The EU plans the revision of its Ecommerce Directive

The European institutions are gearing up for the revision of the 2000 Ecommerce Directive. The Directive has contributed to what is now known as the platform economy in the Single Market. However, at the time of its drafting, many of today’s challenges were impossible to anticipate. The focus of the current debate lies in the complex role platforms play in the economy and in society in general. This role, while bringing benefits, also requires a clearer and updated legal framework, incentivising all players both to abide by the rules of a level playing field and to accept due liability, reflecting today’s challenges and societal expectations. The EU aims to establish a framework that encourages actors to play fairly and be compliant, thus giving Europe the chance to lead in this space.

One of the main reasons for the need to update the liability regime comes from the dramatic increase in the online availability of illegal or unsafe products. As we reported in this Newsletter previously, the EU has become concerned at the number of fake products which are available online. For example, of the counterfeit products registered in the Commission’s RAPEX database, 97% were found to pose a risk for health and safety – and 80% of those were products destined for use by children. Counterfeit or fake goods range from chewing gum and stock cubes, via shampoo and lightbulbs to the highest-priced luxury items. They encompass everything from medicines to shoes, from toys to lipstick. They target all groups in society: children, adults, the elderly, and in all countries. The EUIPO and OECD estimate that the trade in counterfeit goods accounts for 6.8% of all EU imports, growing at a global level by over 30% in the period of 2013-2016 alone. In the EU, this is 121bn EUR a year. That is larger than the GDP of 11 EU countries and is significant in terms of lost revenues in jobs, taxes and duties. The EU is therefore planning:-

• Firstly, to update the legal framework of the Ecommerce Directive.

• Technology can be leveraged to prevent illegal goods from reaching the online market and close loopholes that enable offenders to re-offend – ban them permanently from accessing consumers by using payment and business registration details so that their accounts and access can be removed. Platforms have these tools and details and should be able to verify the identity of sellers operating on their platform and with whom they have a commercial relationship. Businesses should be subject to the same obligations online and offline, regardless of whether they are European or not.

• Address the issue of fake consumer accounts – a single purported individual’s account that sells thousands of the same products should raise questions. The EU plans to use the same tools applied to B2B accounts to eliminate this problem.

• Platforms – including online marketplaces, social media, search engines, and others – deploy algorithms, Artificial Intelligence (AI) and machine learning can be used to protect consumers and genuine businesses and prevent illegal listings.

• Enable under-resourced customs officers to stop counterfeits at the border by giving them access to data so they know which consignments to target. There is usually a trail of who put the container on the ship, handed the boxes to the courier, what is declared in the shipping documents. These intermediaries – the transporter, shipper, courier, freight forwarder, online marketplace or payment provider – will have that data. At every step in the chain, there is data. With millions of products crossing European borders daily, sharing data to enable customs authorities to do their jobs will be a priority.

• When counterfeit products are discovered in the EU, the police and national market surveillance authorities will share intelligence. Income from counterfeiting funds crime,  including organised crime: the perpetrators are often sought by many national agencies. The EU believes that sharing data on illegal activity with law enforcement should be a duty of any legitimate business. Intermediaries who are paid for the movement and sale of illegal products should play their part in this fight.

This Newsletter will follow the EU’s proposals as they unfold over the next months.