Germans Set to Pass New E-Commerce Law

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U.S. Web merchants stand to profit from new e-commerce legislation that the German government approved this month and sent to Parliament for ratification.


The law is based on the "country of origin" principle, which means that customers in Germany who have a beef with an e-tailer must settle it according to the laws of the country where the merchant is located.


Current German law demands that such disputes be taken before a German court. This could involve heavy legal expenses and, especially for Americans, uncertainties about how best to deal with such eventualities.


The legislation would adapt the European Union's e-commerce directive, published last June, into German law. Directives have the force of law in the EU, but member states must transform them into national law in a set time period that varies by directive.


DDV, the German DMA, welcomed the speed "which German lawmakers showed in transforming the e-commerce directive."


Hans Juergen Schaefer, the DDV's director of legal affairs, said speedy action "shows the importance the government puts on renewal of the legal conditions governing development of the Internet economy."


The German Parliament is also debating a new law regarding electronic signatures that would allow online contracts to have the same legal validity as handwritten signatures.


Both laws, Schaefer said, "should give the Internet economy an enormous boost," especially since the government is scrapping two other laws that have been major obstacles to direct and Internet marketers.


The discount law barred merchants from offering price cuts of more than 3 percent, while the add-on law forbade offering customers any extra product or service that was not directly connected to the product.


Lands' End was a major U.S. victim of that law, since German courts ruled that the Wisconsin apparel cataloger could not advertise its unconditional guarantee in Germany. Once the law is scrapped, it will again be able to do so.


Quick action on the directive represents a major shift in German policy. The country has dragged its feet on other EU laws, including the issue of data protection. Member states were to have enacted national laws by October 1998. Germany still has not done so, and the EU is taking the matter to the European court.


Germans consider e-commerce vital to future prosperity.


Economics minister Werner Mueller claimed that 30 percent of all German households are connected to the Internet. He expects the Web to generate 750,000 new jobs.


Existing law clearly discriminates against domestic e-tailers, which must obey German regulations while watching their French or Belgian competitors snag domestic customers who would rather buy abroad than face regulatory problems at home.


The government expects Parliament to complete action on both laws by the summer. However, Schaefer said the end of the year was a more likely date, given the often slow-moving German lawmakers.
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