Legislative update 72. Month - October 1998

In this issue:

1. Electronic commerce
1.1 Draft Directive revealed - country of origin principle under threat
1.2 Consumer aspects of electronic commerce - discussions to continue in OECD and EU Recommendation redrafted
1.3 Global Business Dialogue - Controljornal appointed to the steering committee
1.4 Agreement close on new Internet Corporation for Assigned Names and Numbers (ICANN)
1.5 WIPO Consultation on IP aspects of IDNS process
1.6 OECD conference on electronic commerce - 7-9 October, Ottawa
1.7 First annual survey of e-commerce in Europe
1.8 Transparency mechanism Directive - consolidated text
1.9 Globalisation and the information society - European Parliament adopts report in committee
1.10 Electronic signatures - European Parliament committees begin deliberations

2. Convergence
2.1 European Parliament report adopted at plenary
2.2 US Federal Communications Commission restructures in response to convergence

3. Internet content regulation
3.1 Content and Commerce Driven Strategies in Global Networks (CONDRINET): Building the Network Economy in Europe
3.2 Protection of minors - Commission begins work on self-regulatory guidelines
3.3 Multiannual Action Plan on Promoting the Safe Use of the Internet - Parliament second reading underway

4. Copyright
4.1 Progress slows in Council working group
4.2 Parliament's first reading delayed at committee stages
4.3 US Congress adopts Digital Millennium Copyright Act

5. Advertising
5.1 Commercial communications - expert group considers discounts and toy advertising
5.2 Tobacco advertising - German government launches challenge to EU Directive
5.3 Parliament's adoption of Larive report delayed
5.4 Advertising and children - internal Commission report complete

6. Audiovisual
6.1 Discussions on public service broadcasting continue - New industry Ad Hoc Alliance
6.2 Conditional access - Parliament completes second reading
6.3 Oreja report published
6.4 OECD to pursue MAI negotiations without France
6.5 EBU conference: "European programmes in the digital era"

7. Taxation
7.1 Taxation of e-commerce - agreement at Ottawa on way forward

8. General
8.1 Data protection - talks with the US will run beyond 25 October deadline
8.2 Green Paper on open access to public information - publication expected early-November
8.3 Bangemann proposes new members and new role for Information Society Forum
8.4 Draft Directive on the distance selling of financial services - advertising/data protection provisions
8.5 Green Paper on tackling the problem of counterfeiting and piracy in the single market

Dates for your diary

November

- 3rd - Austrian Presidency conference "Coping with Convergence in the EU", Vienna
- 3rd - Commission deadline for comments relating to supplementary consultation on convergence
- 3rd - Consumer Affairs Council, Brussels
- 6th - new deadline for comments on WIPO consultation on dispute settlement and the IDNS process
- 17th - Culture/Audiovisual Council, Brussels
- 19th-20th - European Commission (DGX & DGXIII) conference: "Dissemination and Exploitation of Public Sector Information", Amsterdam
- 26th - Council/Commission/Industry Internet Working Party
- 26th - Media Workshop 3 of the Government of Schleswig-Holstein ÒOpportunities and Limits of European Media Policy: Competence and ConvergenceÓ
- 26th-27th - Austrian Presidency seminar "Audiovisual media & authorities: tasks & challenges for regulators in Europe's changing media landscape", Vienna
- 29th - INFO2000 conference "Interactive multimedia industries beyond the INFO2000 programme", Vienna

December 1998
- 10th December: 50th Anniversary of the Universal Declaration of Human Rights - WAN campaign to get newspapers to re-print the Declaration in full on that day (text available on request from EPC)
- 7th-8th Committee vote on the copyright Opinion (Barzanti).

January 1999
- 20th-21st - next EPC meeting, London



1 Electronic commerce

1.1 Draft Directive revealed - country of origin principle under threat

The timetable for the adoption of the European Commission proposal for a Directive on electronic has been delayed as disagreements arise in inter-service consultation. The proposal is now expected to be adopted by the Commissioners end-October. A copy of the latest draft obtained by the EPC was discussed at the EPC Corporate Affairs Group in Brussels on 13 October with Margot Frohlinger and Maria Martin-Prat of DGXV.

DGXV takes a minimalist approach in terms of regulating e-commerce on a European level and limits harmonisation to areas identified by interested parties as representing the greatest barriers to electronic trade. A guidance framework is established for regulatory issues such as consumer protection, dispute settlement and advertising but implementation is left up to Member States, with a strong emphasis on self-regulation.

The proposal establishes some key provisions favourable to on-line publishing. Most importantly, it establishes the principle of country of origin control, in line with the TVWF Directive. (Only copyright and the issuance of electronic money are derogated from this principle).

