The EPC MembersÂ’ Newsletter

 
Legislative update 75 Month - February 1999

In this issue:

1. Electronic commerce
1.1 Council working group makes slow progress on the first read through of draft Directive
1.2 European Parliament aims to complete first reading before elections
1.3 WIPO holds second regional consultations on intellectual property aspects of the internet domain name system
1.4 Competitiveness of electronic commerce - Commission Communication imminent and workshop planned
1.5 Council of Europe opens discussions on draft Convention on conditional access services
1.6 Global Business Dialogue - work begins on issue groups

2. Convergence
2.1 Follow-up Communication makes initial recommendations for action
2.2 Oreja group discusses Commission's draft Communication

3. Internet content regulation
3.1 Safe use of the Internet - contracts for preliminary actions awarded

4. Copyright
4.1 European Parliament first reading shows strong support for rightholders
4.2 Council working group holds first meeting of German Presidency
4.3 DGIII seeks bilateral meeting on copyright

5. Advertising
5.1 Commercial communications - expert group to begin discussions on premiums in March
5.2 Code on marketing of alcopops?
5.3 Television without Frontiers contact committee discusses advertising and children
5.4 DGXXIV takes initial steps towards a code of conduct on advertising to children
5.5 European Parliament intergroup discuss advertising of pharmaceutical products
5.6 Food claims - Commission study yet to begin
5.7 Complaints against the Loi Evin and Greek toy advertising ban - slow progress

6. Audiovisual
6.1 Council working group continues with a light agenda
6.2 Study on parental control devices submitted to the Commission
6.3 Oreja group continues discussions on the future of EU audiovisual policy
6.4 Commission's draft report proposes expansion of MEDIA programme
6.5 European Parliament to hold meeting on competition in European broadcasting
6.6 BBC announces pay-TV joint venture
6.7 Commission issues information injunction to Italy, France and Spain regarding public service broadcasting
6.8 Commission rejects case of unfair competition in Germany
6.9 Commissioner van Miert presents conclusions on the application of competition rules to sports

7. Taxation
7.1 Progress expected to be slow in consultations on VAT and e-commerce
7.2 Code of conduct group on business taxation examines tax concessions for the film industry

8. General
8.1 Commission publishes Communication on EU competitiveness in the face of globalisation
8.2 Data protection - EU and USA aim to reach agreement by June 1999
8.3 European Parliament approves proposal to separate ownership of cable TV and telecoms networks
8.4 Commission publishes White Paper on commerce
8.5 Commission to hold consultation on its Green Paper on piracy
8.6 Competitiveness of the publishing industry - work begins on interim report
8.7 Recycling forum - working groups begin
8.8 Competitiveness of forest-based industries - differences of opinion emerge between publishing and paper industries

Dates for your diary

March
- 2nd - European Parliament meeting on the competitiveness of EU broadcasting, Brussels
- 2nd - 3rd - Industry Round table on the Competitiveness of the Forestry-Based Industries, including publishing.
- 2nd - 3rd - Consultation on Commission Green paper on Piracy and counterfeighting

April
- 8th - Commission seminar on competitiveness of electronic commerce, Brussels
- 19th-21st - German Presidency seminar of self-regulation and the media, Saarbrucken
- 26th - Pre-conference reception (ICC/UNICE/EPC/ENPA/FAEP/EAT)
- 27th - Advertising and media Industry Conference, Brussels (details available on request)

May 3rd - World Press Freedom Day

June
- EPC MEETING: 7/8 June, 1999 Berlin
- European Parliamentary Elections


1 Electronic commerce

1.1 Council working group makes slow progress on the first read through of draft Directive
The first read through of the Commission's proposal focused on questions of clarification. Consumer protection is likely to be a contentious issue, with Italy, France, Denmark and Finland expressing concern about country of origin control. In addition, Italy has indicated that it favours an exception for financial services contracts. The chairman will attend the consumer affairs working group in March to discuss aspects of consumer protection.

The German Presidency's optimistic target for a political agreement on a common position remains the June Internal Market Council. However, no Member State yet has a firm position on the proposal which is expected to slow progress in working group. Discussions have started on aspects of liability which are also proving to be contentious.

- Next meetings: 4 March, 25/26 March.

