Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2015/0287 (COD)**

**Brussels, 1 June 2017**
**(OR. en)**

**9901/17**

**JUSTCIV 137**
**CONSOM 246**
**DIGIT 157**
**AUDIO 84**
**DAPIX 224**
**DATAPROTECT 111**
**CULT 83**
**CODEC 968**

**NOTE**

From: the Presidency

To: Council

No. prev. doc.: 9641/17 + ADD 1

No. Cion doc.: 15251/15

Subject: Proposal for a Directive of the European Parliament and of the Council on
certain aspects concerning contracts for the supply of digital content (First
reading)

         - General approach

**I.** **INTRODUCTION**

The Commission proposal for a Directive on certain aspects concerning contracts for the supply of

digital content ('the proposed Directive', 'the Directive') was submitted on 9 December 2015 **[1]** as part

of the 'Digital Single Market Strategy for Europe'.

The proposal is based on Article 114 of the Treaty on the Functioning of the European Union and is

thus subject to the ordinary legislative procedure.

**1** Document 8672/15.

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The purpose of the proposed Directive is to contribute to the proper functioning of the internal

market by introducing a more harmonised framework of EU contract law rules on business-to

consumer contracts for the supply of digital content and digital services, in particular rules on the

consumer remedies for cases of lack of conformity or lack of supply of digital content or digital

services. The proposed Directive aims at providing a high level of consumer protection and

increased legal certainty with a view to building greater confidence amongst European consumers

when buying cross-border and with a view to making it easier for businesses, especially small and

medium-sized enterprises ('SMEs'), to sell EU-wide.

The Council (Justice and Home Affairs) held policy debates on this proposal in March (doc.

6150/16), June (doc. 9768/16) and December 2016 (doc. 14827/16). A progress report was

submitted to the Council (Justice and Home Affairs) in March 2017 (doc. 7429/17).

The European Economic and Social Committee adopted its opinion on the proposed Directive on

27 April 2016.

The Maltese Presidency has acknowledged the importance of this file as part of the Digital Single

Market Strategy, which is also a priority for the Council.

Building on the political guidelines approved by the Council (Justice and Home Affairs) in

June 2016 (doc. 9768/16) and the results of the policy debate at the Council (Justice and Home

Affairs) in December 2016, the Working Party on Civil Law Matters (Contract Law) continued its

deliberations on the proposed Directive at an intensive pace.

In the light of the substantial progress made in the discussions of the Working Party on Civil Law

Matters (Contract Law), the Presidency is of the opinion that a general approach can now be

achieved on the text of the Articles and a number of important recitals of the proposed Directive.

While broad agreement appears to be emerging on the text of the Articles and selected recitals of

the future Directive as set out in Addendum 1 to this note, the remaining recitals will be subject to

further discussions and be finalised as soon as possible after the approval of the general approach by

the Council.

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On 31 May 2017, Coreper expressed overall support for the compromise presented by the

Presidency (the main elements of the compromise package are described in the Annex to this note)

and decided to submit the compromise package as set out in Addendum 1 to this note to the Council

(Justice and Home Affairs) on 8 and 9 June 2017 for approval as the Council's general approach.

The elements of the compromise text are to be seen as an overall package that aims at establishing a

well-balanced regime of a high level of consumer protection and the creation of a business-friendly

environment for EU entrepreneurs. The compromise also provides for a delicate balance between

the different positions of Member States.

**II.  CONCLUSION**

Bearing in mind the importance of keeping this delicate balance, Council is invited:

(a) to approve as a compromise package the draft general approach set out in Addendum 1

to this note,

(b) to take note that the remainder of the recitals will be finalised at technical level as soon

as possible after the Council, and

(c) to take note that this text will constitute the basis for the negotiations with the European

Parliament for a first reading agreement.

**________________**

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**ANNEX**

**MAIN ELEMENTS OF THE COMPROMISE PACKAGE**

**A. Scope**

_**(a) Personal data**_

Acknowledging the increased value of personal data in modern business models, it was widely felt

from the outset of the negotiations that the consumer should be entitled to the contractual remedies

for lack of conformity or lack of supply not only under contracts where the consumer pays a price

for the digital content or digital service, but also under contracts where the consumer provides

personal data to the supplier. At the same time, emphasis was made throughout the discussions on

the importance to ensure that any interference with the application of Union law on the protection of

personal data, in particular the EU General Data Protection Regulation ('GDPR') be avoided.

In the light of this, and taking into account the written opinions provided by the Council Legal

Service **[2]** and the European Data Protection Supervisor **[3]**, the Presidency compromise text includes

within the scope of the proposed Directive all contracts for the supply of digital content or digital

services, except those where the consumer neither pays a price nor provides any personal data to the

supplier.

