Executive Summary Sheet

Impact assessment on Proposals for Directives on the Supply of Digital Content and the Online and other Distance Sales of Goods

A. Need for action

Why? What is the problem being addressed?

The Digital Single Market (DSM) Strategy deals with the supply of digital content and the online sale of goods because the share of e-commerce within the EU retail sector is growing faster than offline trade and the significant untapped growth potential of e-commerce should not be missed. 39 % of businesses selling online but not cross-border quote different national contract laws as one of the main obstacles. This applies particularly to remedies in case of a faulty product (49 % of EU retailers selling online and 67% who are currently trying to sell or considering selling online cross-border). Different national contract law rules have created one-off costs for B2C retailers of around €4 billion; these costs mostly affect micro and small enterprises. Consumers are not confident when buying online across borders. One of the main reasons is their uncertainty about their key contractual rights. They miss opportunities and face a narrower range of goods at less competitive prices. They also suffer detriment due to lack of clear contract law rights for faulty digital content. The combined value of the financial detriment resulting from the most recent problem with only four types of digital content and the time spent trying to resolve problems during the last 12 months is estimated at between €9 and 11 billion.

What is this initiative expected to achieve?

The general objective is to contribute to faster growth of the DSM, to the benefit of both consumers and businesses. The EU's annual GDP is expected to have a permanent increase of about €4 billion. By eliminating contract law related barriers hindering online cross-border trade, it will reduce business costs resulting from differences in contract law and the uncertainty faced by businesses due to the complexity of the legal framework. The initiative will increase consumer trust by providing uniform rules with clear consumer rights.

What is the value added of action at the EU level?

Member States on their own initiative would not be able to remove the barriers caused by differences between national laws. Each Member State individually would not be able to ensure the overall coherence of its legislation with that of other Member States. For goods, this initiative will provide consumers with targeted, fully harmonised contract law rights when buying online and otherwise at distance. It will reduce costs for businesses and therefore consumers will benefit from a larger offer at more competitive prices. For digital content, it will create legal certainty for businesses which want to sell in other Member States. It will at the same time secure coherent consumer rights with a high level of consumer protection. As a result, consumers will be able to acquire and business will be able to supply more easily digital content and goods online within the entire DSM. It will prevent fragmentation of digitial content rules as Member States are starting to legislate individually in this area.

B. Solutions

What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why?

The preferred option (Option 1: targeted fully harmonised rules for digital content and goods) will reduce contract law related costs for traders' cross-border transactions. Increased competition will lead to an overall increase of trade. Consumers will benefit from an increased choice at more competitive prices. Consumers will have a clear set of rights throughout the EU and therefore will be more confident in the DSM. Other envisaged options were: Option 2: Targeted fully harmonised rules for digital content - Application of the trader's law combined with the existing harmonised rules on goods. Option 3 Targeted fully harmonised rules for digital content and no policy change for goods. Option 4: Minimum harmonisation rules for digital content and no policy change for goods. Option 5: A voluntary European model contract combined with an EU trust-mark.

Who supports which option?