Other key provisions include:
- commercial communications: obligation on Member States to ensure that the source, purpose and nature of all on-line commercial communications are clearly identifiable to the consumer;
- electronic contracts: obligation on all Member States to ensure that electronic contracts are recognised in national law (limited exceptions - eg: family law, wills etc.); obligation on service providers to supply certain information about on-line contracts and to implement certain minimum consumer protection measures;
- liability: sets out limitations to service providers' liability with no obligation of surveillance; does not establish a hierarchy of liability (this is left to national law);
- codes of conduct: Member States are encouraged to promote codes of conduct by associations and organisations; codes should be compatible with EU law and notified to the Commission;
- out-of-court settlements: obligation on Member States to provide for a dispute resolution mechanism between users and service providers; precise nature of this mechanism will be determined by Member States;
- legal redress: action within a Member State's jurisdiction against any infringements will be subject to two criteria - legal redress must be available to consumers on-line and in all community languages;
- derogations: limited to fiscal policy, areas covered by the data protection Directive and certain legal activities carried out by a notary;
- restriction of free movement: Member States can restrict free movement of information society services to protect the interests of minors but proposed measures must proportional and be notified to the Commission for scrutiny and prior approval (as in TVWF Directive);

The principle of country of origin control has been vehemently attacked by the European consumer lobby, BEUC, on the grounds that it provides inadequate consumer protection. DGXXIV (consumer protection) is supporting BEUC, whilst the DGXIII (telecoms) position remains unclear. The DGXV draft text remains in inter-service consultation but will be submitted to the Chefs de Cabinets of the Commissioners on 5 November. 11 November is the provisional date for consideration by the College of Commissioners.

The EPC has sent a statement to the Commission and Member States in support of its draft text, and of the principle of country of origin control in particular. The EPC is also engaged in a lobby with other interest groups to support the DGXV position and avert any weakening of the country of origin principle.

1.2 Consumer aspects of electronic commerce - discussions to continue in OECD and EU Recommendation redrafted
OECD member countries failed to guidelines on consumer protection in e-commerce at the Conference on Electronic Commerce (Ottawa - 7-9 October). Disagreements between the EU and the US on appropriate measures persist. As a result, only a statement of intent was adopted committing member countries to continue talks in the OECD's Committee on Consumer Protection and with a view to agreeing guidelines during 1999. These guidelines aim to include provisions on full and fair disclosure of information, advertising, complaint procedures, dispute resolution and legal redress.

Meanwhile, a draft Recommendation on the consumer dimension of the information society has been approved by COREPER for adoption at the Consumer Affairs Council on 3 November. Early drafts of the Recommendation attempted to strengthen consumers' right to redress in their country of residence. The UK was the only Member State to raise this as a potential conflict with country of origin control as enshrined in the DGXV draft Directive on e-commerce. However, in spite of vigorous opposition from industry representatives and DGXV, the redrafted text still includes references to country of residence albeit in more opaque wording. The latest text recommends that consumers should be able to rely on "relevant rights already provided and where appropriate strengthen them" and refers specifically to draft Directives in which harmonisation of the country of origin principle is proposed.

The text is expected to be put to the vote at the Consumer Affairs Council on 3 November without further debate. However, the Commission is expected to make a statement regretting the adoption of the Resolution. Some Member States may also make declarations.

The EPC has circulated a statement in opposition to any strengthening of country of residence control on the grounds that it undermines the principle of mutual recognition and threatens freedom of expression.

1.3 Global Business Dialogue - Controljornal appointed to the steering committee
The inaugural meeting of the GBD was held in New York on 25 September to discuss in more detail the creation of the business steering committee and issue groups. Although it was agreed to increase each region's representation on the business steering committee (BSC) from five to six member companies, the US side has since requested to raise this number to eight companies per region. This will increase the number of European companies from five to seven in the Europe/Africa region.

A meeting in Brussels on 27 October of European companies revealed no objections to this change in principle and it is now likely that each region will now increase its representation to eight companies. Nokia, France Telecom, ABN Amro and Bertelsmann were appointed in September to represent Europe. Marks & Spencer was appointed as the fifth representative.

Once the increase is formally agreed, as expected, Controljornal will be appointed as one of the two remaining members to represent content producers and southern Europe. (The existing members of the BSC will agree on the eighth member in the coming weeks).

The United States will be represented by MCI, Time Warner, AOL, Netscape, Hewlett Packard and IBM. (The remaining two places in The Americas region will be taken up by one Canadian and one Brazilian company).

The European meeting on 27 October put forward the following suggestions for issue groups: information infrastructure, liability, encryption and authentication. The first meeting of the BSC should agree on issue groups and distribute the chairmanships among the regions. The BSC will initially limit priorities to 6 issues. Companies interested in chairing an issue group should contact Bertelsmann in Brussels (marie-luise.barth@bertelsmann.de). The first meeting of the BSC was planned for early November but is expected to be delayed by these changes to the composition of the committee.

Progress will be reported at a conference to be held no later than 30 June 1999. The GBD website can be consulted at: http://webnz.com/gbd/

In the last week, Commissioner Bangemann has surprised business leaders by proposing a role within the GBD for the Information Society Forum - see section 8.3 for details.