1.2 European Parliament aims to complete first reading before elections
The European Parliament's Legal Affairs Committee has postponed its debate on the draft report by Christine Oddy (UK, PSE). Discussions will now take place in March, with the vote in Committee scheduled for April. The supporting committees plan to adopt their respective opinions during March and the first reading vote is scheduled for the May plenary session, the last before the elections in June.

Oddy's draft report is broadly acceptable to EPC taking into account some of our amendments and taking a firm stance in support of the country of origin principle. But she proposes changes to the provisions on liability which the Commission fears could over-simplify the text and leave legal loop-holes. Oddy has proposed an amendment to delete the ban on unsolicited emails and to restrict the exemptions for consumer contracts to aspects not already harmonised at EU level.
Draft report available on request.
The Economic and Monetary Affairs Committee's draft opinion (Karsten Hoppenstedt - D, EPP) takes a similarly strong stance on the country of origin principle. However, Hoppenstedt goes further than Oddy and proposes the deletion of both the ban on unsollicited emails and the exception for consumer contracts as requested by EPC. Draft available on request.

The Culture Committee postponed its first exchange of views until mid-March. The Committee on the Environment, Public Health and Consumer Protection has decided to draft an opinion on this proposal and has appointed Philip Whitehead (UK, PSE) as Rapporteur. His report is expected in March.

1.3 WIPO holds second regional consultations on intellectual property aspects of the internet domain name system
WIPO held its second regional consultation on domain names for Europe in Brussels on 17 February. A poor attendance limited the scope for debate on the interim report published in December 1998. Discussions focused on the most controversial issues namely applicable law, the judicial review of arbitration and the treatment of famous marks. The consultation was inconclusive but delegates were agreed that a quick and simple dispute settlement mechanism was required to limit damage caused by trade mark infringements.

The final report is due in March 1999 which will make recommendations to ICANN on the avoidance and resolution of disputes involving domain names and trade marks.

1.4 Competitiveness of electronic commerce - Commission Communication imminent and workshop planned
Attention within the Commission is turning from the legal to the industrial aspects of electronic commerce. A Communication on the competitiveness of e-commerce drafted by DGIII has entered inter-service consultation and is expected to be published shortly. The Communication is expected to recommend the creation of an on-going dialogue with industry to identify and address competitiveness factors, such as standardisation, investment barriers, obstacles to the free movement of goods and services.

This Communication will be followed-up with a workshop on 8 April with EU industry associations. Magnus Lemmel (acting Director General DGIII) and Commissioner Bangemann will speak, together with representatives from CEN and industry associations. Draft text available on request.

1.5 Council of Europe opens discussions on draft Convention on conditional access services
The Mass Media Committee of the Council of Europe has begun deliberations on a draft Convention to protect services consisting of, or based on, conditional access. The draft text proposes many of the provisions adopted in the EU Directive, including the ban on the marketing, manufacture and use of illicit devices. Draft text available on request.

1.6 Global Business Dialogue - work begins on issue groups
Consultations have begun on draft texts submitted by the Chairmen of the issues groups on liability, intellectual property, authentication/security, privacy/data protection, information infrastructure, jurisdiction, content regulation, consumer confidence and taxation/tariffs. Preliminary reports are expected to be submitted to the first European GBD conference in June 1999, although work is likely to continue after this event.

2 Convergence

2.1 Follow-up Communication makes initial recommendations for action
The Commission's draft text draws together the results of the two consultations on convergence revealing no clear vision for the future of regulation of converging technologies. Divisions were evident on the question of access, concentration and the application of competition rules. Respondents were generally agreed that support mechanisms are appropriate to encourage content production and that self-regulation will be important in regulating on-line services.

Few submissions to the consultation recommended concrete solutions to current regulatory problems. As a result, the Commission's recommendations are cautious and largely based on assessment of existing legislation. Future regulation will be based on 5 key principles:
1. ensure that regulation is appropriate to the prevailing market situation;
2. limit to what is clearly necessary;
3. foster economic growth and competitiveness and maintain legal certainty in the face of rapid technological change;
4. keep regulation technology neutral;
5. establish a global scope to regulation but keep enforcement as close as possible to the source of activities.
The draft Communication available on request is currently in inter-service consultation. A second will be produced on Regulatory Aspects.

