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The EC’s Digital Single Market strategy

Recent developments

27 April 2017

A year after its introduction, the EC published a package of regulatory proposals on audiovisual content, e-commerce and platform strategy. Now the DSM strategy finally seems to be taking shape. This article examines the following recent developments in the EC’s DSM strategy: (1) the revised Audiovisual Media Services Directive; (2) new e-commerce rules; and (3) the EC’s approach to online platforms.

Key Issues:
  • Revisions to the EU’s Audiovisual Media Services Directive aim to address the new challenges faced by a dramatic rise in media consumption since 2010
  • New e-commerce rules are also being introduced with the aim of dealing with geo-blocking, cross-border parcel delivery and customer trust in e-commerce
  • The EC has presented four key principles for the development of online platforms in the EU which should benefit consumers
  • Future reform packages should present concrete benefits to businesses.
Audiovisual Media Services Directive

The first proposal seeks to revise the current version of the EU’s Audiovisual Media Services Directive (“AVMSD”) in order for it to address the challenges that come with the dramatic increase in media consumption since the AVMSD’s adoption in 2010. The regime includes changes aimed at strengthening the promotion of European cultural diversity, ensuring the independence of audiovisual regulators and offering more flexibility to broadcasters over advertising. Once adopted by the EC, the legislative proposal will be sent to the European Parliament and to the Council. In short, the revised AVMSD contains the following key proposals:

  • Promotion of European works – The revised AVMSD will require that on-demand providers ensure their catalogues contain at least a 20% share of European content.
  • The Country of origin principle (“COO”) – under this principle, content providers need only comply with the broadcasting rules of the Member State under whose jurisdiction they fall, as opposed to the rules of each country in which the content is transmitted, maintained and reinforced. The AVMSD will simplify the legal framework for determining which Member State has jurisdiction.
  • Advertising, product placement and sponsorship – Increased flexibility for advertising rules, such as product placement and the spread of commercials across viewing times whilst at the same time implementing rules intended to protect minors from commercials relating to high-fat food and alcoholic beverages.
  • Protection of minors – The revised AVMSD provides for an alignment of the standards of protection for TV broadcasting and on-demand services and will encourage Member States to develop codes of conduct for content that may be inappropriate for minors.
  • Independent regulators – Greater independence for national audiovisual regulators by establishing that they should be legally and functionally independent from both the industry and the government, with the requirement that they operate transparently and can be held accountable.
New e-commerce rules

As part of the DSM strategy the EC presented a three-pronged plan to boost e-commerce by tackling geo-blocking, making cross-border parcel delivery more affordable and efficient and promoting customer trust through better protection and enforcement.

  • Preventing geo-blocking – The EC is proposing legislation to ensure that consumers seeking to buy products and services in another EU country, be it online or in person, are not discriminated against in terms of access to prices, sales or payment conditions, unless this is objectively justified for reasons such as VAT or certain public interest legal provisions.
  • Making cross-border parcel delivery more affordable and efficient – The proposal aims to increase price transparency and regulatory oversight of cross-border parcel delivery services so that consumers and retailers can benefit from affordable deliveries and convenient return options even to and from peripheral regions.
  • Increasing consumer trust in e-commerce – The proposal aims to give more power to national authorities to enforce consumer rights, including being able to check and take-down websites which geo-block consumers or offer after-sales conditions not respecting EU rules (e.g. withdrawal rights).
Platform strategy

Finally, the EC presented its proposed approach to “online platforms”, defined on the basis of five key characteristics. Starting from the observation that only 4% of the largest online platforms hails from the EU, the EC presented four key principles for the development of platforms in the EU:

  • Simplifying, modernising and lightening existing regulations in order to provide a level playing field for (old and new) online platform businesses.
  • Maintaining, for the time being, the liability exemption for intermediaries but ensuring their acting responsibly with additional regulation.
  • Fostering trust, transparency, and innovation in online platforms, by addressing concerns over the sharing and use of user data, and the relations between online platforms and suppliers.
  • Promoting open platform models as opposed to “closed platform ecosystems”.

It would seem that consumers stand to benefit the most from the first wave of reforms, whilst the overall benefits for businesses are limited. However, reform packages on the horizon such as proposals on copyright, telecom regulation and VAT may present more concrete advantages for businesses in Europe.