1.4 Agreement close on new Internet Corporation for Assigned Names and Numbers (ICANN)
A fifth draft of the proposed articles of incorporation and by-laws for ICANN was published on 2 October, taking into account comments on the previous draft and nominating members of the initial board. The European Commission's consultative panel has approved this latest version as a sound basis for the launch on ICANN but has called on the Initial Board to correct certain shortcomings:

- insufficient protection against the extra-territorial application of US law over-ruling international law, other countries' laws or concepts and cultural values;
- potential for more than 50% of final board members to come from a single geographic group.

Other interest groups have expressed concern regarding the membership structure, financial accountability and the need for clarification on the future management of ccTLDs.

Subject to final approval, the ICANN is expected to be created in November with the initial board serving until 30 September 1999.

The latest draft texts can be consulted on the Internet at http://www.iana.org .

1.5 WIPO Consultation on IP aspects of IDNS process
The European regional consultation in the framework of the WIPO Internet Domain Name Process was held Brussels on 29 September. Chaired by Francis Gurry, WIPO Legal Counsel, and addressed by Paul Watershoot on behalf of the European Commission, discussions covered four key areas: dispute prevention, dispute resolution, protection of famous trademarks and the introduction of new gTLDs.

The consultation concluded the following:

agreement on:
- obliging gTLDs and ccTLDs to request and store contact details from applicants;
- applicant should warrant information and sign a statement declaring its validity;
- use of gateway pages/portals as a means of avoiding TM disputes should be "explored";
- desirable to encourage registries of ccTLDs to adhere to any new policies relating to IP issues associated with domain names which may be adopted by ICANN with respect to gTLDs;
- applying agreed, uniform procedures to any new dispute resolution mechanism, while allowing the mechanism to be available through more than one body;
- creation of central administration for a dispute resolution mechanism separate from registries/registrars;
- discretionary suspension of domain name on hearing evidence from both sides (non- automatic);
- applicant should have a right of appeal;
- arbitrator should have power to attribute payment of costs;
- some stages of an alternative dispute resolution process could be carried out on-line (esp. those involving written evidence);
- creation of new gTLDs would not present irrevocable on condition that there is a dispute resolution/prevention mechanism in place and in a controlled manner;

opposition to:
- onus being on registrar/registry to verify information provided by customers;
- waiting period after submission of application for registration;
- restricting the use of a dispute resolution mechanism to cyber-piracy - support for use in all disputes;
- statute of limitations/time bar following registration after which an alternative dispute resolution cannot be brought with respect to a domain name (concern that use of DNs can change);

no consensus on:
- suspending domain name until payment has been received;
- creating a different dispute resolution mechanism for disputes involving famous TMs (even if a workable definition were agreed).

Consultations will continue until 7 November after which comments will be used to draft recommendations to ICANN on the resolution of disputes relating to domain names.

A full report of the Brussels consultation will be available shortly on the Internet at: http://wipo2.wipo.int/process/eng/Br-report.html The results of other consultations will also be available on the Internet at http://wipo2.wipo.int/ under "consultations". All reports are available in English, French and Spanish as audio and text files.

The second consultation on the IDNS process relating to dispute resolution has been extended until 6 November. Details are available on the Internet at: http://wipo2.wipo.int/process/eng/processhome.html

1.6 OECD conference on electronic commerce - 7-9 October, Ottawa
The conference ended with agreement on a number of initiatives in the future of electronic commerce. The conference conclusions acknowledged the leading role of business in the development of e-commerce. The importance of self-regulation was also noted but the business community was urged to meet public expectations by ensuring that codes are transparent, non-discriminatory, open and well enforced.

Angry confrontations between the EU and the US over data protection were avoided, but differences resulted in weak Ministerial declarations on privacy and consumer protection. Declarations were adopted on taxation, privacy, authentication and consumer protection:

- taxation: see section 7.1 (below);
- privacy: vaguely worded statement due to continued disagreements between the US and EU (and others, including the Canadian chair) on approach; agreed to "promote" the effective implementation of OECD's 1980 guidelines in relation to global networks and to develop guidance on their implementation; agreed to build bridges between legal and self-regulatory approaches to privacy policies for on-line services; progress will be reviewed after two years;
- authentication: recognised need for an appropriate balance between government role and market-based solutions; agreed to promote voluntary licensing of digital signatures and business-led development of standards; agreed to encourage widespread use of authentication technologies in public and private sectors and further cooperation at international level;
- consumer protection: see section 1.2 (above).

The OECD action plan adopted at the end of the conference defines a 6-point work programme for the short-term:

1. develop guidelines for consumer protection in e-commerce;
2. work towards the practical implementation of the 1980 OECD guidelines on privacy;
3. analyse technological models for authentication and certification for formulation of policy in this area;
4. initiate work to define and measure e-commerce;
5. extend examination of socio-economic impact of e-commerce and government action (eg: education);
6. continue examination of policy implications of market development, including convergence, access etc.

