreds of thousands of new jobs, notably for younger job-seekers, and a vibrant knowledge-based society.”

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“To achieve this, I intend to take,…,legislative steps towards a connected digital single market, notably by swiftly concluding negotiations on common European data protection rules; by adding more ambition to the ongoing reform of our telecoms rules; by modernising copyright rules in the light of the digital revolution and changed consumer behaviour; and by modernising and simplifying consumer rules for online and digital purchases.”

Digital Single Market (DSM) Strategy was introduced in 2015. The first pillar of the DSM strategy was dealing with better access for consumers and businesses to online goods and services across Europe. All the inhibitors related to this pillar were analysed and following areas in which steps have to be taken were identified:

Cross-border e-commerce rules that consumers and business can trust, Affordable high-quality cross-border parcel delivery, Preventing unjustified geo-blocking, Better access to digital content - A modern, more European copyright framework, Reducing VAT related burdens and obstacles when selling across borders.

The following eight actions that were part of the Roadmap for completing the Digital Single Market were dealing with areas identified above:

A wide ranging review to prepare legislative proposals to tackle unjustified Geo-blocking Measures in the area of parcel delivery (Cross-border parcel delivery) Legislative proposals for simple and effective cross-border contract rules for consumers

and businesses (Contract rules for cross-border e-commerce) Review the Regulation on Consumer Protection Cooperation (Cooperation between

consumer protection authorities) Competition sector inquiry into e-commerce, relating to the online trade of goods and the

online provision of services (e-commerce sector inquiry) Legislative proposals for a reform of the copyright regime (Copyright reform) Review of the Satellite and Cable Directive Legislative proposals to reduce the administrative burden on businesses arising from

different VAT regimes

In line with identified actions, and in order to reach the full potential of e-Commerce, the EU has worked on:

new rules to stop unjustified geo-blocking; the revised Payment Services Directive and new rules on cross-border parcel delivery

services that are already in force; revised consumer protection rules; new VAT rules for the online sale of goods and services.

In the remainder of the document, we will present what the EU has been doing to boost e-commerce and to create new opportunities for consumers, turning the Digital Single Market into a reality.

3.1.1. Rules that ended unjustified geoblocking in the EUGeoblocking was preventing EU citizens buying from a website based in another EU Member State. This was creating barriers for consumers in cross-border shopping, which was resulting in less revenue for companies and less choice for consumers.

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(Source: Factsheet e-commerce in the EU)

To remove barriers related to geoblocking and to end online discrimination on the basis of nationality or place of residence, the Commission has passed the Regulation (EU) 2018/302 (‘Geo-blocking Regulation’), which entered in force in March 2018, but applied from December 2018. The Regulation helps ensure that online sellers treat all EU consumers equally regardless of where they choose to shop.

It also aims to provide consumers and businesses within the EU's internal market with more opportunities. In particular, it addresses the problem of some customers not being able to buy goods and services from traders located in a different Member State because of their nationality, place of residence or place of establishment. It has also introduced rules to ensure EU citizens no longer face unjustified barriers such as being re-routed back to country-specific websites or having to pay with debit or credit cards from a certain country.

Additionally, there are some services not covered by the geoblocking rules as there are already sector-specific rules taking into account the specificities of these services.

Services not covered by the geoblocking rules are as follows: Transport services.

Discrimination based on nationality and place of residence is already prohibited for flight tickets, bus and coach transport, waterborne transport in the EU’s transport regulation.

Retail financial services

There are rules in place concerning: mortgages, opening a bank account, or buying cross-border insurance.

Audiovisual services

Although audiovisual services are not covered by the geoblocking rules, there are specific rules aimed at facilitating access to audiovisual services that are part of other initiatives under the Digital Single Market strategy.

Cross-border portability of online content: since April 2018, Europeans are able to use their online subscriptions to films, sports events, e-books, video games or music when travelling in the EU.

Copyright and related rights applicable to certain online transmissions: easier licencing for online transmissions and cross-border access

Audiovisual Media Services Directive: EU rules for audiovisual media promoting European works and preserving cultural diversity.

It has to be noted that those rules do not cover TV rights buying of which still will be geoblocked.

