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 The EPC Members' Newsletter

Legislative up-date 70. Month - July 1998

To Watch out For in the Autumn:
The Commission is working on two Communications of significance for publishers.
Communication on the role and future of the content industries
Communication on the Competitiveness of the Forestry-based industries, including publishing.
More details will follow in the Autumn



1.1 Austria Sets June-December 1998 Agenda
1.2 Council Gives Electronic Commerce a Consumer Angle
1.3 DG XIII Forum Welcomes International Charter on the Global Electronic Marketplace
1.4 Commission Response to USA Internet Domain Name Proposal
1.5 WIPO Requests Comments by 17 August
1.6 Council Approves VAT and E-Commerce Negotiating Guidelines
1.7 EU-US Data Protection Dialogue

2.1 EP and Commission Progressing
2.2 Austrian Enthusiasm over Convergence Debate
2.3 Looking Ahead: Council of Europe Self- Regulation Seminar
2.4 Future Legislation in the Pipeline

3.1 EP Amended Internet Action Plan: Back in Council's Court

4.1 Council - Work Continues on Copyright
4.2 EP - The Month in Hearings
4.3 EP- Committees Commence Debate
4.4 International conference on copyright
4.5 EP to draft report on WIPO Treaties

5.1 Commission - Rumours of Car Ad Ban ‘Totally False'
5.2 Commission DG X may assess TV ads and children
5.3 Commission - control of minors' access to television
5.4 Commercial Communications - Status Report
5.5 Commission Counters German Promotion Prohibition

6.1 Austrian Presidency Audiovisual Priorities
6.2 EP - Conditional Access Services

7.1 EP Initial Debate on VAT and Telecoms
7.2 EP Rejects Reduced VAT on CD-Roms

8.1 WorldCom-MCI - Commission conditional clearance
8.2 Commission reviews reformed infringement procedures
8.3 Commission: Euro-Consumer-Friendly Logo
8.4 Looking Ahead: TransAtlantic Consumer Dialogue to meet in September
8.6 OECD – guidelines on electronic commerce.
First meeting of the Global Business Dialogue


1.1 Austria Sets June-December 1998 Agenda

Austria took over from the UK rotating Presidency of the Council of Ministers of the European Union on 1 July, to commence a six month term that will end on 31 December 1998.

The Austrian government has placed a high priority on the following in the field of electronic commerce, and will work to ensure rapid progress is made during its term in office:
draft Directive on digital signatures;
Council discussions of Convergence Green Paper;
finalisation of a draft ‘International Charter' on International Communications.
Council resolution addressing the ‘consumer aspects' of electronic commerce.
1.2 Council Gives Electronic Commerce a Consumer Angle
At the 14 July meeting of the Consumer Council Working Group, the following issues were discussed:

Consumer aspects of the Information society: the Council is to prepare a Resolution on the need to ensure that consumers' rights are taken into consideration in the Information Society to the same degree as they are in traditional commerce. The Austrian Presidency hopes to make substantial progress on this matter during its tenure of office. There was also discussion of the EU's position for the OECD Ottawa conference which will include reference to consumer aspects of the information society;

Consumer aspects of commercial communications in the information society: At the last Consumer Council (23 April) Commissioner Bonino presented the Communication on Commercial Communications and indicated that the growth in cross-border commercial communications, in particular the area of new information society services and electronic commerce, would increase the need for efficient protection of public interest objectives. This was discussed by the Consumer Council Working Group in July aon and render more difficult monitoring of trademark violations);
companies should compete to register Internet names;
all registrars should have access to the data base held by Network Solutions Inc (which exclusively registers ‘com', ‘net' and ‘org' addresses);
registrars and registries should keep data allowing trademark owners to identify infringements;
trademark owner should be able to refer disputes to Courts.

The 5 June US White Paper, drafted by the Department of Commerce, has set a 30 September deadline for the establishment of a successor to the Internet Assigned Names Authority, at least in an interim form.

DG XIII is establishing an industry panel to be composed of nominees from interested parties.

1.5 WIPO Requests Comments by 17 August
As requested in the US White Paper on Managing Domain Names, WIPO intends to develop recommendations that will be fed into the new non-profit organisation being formed to manage the policy and technical aspects of the domain name system.

WIPO has requested comments on its draft ‘terms of reference' for recommendations. An international panel of experts will then draft and deliver these recommendations in a final report anticipated for March 1999.

1.6 Council Approves VAT and Electronic Commerce Negotiating Guidelines
The 6 July Council of Economic and Finance Ministers approved the guidelines for the Commission to negotiate on indirect taxation of electronic commerce at the OECD Ottawa Conference in October.