All texts presented and adopted at the conference can be consulted on the internet at: http://www.ottawaoecdconference.org

1.7 First annual survey of e-commerce in Europe
This survey by KPMG Management Consulting predicts that web sales could rise to around US$1990bn by 2001. Major findings of the report include:

- more that a third of respondents strongly believe that Europe is lagging behind the US in the development of e-commerce;
- companies predict a 9% increase in on-line transactions by 2001;
- security was cited by 25% of respondents as a barrier to e-commerce;
- gap between leaders and laggards is widening in terms of sales, marketing budgets and board-level support.

This survey can be consulted on the Internet at: http://www.kpmg.co.uk/uk/services/manage/press/981015a.html .

1.8 Transparency mechanism Directive - consolidated text
Following the adoption of the amended transparency Directive, DGXV has drawn up an unofficial consolidated text of the original Directive and the recent amendments. Available on request as a word doc.

1.9 Globalisation and the information society - European Parliament adopts report in committee
The European Parliament's Economic and Monetary Affairs Committee has adopted its report on the Commission's Communication "Globalisation and the Information Society - the need for strengthened international co-operation".

Drafted by Franco Malerba (I, UPE), the report calls for a non-binding 'Internet charter' setting out internationally agreed objectives and principles to encourage simplified regulation of the Internet. The Committee recommends that such a charter should hasten and complement, but not substitute, legislation in key areas (e.g.: copyright, liability, taxation etc.) and EU competition law.

Rather than a wholly business-led initiative, Parliament favours a two-tier charter of objectives set out by political institutions on the one hand and the GBD initiative on the other providing the knowledge and commitment to remove barriers to e-commerce.

Parliament's definitive opinion will be adopted in the plenary session in November.

1.10 Electronic signatures - European Parliament committees begin deliberations
The European Parliament's Legal Affairs Committee has begun consideration of the draft report by Wolfgang Ullmann (D, Green) on the Commission's draft Directive. An initial exchange of views broadly supported the need to address diverging national legislation in this area and to adopt a common European framework.

Amendments have been proposed to clarify definitions and to upgrade the proposed consultative committee to a 'contact' committee.

The Legal Affairs Committee and supporting committees will return to this issue in November. The first reading is provisionally scheduled for the December plenary.

2 Convergence

2.1 European Parliament report adopted at plenary

The European Parliament has adopted its final report on the Commission's Green Paper on Convergence at its plenary session this month.

The final recommendations represent a shift of emphasis from the pragmatic to the narrowly legalistic. An amendment calling for a Directive on media ownership was re-tabled and adopted. Similarly, reference to the importance of creating "powerful European operators" was replaced with a call for the strict implementation of EU competition law to avoid the creation of "dominant players". A call on regulators to take into account developments in other markets, particularly the US, remains in the final text.

Other adopted amendments call on the Commission to propose a draft Directive to close loopholes in consumer protection when purchasing via electronic networks and to ensure that PSBs are granted "preferential treatment" under the Amsterdam Protocol.

2.2 US Federal Communications Commission restructures in response to convergence
The FCC will restructure its current bureau and office structure over the next year to better deal with converging markets. The present structure, dating from 1934, will be divided into two bureaux, a combined enforcement division and a public information unit. The FCC will move into new premises this year, with the majority of the restructuring taking place in 1999.

3 Internet content

3.1 Content and Commerce Driven Strategies in Global Networks (CONDRINET): Building the Network Economy in Europe

Produced by Gemini Consulting with the support of the Info 2000 programme, this study predicts fundamental changes to the content industries as a result of the growth in Internet use over the next five years. Although research suggests that content producers are in a strong position to benefit from increased internet use, the study predicts only those companies with adequate market and business infrastructures will be able to adapt to the new environment for content creation and distribution.

The report recommends that the content industry develop personalised services for customers, invest in skills and technology, examine partnership and licensing agreements for distribution, as well as co-operate on self-regulation and the development of copyright protection measures.

This study will be the framework for the INFO2000 Conference "Interactive Multimedia beyond the year 2000" which will look at the future of multimedia industries beyond the INFO2000 programme. This will take place in Vienna on 29 November.

This report will form the basis of a DGXIII communication on the content industry which is expected end-1998. An executive summary can be downloaded in Pdf format from the Internet at: http://www2.echo.lu/condrinet/ .

3.2 Protection of minors - Commission begins work on self-regulatory guidelines
The Council Recommendation on the protection of minors in audiovisual and information society services agreed by the Culture Council in May was formally adopted end-September. Attention now turns to the Commission and the services of DGX which will be responsible for the follow-up.

In the Recommendation, Member States called on the Commission to facilitate co-operation between the various actors involved in this issue (national governments, self-regulatory bodies, industry and users). DGX is now drafting a Memorandum of understanding which will set out a framework and aims for this co-operation. This Memorandum is expected to be formally presented by Commissioner Oreja in January 1999.