2.2 Oreja group discusses Commission's draft Communication
The Oreja high level group on the future of EU audiovisual policy met again to discuss the draft Communication on convergence (see above). The 5 principles or future policy proposed by the Commission were accepted by the Group. However, there were divisions on sensitive issues such as the effects of commercial media activity on creativity, the impact of concentration and globalisation on media pluralism, and the impact of English-language content on European cultural diversity.

Commissioner Oreja has indicated that the Commission's next steps should focus on:

- a better definition of public interest;
- a greater role for self-regulation;
- a press-based model for the regulation of new services;
- the need to define priorities: access, standards, copyright, potential distortions of competition, the question of competition and concentration, and whether there is a need for a new competition law, adapted to the reality of globalisation.

The Group also discussed other issues (see section 6).

- Next meeting due on 14 June 1999.

3 Internet (content) regulation

3.1 Safe use of the Internet - contracts for preliminary actions awarded
The European Commission has awarded the contracts to carry out preparatory actions under the Action Plan to promote the safe use of the internet. The actions will be carried out over the next 12 months on the following issues:

- preparatory work for setting up hotlines in Member States and launching a European network of hotlines to gather information on illegal content;
- feasibility study for a European system of content self-rating;
- review of European third-party filtering and rating software and services;
- preparation of awareness actions taking into account the cultural and linguistic diversity of users (parents, teachers etc.).

4 Copyright

4.1 European Parliament first reading shows strong support for rightholders
At its plenary vote on 10 February, the European Parliament voted to uphold the amendments proposed by the Legal Affairs Committee in the Barzanti report. The amendment to Article 5(1) on temporary copies was adopted with a large majority and the crucial amendments to Article 6 on technical measures were also voted through convincingly. Only one new amendment was adopted, a recital inviting Member States to create a mechanism for mediation in cases of copyright disputes. An amendment which would have limited publishers' freedom to negotiate assignment of rights was defeated.

The Commission has indicated that it will reassess its position on Articles 5(1) and 6, having earlier indicated that it could not accept the rightholders' amendments. Telecoms companies and internet providers continue to lobby hard for the Commission to oppose these amendments on the grounds that they would slow the transmission of data on the Internet by outlawing web caching.

First Council working group meeting of
German Presidency held end-February.
Details to follow.

4.3 DGIII seeks bilateral meeting on copyright
In an attempt to move forward on the issue of liability for copyright infringements, and the problems of web caching and hosting, DGIII is pursuing plans to hold a round table meeting in the near future with industry representatives. This move is the initiative of the DGIII services dealing with the publishing sector following aggressive lobbying from the telecoms and internet service sector to try and reverse gains made in the European Parliament.

5 Advertising

5.1 Commercial communications - expert group to begin discussions on premiums in March
The next meeting of the expert group on commercial communication scheduled for 8 March will move on to the issue of premiums. Discussions are expected to last about 6 months. Meanwhile, work continues on the final opinion on discounts which the Commission hopes can be adopted at the expert group's next meeting.

5.2 Code on Marketing of Alcopops MEPs passed amendments to a Directive on food Labelling which call for strict labelling of the contents of alcopops and other premixed drinks, as well as a code of conduct on the marketing of such products. Such a move is supported by the European Commission's health Directorate.

5.3 Television without Frontiers contact committee discusses advertising and children
At its meeting this month, the contact committee of Member State experts overseeing the implementation of the EU broadcasting Directive discussed a DGX draft tender for a study on the impact of advertising on children. Some Member States are pushing for the study to undertake an in-depth examination of the effects of advertising on minors rather than simply gather information about existing national measures in this field. DGX has decided that it will be a restricted tender and will cover press as well as television advertising.

5.4 DGXXIV takes initial steps towards a code of conduct on advertising to children
In a separate initiative, DGXXIV has approached European advertising federations for further information about existing codes of conduct on advertising to children agreed by industry and Member States. The Commission has indicated that it favours a negotiated agreement with the advertising industry but has no preconceived framework for a European initiative. EASA has produced a compendium of all the codes.

