COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposals for Directives of the European Parliament and of the Council on (1) certain aspects concerning contracts for the supply of digital content and (2) on certain aspects concerning contracts for the online and other distance sales of goods
Date: 2015-12-09
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: approximation of laws, commercial contract, consumer protection, contract, digital technology, electronic commerce, information society, single market

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   EUROPEAN COMMISSION  Brussels, 9.12.2015  SWD(2015) 275 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposals for Directives of the European Parliament and of the Council on  (1) certain aspects concerning contracts for the supply of digital content   and  (2) on certain aspects concerning contracts for the online and other distance sales of goods  {COM(2015) 634 final} {COM(2015) 635 final} {SWD(2015) 274 final}  
 
 
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?  
For  digital  content,  a  majority  of  general  business  stakeholders  see  a  need  for  EU  action  in  the  form  of  full 
harmonisation; the IT industry is more divided. Consumer organisations recognise the need to act and support 
full  harmonisation  provided  that  a  high  level  of  consumer  protection  is  guaranteed.  A  majority  of  responding 
Member States also welcome EU action on digital content. For goods, businesses are in favour of action at EU 
level. While a majority would support full harmonisation, others would prefer the application of the trader's law. 
Several  Member  States  and  consumer  associations  are  against  changing  the  Rome  I  Regulation.  Consumer 
organisations  would  only  support  full  harmonisation  if  the  level  of  consumer  protection  is  high  and  existing 
national  consumer  protection  levels  are  not  reduced.  Member  States  are  divided  on  the  need  to  act.  For  both 
digital content and goods, almost all respondents are in favour of dealing with business to consumer contracts 

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only.  A  majority  of  stakeholders  warn  about  the  possible  fragmentation  between  online  and  offline  sales  of 
goods. However, the Commission will take necessary steps to avoid such fragmentation and the benefits to act 
now outweigh this risk of legal fragmentation. 

C. Impacts of the preferred option 

What are the benefits of the preferred option?  
The  preferred  policy  option  will  eliminate  contract  law  related  barriers  to  cross-border  online  trade,  both  for 
consumers and traders. Removing these obstacles is an incentive for cross-border trade: if the barriers related to 
contract  law  were  lifted,  the  number  of  businesses  selling  online  cross-border  could  increase  by  more  than  5 
percentage points. According  to a very conservative estimate, this would mean that 122,000 more businesses 
would be selling online across borders. Intra-EU exports will increase by 0.04 % which corresponds to around €1 
billion.  
Increased online retail competition will lead to retail prices going down in all Member States, averaging -0.25% at 
EU  level.  As  a  result  of  this  price  decrease  and  increased  consumer  trust  stemming  from  uniform  EU  rights, 
there will be additional consumer demand. Household consumption, which mirrors consumers' welfare, will rise 
in every Member State with an EU average of +0.23% which corresponds to about  18 billion. The number of 
consumers  buying  online  cross-border  could  increase  by  almost  7  percentage  points.  This  would  mean  that 
between  8  and  13  million  additional  consumers  would  start  buying  online  cross-border.  The  average  amount 
spent annually by each cross-border buyer would also increase by €40. This increase in supply and demand will 
have  direct  effects  on  the  main  macroeconomic  variables  in  each  Member  State  and  in  the  EU  as  a  whole. 
Overall the real EU GDP is expected to gain 0.03% which represents a permanent increase of about €4 billion in 
EU's annual GDP. 

What are the costs of the preferred option? 
As  to  compliance  costs,  businesses  will  incur  one-off  costs  in  order  to  adapt  their  contracts  to  the  new  rules. 
These costs amount to around €7,000 per enterprise. However, these costs will be more than compensated by 
the fact that traders interested in exporting will be enabled to sell to consumers in all EU Member States, without 
having  to  face  additional  contract  law  related  costs  to  adapt  their  contract  to  each  Member  State's  mandatory 
contract law rules. Businesses will also incur costs linked to the concrete consequences of the application of the 
new  rules  to  their  contracts  with  consumers.  However,  it  is  not  possible  to  assess  the  level  of  these  costs 
because they will depend for example on whether and to what extent the business supplies faulty products.  

How will businesses, SMEs and micro-enterprises be affected? 

Businesses  will  face  costs  to  comply  with  the  new  law  but  even  more  benefit  from  fully  harmonised  rules  to 
export  goods  and  digital  content  throughout  the  EU.  Micro-enterprises  will  not  be  exempted  from  the  new 
legislation which will apply in full to SMEs: exemptions would decrease consumers' trust when purchasing from 
them.  There  is  no  justification  for  giving  consumers  less  protection  when  they  buy  from  an  SME  instead  of  a 
bigger  supplier.  It  would  therefore  undermine  the  benefits  for  them  of  having  one  single  set  of  rules  applying 
throughout the EU. The initiative will particularly be beneficial to SMEs, which are more affected by the costs to 
adapt  their  contract  to  mandatory  rules  of  other  Member  States  and  are  often  confined  to  their  home  market. 
Foreign trade is an important way for them to benefit from the advantages of economies of scale. SMEs face a 
problem in finding customers. This would be easier to cope with in the online context, since the internet enables 
online sales at reduced costs compared to offline trade.  

Will there be significant impacts on national budgets and administrations? 

Except for the obligation to transpose the Directives into national law and enforce them, there are no practical 
implications  for  public  administrations.  Uniform  contract  law  rules  on  faulty  products  in  the  EU  will  facilitate 
enforcement  by  Member  States  and,  in  particular,  cross-border  joint  enforcement  actions  undertaken  by  the 
Consumer Protection Co-operation authorities. 

Will there be other significant impacts? 

The initiative will have a positive impact on fundamental rights. The initiative will ensure a uniform high level of 
consumer protection throughout the EU (Article 38 of the Charter of Fundamental Rights) although for goods this 
will lead to changes to the level of protection in certain Member States. It will increase consumers' awareness of 
the economic value of their personal data in in conformity with Articles 7 and 8 of the Charter and current and 
future  EU  law.  Businesses  will  sell  more  easily  domestically  and  cross-border  (Article16).  Uniform  rules  will 
facilitate the exercise of one's right to an effective remedy before the courts (Article 47). 

When will the policy be reviewed? 
The  Commission  will  monitor  the  implementation  of  the  Directives  and  launch  an  evaluation  to  assess  how 
effectively they reach their objectives 5 years after their entry into application. 

D. Follow up 

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