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In the Regulation it was defined that the Commission should review (within two years from the entry into force of the Regulation) its scope, including potential inclusion of the non-audiovisual services (software, games, e-books, music) under the non-discrimination clause. The Commission should also analyse whether in other sectors, such as services in the field of transport and audio-visual services, any remaining unjustified restrictions based on nationality, place of residence or place of establishment should be eliminated.

3.1.1.1. Short-term review of the Geo-blocking RegulationIn November 2020, the European Commission published the conclusions of its first short-term review of the 2018 Geo-blocking Regulation.

Commissioner for Internal Market Thierry Breton said: “The pandemic has shown to which extent we rely on digital technologies across all EU countries and that cross-border access to goods and services online should be without any barriers or friction for European consumers, regardless of their location, residence, or nationality. This first review of the Geo-blocking Regulation already shows first positive results. We will further monitor its effects and discuss with stakeholders, notably in the context of the Media and Audio-visual Action Plan to ensure the industry can scale up and reach new audiences, and consumers can fully enjoy the diversity of goods and services in the different EU Member States.”

The report analyses the first 18 months of implementation of the current Regulation as well as the possible effects of the extension of its scope, including with regard to copyright-protected content services.

The report’s main conclusions on its first period of implementation are that: Consumer awareness is good – 50% of consumers were aware of the new rules

surveyed after just 3 months following the entry into force of the rules, but also expressed they wanted further information.

The role of competent assistance and enforcement bodies of Member States is key to ensure the compliance of traders, with a high rate (above 50%) of amicable solutions being reached once traders were made aware of issues.

A number of important geo-blocking obstacles have diminished; for example, there has been a stark reduction in barriers caused by location requirements, from 26.9% down to 14% of approximately 9000 websites surveyed. Such restrictions prevent users from attempting to register to foreign websites due to a postal address in another Member State, and is important because registration is a key stage of the online shopping process. A further decrease in restrictions that users faced when trying to access websites cross-border was reported (e.g. users were denied access or automatically rerouted), the remainder of which was residual (only 0.2% of websites blocking access).

Even though the Regulation does not oblige traders to deliver cross-border, the increased access to cross-border websites provided by the Geo-blocking Regulation nevertheless increased the amount of purchases with delivery in the country of the customer (an increase of 1.6% in EU27 compared to 2015). One third of the approximately 9000 surveyed websites offered cross-border delivery.

Other internal market measures, including administrative tools to facilitate compliance with cross-border VAT in e-commerce, which will enter into force from July 2021, and the harmonisation of consumer protection rules, which will enter into force in 2022, still need to materialise entirely before the full effects of the Geo-blocking Regulation can be observed. Therefore, the Commission will continue to monitor the application of the current Regulation, also through the Consumer Protection Cooperation Network, as well as these internal market initiatives. The Commission will also continue to raise awareness, notably through the European Consumer Centres.

The report also considers the possible extension of the scope of the legislation, including with regard to copyright-protected content (such as audio-visual, music, e-books and games). It highlights potential benefits for all consumers in Europe, notably in the availability of a wider choice of content across borders if the Regulation were to be extended to cover audio-visual content. The Report also identifies

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the potential impact that such an extension of the scope would have on the overall dynamics of the audio-visual sector, but concludes that it needs to be further assessed.

3.1.2. Making cross-border parcel deliveries cheaperCross-border parcel delivery prices on average were 3 to 5 times higher than domestic delivery prices for all products. Around 62 percent of companies that wished to sell online identified high delivery costs as a problem and/or as obstacle for the development of cross border e-commerce.

New rules on online cross-border parcel delivery services made it easier to find the cheapest way of sending a parcel from one Member State to another.

The regulation on cross-border parcel delivery services (EU) 2018/644 entered into force on 22 May 2018. The regulation requires parcel delivery providers to provide pricing information that will allow national regulatory authorities to have better regulatory oversight of the providers and their sub-contractors. This will also improve price transparency and make it easier to assess certain high cross-border tariffs.

The regulation on cross-border parcel delivery services has following 3 key objectives: to enhance the regulatory oversight of parcel delivery services to increase the transparency of certain single-piece tariffs through publication on a website to assess tariffs for certain cross-border parcel delivery services

The main changes resulting from new rules: There is no cap on delivery prices, but businesses now have to disclose their prices clearly,

so the consumer can easily compare options. Consumers are able to consult parcel delivery prices on a dedicated webpage on the European Commission's website.