5.5 European Parliament intergroup discuss advertising of pharmaceutical products
The European Parliament intergroup on pharmaceutical products discussed advertising at a recent meeting. There was strong opposition to liberalising the current ban on direct advertising in the EU from professional associations, while the EU consumer lobby spoke out in support of relaxing rules. The Commission undertook to review consumer advertising of pharmaceutical products in its White Paper published in November 1998.

5.6 Food claims - Commission study yet to begin
Due to administrative delays, work has yet to begin on the external study commissioned by DGXXIV to examine the need to amend the misleading advertising Directive to take account of food claims. A contractor has been chosen but the contract is still to be signed. A final report is not expected until the end of the year.

5.7 Slow Progress on complaints against the Loi Evin and the Greek ban on toy advertising.
Commissioner Monti has confirmed that the Commission is still awaiting the outcome of discussions in France between industry and the regulatory authorities before taking further action against the restrictions on sponsorship and advertising. Mr. Monti has also said that the Commission is about to embark on discussions with the Greek Government regarding their national ban on TV advertising of toys.

6 Audiovisual

6.1 Council working group continues with a light agenda
The latest audiovisual working group held a short meeting this month with attention continuing to focus on the forthcoming seminar on self-regulation and the media in Saarbrucken. Questions relating to public service television have not been raised again.

DGIV made a brief presentation of the Commission's plans to revise the 1980 Commission Directive on the transparency of financial flows between Member States and public undertakings. The Commission is understood to want to broaden the Directive to include more categories of public companies and to oblige Member States to disclose more information about transfers. Member States are concerned that the Commission proposal will impose unacceptable transparency rules.

6.2 Study on parental control devices submitted to the Commission
Researchers at Oxford University have submitted the results of the study on parental control devises to DGX. Commissioned as part of the follow-up to the revised broadcasting Directive, the study examines the viability of a mechanism for filtering and rating content in Europe.

The study rejects the V-chip used in the US and Canada as unsuitable for Europe given the present transition to digital technology and because it presupposes a homogenous media culture. Instead, the study proposes the continued use of watersheds and broadcaster responsibility during the transition period, plus the development of screen icons which correspond to ratings of content transmitted digitally.

However, researchers propose the creation of multiple rating bodies which may pose a dilemma if the same programme is rated differently by one or more rating bodies and the ethical difficulties of third party rating which some believe could be tantamount to content censorship.

6.3 Oreja group continues discussions on the future of EU audiovisual policy
The Oreja Group met again end-February to discuss three key issues - convergence (see above), parental control devices and the future of the MEDIA programme.

The study on parental control devices (see above) was the main point of contention amongst the members of the Group, with many demolishing its proposals.

The Group will continue its work and will meet again the 14 June, shortly before the Culture Council. The members are invited to the Presidency's seminar on self-regulation in Saarbrucken in April.

6.4 Commission's draft report proposes expansion of MEDIA programme
The draft evaluation the MEDIA II programmes has proposed a reorientation of support for the European audiovisual industry towards rewards for successful producers and the promotion of exports. In addition, the report proposes the expansion of automatic support and the creation of simultaneous "European cinema days" throughout Europe. Formal proposals for a revised programme are expected later in 1999.

6.5 European Parliament to hold meeting on competition in European broadcasting
On the initiative of MEPs Ernesto Caccavale and Gianfranco dell'Alba, the European Parliament will hold an ad hoc meeting on 2 March to discuss competition in the broadcasting sector. Commissioners Oreja, Van Miert and Bonino are due to speak at the event, together with commercial and public broadcasters. The meeting will focus on two themes:

- the need for a proper framework of rules to guarantee fair competition and transparent accounting;
- the definition of quality public service taking into account public interest, transparency, competition and non-discrimination.

The second theme will take the Italian model as a case study.

6.6 BBC announces pay-TV joint venture - Commission calls for comments.
The Commission is calling for comments on a number of proposed joint ventures between BBC Worldwide and Flextech Plc which it considers to fall within the scope of EU competition rules. The joint ventures concern a proposal for the licensing and supply of English-language programming for pay-TV channels world-wide. Further details available on request.

