Battle rages over protection for consumers who shop on the Net

Date: 15/10/1998

By Peter Chapman

CONSUMER Affairs Commissioner Emma Bonino and her single market counterpart Mario Monti are at loggerheads over proposals for an EU-wide legal framework for electronic commerce.

As Monti's single market department prepares to launch plans for a directive to govern the legal obligations of service providers and online traders, Bonino's staff are proposing a totally different approach.

A draft policy statement on the consumer protection issues raised by electronic commerce drawn up by the Directorate-General for consumer affairs (DGXXIV), which is currently being debated by EU member states, argues that customers should have the right to seek legal redress action in the country in which they live when contractual disagreements arise over goods and services bought over the Internet.

This is in stark contrast to Monti's draft directive, which calls for Internet service providers and other companies conducting business online to comply with the laws in the country from where the goods were supplied.

Bonino's move is being seen by critics as a deliberate spoiling tactic as officials in the Directorate-General for the internal market (DGXV) put the finishing touches to their proposals.

Monti's staff claim their proposals would establish a light-handed regulatory framework which would create a level playing-field for electronic commerce, in line with the approach taken to the Union's single market. They say it would rid companies of the need to employ teams of lawyers to ensure they were meeting their legal obligations in each of the EU's 15 member states.

But a Bonino aide claimed this approach was based on a misinterpretation of the EU treaty.

He added that DGXV officials had not sought the views of their consumer affairs counterparts when drafting the proposed directive, claiming that they were instead listening to "powerful industry lobbies" in Brussels.

The aide said that it was vital for consumers to be able to seek redress in the country in which they lived.

"What if you live in Spain and you bought something over the Internet from Japan? You should be able to see a judge in Spain," he insisted.

However, leading industry players, including the European telecoms operators' lobby ETNO and US software giant Microsoft, have attacked the approach suggested by Bonino, claiming it could deter firms from offering electronic commerce services.

"You need to provide consumers with protection. But the flip side of this approach is that you would be putting a tremendous burden on companies," said John Frank, legal counsel for US software giant Microsoft.

He said the 'offline' world already suffered from regulatory burdens which often made it difficult to persuade suppliers to send goods sold through catalogues or magazines from one EU country to another and warned that local laws could be used to create barriers to trade.

"The opportunities of electronic commerce are going to be lost if we permit laws to be used to protect national markets," he warned.

The issue is expected to be discussed by consumer ministers at a meeting on 3 November.