The guidelines cover the following:

indirect taxation: No new taxes will be imposed, but VAT will be adapted to deal with e-commerce.;
supply of services definition: A supply that results in a product being placed at the disposal of the recipient in digital form via an electronic network constitutes supply of services for VAT purposes;
services should, in principle, be taxed at the place of consumption;
taxation must be enforceable on services received;
paperless-electronic invoicing must be authorised for transactions within the EU, although there must be means to ensure control and prevention of abuse;
compliance for non-EU operator should be easy and simple;
fiscal administrations should be able to use electronic VAT declarations and accounting.

1.7 EU-US Formal Data Protection Dialogue
The building tension between the EU and US concerning ambiguous provisions in the European Data Protection Directive has brought the two sides to the table.

John Mogg of Commission DG XV (Internal Market) and David Aaron of the US Dept. of Commerce have held several informal discussion to seek a resolution.

The crux of the debate lies in the Directive's prohibition of data transfers to countries lacking ‘adequate' data protection rules. As ‘adequacy' is not further defined, US officials are concerned that the US self-regulatory regime will not meet the potential interpretations given by the 15 Member States' authority upon implementation.


2.1 EP and Commission Progressing Dossier

Following an initial postponement of the reports in June, the two EP committees considering the Convergence Green Paper have established the following calendar for completion of their respective debates:

Economic and Monetary (lead) will vote on and adopt its draft Report by Rapporteur Paasilinna (PES, Finland) in September. This will be sent to Plenary in October.

The Legal Affairs Committee will adopt and submit to the Economic and Monetary Committee its advisory opinion in early September.

DG XIII (Telecoms and Information Industry) has asked for a significant extension of the treatment of publishing in the follow-up to the Green Paper, which is currently scheduled for 3 November 1998. The Commission reported to the Broadcasting Directive contact committee on 30 June that it is reviewing more than 250 replies to the original Green Paper.

2.2 Austrian Enthusiasm over Convergence Debate
The Austrian Presidency will be giving greater opportunity to the Member States of the EU to debate specific questions related to the Convergence Green Paper.

Discussions to be held within the Audiovisual Council will focus on the issues of regulation v. self-regulation, and the future structure of regulatory authorities.

2.3 Looking ahead: Council of Europe Self- Regulation Seminar
The Council of Europe will hold a seminar entitled ‘Self-Regulation and the Media' on 7-8 October. The conference will address the broad issues of the basic concept, value and the limits of self-regulation. Participation is welcomed from industry, officials and parliamentarians from new democracies, where self-regulation has a limited experience.

2.4 Future Legislation in the Pipeline
The Commission plans to launch inter-service consultation, the internal Commission negotiation for drafting proposals, during the month of August on the following:

Service-provider liability (ISP and Telecoms);
Electronic Commerce.

These dossiers are due to be adopted by the Commission by early October at the latest.


3.1 EP Amended Internet Action Plan: Back in Council's Court

The European Parliament adopted this month its report on the Multi-Annual Action Plan on promoting Safe Use of the Internet.
Among the 24 amendments adopted were the following:

change of legal base from Art.130 to Art.129A
(this would permit joint decision-making powers to the EP)
pornography involving children,
racism and anti-Semitism,
any content which endangers national security,
protection of human dignity,
economic security,
data protection,
protection of private life and reputation,
health protection,
intellectual property.

Commissioner Pinheiro stated that the Commission would likely accept 20 of the 24 amendments, but not those relating to comitology or self-regulation.

The matter will now be returned to the Council once the Commission drafts a revised proposal taking on these amendments. The Austrian Presidency has declared its intention to obtain final adoption of the Action Plan before December 1998.


4.1 Council Work Continues on Copyright

The Copyright Working Group, composed of Member State experts who deal with technical, rather than political, issues, held its last debate under the UK Presidency on 24 June.

Talks focused on the Exceptions in Article 5, where many Member States consider the wording insufficiently flexible, and on Article 6. Little progress was made on addressing the issue of anti-circumvention devices under Article 6, but work is expected to continue under the Austrian Presidency.

Meetings of the working group will recommence in September and it is expected that 4 to 5 additional sessions will be convened between September and December.

4.2 EP - the month shows little understand of the needs of rightsholders
The Legal Affairs Committee hosted on 2 July a ‘public hearing' on copyright in the information society.

Presentations to MEPs and a large audience of visitors were made by fourteen organisations, including from the Software business, European Consumers, European Broadcasting Union and newspaper, magazine and book publishers.

MEPs then held a brief discussion, during which MEPs raised the issues of the rights of artists, how technology could prevent piracy, remuneration to rights holders, private copying, browsing and international commitments such as WIPO.

The Committee's Rapporteur (Roberto Barzanti) on the copyright proposal intends to consider both the written and oral evidence presented at the hearing.

