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 EPC Members' Newsletter: March 2003

 
EPC MEMBERS’ MARCH NEWSLETTER 119



DATES FOR YOUR DIARY

KEY ISSUES OF THE MONTH
Publishers’ Round Table
Takeover Bids
Rome II
Duty to Trade Fairly
Public Sector Information
Services of General Interest Coalition

WHAT’S NEW
Electronic Commerce

1.1 Company taxation
1.2 Commission action plan for contract law
1.3 Consumer policy strategy adopted by Parliament


Internet Regulation
2.1 Internet safety conferences

Copyright
3.1 Patentability of software
3.2 UK universities to be sued for music downloads
3.3 AOL starts music copying service

Advertising
4.1 Sales Promotion
4.2 Parliament reports on consumer protection

Audiovisual & General Media Policy 
5.1 Television Without Frontiers Hearings
5.2 Need for ‘Loi Fontaine’ amendment

General
6.1 Competitiveness Council
6.2 Convention legislative articles released
6.3 Transparency directive
6.4 Market abuse update


DATES FOR YOUR DIARY

5-6th May culture council Brussels
May (date to be confirmed)- EPC ACT meeting on white paper on public service broadcasting
12th –13th May 2003 – EPC Meeting, Athens
12-14th May Competitiveness and Telecoms Council, Brussels
15-16th May - 5th Annual TV Meets the Web Seminar. Amsterdam
20th June European Council, Thessaloniki
27-30th July - Seventh World Multi-Conference on Systemics, Cybernetics and Informatics. Orlando, Florida, USA.
17th September - International congress on trustmarks in ecommerce, Luxembourg
 

KEY ISSUES OF THE MONTH

Publishers’ Round Table

The European Publishers’ organizations had the chance to meet with Commissioner Liikanen and several other high-ranking Commission officials at a round table conference this month.

Delegates discussed a wide range of subjects, including data protection, VAT on books, media concentration and innovation. The Commission used the occasion to announce plans for a series of sector-specific studies which would examine the competitiveness of the newspaper, book, database and magazine industries.

A full copy of the report of the meeting is available from EPC on request.


Takeover Bids

As reported in the last EPC news, work is continuing in the bid to find a compromise which will ensure the passage of the draft Directive through Parliament and Council. Readers will remember that the main sticking point was the issue of multiple voting rights. Germany has banned them and feels strongly that they should be banned in the rest of Europe as their continuance would put Germany at an unfair disadvantage. The Commission felt unable to take this step in its proposal for new legislation and the Greek Presidency stepped in to help with a series of changes which were meant to appeal to all.

Readers will also remember that many publishing organisations throughout Europe use multiple voting rights to protect themselves from hostile takeover bids and are therefore concerned about the direction this debate will take.

The latest development is that the Economic and Monetary Affairs Committee of the European Parliament has produced its draft opinion on the Takeover Bid Directive proposal. Amendments from this opinion will feed into the main report by the Legal Affairs Committee. As the Hughes procedure has been invoked, both committees will have equal standing although Legal Affairs would have the final word in the event of strong disagreement.

Mr Huhne, the Rapporteur, has focused much of his attention on the issue of MVR. He favours the idea of a grandfather clause which would allow existing MVR arrangements to continue indefinitely but ban any new MVR arrangements.

The opinion is scheduled to be debated on the 23rd April, although given the number of amendments submitted (220) it is more likely that the vote will be rescheduled to May.


Rome II

EPC has acquired a version of the new Rome II proposal currently in inter-service consultation. The Commission has slightly changed its position on defamation. At the hearing in January, the Commission argued that the applicable law in defamation cases should be the country of residence of the plaintiff.

In this new proposed text the Commission argues that defamation can be included in the general rule which covers most of the issues raised in the Rome II proposal.

The actual text of the article on defamation is:
“The law applicable to non-contractual obligations arising from a violation of private or personal rights or from defamation shall be the law of the country of the court before which the case is brought, if the law which would normally be applicable under article 3 (general rule) contradicts rules on freedom of expression and freedom of the press of the country where the competent court is located.”