Together with the Recommendation, the Memorandum forms part of a three-pronged Commission strategy on the protection of minors, the third part of which is the on-going study into parental control of television broadcasting (also expected January 1999).

3.3 Multiannual Action Plan on Promoting the Safe Use of the Internet - Parliament second reading underway
The committee stages of the Parliament's second reading of the Commission's draft Action Plan have now been completed. The Committee on Civil Liberties and Internal Affairs adopted the recommendation for a second reading drafted by Gerhard Schmid (D, PSE).

A small number of amendments to the Council's common position were passed. MEPs called for a study to assess legal questions raised by the content or use of the internet, focusing on a clearer definition of illegal content, closer judicial and police co-operation, and the easy identification of content providers. Members also called for a European quality labelling system to be developed for suppliers of Internet services within the framework of codes of conduct proposed in the Action Plan. An amendment seeking to increase the proposed budget for the Plan was defeated.

The second reading vote will take place at the November plenary session.

4 Copyright

4.1 Progress slows in Council working group

The latest the IP working group was held end-September but discussions proved as slow and disappointing as at earlier meetings. Talks moved on to the crucial Articles 5(2) and 5(3) but progress was frustrated by a failure to agree on basic points of principle regarding exceptions. At this stage, no Member State appears satisfied with the Commission's proposal but experts cannot agree on a common approach, with many seeking amendments to reflect exceptions present in national copyright law.

Although the Commission is keeping Member States informed of progress in the European Parliament, in-depth consideration of the Parliament's position has been postponed until after its first reading. Member States are also waiting to see if the Commission tables a revised proposal in early 1999.

Meanwhile, progress in working group will continue to be slow. The Austrian Presidency will continue to divide meeting time between the copyright and 'droit de suite' proposals. As a result, copyright will not be discussed again in-depth until 2-3 December.

4.2 Parliament's first reading delayed at committee stages
The European Parliament's Legal Affairs Committee gave further consideration to Barzanti's draft report at its meeting on 28 October. Committee members have tabled a total of 221 amendments to the Commission's draft Directive in addition to the amendments adopted by the supporting parliamentary committees in September.

Given the volume of amendments, the Legal Affairs Committee has decided to hold a more in-depth discussion at the next meeting on 25 November. In the meantime, the Rapporteur will look to drawing up compromise texts on key amendments, notably to Articles 2, 5 and 6.

Of the 221 amendments, the Commission has indicated that a number are inadmissible on the grounds that they are contrary to WIPO and/or the 'acquis'. Although the remainder do not represent such diverse positions as those put before the supporting committees (the majority in fact support the rightholders) it remains evident that there is still a lack of understanding of the copyright agenda among MEPs. Rightholders' groups plan to run a campaign in the Parliament highlighting key issues of importance to rightholders ahead of the first reading vote.

The vote in the Legal Affairs Committee has now been postponed until early December. The adoption of the first reading vote is now likely to take place during the January plenary session.

4.3 US Congress adopts Digital Millennium Copyright Act
US Congress has completed its adoption of revised copyright legislation to protect works in the digital environment and implement the WIPO Treaties. The Act outlaws the manufacture or sale of technology which can be used to break copyright protection devices or to commit acts of circumvention. These provisions will enter into force 18 months and two years respectively after the Act is signed into law by the President. An infringement will carry a fine of up to $2,500.

The Act includes provisions requiring webcasters to pay a licensing fee to rightholders for the use of copyrighted works. In addition, certain provisions limit service providers' liability for on-line copyright infringements and limit exclusive rights with respect to ephemeral recordings. Some exceptions also exist for libraries and archives, but prohibit copies from being distributed outside the library/archive premises in digital format.

5 Advertising

5.1 Commercial communications - expert group considers discounts and toy advertising

The expert group on commercial communications met on 22 October for its second meeting on the subject of discount sales. Experts were asked to consider cross-border provision of services in the light of their respective national provisions and the proposed methodology assessment set out in the Communication. In particular:

- whether the principle of mutual recognition is being applied by the Member States such that discount offers can be provided across the entire Community when regulated solely in the country of origin;
- why any restrictions might exist and, if so, whether they are compatible with the Treaty;
- whether mutual recognition or harmonisation might be required;
- whether existing cross-border systems of redress are adequate.

National experts have asked for more time to consult with their national Ministries with the result that the group's opinion will not be finalised until the next meeting scheduled for 16 December. The group has therefore agreed that it will not be in a position to report to the Internal Market Council on 9 November as planned.

Experts also discussed advertising aimed at children. DGXV describe this as an information-gathering exercise, not linked with the on-going infringement case against Greece on toy advertising. Experts were asked for details of national legislation in this area.

Initial discussions have taken place on the future agenda of the group. Extending talks on discounts to include premiums is a possibility but a decision will be left until nearer the end of the year. It now looks unlikely that advertising and children will feature on the agenda in the near future. Although this is one of the six topics highlighted in the Communication, DGXV is understood to be waiting for DGX to complete its work in this area.

