1

eBay Contribution to

the Public Consultation on the Future of e-Commerce in the Internal Market:

The e-Commerce Directive remains crucial for legal certainty online

Concerted action against identified barriers to online commerce

is the means to unlock e-commerce’s full growth potential

eBay welcomes this important consultation by the European Commission on the development of

European e-commerce, with a focus on the implementation of the Directive on Electronic Commerce

2000/31/EC (referred to hereafter as “ECD”). eBay’s contribution details the company’s own

experiences and views, but importantly also collates information and feedback received from eBay’s

European users, which include some 350,000 SMEs and 30 million consumers.

SUMMARY: EBAY’S POSITION ON THE FUTURE OF E-COMMERCE IN THE EU

e-Commerce boosts economic growth, jobs and consumer choice

The Monti Report on A New Strategy for the Single Market states that e-commerce is one of the

sectors with the largest growth and employment dividends for the future. It is also the message

conveyed by Competition Commissioner Almunia in a speech of 21 October 2010: “the digital sector

holds out the promise to bring a new impetus to our economy.”1

Recent studies have begun to explore the extent of e-commerce’s contribution to growth and

employment. A Boston Consulting Group study on e-commerce in the UK, commissioned by Google,

shows that e-commerce is the most significant contributor to the UK’s Internet economy, which in

turn would rank as the 5th most important economic sector by UK GDP share.2 Aside from online

commerce’s direct contribution to economic growth, its impact on the retail sector overall is

substantial. An IMRG survey found that 600 000 jobs in the UK have a link to online retailing3; eBay’s

own research for its Online Business Indexes has similarly outlined the number of jobs that

multichannel retailers create and sustain4. These statistics, coupled with the figures outlined in this

consultation response on e-commerce growth, demonstrate why the Commission is justified in

prioritizing the removal of barriers to the further development of online services and commerce.

1 Competition Policy: State of Play and Future Outlook, Brussels, 21 October 2010:

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/576&format=HTML&aged=0&language=EN&guiLan

guage=en 2 Boston Consulting Group: The Connected Kingdom, 2010: http://www.connectedkingdom.co.uk/downloads/bcg-the-

connected-kingdom-oct-10.pdf 3 IMRG Press Release, 18 March 2010: Jobs Index: 600,000 And Counting:

http://www.imrg.org/8025741F0065E9B8/%28httpPressReleases%29/50E504F7E00E8FCB802576E90035CC06?OpenDocu

ment&view=archive 4 Spring 2009 eBay UK Online Business Index, p. 10:

http://pics.ebaystatic.com/aw/pics/uk/pdf/businesscentre/OBI_Spring2009.pdf

2

The ECD retains its great value for online transactions in Europe

The adoption of the ECD in 2000 established legal certainty for transactions concluded online across

the internal market. It recognized the opportunities e-commerce provides for consumers and

businesses, especially SMEs. It understood the emerging importance of new business models, such

as online intermediary service providers. In 2010, the Directive continues to play this essential role

for the growth and continued evolution of European e-commerce.

The ECD’s key principles lay the foundations for trust in online commerce. They facilitate the

ongoing development of hundreds of thousands of European SMEs’ commercial activity on the

Internet. They provide an appropriate legal environment for online intermediaries, which have

proved important and popular enablers of e-commerce in Europe. eBay urges policymakers and

legislators to maintain their support for the Directive itself and to boost its uniform and consistent

application across all Member States.

Online intermediary services are important tools for EU businesses and consumers to take

advantage of the legislative framework

Upon the publication of the Commission’s Report on the Application of the ECD in 2003, the then

Commissioner Frits Bolkestein reported that the ECD “is helping e-commerce to take off in the

Internal Market […] . Real online success stories are emerging”.5 Intermediary services such as online

platforms are key to the emergence of many of these success stories. For example, eBay provides a

framework around a basic hosting service, with tools that foster trust in online shopping. Third

parties list and describe their items for sale; consumers can find and compare goods easily. eBay

continues to develop its tools to ensure that retailers can reach new and different customers to

grow their businesses, whilst consumers benefit from greater choice and better value.

