Analytics, EU – Baltic States, Internet, Markets and Companies, Technology

One of the Digital Market Strategy's pillars is to ensure better access for consumers and businesses to online goods and services across Europe. E-commerce is growing, but its full potential remains untapped both for businesses and consumers in Europe: only 12% of EU retailers sell online to consumers in other EU countries, while three times as many (37%) do so within their own country.

Similarly, only 15% of consumers purchase online from another EU country, while roughly three times as many (44%) do so from their own country.

Delivering on its Digital Single Market strategy, the Commission presented two proposals to better protect consumers who shop online across the EU and help businesses expand their online sales:  

= one, on the supply of digital content (e.g. streaming music), and

= another one, on the online sale of goods (e.g. buying clothes online).

The two proposals will tackle the main obstacles to cross-border e-commerce in the EU: legal fragmentation in the area of consumer contract law and resulting high costs for businesses – especially SMEs- and low consumer trust when buying online from another country.  

Background

The new rules related to copyright (IP/15/6261) and digital contracts are the first legislative proposals to be presented as part of the Digital Single Market strategy. Overall, 16 initiatives will be presented by the end of next year.

The full potential of online sales is not yet well exploited in the EU: in 2014, the share of e-commerce in the total retail sector in Europe was 7.2%, while in the USA it reached 11.6%.

Indeed, there is a clear gap in EU legislation in the area of defective digital content. Most EU states do not have any legislation in place in this area.

Moreover, while consumer protection rules are already harmonised across the EU in certain areas, there are still divergences between national consumer contract laws. These divergences create additional costs for businesses and affects consumers' confidence in cross-border shopping. In particular, regarding consumer rights in case of defective goods, Europe still works with 28 partly different sets of consumer contract laws, as there are only minimum EU requirements in place.

Commission’s opinion

Presenting EU’s proposals, Commission vice-president for the Digital Single Market, Andrus Ansip, said that when downloading a movie or a song, one must play. If this is not the case, one should be able to end the contract and get money back. The new proposals, he added, would give more rights to consumers on-line, i.e. allow them to enjoy products and services from other EU countries in full confidence.

Hence, businesses, especially the SMEs, can grow across borders at less cost, with a common set of EU rules instead of a patchwork of national laws.

The EU Digital Single Market is under way, improving the daily life of people, where digital is everywhere, he concluded.

Commissioner for Justice, Consumers and Gender Equality, Věra Jourová underlined that two proposals would give confidence to consumers to buy across borders and offer simplification for businesses, especially SMEs, selling online across Europe.

As soon as internet has lifted technological barriers to a Digital Single Market, the digital contracts would lift legal barriers. “Harmonising contractual rights throughout the EU, she said, would facilitate the supply of both digital content and goods across Europe so consumers would benefit from simple and modernised rules while businesses would get more legal certainty, cheaper and easier ways to expand their activities”.

This in turn will bring more choice at competitive prices to consumers, she concluded.

Reference: European Commission, press release “Modern digital contract rules to simplify and promote access to digital content and online sales across the EU”; Brussels, 9.12.2015.

In: http://europa.eu/rapid/press-release_IP-15-6264_en.htm 

Online trade and contract law

Removing barriers due to contract law differences should bring an overall benefit to the European economy. Over 122,000 EU businesses are expected to start selling to consumers in other EU states; and the total number of consumers buying online from other EU countries could reach up to 70 million.

This will open up new markets, especially for small and medium-sized enterprises (SMEs), increase competition and contribute to economic growth: lower consumer prices are expected to boost consumption in the EU by €18 billion and EU GDP is expected to increase by €4 billion from its current level.

Consumers will benefit from a higher level of consumer protection, a wider choice of products at more competitive prices:

·         Reversal of the burden of proof: For instance, if an Italian consumer discovers today that a product he/she purchased online more than 6 months ago is defective and asks the seller to repair or replace it, he/she may be asked to prove that this defect existed at the time of delivery. Under the proposed new rules, throughout the two-year guarantee period, the consumer will be able to ask for a remedy without having to prove that the defect existed at the time of delivery.

·         Clear and specific rights for digital content: For instance, a consumer who downloads a game which is then not working properly may currently receive as compensation only a discount on downloading other games in the future. With the proposed directive, consumers will be able to request such problems to be fixed and, if this is not feasible or not done properly, to obtain a price reduction or terminate the contract and be fully reimbursed.

Businesses will be able to supply digital content and sell goods online to consumers throughout the EU, based on the same set of contract rules:

·         Legal certainty and a business-friendly environment: Today businesses need to spend time and money to adapt to contract law rules in other EU states they sell to. Under the proposed rules, businesses will no longer need to deal with this fragmentation: they will be able to supply digital content or sell goods to consumers in all EU states based on the same set of key contract law rules.

·         Cost savings for businesses: Businesses now face an additional one-off cost of €9,000 to adapt to the national contract law of each new member state they wish to sell to. With the new EU-wide rules, a business could save up to €243,000 if it wishes to sell to all other EU countries.

See: http://europa.eu/rapid/press-release_IP-15-6264_en.htm 

For more information, see Digital contract rules.