In the Commission preamble to the text, there is a strong indication that in its opinion, the place where the damage occurs is the place of distribution of defamatory material. Following the logic of Shevill, this would generally be considered to be country of residence. The press freedom exception, although a concession from the Commission, is not particularly useful. It allows the court to apply its own law in cases where press freedom is threatened but given that most plaintiffs will take the case to the court in their country of residence, the situation would remain the same unless the judge agreed to follow the law of publication.

Other DGs who have been consulted must respond by the 15th April. EPC will update members on developments as they happen.


Duty to Trade Fairly

EPC has received an advance copy of the Commission proposal for a Directive relating to unfair business to consumer practices. The text is currently at inter-service consultation level and will be officially released in June. It is the result of a long consultation period with stakeholders and comes after a green paper, a follow-up Communication and a workshop in Brussels at the beginning of the year. DG SANCO had given some indication as to what the content of the proposal would be and this is reflected in the text. However, DG SANCO also claims that the proposal is supported by a full impact assessment as required by the new ‘Better Regulation’ rules. This is not the case as only the partial assessment backed up by some Eurobarometer studies is put forward to support the proposal. Parliament’s Legal Affairs Committee has asked that a new assessment be undertaken as soon as possible.

This is the basic form of the proposal:

  • It will cover only business to consumer practices and will consist of a general clause prohibiting unfair trading;
  • This will be backed up by two clauses addressing misleading practices and aggressive practices;
  • Misleading practices is further split into ‘misleading actions’ and ‘misleading omissions’;
  • Aggressive practices are qualified as ‘harassment, coercion, undue influence’;
  • Criteria to identify these practices are then given and a non-exhaustive list of unfair practices given in one of the annexes to the draft Directive.

The proposal is an improvement on the earlier draft in the Commission’s follow-up to the Green Paper. That said, it is by no means perfect and EPC will be raising the following concerns at Commission, Council and Parliament level as soon as possible:

  • The Directive will differentiate between an ‘average consumer’ and a ‘vulnerable consumer’ depending upon which demographic group marketing is directed at;
  • The rules of the Directive apply as long as there is no existing Community measure in place. This will cause confusion as to what comes within the scope of the Directive;
  • The definitions of misleading and aggressive practices are open to quite wide interpretation;
  • The procedure for the endorsement of codes of conduct seems a little unwieldy. Also it is unclear how the Commission will make its decision to endorse given that all stakeholders will be consulted via the Official Journal. In the preamble to the Directive the Commission urges the inclusion of consumer bodies in the construction of codes. It is unclear whether this will be mandatory.

EPC continues to examine the paper and will produce a position on it in the near future. A copy of the proposal is available on request.


Public Sector Information

The Council has agreed the text on the proposal for a Directive on the re-use and commercial exploitation of public sector documents which will be adopted as the Council's common position on the Directive.

The Council has made further damaging changes to the draft directive. In its common position which will be officially adopted in April/May, it specifies that the Directive does not feature any compulsion to allow the reuse of documents. The decision to allow this or otherwise is up to the Member States. Some Member States pushed for authorities to be compelled to allow the use of legislative and administrative documents but the final compromise does not reflect this viewpoint. The Council disagrees with the Parliament about the definition of the scope of the Directive and
retains the term “document”, whereas MEPs opted for “information” to cover information of all types.

As for charging principles, the compromise reflects the Commission's view to a great extent, stating that when the fees are charged, the total income generated should not be any higher than the cost of information gathering, production, reproduction and distribution. However, there should be a reasonable return on the investment. This reflects the Parliaments last minute change of heart at Plenary earlier in the year. The Parliament asked for ‘basic’ information to be made available at no cost. The Council disagrees.

The other provisions in the compromise include:

  • a ban on exclusive rights agreements and when an exclusive right is needed to provide a general interest service, the justification for this has to be reviewed every three years;
  • the provision of documents in an electronic format, whenever possible;
  • the publication in advance of the typical conditions and fees applied;
  • scope for covering document reuse with a licensing system;
  • the application of intellectual property rights.

Commissioner Liikanen welcomed the compromise, describing it as in keeping with the principles governing the Commission proposal. However, he pointed out that the Council failed to include the Parliamentary amendment designed to ensure the provision, ideally online, of lists of items of information held by public bodies, specifying the reuse conditions.