Online e-commerce platforms act as a launch pad, an important distribution channel or even a

lifeline to many businesses. They give consumers a convenient, safe location to shop online and

more easily find the products they seek. Between 2000 and 2009, eBay gained almost 850 million

new registered users on its European platforms. In 2010, eBay expects that 127 SMEs who sell goods

via eBay UK will break through the one-million-Pound turnover threshold; as many as 480 SMEs

using eBay Germany will break through the one-million-Euro threshold. And with combined sales of

€5.7 billion a year, businesses on eBay’s European platforms make a huge contribution to the EU’s

economy. Furthermore, with more than €813million a year of combined export sales, they are

increasingly a force for European integration. These impressive figures demonstrate the value of the

ECD’s consideration of online intermediary services and why it remains vital that its provisions

continue to apply in full to online hosting, access and caching services.

5 Press release of 21.11.2003, “e-commerce: EU law boosting emerging sector” (IP/03/1580).

3

Eliminating barriers to e-commerce requires attention to other legislation and policy areas; it will

also create positive effects for related industries

However, while the ECD has gone far in facilitating cross-border online services, obstacles have been

erected through other rules and practices. In 2009, the Commission published two robust reports6

identifying barriers to e-commerce within the EU, such as differing consumer rights, VAT rules,

contractual restrictions and inadequate delivery services. The reports also made suggestions as to

how these barriers could be addressed. The recent European Parliament report on e-commerce7

confirms the Commission’s findings and calls for action as a matter of urgency to untap the potential

of online markets. There is broad political support for effective and immediate action against these

types of barriers in the form of the 2020 Europe Strategy and the Digital Agenda, whilst the Monti

Report recognizes the role of e-commerce for the broader European project.

eBay welcomes the political focus on removing unnecessary barriers to e-commerce and urges swift

action to achieve this. Indeed, e-commerce is much more than just a new form of distribution. As the

Commission itself noted in its work on retail markets overall, e-commerce supplements offline retail

markets; it does not replace or substitute them. It complements physical distribution channels to

improve and expand opportunities for business, especially SMEs, whilst embracing consumer choice.

It means that small businesses have a new means to compete in the Internal Market and that

consumers – especially in rural areas - have access to a greater range of products. The digital world

continues to move ahead at pace: e-commerce represents a natural, inclusive evolution of, and

addition to the retail markets. Removing barriers to its further development must remain a priority

for the EU Institutions.

Conclusions

The ECD remains a future-proof, solid legislative basis for e-commerce in Europe. eBay urges the

Commission to maintain its focus on other barriers to e-commerce, identified in extensive

Commission and Parliament work within the last 18 months. Removing those obstacles is vital to

promoting economic growth, employment and consumer choice.

eBay stresses that online intermediaries continue to play the key role in the e-commerce value chain

foreseen by the EU Institutions upon their adoption of the ECD in 2000. Services such as online

commerce platforms have proved vital in allowing businesses of all sizes, but especially SMEs, a

route into the internal market. They also present a safe, user-friendly e-commerce environment for

consumers. To this end, eBay urges the Commission to clarify that such hosting services fall firmly

within the scope of the ECD’s liability limitations, thus ensuring that the ECD’s appropriate balance

of interests continues to underpin European e-commerce.

6 DG SANCO’s Report on cross-border e-commerce in the EU, SEC(2009) 283; Commission’s Communication on Cross-Border

Business to Consumer e-commerce in the EU, COM(2009) 557 7 Report on Completing the Internal Market for e-Commerce, (2010/2012(INI)), 7 September 2010

4

About eBay

Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering

them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet

platforms of choice for global commerce and payments. Since its inception, eBay Inc. has expanded to include

some of the strongest brands in the world, including eBay, PayPal, Marktplaats, StubHub, Shopping.com, and

others. eBay Inc. is headquartered in San Jose, California.

Our contribution to this consultation focuses on our EU e-commerce platforms. eBay aims to create, maintain

and expand the functionality, safety, ease-of-use and reliability of its online commerce platforms while, at the

same time, supporting the growth and success of its community of users.