5.2 Tobacco advertising - German government launches challenge to EU Directive
The out-going German government has formally filed a complaint with the European Court of Justice against the EU Directive banning tobacco advertising. The Ministry of the Economy formally announced its challenge on 19 October on the grounds that the Commission has exceeded its competencies in the field of public health protection and that it undermines fundamental freedoms enshrined in the federal constitution.

5.3 Parliament's adoption of the Larive report delayed
The European Parliament Committee on Economic and Monetary Affairs has held an initial exchange of views on a working document drafted by the Rapporteur Jessica Larive (NL, ELDR) on the Commission's follow-up Communication. MEPs called for a swifter infringement procedure with strict time limits for decisions. There is support for more self-regulation in this area and for a tripartite committee of regulators, consumers and industry, an issue raised in the Parliament's resolution on the Green Paper.

Further discussion of this working document has been postponed until the Committee's next meeting in November.

5.4 Advertising and children - internal Commission report complete
The European Commission has completed its internal report on advertising aimed at children initiated in the wake of infringement proceedings against Greece's ban on toy advertising. The study encompasses all available academic material on the effects of television advertising on children. The question of advertising and children was also raised at the latest meeting of the expert group on commercial communications on 22 October (see above).

Report available on request.

6 Audiovisual

6.1 Discussions on public service broadcasting continue

The Council's audiovisual working group has devoted considerable meeting time this month to discussions on public service broadcasting. The Austrian Presidency's draft political statement is still under consideration for adoption at the Council planned for 17 November. Additional meeting time was set aside during October to discuss the DGIV paper on state aids and PSB.

The multilateral committee on state aids met in Brussels on 19-20 October to discuss the DGIV paper in-depth. Member States were represented by civil servants from both industry and culture Ministries and made clear their opposition to any EU interference with the remits of their respective public service broadcasters. Member States remain divided on whether to support guidelines on PSB or the assessment of broadcasters on a case-by-case basis. Opinion is also divided on the impact of advertising income and what degree of transparency is desirable for commercial activities.

DGIV has undertaken to redraft the paper for further discussion in the committee in December/January and to take into account broader issues raised by Member States such as pluralism, culture and national identity. Although DGIV has made it clear that it is legally obliged to act in this area, it remains uncertain how influential Member State criticisms will be.

Member States have been invited to submit written comments within one month, after which the paper will be redrafted by DGIV. Commissioner has undertaken in a recent statement to consult with private broadcasters.

EPC Breakfast meeting with Martin Bangemann 29 September.
á Members of the EPC were joined by private broadcasters to discuss with Commissioner Bangemann the growing problem of distortions of competition arising from the commercial activities of publicly funded broadcasters in both the TV and new services markets. Bangemann said that the Amsterdam Treaty Protocol on public service broadcasting was more of a restriction than a gift and that public service broadcasters must accept that their Ôhappy timesÕ are over. If public service broadcasters receive public funds, their activities need to be restricted to meeting their public service objectives. Public funds cannot subsidise activities outside the public service remit and there was no longer room for public service broadcasters to receive funding on the grounds of either spectrum scarcity or maintenance of neutrality. Neither was still valid. However, the Culture Council of Ministers will continue to argue the need for public funding on grounds of culture, impartial information and high standards of programme production/quality. Bangemann believes that public service objectives can easily be met by private broadcasters, including news coverage and programme quality.
á He urged us to keep up the pressure on DG 4 to deal with complaints from the private sector and to open discussions formally with private media companies on the implications of the discussion paper on state funding in the broadcasting sector. He invited us to submit background papers and statistics on broadcast funding at national level. He agreed to promote and support our cause at Commissioner level and confirmed that his Òinformation societyÓ group would continue to monitor unfair competition and public broadcasting. He advocated de-regulation of the public broadcasting sector, including free distribution of psb archives!

Following the Bangemann Breakfast, EPC Members together with colleagues from the private broadcasting sector agreed to launch a new Ad Hoc Alliance against unfair competition in the broadcasting and new services markets. A press release, announcing the launch and criticising the Culture Council Resolution will go out mid-November. Details available on request.

6.2 Conditional access - Parliament completes second reading
The European Parliament voted through its second reading of the draft Directive on the legal protection of conditional access services. The two amendments proposed by the Legal Affairs Committee were passed unopposed by the plenary session. These amendments would oblige the Commission to report on the application of the Directive 3 years after its implementation, instead of 5 years set out by Council in its common position.

Parliament's amendments are unopposed by Council and the Directive is expected to be definitively adopted at the Internal Market Council on 9 November. Member States will have to comply with provision within 18 months of its publication in the Official Journal.