The EP's Consumer Inter-Group discussed copyright at a meeting in Strasbourg on 16 July, involving the sponsorship and involvement of industry. Debate centred on fair use/fair practices and on exemptions. MEPs called for greater use of exceptions to both the communication to the public and the reproduction rights “in the public interest”. MEPs are concerned that consumers and users will be denied access to on-line content by greater use of encryption and other anti-circumvention devices.

Representatives from British Music Rights Association, European Blind Union, FEP, EBLIDA, and the EACEM Copyright Committee were present.

4.3 EP - Committees commence copyright debate
The Culture Committee, which will be delivering an advisory opinion to the Legal Affairs Committees has very briefly discussed a draft Opinion by Maren Günther (Germany, EPP). The final opinion will be adopted in early September to enable the Legal Affairs Committee to adopt its own report on 3 September.

The draft Opinion suggests 15 amendments to the Commission's proposed directive, covering remuneration, the definition of acts of reproduction, and Member State use of the exceptions in Article 5 of the proposed Directive, amongst others.

Phillip Whitehead's Draft Opinion for the Environment Committee is also now available. He states that Member States should allow for exceptions to the exclusive right of copyright or related rights for any “fair practice use”. This would take account of the nature of the use and of the copyright work and the effect of the use upon the potential market. Whitehead also emphasises the importance of providing “effective and enforceable legal sanctions and remedies”.

4.4 International conference on copyright
Representatives were present from industry, rightholders, users, governments and international organisations at DG XV/Austrian Presidency co-organised conference entitled ‘Creativity and Intellectual Property Rights: Evolving Scenarios and Perspectives' in Vienna on 12-14 July 1998.

The conference discussed digital broadcasting rights, private copying, applicable law, moral rights and the administration of rights, with the objective to assess possible developments and the need for further action, as well as to strengthen international co-operation on copyright.

Speaking at the conference, Commissioner Monti, who is responsible for the Single Market portfolio, pledged to take all parties' contributions into consideration on how to prevent digital piracy.

The conference has incited controversy, however. The Alliance for a Digital Future has forwarded an official complaint to Commission President Jacques Santer for its exclusion from the conference. EACEM (representing hardware manufacturers) has further claimed that outlawing private copying will unduly restrict consumer access to information and culture.

Angela Mills representing the EPC was an invited speaker on the panel dealing with moral rights. Despite the rather controversial nature of this session, the Commission concluded that although there were differences in moral rights' regimes these were not interfering with the single market so that action at Community level was not needed at the moment. However, the Commission will return to the issue especially as performers' moral rights have now been recognised in the US and will be subject to WIPO treatment later this year. Any agreements arising from WIPO discussions will have to be implemented in the EU which will set the precedent for another debate on moral rights generally. The most interesting aspect of this debate was that the authors' representatives claimed that moral rights and economic rights were becoming blurred and some accused broadcasters and publishers of threatening behaviour when concluding contracts with writers and photographers.

4.5 EP to draft Report on IP Treaties
The European Parliament's Legal Affairs Committee will be doing a report in the autumn on the implementation of the WIPO Treaties (WIPO Copyright Treaty and WIPO Performance and Phonograms Treaty).


5.1 Commission - Rumours of Car Advertising Ban ‘Totally False'

Sarah Lambert, spokesperson for Commissioner Neil Kinnock (Transport) announced at the 20 July Commission press briefing the reports in French and German press that the Commission plans to ban or limit car advertising were false. The Commission has ‘absolutely no intention of proposing any ban' but that they had wanted a code of conduct.

The Commission had sought the opinion of a range of industry and consumer groups about a UK-style code of conduct on car advertising, but had found ‘very little support' for such an instrument. In fact the European advertising and media industry had lobbied vociferously against the imposition of such a code and it now appears that the Commission has retreated.

5.2 Commission DG X may assess TV ads and children
As required in the revised Broadcasting Directive, the Commission will undertake a study into the effects on children of television advertising. This study would not commence until 1999.

As this report may serve as a foundation for a similar study DG XV mentioned as a possibility in connection with the Greek toy advertising case, it may cause further delay in the resolution of the Greek case.

5.3 Commission - control of minors' access to television
Programmes in Comparative Media Law and Policy (PCMLP) has been awarded the contract to undertake a study on controlling minors' access to television programming.

The study must be completed by 30 November, with a progress report made to the Commission before 15 October.

5.4 Commercial Communications- Status Report
The Commission is working on a follow-up report to the Communication on Commercial Communications in co-operation with the expert Group on Commercial Communications. The Expert Group will next meet in October and their report will be presented to the 9 November Internal Market Council.

The Consumer Council working group, composed of Member State experts and dedicated to addressing technical issues has begun discussions on how information society aspects of commercial communications would increase the need to protect public interest objectives. The consumer aspects of Commercial Communications will be discussed at the 3 November Consumer Council.

For administrative reasons, further debate on the Commercial Communications dossier has been postponed by the European Parliament's lead committee (Economic and Monetary Affairs) until September.