5

Table of Contents

ISSUE 1: THE DEVELOPMENT AND PRACTICE OF ELECTRONIC COMMERCE .......................................................... 7

QUESTION 19: the growth of e-commerce........................................................................................................ 7

QUESTION20: delivery problems ....................................................................................................................... 9

QUESTION 24: payment problems................................................................................................................... 11

QUESTION 27: statistics or studies on e-commerce ........................................................................................ 12

QUESTION 28: the types and growth of e-commerce businesses. .................................................................. 13

QUESTION 29: economic sectors ..................................................................................................................... 14

ISSUE 2: QUESTIONS CONCERNING DEROGATIONS FROM ARTICLE 3 ................................................................. 16

QUESTION 34: the Internal Market clause....................................................................................................... 16

QUESTION 35: discrimination on the basis of nationality................................................................................ 16

QUESTION 37: cross-border online services .................................................................................................... 18

ISSUE 3 (PART 1): CROSS- BORDER COMMERCIAL COMMUNICATIONS, IN PARTICULAR FOR THE REGULATED

PROFESSIONS........................................................................................................................................................ 21

QUESTION 38: unsolicited commercial communications ................................................................................ 21

QUESTION 39: "opt-out" registers ................................................................................................................... 21

QUESTION 40: criteria...................................................................................................................................... 22

QUESTION 41: the 'acquis communautaire' .................................................................................................... 22

ISSUE 5: INTERPRETATION OF THE PROVISIONS CONCERNING INTERMEDIARY LIABILITY .................................. 23

QUESTION 52: the provisions on the liability of the intermediary service providers ...................................... 23

QUESTION 53: the term "actual knowledge"................................................................................................... 23

QUESTION 54: the term "expeditious" ............................................................................................................ 24

QUESTION 56: notice and take-down .............................................................................................................. 24

QUESTION 57: "notice and stay down” "notice and notice” ........................................................................... 24

QUESTION 58: general monitoring or filtering obligations (1) ........................................................................ 25

QUESTION 59: specific filtering methods......................................................................................................... 25

QUESTION 60: technical standards for filtering............................................................................................... 25

QUESTION 61: cooperation systems................................................................................................................ 25

QUESTION 62: liability regimes for hyperlinks................................................................................................. 26

QUESTION: 64: liability regime for Web 2.0 and "cloud computing” .............................................................. 27

QUESTION: 65: specific fields & obstacles to e-commerce ............................................................................. 27

QUESTION 66: Google vs. LVMH case.............................................................................................................. 28

QUESTION: 67: general obligation to monitor(2) ........................................................................................... 28

QUESTION: 68: classification of technical activities in the information society, ............................................. 29

QUESTION: 69: investment law enforcement.................................................................................................. 29

ISSUE 7: THE RESOLUTION OF ONLINE DISPUTES................................................................................................. 31

QUESTION 74: on-line dispute settlement systems......................................................................................... 31

QUESTION 75: equivalence of online and offline resolution ........................................................................... 31

QUESTION 77: on-line disputes settlements & improved victims' rights ....................................................... 32

6

ANNEX 1: New Market Mechanics

ANNEX 2: Compilation of eBay Market Surveys Confidential

ANNEX 3: Market Barriers and Online Platforms

ANNEX 4: Mobile Commerce

ANNEX 5: PayPal Contribution

ANNEX 6: Examples and Analysis on Intermediary Liability Confidential

ANNEX 7: Analysis of Specific Issue in Google vs. LVMH Confidential

ANNEX 8: Details on Filtering Confidential

7

ISSUE 1: THE DEVELOPMENT AND PRACTICE OF ELECTRONIC COMMERCE

QUESTION 19: What are your views on the growth of the economic development of electronic

commerce and information society services in Europe, in general and compared to its most

important competitors?

eBay believes that e-commerce has developed into a major source for SME growth, job creation,

market integration and consumer empowerment. The internet has allowed new, consumer-centric

retail services to emerge, often based in rural areas and able to serve a pan-European customer

base. E-commerce in Europe has grown in the last decade, but not nearly as much as in other parts

of the world, such as Asia. This is mainly due to a host of barriers to online trade in the EU. To

ensure e-commerce continues to grow and deliver consumer benefits also when markets mature,

barriers to cross-border trade must be dismantled and retailers must enjoy the necessary flexibility

allowing them to change and evolve their retail strategies and adopt new technologies.

E-commerce is dramatically changing the market dynamics. According to a February 2010 report by

the Centre for Retail Research European online sales will grow by 20% from € 141billion Euro in 2009

to €169 billion in 2010. However, its impact overall is much higher. The Commission’s 2009 Report

(DG SANCO) identified how e-commerce allows access to a wider variety of goods and services;

holds the promise of making the retail Internal Market a reality for consumers; and, thanks to its

interconnection with offline shopping, has positive implications for retail services in general and the

broader economy. As the Commission’s Retail Market Monitoring Report concluded: e-commerce

keeps pressure on prices both online and offline.