Obviously this is disappointing for EPC as many of the amendments which members approved of have not survived the Council process. The common position will now go back to Parliament for second reading and it is hoped that MEPs will work to change back some of the Council amendments, most particularly those relating to charging for basic information and restricting the scope of the Directive to ‘documents’ rather than ‘information’.

Services of General Interest Coalition

EPC has joined the Coalition for Fair Competition in the Services Market. The Coalition consists of media, telecoms and direct marketing organizations with a commercial interest in the provision of Services of General Economic Interest to the public. Coalition members offer these services on a competitive basis but are in direct competition with government organizations providing the same services. Services such as broadcasting and postal services as well as water, electricity and telecoms provision are included in this group.

In the past there has been little effort by the EU to ensure that competition rules are effectively applied in this area (particularly in the area of Public Service Broadcasters) and it is hoped that negotiations on the new European Convention can be used to ensure that this will not be the case in the future.

In a letter to the Praesidium (European Convention Presidency) the Coalition affirms that free competition will help the market in Services of General Interest and provide a higher quality of service to the European consumer. It also reminds the Praesidium that the market accounts for 70% of EU GDP and could be further developed with effective management of competition rules.

At the same time, France has presented a paper to the Spring Council demanding a Directive relating to Services of General Interest. According to the French paper, "public funding of SGIs is not State aid when it serves to compensate for extra costs caused by missions of a public service". France, moreover, would like the summit to call for the adoption of an action plan on company law in 2003 and improvements to the control of concentrations. This is obviously a position EPC cannot agree with. Coalition members will be lobbying Member States to ensure that any Directive which is proposed would not contain such wording.


WHAT’S NEW

Electronic Commerce

1.1 Company taxation

The European Commission has launched open consultations on two projects in the field of EU company taxation. One concerns the possibility of using International Accounting Standards (IAS) as a starting point to develop an EU-wide consolidated tax base for companies. The other involves a "Home State Taxation" pilot project for SMEs, which would allow an SME to account for its EU-wide profits in one tax declaration which it would submit to the Member State where its main seat is located. This exploratory work follows the Commission’s Company Tax Communication and study. The aim is to find solutions that would address the tax obstacles and inefficiencies resulting from the operation of fifteen different sets of tax rules in the EU.

The Commission has asked for wide stakeholder response to these consultations. For further information please contact EPC.

1.2 Commission action plan for contract law

The Commission has published its action plan for contract law in the Official Journal this month. This action plan suggests a mix of non-regulatory and regulatory measures in order to solve problems of divergences in national contract laws throughout the EU.
The plan includes measures:

  • to increase the coherence of the Community acquis in the area of contract law;
  • to promote the elaboration of EU-wide general contract terms;
  • to examine further whether problems in the European contract law area may require non-sector specific solutions such as an optional instrument.

The action plan can be found on the DG MARKT website and is open for comment by interested parties.

1.3 Consumer policy strategy adopted by Parliament

The report by Phillip Whitehead on the Consumer Policy Strategy 2002-2006 calls for priority to be given to legislation on the safety of services, the EC mark system, revision of the toys Directive, a Directive on fire safety in hotels, improvement of the EU timeshare Directive, extension of consumer protection measures from air transport to other modes of transport, the adoption of optimal provisions on health and safety in the evaluation of chemical substances, and the promotion of consumer confidence in electronic commerce. An amendment stresses the need for a Single Market in financial services, such as insurance, investment and banking, for the benefit of consumers. In adopting the report, MEPs also recommended greater visibility for Eco-labels to allow consumers to make informed choices. They urged the Commission to promote in the WTO the use of labelling to inform consumers on the origin of products and on production methods. Parliament called on the Commission to improve the accessibility of information on consumers' rights in the Single Market. However, on the point of adapting existing Directives from minimum to harmonisation (the new unfair trading practices Directive is based on maximum harmonisation), Parliament disagrees with the Commission. It asks instead for the need for minimum or maximum harmonisation to be decided on a case-by-case basis. The Council will now consider the report and make its recommendations.


Internet Regulation

2.1 Internet safety conferences

EPC attended a two-day conference in Luxemburg on two different aspects of internet safety.

The first day was dedicated to trust marks, filtering and content rating and the second to pedagogical aspects of safety on the Internet.

