Tangible goods proposal: need for a fully harmonized framework that provides maximum legal certainty for online merchants

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Ecommerce Europe is closely monitoring the legislative process for this file, and is strongly advocating for a Directive that includes the maximum possible level of harmonization, and provides the greatest degree of legal certainty for traders and consumers. Last week, Ecommerce Europe met with MEP Hautala in order to present and explain our position. Ms. Hautala is the Rapporteur for Opinion of the Legal Affairs (JURI) Committee of the European Parliament, who published her Draft Text in November 2016. The leading Committee for the goods proposal is the Internal Market and Consumer Protection (IMCO), which will vote on the Draft Report of its rapporteur, MEP Pascal Arimont, on 8 June 2017.

Extending the scope to all B2C sales
One of the most welcome elements of MEP Arimont’s draft report was his extension of the scope of the Proposal to cover all B2C sales, instead of only distance sales. In the view of Ecommerce Europe, this is essential for a coherent legal framework, as it would be distortive to have one set of rules applying for online and distance sales, and another for sales in brick-and-mortar shops. In addition, the extension of the scope helps to provide legal certainty, in particular given the rise of omni-channel shopping behavior, which blurs the distinction between online and offline sales.

The need for full harmonization
One of the core aims of the Proposal is to harmonize the regimes for contract law between the different EU Member States. In particular, the Proposal introduces a harmonized maximum legal guarantee period of two years.

From Ecommerce Europe’s perspective, this full harmonization is badly needed, in order to promote the growth of cross-border e-commerce. According to the results of Ecommerce Europe’s cross-border Barometer 2016, differences of legal frameworks – including consumer and contract law – between Member States continues to be one of the leading barriers to cross-border e-commerce.

For this reason, Ecommerce Europe cannot support the introduction of a lifespan guarantee in the proposal, based on the expected lifetime of a good. This provision would be practically difficult to implement, given the great diversity of products and therefore lifespans concerned by the legislation. It would ultimately produce greater legal uncertainty and not help in fostering cross-border e-commerce.

In addition, Commission research during its REFIT exercise found that 96% of defects of good were discovered within a two-year period. This demonstrates that a full harmonization approach, with a two-year legal guarantee period would be the most logical one.

The issue of tangible goods with embedded digital content
An important issue that the tangible goods proposal must address is the distinction between itself and the Proposal for a Directive on digital content, and, in particular, the question of whether tangible goods with embedded digital content will fall under the scope of the tangible goods or digital content proposal.

In MEP Arimont’s Report, the tangible goods proposal does not apply to goods with embedded digital content unless the supplier proves that the lack of conformity lies in the hardware of the good. In practice, this means that, in the majority of cases, tangible goods with embedded digital content will fall under the scope of the digital content proposal.

In Ecommerce Europe’s view, this is deeply sub-optimal. For the purposes of clarity from the perspective of both the trader and the consumer, it is highly preferable that tangible goods with embedded digital content are governed by the tangible goods proposal. This is also the most logical framework, given that tangible goods with embedded digital content are subject to the same wear-and-tear as other tangible goods.

Next Steps
The IMCO Committee will consider amendments to MEP Arimont’s draft report on the 20-21 March, and will finally vote on compromise amendments and the report as a whole on 8 June 2017. On 22-23 March 2017, a joint session of the Legal Affairs (JURI) Committee of the European Parliament, will vote on the Draft Opinion of MEP Hautala, which – even if not binding – will help to inform the work of the IMCO Committee.

Once the IMCO Committee has adopted its position, the file will be scheduled for a vote in the plenary session of the European Parliament. Throughout the legislative process, Ecommerce Europe will continue to advocate for a framework that provides maximum legal clarity and harmonization.

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