E-commerce is driving a shift in power, from supply (producer choice) to demand (consumer choice),

and with that we see the emergence of a new market environment. This is an environment

characterized by fragmented, non-linear, value chains and exhibiting an intense level of competition.

E-commerce is a game changer: it places the focus on consumer insights and the ability to adapt to

changing consumer habits. It allows the retailer to take on a new role: with access to a larger pool of

potential customers and customer information come the possibilities to specialize and satisfy

“niche” needs and to expand beyond the locality.

For an overview and illustration of the basic mechanics behind the new market dynamics we refer to

Annex 1.

SURVEY: Coming out of the Recession

eBay’s survey shows that online businesses survived the recession by adapting to changing

consumer demand and becoming more efficient, e.g. selling different stock and squeezing

office costs.8 Compare that to a recent report by BDO LLP, which found that more than 26,500

high-street shops in the UK will have to close before 2015. The reason being partly the failure

to adapt to the “psychology of the post-credit crunch consumer” – a consumer who looks for

better value for money and better quality.9

8 eBay Online Business Index (UK) Summer 2009

9 Press release by BDO : http://www.bdo.uk.com/press/2010/10/canny-consumers-command-uk-high-street

Article on Telegraph.co.uk, 15 October 2010 :

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8064104/UK-high-street-faces-more-

than-26500-shop-closures-by-2015.html

8

The new market environment is a source for SME growth, the creation / protection of locally

situated jobs and consumer empowerment:

� Online businesses are a positive force in the jobs market. Online businesses using the eBay

platform in the UK have an average of 8 full time employees. 44% of these businesses are

SME retailers that employ three or more people.10 The UK organisation IMRG (Interactive

Media in Retail Group) found in March 2010 that more than 600 000 jobs in the UK are

associated with online retail. In addition, jobs are often created or maintained in rural areas

thanks to e-commerce. For example, 44% of online UK businesses surveyed by eBay have

their base in rural areas. 11 Other markets in the EU show similar trends.

� The efficiencies of online businesses trickle down to consumers. 57% of European online

consumers say that online is the place where they find the better deals and value.12 More

specifically, a Frontier Economic study of 2008 found that eBay buyers save around €1.1

billion per annum, the equivalent of €3 million per day, by shopping on eBay. The study

compared the prices of products sold on eBay in the UK, France and Germany with the prices

of the same products sold in retail stores. 13

� The consumer benefits are sustainable. Even during the economic recession, online sales

kept growing. 14 Indeed, in the midst of the economic downturn last year, almost four in five

UK online businesses planned to expand or diversify.15 And online retailers came out of the

recession poised: 64% of UK online businesses surveyed in September 2010 are still

confident about the outlook for their businesses with 69% having met their sales targets for

the past six months. 16

CASE STUDY

David began trading as Valatech Computers on eBay in 2007 and now lists over £100,000

worth of goods on the site every month. The average selling price of items on Valatech

Computers is over £100 and David has forecast that the business will turn over more than 1.5

million in 2010.The business has doubled in size year-on-year for the past three years and is

now employing seven full time permanent members of staff and two part time web

developers.

But as online markets mature, growth risks slowing down. A recent study by Verdict estimates that

the average annual growth of e-commerce in the UK between 2009 and 2014 will drop back to 12%,

compared with 35% per year over the previous decade.17 As the UK is a relatively mature online

market, these are highly relevant figures indicating what is expected to occur in other Member

States at a later stage.

10

eBay Online Business Index (UK) Summer 2009. See Annex [...] for a compilation of eBay’s own surveys. 11

eBay Online Business Index (UK) Autumn 2009 12

Forrester, 5 March 2010, Western European Online Retail Forecast, 2009 to 2014. 13

Frontier economics, Economic study of the consumer benefits of eBay, September 2008. 14

Forrester, 5 March 2010, Western European Online Retail Forecast, 2009 to 2014. 15

eBay’s Online Business Index (UK) Spring 2009. 16

Survey by Fresh Minds, commissioned by eBay (1 October 2010). See Annex 2 for a compilation of eBay

research results. 17

E-retail 2010 and Beyond, press release: http://about.datamonitor.com/media/archives/4832