**2** Document 15287/16.
**3** Document 7369/17.

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With a view to achieving a balance between consumers' and businesses' interests, it was of

importance to many delegations that the Directive does not apply to situations where no commercial

use of the consumer's personal data is made by the supplier. Therefore, under the Presidency

compromise text, the proposed Directive will not apply where personal data are exclusively

processed by the supplier for supplying the digital content or digital service, or for the supplier to

comply with legal requirements to which the supplier is subject, and the supplier does not process

the data otherwise.

The compromise text also clarifies explicitly that any processing of personal data in the context of a

contract for the supply of digital content or digital service has to comply with Union law on the

protection of personal data and that, in case of conflict, Union law on the protection of personal data

will prevail.

_**(b) Embedded digital content**_

Regarding digital content forming part of a good in a way that such good would be inoperable or

would be prevented from performing its main functions in the absence of such digital content

('embedded digital content'), the majority considered it more appropriate that the rules applicable to

goods determine the consumer's remedies in case of a lack of conformity or lack of supply of such

goods and the embedded software.

The Presidency compromise therefore excludes embedded digital content from the scope of the

proposed Directive.

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_**(c) OTTs and the relationship with telecommunication rules**_

In light of the evolving market of new apps and digital services that provide 'over the top' (OTT)

interpersonal communication and messaging services over the Internet leading to more consumers

to use such services as a means of communication over traditional telecommunication services, it

was deemed necessary to provide effective consumer protection with respect to these emerging

services.

The Presidency compromise therefore reflects the policy decision taken by the Working Party to

provide consumers using OTTs with the remedies for the lack of supply and the lack of conformity

provided for by the proposed Directive.

_**(d) Bundle contracts**_

As regards bundle contracts which contain elements of supply of digital content or a digital service

and elements of the provision of other services or goods, the Presidency compromise suggests that

the proposed Directive shall only apply to the elements of the contract concerning the digital

content or digital service. Any effects that the termination of the digital content or digital service

element of the bundle may have on the other elements of the bundle contract are left to national law.

However, as traditional telecommunication services are already highly regulated, by way of

exception, Article 16 of the Directive (providing for the consumer's rights to terminate long-term

contracts) should not apply in cases where the bundle contract includes elements of traditional

telecommunication services (number-based service). In such cases the EU telecommunication rules

will apply to such bundle contracts.

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**B. Conformity criteria**

Following the directions given by the Council (Justice and Home Affaires) in June and December

2016, the Presidency compromise provides for a balance between _'subjective'_ conformity criteria

(i.e. agreed in the contract) and _'objective'_ conformity criteria (i.e. stipulated by law).

The Presidency compromise text also clarifies that it is a matter of non-conformity if the digital

content or digital service does not comply with third party rights, in particular those relating to

intellectual property, and that in case of a violation of such rights the remedies for lack of

conformity provided for by the Directive shall be applied unless national law provides for the

nullity or rescission of the contract as a result of such violation.

**C. Remedies**

_**(a) Remedies for failure to supply**_

With a view to preserving both the interests of suppliers and of consumers, the Presidency

compromise on the remedies for the failure to supply includes a principal obligation of the

consumer to give the supplier a second chance to supply the digital content or digital service. This

is, however, subject to safeguards allowing the consumer to terminate the contract immediately in

certain situations without giving the supplier a second chance.

_**(b) Remedies for lack of conformity**_

With a view to respecting the different Member States’ systems and to preserving a fair balance

between consumers' and suppliers' interests, the Presidency compromise text, contrary to the

Commission proposal, does not provide for a strict hierarchy of the remedies in cases of lack of

conformity, but allows for more flexibility in accessing the different remedies (bringing into

conformity, price reduction, termination of the contract) by setting out the conditions for the use of

the different remedies.

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**D. Time limits for the supplier's liability for non-conformity and the reversal of the burden**

**of proof**

As to the time limits for the liability of the supplier for non-conformity and the related time limit for

the reversal of the burden of proof (Articles 9a and 10), the views of Member States diverged very

strongly. The Presidency text on these provisions should therefore be seen as part of an overall

compromise that attempts at approximating the diverging views as closely as possible and counting

on delegations' spirit of compromise and concessions on other parts of the compromise package.

Considering the very different concepts in the Member States’ national laws on guarantee periods

and limitation periods, the Presidency compromise had to accept that it would not be possible to

provide fully harmonised rules on the time limits. Therefore, to achieve the objectives of the

proposed Directive, the Presidency compromise in Article 9a provides that any guarantee or

limitation period provided under national law for the liability of the supplier for cases of lack of

conformity (expressed in simplified words) may not be shorter than two years.

On the period for the reversal of the burden of proof (Article 10(1a)), the Presidency proposes a

period of one year as a compromise between those delegations that prefer a short period of six

months, those which prefer a period of one year and those which want to align this period with the

time limit of two years provided for in Article 9a.

**E. Other consumer rights**

The compromise text on Articles 15 and 16 providing for the consumer's rights in the event of the

modification of the digital content or digital service by the supplier, and the consumer's right to

termination in the case of long-term contracts are important elements of a balanced package

protecting consumers from being tied to a modified contract or a long-term contract they no longer

want.

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