6.7 Commission issues information injunction to Italy, France and Spain regarding public service broadcasting
The European Commission has sent formal requests for further information on several forms of direct and indirect financial assistance granted to public service broadcasters in Italy, France and Spain as part of outstanding investigations into complaints of unfair competition from commercial broadcasters. The Commission has stated that insufficient information is available to make a formal decision on whether funds granted by these governments constitutes existing aid. If the financing is deemed to be state aid, the Commission will continue its evaluation of the claims of unfair competition.

6.8 Commission rejects case of unfair competition in Germany
The European Commission has found in favour of the two German theme channels, Kinderkanaal and Phoenix, following a complaint from commercial broadcasters that funding from licence fee revenue constitute state aid. The Commission decided that funds stemming from licence fees are considered as state aid, but that in this case the transfers to finance the broadcasting activities of the two channels are compatible with the provisions of Article 90(2) since they do not exceed what is necessary for the delivery of "services of general economic interest".

6.9 Commissioner van Miert presents conclusions on the application of competition rules to sports
The services of DGIV have concluded that the specific features of sporting activities do not exempt them from competitions rules and have drawn up general rules on the application of EU rules to this sector:

- safeguard a balance between the general interest and the protection of private interests;
- restrict Commission action solely to cases with a Community dimension;
- ally a de minimus rules, under which certain agreements are deemed not to affect trade between Member States;
- apply current authorisation criteria in Article 85(3) on exceptions and refuse exceptions to any agreement which infringes other provisions of the Treaty, including freedom of movement of persons;
- define relevant markets applicable to the sector.

DGX will undertake a consultation with EU sporting organisations before DGIV draws up final conclusions.

7 Taxation

7.1 Progress expected to be slow in consultations on VAT and e-commerce
The early stages of consultation on the development of a mechanism to apply VAT to electronically traded goods indicate that little progress will be made this year. A tentative deadline of mid-March has been set for comments on DGXXI's first consultative paper, available on request. A follow-up is not expected for several months. Meanwhile, talks are continuing in the OECD.

7.2 Code of conduct group on business taxation examines tax concessions for the film industry
The ad hoc group of Member States experts on direct taxation have identified tax concessions for film production as one of over 80 fiscal measures which may obstruct the free movement of capital within the single market and may contribute to harmful tax competition. The group will assess the compatibility of the measures with the code of conduct agreed in 1997. An interim report is expected in May, with a final report being submitted to the ECOFIN Council in October.

8 General

8.1 Commission publishes new Communication on EU competitiveness in the face of globalisation
This Communication, adopted end-January, aims to launch an on-going debate with economic and social actors on how EU industrial policy should be revised to place European business in the best position to benefit from globalisation. The Commission takes a positive approach to globalisation, seeing it as an opportunity rather than a threat. It identifies competitiveness factors and diagnoses weaknesses in EU industry. It concludes by recommending actions aimed at reinforcing investment and removing barriers in order to improve competitiveness. Document is available on request.

The Commission's text will be discussed at the Industry Council in April.

8.2 Data protection - EU and USA aim to reach agreement by June 1999
Director General of DGXV, John Mogg, met again with David Aaron, US Under Secretary of State, end-January for further bilateral talks on the protection of EU data exported to the US. In its latest report, the EU's working party identifies a number of areas where the US safe harbour principles fall short of the "adequate protection" required by the EU Directive. Bilateral talks will continue with a view to reaching an agreement before the EU-US Summit in Germany in June.

8.3 European Parliament approves proposal to separate ownership of cable TV and telecoms networks
At its February plenary session, the Parliament voted through the report by Graham Watson MEP (UK, ELDR) on the draft Commission Directive on the legal separation of ownership of cable TV and telecoms networks by a single entity. The Commission is expected to adopt the Directive in due course which aims to de-regulate networks and increase competition. Text available on request.

8.4 Commission publishes White Paper on commerce
Following on from the 1996 Green Paper on Commerce, the White Paper proposes an action plan of initiatives to improve the performance of the distributive trades in the EU. Among them, are a series of initiatives relating to information technology and the existence of barriers to electronic commerce. A series of pilot projects are proposed for 1999-2001. Text available on request.

8.5 Commission to hold consultation on its Green Paper on piracy
The European Commission and the German Presidency will hold a consultation on 2-3 March on the main aspects of the Green Paper published end-1998 (available on request). The meeting will bring together businesses, academics, national experts, lawyers and international organisations and will be hosted by the European Patent Office in Munich.

