“The Digital Single Market will not lead to large-scale price effects throughout Europe”

3 Questions to Nathalie Vandystadt, European Commission spokesperson for the Digital Single Market.

Per Strömbäck: On November 28, EU member states agreed to ban unjustified geo-blocking between member states. What will be the consequences for online retail in member states with purchase power below average? Will the prices rise to the European average? Or to top-Euro? If online retail becomes more expensive than bricks and mortar shops, will that limit the development of digital retail?

Nathalie Vandystadt: Regarding the consequences for Member States with lower purchasing power, the geo-blocking proposal leaves pricing to traders and does not mandate a uniform EU price. Furthermore, in the Commission’s Impact Assessment accompanying the geo-blocking proposal (see here, starting from p. 39) it is assumed that the proposal will not lead to large-scale price effects throughout the EU. The aim of the proposal is to improve cross-border access to goods and services for consumers and businesses. However, the price effect depends on many factors and price elasticity is particularly linked to competition. By improving cross-border access to goods and services, competition should be increased and this could lead to a wider variety of products and lower prices. Potential price effects would also not be specific to the geo-blocking phenomenon, but comparable to those of other Single Market measures.

As regards the effect on online retails vs. brick and mortar shops, the data and studies available to the Commission show a constant increase in online commerce. Throughout the EU and since years, more and more consumers decide to buy online or combine online with offline shopping (Click&Collect etc.). The Geo-blocking proposal does not treat online retail as such differently from brick and mortar shops and we therefore do not see grounds for assuming that online retail will become more expensive. The Commission does not make judgments as to the preferred sales channel, but rather works to achieve the same or similar set of rights for European consumers in cross border transactions, be it in the online or offline environment.

PS: Many have pointed to the role of intermediaries to restrict illegal distribution of content online. The duties of intermediaries are restricted by – in part – the E-commerce directive. As part of the copyright reform package, why did the Commission proposal stop short of opening the E-commerce directive?

NV: In the Communication on Online Platforms from 25 May 2016, the Commission recognised that the nature of online intermediaries has significantly evolved since the E-commerce Directive was conceived, but committed itself to maintaining the present intermediary liability regime in the EU, given its positive effect on the scaling-up of online platforms. Maintaining this regime remains contingent on targeted actions in a number of domains, including copyright and audio-visual media services, further progress in self- and co-regulatory measures (e.g. on hate speech, on limiting exposure of children to harmful content, on tackling the sale of counterfeit goods, etc.).

Digital technologies can serve to significantly improve our quality of life in crucial areas such as health, transport, energy or education.

PS: Answering a question on competition law enforcement in relation to contractual freedom in copyright licensing at the Digital Assembly in Bratislava earlier this autumn, Giuseppe Abbamonte, Director of Media Policy at DG CONNECT, said it would not be possible to consider “all imponderable things” when making policy proposals. Should not the Commission consider all aspects when new proposing legislation (in this particular case the Commission’s own action)? If not, how does the Commission select which aspects are considered and which are disregarded?

NV: Before presenting a legislative proposal, the Commission thoroughly analyses the impacts of regulatory measures in an Impact Assessment, which analyses several policy options according to their effectiveness, efficiency, impact on different groups of stakeholders and coherence. Impact Assessment reports present the most significant and likely impacts of a possible intervention. In the case of the Impact Assessment accompanying the modernisation of EU copyright rules, the report presents the economic impacts on different group of stakeholders (e.g. broadcasters, service providers, right holders) as well as social impacts (e.g. on cultural diversity) and impacts on fundamental rights. However, the Commission cannot take into account ongoing competition investigations when preparing an Impact Assessment

PS: How do you define “digital single market”? How do you know when there is a digital single market?

NV: Creating a digital single market is about breaking down national silos in telecoms regulation, in copyright and data protection legislation and in the management of radio waves. It is also about helping build the framework conditions for protecting citizens online, including fighting against cybercrime and simplifying consumer rules for online shopping. It is finally about, mobilising additional public and private investment for infrastructure such as broadband networks, promoting digital and eGovernment approaches in national and EU administrations and supporting the development of cultural and creative industries in Europe.

The digital revolution is a major opportunity for all European citizens and businesses. Digital technologies can serve to significantly improve our quality of life in crucial areas such as health, transport, energy or education. Technology can be used to expand markets, provide better services at better prices, offer more choice and create new sources of employment.

However, existing barriers lead to citizens and business missing out on the benefits brought by digital innovation. For example, only 59% of Europeans can access 4G networks. 52% of cross-border purchases are blocked. EU legislation needs to address these barriers and offer the right framework to foster innovation and allow market growth. Additionally, in many cases, the EU needs a coordinated response to digital opportunities and challenges.

Eighteen months after having presented its Digital Single Market strategy (DSM), the Commission has delivered specific proposals on most of the DSM Strategy initiatives. They touch on a large number of policy areas, such as consumer protection, competition, industrial policy or tax.

The remaining DSM Strategy proposals under preparation include:

– an initiative on building the data economy

– a review of the e-Privacy Directive

– modernisation of VAT rules

– a review of Directive on enforcement of intellectual property rights

– a revision of the European Interoperability Framework

Most of the initiatives in the Digital Single Market Strategy have already been launched by the European Commission and not all of them involve legislative proposals. In May 2017, we will be taking stock of what has been done so far and, for those initiatives still with the co-legislators, call for swift adoption of the proposals by the end of 2018 as requested by the June and October 2016 European Council.

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