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EU Commission announces areas for action in its Digital Single Market Strategy

On 25 March 2015, the European Commission announced that it will be focussing on three policy areas in order to further completion of the digital single market: i) ensuring better access to digital goods and services, ii) enabling digital networks and services to grow, iii) creating a digital economy and society with “growth potential”.
So what does this mean in practice?
  1. Better access to digital goods and services across Europe
Official Commission statistics show that only 15% of consumers bought from other Member States in 2014 and only 7% of SMEs sell across EU borders. The cost of adapting to national laws in other Member States is purported to amount to EUR 9,000. The Commission considers that EU consumers could save EUR 11.7bn per year if they had access to a full range of EU goods and services online. The solution?
  • Harmonising consumer and contract rules
  • Ensuring a cheaper parcel delivery service which can deliver to customers across Member States (> 85% of customers say that delivery is the most important factor when buying online)
  • Reducing geo-blocking – where online customers are routed to local services, often with higher prices.
  • Modernising copyright law to ensure a fair balance between the interests of creators, users and consumers. In particular, the Commission appears to be keen to ensure that images, films and music and games are available to consumers across different Member States to ensures consumers can watch, listen and/or play home content while abroad or vice versa
  • Simplifying VAT arrangements – reducing tax barriers could save EUR 80 bn.
  1. Enabling digital networks and services to grow
Only 25% of EU citizens can access 4G and as little as 4% in rural areas. This compares starkly with 95% in the US. Ensuring access to 4G spectrum is key particularly given the consequential drop in prices of mobile services. While providing better and more widespread access to the internet is a priority area of the Commission, so is protecting consumers’ personal data to instil trust in them to use the internet more - 72% of users consider they are asked to provide too much personal data online. The Commission’s proposals include:
  • A widespread review of the current telecoms and media rules (in particular in relation to consumer uses such as increasing voice calls made over the internet) to ensure adequate investment in infrastructure.
  • Creating a European approach to managing spectrum.
  • Policing online platforms to encourage trust in online services through greater transparency on the one hand and protection of personal data on the other.
  1. Creating a digital economy and society with “growth potential”
Studies suggest that an increase in Big Data analysis by 2020 could increase GDP by EUR 206 bn. The Commission’s plan is to =:
  • Help industry integrate new technologies into their businesses and become part of a “smart industrial system” (“Industry 4.0”)
  • Ensuring interoperability for new technologies by creating standards faster
  • Regulating Big Data, particularly in terms of ownership, data protection and standards.
  • Regulating cloud computing
  • Developing citizen’s digital skills to take advantage of e-services
While the above may seem like political rhetoric – the bullet points belie a radical overhaul of large number of areas, some of which are either already subject to EU regulation (copyright laws) or have been pinpointed for regulation (radio spectrum policy); some have been “merely” subject to ad hoc individual competition investigations (online distribution platforms); and some have hitherto not faced regulation or regulatory interference at all (Cloud computing and Big Data).
The policies unveiled on Wednesday follow recent dawn raids in relation to the online distribution of consumer electronics by companies such as Redcoon and the reported “regulatory investigation” of geo-blocking in relation to online video games.  It has often been the case that antitrust investigations are the first step in an industry investigation which in certain circumstances can lead to sector-specific regulation and this seems to be no exception.
So what does this list of bullet points mean in practice? It is not clear how Commission action will manifest itself in the first stages. We have some pointers – for example we know that there is going to be an sector inquiry into the e-commerce industry which will involve a number of different directorates-general. It’s initial focus will be on buying goods on line and on digital content.  For insight on what might be in store in relation to the overhaul of the EU copyright rules see for example the recent EU Copyright evaluation report commissioned by the European Parliament and the latest report on the implementation of the Radio Spectrum Policy Programme (RSPP) see here.

Although the Commission provided a reasonable level of detail, it is too early to identify the exact focus of every investigation. What is clear is that the impact of these Commission initiatives will have far – reaching consequences not only in the field of competition law but in many different policy areas - it is enough to look at some of the main Commission departments contributing to the Digital Single Market Strategy (Digital Economy & Society; Internal Market, Industry, Entrepreneurship & SMEs; Research, Science and Innovation; Economic & Financial Affairs, Taxation & Customs; Competition to name but a few) - to see how far-reaching these policy initiatives may be. More concrete proposals will be published in May 2015.

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