The Electronic Retailing Association

Committee Bulletin: Public Affairs 2Q18

Public-affairs-square
The ERA Public Affairs Committee discusses current national and European public affairs issues and defines ERA Europe's position on them.

Report from the Public Affairs committee which met on 18th June during the ERA Conference in Seville.

The main topic was platform liability and the current discussion in the EU. The board learned about the topic through the example of the product basket of Amazon. The problem is as follows:

The brand owner adds a product to the listing, defines its RRP, adds content and marketing material, invests into instore marketing and provides Amazon with the respective stock.

Rogue sellers identify best-selling products, piggy back these listings with their own products. They add their own price and delivery options and provide Amazon with their (counterfeit) stock.

The Amazon Buy Box lists a certain product with the price, delivery options and ratings. With the low pricing, the counterfeiters win this buy box as the listing usually lists the cheapest product first. This happens regardless of the fact that many of these products have a very long delivery time.

However, as these are counterfeits, they do not keep the quality standards and kill the customer rating of a product in a short timeframe. Even if the legitimate owner can prove to Amazon that counterfeiters are selling the product on their platform, it will take a long time to take them down. Additionally new counterfeiters will start their activities for that product. The product is ruined. This leads not only to a loss of sales with regards to that product but also ruins the overall reputation of the product owner.

As a result, the platform as well as the counterfeiters earn millions while the legitimate product owner is seriously harmed. The board of ERA Europe decided to take immediate action.

ERA Europe also attended the EMOTA LAC (Legal Affairs Committee meeting) in Brussels on 3th July 2018.

During that meeting ERA Europe clearly addressed that the non-liability for platforms that earn money with illegal content (i.e. counterfeit products) is not acceptable.

ERA Europe will develop a paper outlining an own position and closely monitor the various activities in Brussels such as

  • liability for VAT

  • world-wide counterfeit and piracy watchlist focusing on online marketplaces outside EU

  • Proposal on Platform to Business requiring more transparent terms and conditions by online intermediaries such as platforms/marketplaces/search engines

The revision of the commerce directive will need a clarification of Article 14 to avoid these practices in the future.

https://ec.europa.eu/digital-single-market/en/illegal-content-online-platforms

https://ec.europa.eu/digital-single-market/en/platforms-to-business-trading-practices

Ongoing co-operation with Medientage München increasing awareness of the industry branch represented by ERA Europe

Another milestone will be the cooperation with Medientage München regarding the conferences and therefore awareness of the industry branch represented by ERA Europe.

The first step was successfully implemented during the 2018 MCMS Conference (Multi Channel Money Streams Conference) that was held on 20th June during the second day of the Multi-Channel Home Shopping Conference at the Hotel Barceló Renacimiento, Seville, Spain in co-operation with Münchener Medientage. Several panels were dedicated to the innovations, challenges and regulatory changes ERA member companies are facing. ERA Europe will also be present with its issues and its association during the trade fair Medientage München in October 2018.

Focus of work in Q2/Q3

In Q2/Q3 ERA is focussing its public affairs work on the following recent dossiers of greatest importance for our members concerning homeshopping and e-commerce.

- Teleshopping and the revision of the audio-visual Media Service directive ('AVMS Directive')

- Consumer Protection: New Deal for Consumer protection

- Level playing field between marketplaces and teleshopping

TELESHOPPING and AVMS Revision

The AVMS Directive regulates all means of broadcasting and television including teleshopping and has been in trilogue (final negotiations) for the past six months; a final text is expected in the next months.

Teleshopping windows and commercial communication

A revised AVMS directive will bring a small liberalisation on commercial communication regulation benefiting also teleshopping providers. Minutage restriction on TV advertising will be liberalised and will facilitate the operation of teleshopping windows. Whereas commercial communication was limited to 20% per hour in the AVMS directive, the revision will introduce two windows whereas 20% calculation will apply (currently from 6am o’clock until 6pm o’clock and from 6 pm o’clock until 12 midnight o’clock and will therefore allow more flexibility. Cross-promotion of own services or services of affiliated company as well as black seconds are not deemed to be commercial communication and therefore are excluded from this calculation. Teleshopping spots in children programes will be prohibited.