The Commission has recently proposed to extend the Safer Internet programme by a further two years. The speakers at this conference represented either the Commission or different initiatives within the framework of the Safer Internet programme.

Petra Wilson from DG Information Society spoke of quality criteria for health web sites.
In November 2002 the Commission published a Communication entitled “Quality Criteria for Health Related Websites”. Ms Wilson underlined that health is an area for which the Member states are responsible and the Commission can only provide ideas and guidelines.

Haitze Siemers from DG SANCO spoke of proposal for a Commission Recommendation on trustmarks, which is to be released in June-July 2003. According to Mr Siemers this recommendation will be based on the BEUC & UNICE agreement from 2001.

Damian Tabini from Oxford University referred to the PCLMP research project on site labelling, financed by the Safer Internet programme. According to Mr Tabini, survey data on online transactions and perceptions of online material show that trust levels amongst the public today compared to two years ago are unchanged. For him the question is how to increase trust levels. He believes that the best way to do this is through trustmarks and site labelling. However experience has showed that trustmarks are complicated and expensive to manage.

On the second day of the conference, much attention was drawn to parents’ and teachers’ responsibilities in relation to Internet safety. One survey, undertaken in the Scandinavian countries, shows that parents believe they know what their children are doing on the Internet but at the same time a majority say they never talk to their children about the Internet.

Different ongoing projects, such as Inhope (hotlines to signal illegal use of the Internet), the Safer-Internet.net (campaign to promote culture of responsibility) and EDUCANET 2 (teaching kit), were also presented.

Some of the presentations from the two-day conference can be found at: http://www.saferinternet.org/news/Quality-label-workshop.asp.


Copyright

3.1 Patentability of software

Arlene McCarthy MEP is arguing for improvements to the current law relating to software design. Her argument is that many SMEs are unable to protect their IP due to the lack of protection they receive at EU level. At the moment software is protected by copyright law but cannot be patented according to the European Patent Convention. Ms McCarthy argues that this is not sufficient protection and that in order to remain competitive in the global market it should be possible to patent software inventions. She has introduced a number of unpopular amendments to the proposal as it is being debated in Parliament. EPC will continue to report on developments.

3.2 UK universities to be sued for music downloads

The BPI (British Phonographic Institute) is sending letters to all of the universities in the UK warning them of the dangers of allowing students to copy music from the internet. According to recent studies, up to 50% of some institutions’ hard drive capability is taken up with illegally shared files. The BPI warns universities in its letter that, "the legal risks include injunctions, damages, costs and possible criminal sanctions against the institutions and their heads where systems are used for copyright theft".

3.3 AOL starts music copying service

America Online has launched a music service enabling its subscribers to listen to newly released music and copy it onto CDs for a fixed monthly fee. There is some debate as to whether AOL users will pay as much as $17.95 a month to download music, since this service is already provided free by unauthorised sites like Kazaa.


Advertising

4.1 Sales Promotion

The Commission official responsible for the Sales Promotions Regulation has been touring some of the EU Member States to encourage national governments to accept the compromise proposal on Sales Promotions put forward by the Greek Presidency. At a meeting of the working group on Sales Promotions in March it seems that this strategy has not been entirely successful and that there is still no agreement on what the form of the Common Position should be.

EPC is still lobbying to ensure that the threshold for prize values is raised from €100 000. An industry letter is being finalised by the coalition for Fair Trade and will be available for members to read in the next few days.

4.2 Parliament reports on consumer protection

Both reports on the follow-up to the green paper on commercial practices have been adopted by the Parliament which now asks the Commission to prepare a draft Directive in this area. The Commission’s response to the Resolution will be the Directive on Unfair Commercial Practices (see above). It is as yet unclear whether the lead committee will be legal affairs (Thyssen) or environment (Patrie). The division of power in this area between the two committees has caused some controversy in the past. EPC will follow the debate closely.


Audiovisual & General Media Policy

5.1 Television Without Frontiers Hearings

The Commission held a series of Television Without Frontiers Hearings at the beginning of April to establish stakeholder views on issues such as advertising, the protection of minors and short extract reporting. The 3-day event concentrated on advertising for the first two days and short extract reporting for the third.