DGXV is also continuing its follow-up of the commitment made by Commissioner Monti to the European Parliament to undertake a study into the use of conditional access for non-remunerated services. Approval of the chosen contractor is expected before end-1998 so that work may early next year. The Parliament had sought to extend the Directive at the first reading stage to include non-remunerated services.

6.3 Oreja report published
The final report of the high level group on audiovisual policy was unveiled by Commissioner Oreja on 26 October.

The report recommends:
- media and society - take advantage of the 'window of opportunity' and promote digital TV; create a 'media literate' society;
- competitiveness of the European audiovisual sector - develop a securitisation scheme for European content production; reform MEDIA II into a multi-annual programme with a level of automatic funding;
create European film schools; develop European showcase awards; encourage investment in TV production; guarantee copyright protection;
- role of the public sector in broadcasting - maintain dual system of private and public service broadcasting; national governments should remain responsible for drawing up a public service remit but the remit should be clear; funding must not go beyond what is necessary to fulfil a remit and must be open and proportional; licensing procedures must be simplified and regulation clear and consistent; improved co-operation between regulators within agreed structure; 'cultural exception' should be applied in international trade negotiations;
- Central and Eastern Europe - EU should work with CEECs to develop a balanced and free framework for broadcasting.

Commissioner Oreja will present the group's recommendations on public service broadcasting to Commissioner Van Miert.

The report can be consulted on the Internet at: http://europa.eu.int/comm/dg10/avpolicy/key_doc/hlg_en.html

6.4 OECD to pursue MAI negotiations without France
At a meeting in Paris on 20 October, negotiators representing OECD member countries agreed to continue talks aimed at concluding a multilateral agreement for investment despite France's announcement on 14 October that it will no longer participate in negotiations. France formally withdrew after it failed to secure the de facto exclusion of the audiovisual sector from the scope of the proposed MAI.

Talks were suspended in April when it became clear that member countries could not agree on special treatment for the audiovisual sector. The decision to resume work paves the way for talks on an improved text but negotiators remain pessimistic of success.

6.5 EBU conference: "European programmes in the digital era"
The EBU used its conference on 27-28 October in Brussels to unveil the "key messages" of a report commissioned from Arthur Andersen on the impact of digital technology on TV programming in Europe.

The study analyses trends in television revenues and programme expenditure of 47 European broadcasters in 16 European countries during the period 1990-1996. The five key messages extracted from the study are:

- programme expenditure is not increasing relative to television revenues;
- greater competition leads to an increase in expenditure on acquired programming at the expense of programme production;
- the introduction of digital television intensifies the major trends of analogue television;
- digital television will fundamentally alter the ways in which viewers access programmes and programme providers gain access to viewers;
- if the benefits of the current funding and regulatory structures for the delivery of television services in Europe are not to be lost, initiatives to promote investment in production and to ensure access need to be strengthened.

The full study will be published by Arthur Andersen in about one month.

7 Taxation

7.1 Taxation of e-commerce - agreement at Ottawa on way forward

The OECD's conference on e-commerce (see section 1.6 - above) agreed to co-operate to develop a common approach to taxing electronic trade, based on the principles of neutrality. A 'bit' tax was ruled-out, together with a new tax regime specifically for e-commerce. It was also agreed that VAT to be levied at the place of consumption.

OECD governments have pledged to agree an intensive work programme aimed at clarifying definitions (e.g.: "place of consumption") and the application of principles for tax purposes (e.g.: "permanent establishment" of a business for tax purposes). This work programme is expected to cover the next two years. A number of joint government-business committees are to be established to advise on the development of e-commerce taxation and how it should be adapted to technological change.

The conference also agreed on the division of work on different aspects of taxation and e-commerce. The WTO will deal with tariffs, the World Customs Organisation with customs procedures, and the European Union with VAT. The OECD will examine international and direct taxation issues.

8 General

8.1 Data protection - talks with the US will run beyond 25 October deadline

Talks between John Mogg, Director General of DGXV, and David Aaron, US Under-Secretary of Commerce, continue on the implementation of the EU Directive on data protection. Although no agreement on the protection of exported data was reached before the 25 October deadline, EU officials have stressed that there will be no wholesale ban of data flows to third countries.

Interim measures will be put in place enabling transfers to be assessed on a case-by-case basis, usually by national data protection registrars. At a meeting in Brussels on 26 October, the two sides discussed the possibility of creating safe havens for US companies which satisfy the Directive's provisions on the supervision and enforcement of voluntary codes. American companies wishing to continue trading electronically with the EU should be allowed to do so provided they sign up to a set of privacy principles to be drawn up by the US Department of Commerce.

Talks will continue with a view to reaching a long-term solution.

8.2 Green Paper on open access to public information - publication expected early-November
Inter-service consultation is progressing smoothly within the Commission on the DGXIII Green Paper on access to public information. It is hoped that the draft paper will be presented to the college of Commissioners for approval on 11 November. However, delays or a week or two may arise if objections are raised at Chef de Cabinet level.