Country of origin principle

The initial proposal on changing the country of origin underlying establishment criteria from ‘significant part’ of the workforce to the ‘majority’ of the workforce will not be included meaning that there will be no economic challenges for all the teleshopping providers within EU relying on this principle.

http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2016/0151%28COD%29&l=en

CONSUMER PROTECTION: „New Deal for Consumers“

On 11th April 2018, the European Commission published its NEW DEAL ON CONSUMER PROTECTION package, introducing new obligations on e-commerce and the instrument for representative actions (http://europa.eu/rapid/press-release_IP-18-3041_en.htm).

The New Deal for Consumers proposes:

1. Strengthening consumer rights online including:

- More transparency in online market places – when buying from an online market place, consumers must be informed about whether they are buying products or services from a trader or from a private person, so they know whether they are protected by consumer rights if something goes wrong.

- More transparency on search results on online platforms – when searching online, consumers must be informed when a search result is being paid for by a trader. Moreover, online marketplaces will have to inform the consumers about the main parameters determining the ranking of the results.

- New consumer rights for “free” digital services – when paying for a digital service, consumers benefit from certain information rights and have 14 days to cancel their contract (withdrawal right). The New Deal for Consumers will now extend this right to ‘free' digital services for which consumers provide their personal data, but do not pay with money. This typically would apply to cloud storage services, social media or email accounts.

2. Giving consumers the tools to enforce their rights and get compensation by:

- Introducing representative action: it will be possible for a qualified entity, such as a consumer organisation, to seek redress, such as compensation, replacement or repair, on behalf of a group of consumers that have been harmed by an illegal commercial practice. In some Member States, it is already possible for consumers to launch collective actions in courts, but now this possibility will be available in all EU countries (here Dieselgate was the blueprint)

- Introducing rights against unfair commercial practices: consumers will have the right to claim individual remedies (e.g. financial compensation or termination of contract) when they are affected by unfair commercial practices, such as aggressive or misleading marketing. This protection currently varies greatly across the EU.

The consumer rights directive is deemed to be extended to digital services: the Commission proposes the same right for pre-contractual information and the right to cancel the contract within 14 days, regardless whether the consumer pays for the service with money or provides for it with personal data.

3. Introducing effective penalties for violations of EU consumer law

Under the proposal, national consumer authorities will have the power to impose effective, proportionate and dissuasive penalties in a coordinated manner. For widespread infringements that affect consumers in several EU member states, the available maximum fine will be 4 % of the trader's annual turnover in each respective member state. Member states are free to introduce higher maximum fines.

4. Tackling dual quality of consumer products

Following up on the Commission's guidelines from September 2017, the New Deal for Consumers will update the Unfair Commercial Practices Directive in order to make explicit that national authorities can assess and address misleading commercial practices involving the marketing of products as being identical in several EU countries, if their composition or characteristics are significantly different.

The industry is concerned that the proposal puts restrictions on marketing of identical products with different composition.

5. Improved conditions for businesses

The New Deal will remove unnecessary burden for businesses, including lifting obligations on companies as regards the consumer's withdrawal right. For instance, consumers will no longer be allowed to return products that they have already used instead of merely trying them out, and traders will no longer have to reimburse the consumers before actually receiving the returned goods („overused products“).

The new rules also introduce more flexibility in the way traders can communicate with consumers, allowing them to also use web forms or chats instead of e-mail, provided the consumers can keep track of their communication with the trader.

Timetable: The Commission has been seeking to push the member states for a general approach on 29 November, however, there is an impression that the Austrian Presidency is not likely to follow this ambition.

In the European Parliament, the files are divided by IMCO and JURI Committees with the rapporteurs and the shadow rapporteurs mostly being designated across the political groups. The choice of rapporteurs and shadow rapporteurs suggests that the outcome in the European Parliament could be prioritising consumers over businesses.

http://europa.eu/rapid/press-release_IP-18-3041_en.htm

PLATFORM LIABILITY: Decision of the Court of Justice of the EU (CJEU) on Facebook fan pages

The ruling of the CJEU from 5th June 2018 might have a great impact on social media campaigns on social media platforms such as Facebook by also challenging the data protection policy.

The CJEU decided that any operator of a fan page on Facebook must take its share of responsibility for the collection of user data, in this case the fan page operator used a -very common- Facebook feature to collect anonymised data on visitors to the fan page through the use of cookies without informing the users and without the specific consent of the user, thereby infringing data protection rules. A general consent given by users, by logging in to Facebook and agreeing to Facebook data protection policies, is not sufficient. All Facebook insight tools and social plugins are be affected by this decision.

https://www.reuters.com/article/us-eu-court-facebook/facebook-fan-page-operator-has-privacy-responsibilities-eu-court-idUSKCN1J1142