The Electronic Retailing Association

Committee Bulletin: Public Affairs 3Q18

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

Priorities of ERA Europe in 2018: fair terms and liability of online marketplaces and platforms

As our members are relying more and more on platforms for e-commerce businesses, ensuring a level playing field and fair terms in relation to these gatekeepers is of greatest economic priority. On 18th June, during the committee meeting at ERA Europe Conference in Seville, the Public Affairs committee for this reason decided to focus its Public Affairs work on all initiatives relating to platform businesses.

One of the main topics will be the platform liability and the current discussion in the EU. The board learned about the topic using 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 respective stock.

Rogue sellers identify best-selling products, then piggyback 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 the price, delivery options and ratings for a certain product. With the low pricing the counterfeiters win this buy box as the listing usually lists the cheapest product first. This happens regardless that many of these products have a very long delivery time…

However, as these are counterfeits, they do not meet the required quality standards and kill the customer rating of a product in a short time. Even if the rightful product owner can prove to Amazon that counterfeiters are selling the product on their platform, it takes a long time to take it down. In the meantime, new counterfeiters will start their activities for that product. The product is ruined. This leads to a loss of sales for that product aswell as ruining the overall reputation of the product owner.

As a result the platform and the counterfeiters earn millions while the legitimate product owner is seriously harmed. The Board of ERA Europe have decided to take immediate action.

As a consequence of this, ERA Europe is focussing its activities on the relation between platforms and business with regard to the third party sales of counterfeit products. So far, sellers only can rely on a voluntary Memorandum of Understanding to tackle the problem. A legally binding provision implementing the liability of platforms is needed.

In order to prevent the sale of counterfeit goods online, the Commission set up a process in a Memorandum of Understanding on the Sale of Counterfeit Goods via the internet (‘MoU’) for products for which counterfeit and pirated versions are sold online (e.g. fastmoving consumer goods, consumer electronics, fashion and luxury products, sports goods, films, software, games and toys), operating at regional and global level. The intellectual property rights covered by the scope of the MoU are registered trademarks, registered design rights and copyright set out in applicable Member State or EU law. The MoU includes commitments on pro-active and preventive measures.

The platforms provide appropriate technology, such as filters, and monitoring programmes in order to detect illegal content. The MoU also includes a number of commitments on Notice and Take-Down procedures (‘NTD’). In the context of the MoU, NTD procedures make it possible for: a) Rights Owners to notify Internet Platforms about alleged Counterfeit Goods being offered on their sites, and b) Internet Platforms to remove individual offers of alleged Counterfeit Goods from their sites.

Some Internet Platforms have policies which allow sellers to open only one store (one ID). Therefore, once that store is shut down, the ID is blocked from opening a new store. Also, once a seller is banned, they are put on a blacklist. The MoU was concluded in May 2011 and revised in 2016. Although, the two market leading platforms, Amazon, eBay and Alibaba, signed the renewed MoU, the instrument does not work in practice to tackle these counterfeits.

ERA Europe is also following with great interest that the EU Commission has opened preliminary investigations against Amazon, as announced on 19th October 2018. The inquiry will focus on how Amazon collects data from retailers on Amazon Marketplace. The informal investigation concerns the ecommerce group’s dual role as both competitor and host to third-party merchants, who sell goods on Amazon’s websites, said Margrethe Vestager, EU competition commissioner. Of particular economic interest for all ERA Europe members, is the investigation to discover whether Amazon use the data of smaller merchants for their own calculations, “as to what is the new big thing, what is it that the people want, what kind of offers do they like to receive". (EU Commissioner Verstager) hence giving Amazon an unfair competitive advantage. The commission sent questionnaires to merchants this week to gather information. The action was not prompted by a complaint but rather initiated based on the commission’s own market observations and the results of its ecommerce sector inquiry completed in 2017.

ERA Europe at the Münchener Medientage

Another milestone is ERA Europe's cooperation with MEDIENTAGE MÜNCHEN which is raising awareness of the industry branch represented by ERA Europe.

Thanks to the cooperation, ERA Europe will be represented with a panel at the MEDIENTAGE MÜNCHEN, one of the most important and best visited conferences among decision makers and political key stakeholders within Europe. On 26th October 2018 in Munich, the ERA Europe MCMS session will include presentations and discusson on topics including: “Emotions & Alibaba – Trends in Multichannel Home-Shopping”, “The Impact of Human Emotions & Behaviour on Omni-Channel Retailing: the Mix of Real and Digital" and  "What makes Alibaba strong".