9

Indeed, figures by Euromonitor suggest that e-commerce as part of overall retail is growing at a

faster pace in Asia (a region of fragmented countries comparable to the EU) than in Europe. In Asia,

the forecast is that from 2009 to 2012 e-commerce will grow from 4.3% of retail to 8.4%. In Europe,

it will grow from 4.1% to 5.8%. 18 Furthermore, e-commerce in Asia is expected to grow about 60%

between 2010 and 2012, whereas European growth rate is estimated at about 30%.19

These more solemn figures underscore the importance of promoting cross-border e-commerce in

the EU. The Commission’s spring 2010 Consumer Market Scoreboard revealed that the gap between

domestic and cross-border online shopping is growing: in 2009, 34% of EU consumers bought goods

or services online from national sellers (28% in 2008), but only 8% ordered from elsewhere in the EU

(6% in 2008).

Cross-border e-commerce is an untapped potential for European growth. A dynamic and integrated

European market means larger customer pools and more competition, and it is a prerequisite if the

EU is to compete successfully in the global arena. E-commerce is a powerful tool for market

integration purposes.

QUESTION20: More specifically, do you have any indications that delivery problems would be an

obstacle to the development of your electronic commerce activity? If so, which?

Retailers who use eBay as a distribution channel regularly identify issues relating to delivery

services as a key limitation to the success of online sales. The main problems relate to costs,

reliability and coverage. As trouble-free, quick item delivery is a key component of consumer and

traders’ trust in online commerce. The lack of inexpensive tracking services, both within EU

Member States and especially cross-border, is a further sign that delivery services in Europe

generally fail to meet the needs of businesses and consumers. This especially hurts SME traders,

who are not in a position to negotiate separate, more advantageous commercial deals with postal

or logistics service providers.

Fast, efficient delivery of goods is absolutely crucial for successful and consumer-friendly e-

commerce. However, large and small businesses using eBay as a distribution channel consistently

identify delivery problems as a major impediment to e-commerce; 42% of UK eBay sellers said that

improvements to the postal services should be a key feature of the UK Government’s flagship

“Digital Britain” programme; more than 60% of surveyed German eBay sellers said that the costs

associated with shipping prevented them from offering products to consumers outside Germany.20

The problems identified relate to the reliability and coverage of services, as well as the costs

involved. Problems are usually multiplied when deliveries are cross-border.

18

Figures derived from Euromonitor, “Retailing: Euromonitor from trade sources/national statistics”. Retail

includes all non-internet channels, such as shop-based retailing, vending, home shopping, and direct selling. 19

Figures from JPMorgan, "Nothing But Net," provided to eMarketer, January 4, 2010; Taiwan eCommerce

Report, Feb 2010/Daishin Securities, Oct 09 20 eBay’s UK Online Business Index Autumn 2009 and eBay’s German Online Business Barometer

November 2009 – see also Annex 2.

10

Delivery services as part of the “trust” equation. Successful delivery of goods is a key component

for trust in e-commerce. Goods that take longer than expected to arrive, or are damaged in transit,

undermine the value and convenience of e-commerce for consumers. Given that it is such a crucial

part of the e-commerce service experience, shipping features are among the points that consumers

on eBay rate sellers on in our popular feedback programme. Whilst this feedback relates to costs

and dispatch time (which a buyer can see from their “My eBay” page), many buyers confuse dispatch

time with delivery time. Therefore, delivery service problems for which the seller was not at fault

still reflect badly on them, causing additional dissatisfaction amongst e-commerce traders when

problems do arise.

Impact on SMEs. It should be stressed that the current situation regarding postal services across

Europe especially hurts small online traders. Larger e-commerce enterprises are often able to

negotiate favourable commercial agreements with shipping and logistics providers, because of the

volume of goods for which they require transportation. Smaller businesses must often rely on the

traditional postal service providers for the delivery of goods. This means they typically have higher

delivery costs and reliability is significantly reduced. Failure to address postal service problems,

therefore, disproportionately impacts SMEs; eBay urges the Commission to make this area a priority.