NB: The Commission hopes to have a comprehensive Internet site providing access to information on national regulations and self-regulation up and running by November. This will be followed by the establishment of an Expert Network.

5.5 Commission Counters German Promotion Prohibition
The Commission Legal Service is drafting and will shortly send a ‘Reasoned Opinion' to Germany, arguing that its prohibition on the granting of promotional gifts and discounts imposes a disproportionate restriction on entrants to the German market.

Once it receives the Opinion, the German government will have forty days to respond.


6.1 Austrian Presidency Audiovisual Priorities

During the six month term from 1 July to 31 December 1998, the Austrian Presidency will focus its attention on the following priority audiovisual dossiers.

Public Broadcasting. In light of the Amsterdam Protocol reference to the form and significance of public broadcasting, the Austrian government will carry this debate forward.

Follow-up to the Birmingham conference on audiovisual policy: The two specific themes of future broadcasting regulation and support for the audiovisual industry will be addressed.

The 13 July Audiovisual working group, the last before the summer recess begins, Member State government experts gave their reactions and ideas on these themes, including a brief analysis of the effects of digitalisation. No definitive conclusions were reached.

Some delegations were apparently concerned that discussing the role of regulators in absence of a Commission decision on the form of regulation in audiovisual services would be difficult.

The next Audiovisual working group meeting is scheduled for 4 September.

The EPC Working Group on unfair competition in the broadcasting market next meets on 29/30 September when Commissioner Bangemann is due to attend.

6.2 EP - Conditional Access Services
The EP Legal Affairs Committee held a brief exchange of views on the draft Directive on the legal protection of conditional access services. The Rapporteur, Giorgios Anastassopoulos (EPP, Greece) state that the EP would have to complete its Second Reading by 16 October. He will therefore submit a draft recommendation for the Second Reading following the August recess.


7.1 EP holds initial discussion on VAT and Telecommunications

The Rapporteur for the Committee on Economic and Monetary Affairs Report on the Proposal to amend value added arrangements for telecommunications services, Mr Cox (ELDR, Ireland), reviewed past developments in this area. He stated that the Committee still must decide whether it should call for a specific VAT rate.

7.2 EP Rejects Reduced VAT on CD-Roms
The Economic and Monetary Affairs Committee rejected both of its Rapporteur's clauses calling for reduced taxation of CD-Roms. Mr. Bernard Castegnede (ARE, France) had called for the Commission to update Annex H (which lists products eligible for reduced VAT rates) to account for technological change. He had also inserted a recital that indicated that the differences between books and CD-Roms do not justify separate tax treatment.

The adopted report will now be considered by the next Plenary Session of the European Parliament. The Commission is expected to make proposals on the content of Annex H of the Sixth VAT Directive in November 1998.


8.1 WorldCom-MCI - Commission conditional clearance

The Commission published its initial decision on the WorldCom-MCI merger, making clearance conditional upon MCI divesting its Internet assets.

In line with the Commission's policy of ‘positive comity' with the US antitrust authorities, investigations apparently showed a deep level of co-operation with the US Department of Justice.

8.2 Commission reviews reformed infringement procedures
The Commission has evaluated its reformed procedures for treating infringements of EC Law. The published report was released on 24 June and is available on request.

8.3 Commission: Euro-Consumer-friendly retailers have new logo
On 30 June, a voluntary scheme was agreed by consumers and industry under the auspices of the European Commission to recognise retailers to provide information to consumers during the Euro changeover.

In order to affix the logo, retailers, must commit to the following:

dual display of prices and payments is carried out in accordance with conversion and rounding rules information is available on the arrangements for the introduction of the Euro dual pricing of many products and services, and of all products on special offer consumers may pay in Euros wherever possible

Compliant retailers may display and publish the new logo in advertisements and catalogues.

8.4 Looking Ahead: TransAtlantic Consumer Dialogue to meet in September
More than 60 consumer organisations from the EU and the USA are expected in Washington in September at the inaugural meeting of the TransAtlantic Consumer Dialogue (TACD).

On the agenda are consumer guarantees in electronic commerce and the future of the new forum, intended to counter-balance the influential TransAtlantic Business Dialogue (TABD).

Global Business Dialogue

An interim steering group of the newly formed Global Business Dialogue will be meeting on 25 September in New York at the offices of Bertelsmann to constitute a Steering Committee and future work programme.

8.6 OECD – Consumer Guidelines on electronic commerce
OECD will be meeting to agree guidelines for consumer protection in the context of electronic commerce on 7-9 October in Ottawa.

July 1998

For further information please contact:
General Enquiries: Angela Mills
Telephone: +44 (0)1865 310 732 
Facsimile: +44 (0)1865 310 739 
Press Enquiries: Heidi Lambert 
Telephone/facsimile +32 2 735 3603