DGX and DGXIII will jointly host a conference on public sector information in Amsterdam on 19-20 November.

8.3 Bangemann proposes new members and new role for Information Society Forum
The ISF has taken steps to broaden its membership to include interests from Central and Eastern Europe. At the recent plenary session held on 19-20 October, the ISF confirmed the appointment of some of the new members invited to join by Commissioner Bangemann. New members include trade bodies such as Intergraph (printing) and interest groups from the CEECs. Further appointments are expected at the next plenary in February/March 1999.

Commissioner Bangemann has invited the Forum to fulfil a complementary role to the GBD (see section 1.3 - above). While acknowledging that the GBD is a business-led initiative, Bangemann has called on the ISF to act in parallel with the business dialogue and to provide the "societal dimension" of the information society. The hope is also that the GBD may avoid potential criticism for being too one-sided.

The ISF will be restructured into a series of task forces with a more time-limited approach to its work programme. The present system whereby all decisions must be approved by the plenary session will be abandoned and replaced by a steering committee of task force chairmen with overall responsibility for co-ordinating and mandating action. All interested parties will be invited to express their view and participate in the task forces. Opinions are considered "approved" once adopted by the relevant task force.

The present Chairman of the ISF, Mr. Claudio Carelli, is also a member of the GBD and has undertaken to contact Dr. Middelhof (GBD Chairman) to offer the ISF's assistance along the lines suggested by Commissioner Bangemann. A way forward will be formulated on the basis of the GBD's reply. The GBD has yet to formally comment.

8.4 Draft Directive on the distance selling of financial services - advertising/data protection provisions
The European Commission has proposed a Directive to regulate the distance selling of financial services. The draft Directive contains certain provisions relating to advertising and data protection as follows:

- restrictions to unsolicited direct marketing (national implementation);
- ban on inertia selling;
- Directive on data protection in telecoms services would apply to unsolicited telephone calls;
- provisions on commercial communications proposed in the draft Directive on electronic commerce would apply for internet sales;
- Directives on the protection of personal data, misleading advertising and comparative advertising would apply as horizontal laws.

8.5 Green Paper on tackling the problem of counterfeiting and piracy in the single market
The European Commission has published a Green Paper drafted by DGXV on combating counterfeiting and piracy in the EU. The Green Paper marks the beginning of a consultation process to assess the extent and impact of this problem.

The Green Paper considers four potential measures to improve the effectiveness of protection:

- support for private-sector monitoring;
- legal protection of security and authentication devices;
- assessment of the means of enforcing intellectual property rights;
- establishing suitable administrative co-operation between national authorities.

Interested parties are invited to comment on the Green Paper by March 1999. This consultation period will be followed by a hearing under the German Presidency in Munich on 2-3 March. The document can be consulted on the Internet at: http://europa.eu.int/comm/dg15/en/intprop/indprop/922.htm

Documents available on request

European Commission

Draft Directive on electronic commerce - (provisional version - in French)

Directive on the provision of information in the field of technical standards and regulations ("transparency mechanism")
- unofficial consolidated text

Study on the effects of television advertising and children
- provisional version

Draft Directive on the distance selling of financial service contracts
- formal proposal

European Parliament

Draft Directive on copyright (first reading - codecision)
Legal Affairs Committee on copyright (lead) - draft report & amendments (Barzanti)
Economic & Monetary Affairs Committee - adopted opinion (Cassidy)
Culture Committee - adopted opinion (Gunther)
- Environment Committee - adopted opinion (Whitehead)

Convergence Green Paper (consultation)
European Parliament resolution (based on Paasilinna report)

WIPO Treaties (consultation)
- Legal Affairs Committee - draft report (Habsburg-Lothrigen)
Culture Committee - draft opinion (Kerr)

Communication "Globalisation and the Information Society" (consultation)
Economic & Monetary Affairs Committee - adopted opinion (Malerba)

Draft Directive on the legal protection of conditional access services (second reading - codecision)
- European Parliament second reading resolution (based on Anastassopoulos report)

Multiannual action plan to promote the safe use of the Internet (second reading - codecision)
- European Parliament recommendation for a second reading (Schmid)

Commission Communication on commercial communications in the single market (consultation)
- Economic & Monetary Affairs Committee - working document (Larive)

Draft Directive on a European framework for electronic signatures (first reading)
- Legal Affairs Committee - draft Report (Ullmann)
(Economic & Monetary Affairs Committee and civil Liberties Committee - draft opinions not yet available)

EPC Documents
á Statements on electronic commerce and the Consumer Resolution
á EPC Corporate Affairs Group Minutes (13/10)
á Minutes and Statements from the Ad Hoc Alliance against unfair competition in the broadcasting and new services markets

Others

WIPO - draft database Treaty
- Consultation documents

EBU conference "European Programmes in the Digital Era"
- conference material and speeches

Arthur Andersen study: "The impact of digital television on the supply of programmes"
- key messages (published in advance of final study) - 23 pages


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