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EU Passes E-Commerce Directive

BRUSSELS – The European Parliament passed the EU’s e-commerce directive yesterday. It now moves on to the member states for ratification – a “good thing for people who sell on the Web,” according to spokesman Anders Ganten.

Lobbies for Web merchants and direct marketers have pushed for early adoption of the directive, which all member states must implement into national law, so that individual countries don’t pass harsher laws on their own.

By and large they are satisfied with the draft the European Commission has written and feel they were able to block several damaging amendments that some members of Parliament had wanted to introduce.

The draft has been unscathed although Alastair Tempest, director general of FEDMA and the industry’s chief lobbyist here, said some definitions still needed clarification and the text had to be “cleaned up.”

“The good point about this directive,” Ganten said, “is that it is technologically neutral and more concerned with principles about the liability of intermediaries than it is about encryption or bits and bytes.

“Nor does legislation mandate solutions but sets down liabilities. Spamming requires an opt out register but the law does not tell anybody how to go about doing so. That’s up to the member states. And opt in is out.”

Most important for the industry is the establishment of “the country of origin principle,” Ganten said. A marketer based in, say, Sweden can market across Europe so long as what he does complies with relevant Swedish law.

Consumers who want to complain will have to do so in the marketer’s home country, a provision that will make implementation of the law difficult in Germany where even the local DMA (DDV) believes in country of destination law.

“You can’t expect German consumers to take their complaint before the court of another country where they are not familiar with the law,” Hans Juergen Schaefer, the DDV’s director of legal affairs said.

He expects Germany to adapt the e-commerce directive into German law pretty much as written without, however, putting local laws that do not accept the country of origin principle out of business, even if the EC then takes Germany to the European court of justice.

That’s one reason Germany may prove the hardest nut to crack. Another is a law limiting discounts merchants may offer to 3 percent, a law more honored in the breach in purchase of capital goods.

“You can routinely knock 15 percent off buying a new car,” Schaefer said, “without the government blinking an eye. But you can’t exceed three percent in the retail trade because of its political clout. That law is going to change and we think it will be gone in three years.”

Lands’ End is affected both by the discount law and the country of origin principle. The company offered customers an unlimited guarantee on all apparel, meaning it could be returned any time, even years after purchase.

German courts enjoined the guarantee for violating the discount law, i.e., the guarantee is a separate item in addition to the garment and therefore illegal.

Although Lands’ End has a German operation, it may be difficult to prove that Germany is the country of origin for a company located in Wisconsin and whose European HQ is in the UK.

“The point of the single market,” Ganten said, “is to be able to sell products freely across Europe without too much adaptation.”

The directive, he added, is also likely to help speed Internet development in Europe which varies greatly – Sweden has more than 50 percent penetration and Greece less than six.

The directive has moved quickly through the notoriously slow European institutions. The EC first proposed it in November 1998 – and has a provision calling for a review within three years, crucial in an industry that is changing so rapidly.

After clearing parliament, the directive goes to the council of ministers who are expected to approve it in early summer after France assumes the presidency. National implementation should take 12 to 18 months.

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