8.6 Competitiveness of the publishing industry - work begins on interim report
The Media Group presented its first working document this month on statistical data gathered in cooperation with EU publishing federations. This information will be used to identify countries which will form the focal point of further study on the factors affecting competitiveness in the sector. Work will now begin on the interim report which will be presented end-March.

8.7 Recycling forum - working groups begin - Focus on NEWSPRINT
Paper, including newsprint, is clearly a Commission target for voluntary arrangements in the recycling forum, based on the German model. Working groups were held end-February on regulation and innovation and research when this move became clear. Further working groups will be held in early March on markets, and standards and diagnostics and statistics. The working groups will continue to meet approximately every 6 weeks until October. Two further plenary sessions are scheduled in June and November before final recommendations are made at the end of the year. (Reports of the working groups will be available in early March on the internet at:
http://europa.eu.int/comm/dg03/directs/dg3c/recycling/recycling.htm).

EPC is represented on the working groups.

8.8 Competitiveness of forest-based industries - differences of opinion emerge between publishing and paper industries
As the Commission works on its draft Communication, the draft document on forest-based industries drawn up by the Confederation of European Paper Industries (CEPI) has failed to win the support of European publishers' federations. Intended as a joint contribution to the DGIII communication on the competitiveness of the sector, the CEPI paper calls for concessions to the paper industry and greater concentrations which are not acceptable to publishers. A further meeting will take place in March to try and resolve outstanding difference.

Meanwhile, the European Commission is holding a Round Table for industry representatives to discuss various aspects being covered by their Communication. Meeting takes place 2-3 March. Several EPC members are due to attend and Jane Reed of News International will be speaking on globalisation.

Further consultation meetings are planned over the next few months.

Documents available on request

European Commission
- Non-paper on taxation of electronic commerce: options for the EU VAT system
- Communication on the competitiveness of European enterprises in the face of globalisation
- White Paper on commerce
- Working party on the protection of individuals with regard to the processing of personal data - opinion of 26 January 2024
- Green paper on Public Sector Information in the Information Society
- Green paper on piracy
- Draft Communication on competitiveness of e-commerce
- Draft Communication on Convergence

European Parliament

Draft Directive on electronic commerce (first reading - codecision)
- Legal Affairs Committee - draft report (Oddy)
- Economic and Monetary Affairs Committee - draft opinion (Hoppenstedt)
- Culture Committee - draft opinion (Heinisch) forthcoming
- Environment Committee - draft opinion (Whitehead) forthcoming

Draft Directive on copyright (first reading - codecision)
- first reading resolution (based on Barzanti report)

WIPO Treaties (consultation)
- Legal Affairs Committee - draft report (Habsburg-Lothrigen)
- Culture Committee - adopted opinion (Kerr)
Draft Directive on a European framework for electronic signatures (first reading)
- first reading resolution (based on Ullmann report)

Draft Commission Directive to ensure that telecommunications networks and cable TV networks owned by a single operator are separate legal entities
- adopted resolution (based on Watson report)

EPC Documents
- latest statements from the Ad Hoc Alliance against unfair competition in the broadcasting and new services markets
- EPC position paper on e-commerce
- Press releases on copyright
- Minutes of the EPC meeting held 21 January

Others

WIPO
- draft database Treaty
- Consultation documents

WIPO
- audiovisual performers Treaty
- consultation documents

CEPI
- Towards a European Agreement on the Recovery of Paper and Board Products
- draft paper on producer responsibility

Media Group
- first working document for study on the competitiveness of EU publishing industries

Bonn University study on advertising and children
- results of academic survey and statistical data

Council of Europe
- recommendation on measures to promote media pluralism - text formally adopted the Committee of Ministers (Jan. 99)
- draft Convention on the legal protection of services consisting of or based on conditional access

Association of Commercial Television (ACT)
- Position paper on public service broadcasting

General enquiries: Angela Mills

Telephone: +44 (0)1865 310 732
Facsimile: +44 (0)1865 310 739

Emma Ascroft

Telephone: +32 2 231 1299
Facsimile: +32 2 230 7658

Press Enquiries: Heidi Lambert

Telephone: +32 2 732 5546
Facsimile: +32 2 735 3603