The first milestone was successfully implemented on 20th June 2018, when the MCMS Congress (Multi-Channel Money Streams congress) was held in co-operation with MEDIENTAGE MÜNCHEN, on the second day of the Multi-Channel Home Shopping Conference in Seville, Spain. Several panels were dedicated to the innovations, challenges and regulatory changes ERA Europe member companies are facing.

Update on the ERA Europe Public Affairs Activities in Q2/Q3

ERA is focussing its public affairs work also on the following recent dossiers

  • Teleshopping and the impact of the revised audio-visual Media Service directive („AVMS Directive“)
  • Consumer Protection: New Deal for Consumer protection
  • Level playing field btw. Marketplaces and e-commerce providers and the teleshopping including the Proposal on Platform to Business requiring more transparent terms and conditions by online intermediaries such as platforms/marketplaces/search engines

Update on Platform2Business Proposal (“P2B Regulation”)

https://ec.europa.eu/digital-single-market/en/news/regulation-promoting-fairness-and-transparency-business-users-online-intermediation-services

On Monday 24 September, The Internal Market Committee (IMCO) discussed the draft report concerning the online platforms regulation. The rapporteur finally stated that she aims to put the proposal into inter-institutional negotiations with the Council and Commission by early November, with the end goal to have final legislation adopted before the 2019 elections. The COMPET Council which took place on 27th - 28th September 2018 did not discuss the proposal in detail but acknowledged it as one of the relevant e-commerce-related files yet to be completed.

Due to the importance of this file, ERA Europe addressed its concerns to the upcoming meeting of the EU Competitiveness Council Ministers on 27th-28th September 2018. ERA Europe believes that the Commission proposal for a P2B Regulation recognises the systemic nature of unfair business practices by certain online platforms and the serious harm they inflict on innovation, competition and consumer choice. However, the current proposal focuses on transparency, but targeted measures to prevent unfair practices by platforms are needed if the legislation is to promote sustained digital growth. ERA Europe stressed that transparency alone will not rebalance the relationship between platforms and the businesses that depend on them. The P2B Regulation should prohibit the most harmful business practices, in particular those that reinforce a platform's privileged position or unfairly favour proprietary services and which have no clear consumer benefit. This would not create administrative or cost burdens for small platforms.

New rules for audiovisual media services approved by Parliament

http://www.europarl.europa.eu/news/en/press-room/20180925IPR14307/new-rules-for-audiovisual-media-services-approved-by-parliament

On 2nd October 2018, the European Parliament formally adopted a revised Audiovisual Media Directive governing broadcasting within the European Union.

The proposal still needs to be formally approved by the Council of EU ministers. After publication in the Official Journal (to be expected in November 2018), the Member States will have 21 months to transpose the new rules into national legislation, meaning that the rules must be come into force latest until mid-2020.

Scope of the directive

The revised legislation will apply to broadcasters, but also to video-on-demand and video-sharing platforms, such as Netflix, YouTube or Facebook, as well as to live streaming on video-sharing platforms. Regarding teleshopping the scope is therefore unchanged. Television broadcasting programmes are deemed to be all programmes provided for simultaneous viewing on the basis of a programme schedule.

Commercial Communication and Teleshopping Windows

As the AVMS Directive regulates all means of broadcasting and television including teleshopping, it is of economic importance for all of us.

The 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 for which a 20% calculation will apply.

The new rules impose a maximum 20% quota of advertising in the daily broadcasting period between 6:00 and 18:00, giving the broadcaster the flexibility of adjusting their advertising periods. A prime-time window between 18:00 and 0:00 was also set out, during which advertising (including teleshopping windows) will only be allowed to take up a maximum of 20% of broadcasting time.

Cross-promotion of own services or services of an 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 programmes will be prohibited.

Signal integrity and protection against overlays

The Parliament also secured measures to ensure the integrity of the signal. It applies to smart TVs and means that the media service provider cannot add a window with content to the screen during a programme, without first having the agreement of the broadcaster.

CONSUMER PROTECTION: „New Deal for Consumers“

On 11th April 2018, the European Commission published its NEW DEAL ON CONSUMER PROTECTION package introducing new obligations for 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 the unnecessary burden for businesses, including lifting obligations on companies regarding 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 29th November 2018, 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