Looking to the Future. eBay notes that the European Commission understands the importance of

postal services for e-commerce. The Commission’s 2009 Communication on Cross-border e-

commerce identified problems with delivery services as a key barrier to cross-border e-commerce

development. Furthermore, a panel on e-commerce was part of the High-Level Commission-Spanish

EU Presidency Conference on the Future of Postal Services, in April 2010. In his opening speech at

the conference, Commissioner Barnier committed the Commission to addressing this area fully:

“Nous allons … dresser un inventaire complet des obstacles qui freinent l’attractivité du commerce

électronique, et qui peuvent résulter entre autres du fonctionnement des services postaux.”21

eBay notes there are examples of companies - such as DHL/Deutsche Post - who have responded to

demand in Europe by creating services for online traders. These companies realise that the future of

their services lies in distributing goods, not traditional letters. eBay estimates that sellers on its

European platforms spent more than 1 billion Euro in 2009 on shipping goods. Similarly, in the US

eBay and the USPS have enjoyed a strong formal partnership since August of 2003: today eBay

sellers are, collectively, the USPS’ single largest package customer and the total USPS revenue

related to commerce over eBay is approximately $1.7 billion.

eBay urges the European Commission to promote policies that encourage postal service providers to

further develop competitive, future-orientated services that serve consumer and business interests.

21

Commissioner Barnier speech, 29 April 2010:

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/196&format=HTML&aged=0&language

=FR&guiLanguage=fr

11

Key policy questions for the European Commission to consider. eBay urges the Commission to

consider policy that promotes the following, which are essential for e-commerce users (businesses

and consumers):

• Local drop-off/pick-up points for parcels;

• Regular deliveries at consumer-friendly times of the day;

• Effective tracking of packages for SMEs and consumers;

The following are key policy questions for the European Commission:

� How to foster more competition in the lightweight parcels market – i.e. below 2kg

� To promote cross-border trade, the efficiency and value of complex customs regulations need

to be assessed

� The needs of SMEs’: the “many to many” model is different from the “one to many” model

that large retailers employ. Coverage of delivery services must take this into account.

� Future policy choices must be based on an appreciation that the postal network is less

important as a communications network, but gains in importance as a distribution network.

QUESTION 24: Do you have information according to which payment problems (lack of choice in

terms of methods of payment, confidentiality issues, refusal of payment cards from another

Member State, etc) would be an obstacle to the development of your electronic commerce

activity? If so, can you assess and illustrate these problems?

Studies by the Commission have identified consumer trust in online businesses, including in

connection with payment systems, as a constraint to online shopping (e.g. DG SANCO’s 2009 Report,

2010 spring Consumer Markets Scoreboard). We would add that consumers and retailers depend on

mutual trust to conduct problem-free internet transactions and safe payments are a key component

of this. They allow consumers and retailers to buy and sell across borders using their preferred

national payment instrument. Simple and safe online payment methods help to increase trust,

educate and protect the participants of e-commerce, and allow especially smaller businesses to

drive and benefit from e-commerce growth.

For more details on PayPal’s position see Annex 5.

12

QUESTION 27: Are you aware of statistics or general or sectoral studies at national level on the

electronic commerce market and in particular its cross-border aspects? If in the affirmative,

which?

There are two highly relevant reports on European e-commerce, which describe how consumers and

retailers are deploying a multichannel strategy and illustrate how e-commerce constitutes a driving

force for the wider economy:

• Depicting European Shoppers’ Complex Purchasing Decision Path (5 November 2009)

• Western European Online Retail Forecast, 2009 To 2014 (5 March 2010)

The Interactive Media Retail Group published a survey in March 2010 (e-Jobs Index). The survey

revealed that more than 600,000 UK jobs are now either directly created in or support the UK’s

estimated 150,000 online retail businesses

Moreover, eBay undertakes itself regular surveys of its top sellers in France, Germany and the UK.

These surveys look at, inter alia, business performance, “red tape” issues as well as cross-border

trade. A compilation of these surveys can be found in Annex 2.

TREND: Global E-Commerce

The internet allows European consumers to search for information and browse product

offerings regardless of physical country or continent boundaries. For example, the Asian-

Pacific region presents huge opportunities for European consumers looking for other product

offerings and prices. Indeed, a study by McKinsey22

explains that China is “moving up the

value chain”, producing and exporting skill-intensive goods and services.

As globalization ties countries closer together, trade between them tend to pick up. We see

this happening between European countries as they are tied closer to the core EU area. eBay

surveys show that exports from the UK to neighboring European countries (outside of the

EEA) grew by 225% compared to a growth of 144% in EEA countries. And as new members

have joined the EU, online cross-border trade with these new Member States has increased

significantly. For instance, in 2008, we saw a 206% rise in exports to Malta from the UK and

exports from the UK to Poland rose with 350%. This was an even stronger growth than in

cross-border trade with some established markets.23

As recognised by the recently adopted parliamentary report on the future of e-commerce in

the Internal Market24

, consumers in the EU very often opt to engage in transactions with firms

based outside the EU. Indeed, European consumers rarely differentiate between European

and non-European countries when shopping online. The report notes that this is a factor

which points to the need to develop a policy for encouraging global e-commerce firms.