The debate focused on the following:

  • what should be the concept of ‘broadcast’? At the moment the scope of the Directive only covers what would traditionally be termed broadcast and not internet broadcasts;
  • a general call for a self-regulation approach to advertising to children;
  • how to define a split between content and advertising;
  • the twenty minute time constraint between adverts and what the duration of adverts should be;
  • what the rules should be for sponsorship;
  • the possibility of the Commission adding an interpretive note to the new Directive on new forms of advertising;

In the area of access to events the debate focused on:

  • whether there should be an extended list of events which a majority of viewers should have access to;
  • what the percentage of audience share should be before a company could bid for reserved events;
  • whether that figure should be set by national governments or the Commission;
  • what a fair price was for reserved events;

On the subject of short reporting, Reuters presented a video to illustrate what news access would be lost to the public if there was not access for agencies to events like the Olympics, motor racing and the World Cup. The general theme of the debate was that gaining access was becoming more difficult and the Commission should try to implement the European Convention rule which allowed 90 second clips to be shown. The majority favoured Commission action in this area, although there were some present who preferred this to be left to contractual arrangements.

There was no detail from the Commission of what it saw as possible changes that could be made to the Directive. It seemed to be in listening mode. The questions raised will be the subject of a public consultation lasting until July. Based on the outcome of the consultation, the Commission will publish in late 2003 or early 2004 a Communication on the future of broadcasting policy.

5.2 Need for ‘Loi Fontaine’ amendment

The French ‘Conseil Superieur Audiovisuel’ has asked for a revision of the rules contained in the Loi Fontaine. At the moment the law gives the CSA the right to regulate the internet but the organisation says this is too large a competence and wants it to be limited to TV and radio online. Many French regulatory authorities are calling for changes to article one of the law which defines online communication as a subheading of audiovisual issues.


General

6.1 Competitiveness Council

The EU Competitiveness Council met for the first time in March. Amongst items discussed were:

  • A public debate on the spirit of competitiveness and entrepreneurship;
  • The simplification and reduction of Community legislation.

The Council reminded those present of the role of the internal market as a means of competitiveness and considered that "urgent" action must be taken to create a genuine internal market in services. It stressed the need to make progress in a number of areas, including public tendering, intellectual property rights and the Community patent and to strike a balanced agreement as soon as possible on the merger directive.

6.2 Convention legislative articles released

After releasing the Articles relating to the foundation of the European Community and the competencies it would have earlier in the year, the Praesidium of the Convention has released the Articles of the Convention relating to legislative instruments in Europe. The aim is to reduce the number of instruments and simplify Community legislation. All legally binding decisions (Regulations and Directives) will now be subject to the co-decision procedure which will be known as the ‘legislative procedure’. Both Parliament and Council when voting to adopt a law will be required to do this in public. Secondary legislative powers delegated to the Commission to ensure smooth implementation must be stated explicitly in the proposed law and can be revoked if either Parliament or Council does not agree.

There will be an extraordinary Council on 30th June to discuss the form of the new Convention in the light of the large number of amendments received by the Praesidium.

6.3 Transparency directive

The Commission has released a draft Directive on transparency requirements for securities issuers trading on a regulated market. Issuers at the moment are required to release relevant information about themselves. At the moment, how this information is released is at the discretion of the Member States. In many Member States this means that the issuer has used the press to disclose the required information.

The draft Directive calls for one method of dissemination, preferably electronic, across Europe. This could have an effect on the revenue collected by some newspapers in the EU. The Directive is at an early stage in its development and EPC is investigating its impact further. Information will be sent to members as it becomes available.

6.4 Market abuse update

EPC and other publishers are preparing their response to the Commission technical measures for the implementation of the Market Abuse Directive. In the preamble to the Commission measures there is a statement which recognises that journalists are self-regulating but there is no effect given to this statement in the actual text.

Publishers will prepare a letter asking for this situation to be rectified and asking the Commission to re-state definition of ‘recommendation’ as it relates to journalists to ensure that the very limited scope described by Commissioner Bolkestein is honoured (i.e. that the rules on presentation and declaring conflicts of interest only apply to journalists who make buy, sell or hold recommendations in shares which they have themselves invested).

 
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