National authorities will collect information every year from parcel delivery companies. Where parcel delivery is subject to a universal service obligation, national regulatory authorities will be required to assess where tariffs are unreasonably high.

3.1.3. Protecting rights of an online consumerEU-wide rules make it easier for Member States to protect consumers online. These rules enable the removal of sites or social media accounts where scams have been identified. They also make it possible to request information from internet service providers or banks, in order to trace the identity of rogue online traders.

3.1.3.1. New deal for consumers

The Commission proposed a new deal for consumers in 2018 to further strengthen consumer rights online. The main changes were the following:

online market places will have to inform consumers whether they are buying from a trader or a private individual, so they are aware of their rights if something goes wrong;

when consumers search online, they will be clearly informed when a search result is being paid for by a trader

online marketplaces will have to inform consumer about the main parameters determining the ranking of the results;

when consumers pay for a digital service, they will benefit from certain information rights with 14 days to cancel the contract.

The “New Deal for Consumers” initiative aimed at strengthening enforcement of EU consumer law in light of a growing risk of EU-wide infringements and at modernising EU consumer protection rules in view of market developments. The Commission adopted it on 11 April 2018.

The initiative was composed of two proposals for Directives and a Communication.

Following these proposals, the Directive on better enforcement and modernisation of EU consumer protection was adopted by the European Parliament and the Council on 27 November 2019.

The Directive on Representative Actions was adopted on 25 November 2020.

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3.1.3.2. Digital contracts

Purchasing goods, digital content and digital services from any EU country should be easy within the Single Market. However, when products are faulty, consumers are often uncertain about their rights. Many businesses also hesitate to offer their products to consumers abroad, because of differences in national contract laws. 

To solve these problems, in 2015 the European Commission proposed a directive on contracts for the supply of digital content and digital services (e.g. streaming music or social media account) and a directive on contracts for the sale of goods (e.g. buying a camera or a smart watch).

The directives harmonise key consumer contract law rules across the EU. This will ensure a high level of consumer protection and increase legal certainty for both consumers and traders in millions of everyday transactions concerning goods, smart goods, digital content and digital services.

The European Parliament and the Council adopted the digital contracts directives on 20 May 2019. Following the publication of the directives in the Official Journal, Member States have two years to transpose them in their national law. The new rules will begin to apply throughout the EU by the end of 2021 and will create clearer rights for consumers when accessing digital content and digital services.

For example, if the digital content users receive is not as agreed or as they reasonably expected, they have specific contractual rights. These rights also apply when the consumer has provided personal data to the trader without paying a price.

3.1.3.3. Other

As of January 2020, revised consumer protection rules came into force, which made it easier for national authorities to protect consumers online:

Sites or social media accounts where scams have been identified, will be removed Authorities will be able to request information from internet service providers or banks, in

order to trace the identity of rogue online traders European Consumer Centres and consumer organisations will be able to post alerts about

bad practices

As of January 2021, simplified VAT rules making it easier to buy and sell goods online entered into force.

4. Key questions raised in the workshop

4.1. Question 1. What other issues do you think will arise in the future concerning eCommerce?

The large commerce and other platforms are perceived as problematic around the world. The platforms could become monopoly providers. They are the gatekeepers and can steer the development of the market. Sometimes they are also providing goods and services alongside other providers.

In traditional telecommunications regulations wholesale providers of the network and those providing services to consumers are kept separate and compete on a ‘level playing field’ with clear and transparent rules.

Europe is trying to ensure lower barriers to entry to make it easy for everyone to trade online in a competitive environment.

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4.2. Question 2. Did EU adopt model contracts for e-commerce transactions? What are the key elements? Did EU implement UNCITRAL’s Model Law on E-commerce?

The European Parliament and the Council adopted the digital contracts directives on 20 May 2019. Following the publication of the directives in the Official Journal, Member States have two years to transpose them in their national law. The new rules will begin to apply throughout the EU by the end of 2021 and will create clearer rights for consumers when accessing digital content and digital services.

The directives harmonise key consumer contract law rules across the EU. This will ensure a high level of consumer protection and increase legal certainty for both consumers and traders in millions of everyday transactions concerning goods, smart goods, digital content and digital services.

More details on: https://ec.europa.eu/info/business-economy-euro/doing-business-eu/contract-rules/digital-contracts/digital-contract-rules_en

4.3. Question 3. The e-Commerce Directive applies to information society services. An information society service covers "any service normally provided for remuneration..." Does the e-Commerce Directive applies to services that are provided on "freemium" business model / basis?

The services covered by the eCommerce Directive include services ‘provided free of charge’. Examples of services covered by the Recital 18 of the Directive include:

online information services online selling of products and services online advertising professional services entertainment services and basic intermediary services, including services provided free of

charge to the recipient (e.g. funded by advertising).

More details on: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32000L0031&from=EN

4.4. Question 4. Any EU regulations on online advertising service to protect traditional newspapers’s advertising services?

N/A

4.5. Question 5. More details on EU'S Strategy with regards to last mile parcel delivery?

More details on cross borders parcel delivery on: https://ec.europa.eu/growth/sectors/postal-services/parcel-delivery_en

4.6. Question 6. Does Geo-blocking rules prevent SMEs from entering into digital services as they are not capable of marketing or arrangements across border due to lack of scale of economy? or SMES are allowed to choose the geographical areas they want to serve?

Geoblocking prevents EU consumers buying from a website based in another EU Member State. This creates barriers for consumers in cross-border shopping. EU-wide rules against geoblocking should end online discrimination on the basis of nationality or place of residence. It also introduces rules to ensure EU consumers no longer face unjustified barriers such as being re-routed back to country-specific

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websites, or having to pay with debit or credit cards from a certain country. All in all, if the EU consumer wants to shop from another country in EU, it should not be prohibited to do so.

4.7. Question 7. What is the reason for imposing geo-blocking, in the first place?

Geblocking was not imposed, but the rules that prevent geoblocking to happen. For more details, see the answer on question 6.

4.8. Question 8. Does EU contract rules apply to non-EU digital e-market platforms? How could EU enforce the rules in this case

All the EU can impose are regulations on businesses working and operating in the EU. We don’t think they can impose their services to non-EU countries.

4.9. Question 9. Is that mandatory for parcel service providers to publish their prices on EU website for transparency? Any other services has to comply with the regulation?

One of the aims of the regulation on cross-border delivery services is to improve price transparency. The regulation requires that providers with 50 or more employees, as well as providers established in more than one EU country, provide their respective national regulatory authority with domestic and cross-border prices for up to 15 basic parcel delivery services (in certain cases, national regulatory authorities may have used a threshold of 25 employees to take into account certain conditions in their country).

The Commission publishes those prices on the following link: https://ec.europa.eu/growth/sectors/postal-services/parcel-delivery/public-tariffs-cross-border_en

4.10. Question 10. Does EU have a regulation for multiple platform (information, mass media, e-com..), especially dealing with cross border platforms?

Digital Services Act covers this. As regards the cross border platforms, the rules apply in the EU single market, without discrimination, including to those online intermediaries established outside of the European Union that offer their services in the single market. When not established in the EU, they will have to appoint a legal representative, as many companies already do as part of their obligations in other legal instruments. At the same time, online intermediaries will also benefit from the legal clarity of the liability exemptions and from a single set of rules when providing their services in the EU.

More details on: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_2348

5. Workshop overview and conclusionsOver 30 people attended the workshop. As indicated above it generated many questions and a great deal of engagement.

5.1. Overview and most useful elements of the presentationParticipants were asked which parts of the presentation will be most interesting. The most popular areas were:

The fact that ‘free’ services are covered by eCommerce regulations; The insights to digital contracts and importance of promoting consumer protection were

very useful;

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Promoting trust and security to re-assure consumers is central to developing digital markets;

I never thought I would learn about parcel prices in Europe and their significance for eCommerce.

5.2. Overview and most useful elements of the presentationParticipants were asked which parts of the presentation will be most useful in their jobs. The most popular areas were:

Breaking down policies and regulations into bite sized chunks (geo-blocking, liabilities of intermediaries, the precise items (including fee services) covered by the directive, cross-border trading and citizen safety) and providing URLS for a lot of the regulations;

Interesting how several different policies and Directives fit together to provide a wide ranging and comprehensive policy;

The role of different online players – hosting services, platforms and possible monopoly positions;

5.3. Topics worthy of further investigationParticipants were asked which elements of the presentation would be worth examining further in future workshops. The most popular areas were:

1. Platforms – dominance, competition and ethical issues;2. Digital contract and harmonization of regulations;3. Developing a fit for purpose regulatory framework.

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