22

McKinsey, A truer picture of China’s export machine, September 2010. 23

eBay’s Online Business Index, Spring 2009. 24

Parliamentary Report on completing the internal market for e-commerce by Mr. Arias Echeverria,

(2010/2012(INI)).

13

QUESTION 28: Are you aware of information on the types and growth of e-commerce businesses

and on whether this substitutes or complements offline retail services? If so, please specify.

The dividing lines between offline retail and e-commerce are blurring and both are growing.

Successful retailers are responding to changing consumer habits by developing multichannel

strategies and often rely on the support of online platforms. Recent research shows an interlinked

and complementary relationship between online and offline channels and services. 25

In addition to being a valuable stand-alone service, e-commerce has become a major supplement

to offline retail. Today, consumers use a wide array of web resources to locate, inform themselves

about and compare products, rather than merely consulting a sales person in a brick-and-mortar

store and then buying online. More than one in three European consumers mix online and offline

channels during the purchasing process.26

This reality of changed consumer habits has resulted in two clear growth trends:

� Multichannel retail strategies allow retailers to reach more and different customer

segments and are widely viewed as ensuring that a business will remain sustainable during

difficult economic times.27 eBay’s own research shows that traditional retailers, big and

small, increasingly use e-commerce to support their existing business. eBay’s research also

shows that multichannel retailers are able to compete on a level playing field and actually

out-perform other online firms. We refer to Chapter 3 of Annex 2 for our research results.

� Online platforms play a key role with regard to innovation in retail services. A recent study

of more than 700 online sellers found that 74% did not have their own e-commerce site.28

There are more than 320,000 SMEs trading on eBay across Germany, the UK, France and

Italy alone, with combined sales of more than €5bn per year.29 We refer to Annex 3 for

more details on the role of online platforms in overcoming market barriers.

We would also want to direct the Commission to eBay’s response to the recent Retail Market

Monitoring Report, where we provided detailed input on e-commerce’s role in the dynamics of the

wider retail sector.

25

See e.g. http://www.internetretailer.com/internet/marketing-conference/35743-than-two-thirds-

consumers-shoponline-

before-buying-offline.html ; http://www.internetretailer.com/internet/marketing-conference/73187-

twothirds-

consumers-shop-online-before-buying-new-poll-reports.html ;

http://online.wsj.com/article/SB123144483005365353.html?mod=dist_smartbrief; and Forrester Research

Report, July 29, 2009, Updated August 6, 2009: Profiling The Multichannel Consumer, by Patti Freeman Evans. 26

Forrester Research, Depicting European Consumers Complex Purchasing Path (5 November 2009) 27

A multi-channel, international strategy is the recommendation by the BDO report finding that UK high-street

retailers have failed to adopt to changing consumer patterns (see footnote […] for source). 28

Survey by SaleHoo.com 29

eBay’s Online Business Index, Summer 2009

14

EXAMPLE: Complementary Retailing - as adopted by some retailers30

� Shoppers can transact in the channel of their choice: they can order online for pick

up in store, or order via in-store interface for home delivery.

� Shoppers can use the internet for pre-purchase research: advanced technologies

enable the online visualization of product details and Augmented Reality features let

shoppers “try on” products.

� Shoppers can compare prices on the high-street and online: they can use bar-code

scanning applications on their mobile device to get a quick overview of the

availability and price of a product.

� Shoppers can be reached on the move: mobile subscribers who opt-in can get “Shop

Alerts” on their mobile device when they are in proximity of a store (e.g. O2 is

offering this service in the UK).

See also TREND omnipresent consumers on page 10.

See Annex 4 for more details on the development of mobile commerce.

QUESTION 29: In your view, what are the economic sectors where electronic commerce has

developed significantly over the past decade and the fields where, on the other hand, its potential

has not yet been sufficiently exploited?

E-commerce has developed significantly over the past decade across almost every consumer goods

sector. It is maturing as a phenomenon: moving from the early adopters to the mainstream. 31

Consumers are increasingly confident purchasing almost any consumer product online. One of the

most popular product categories for both online and mobile shopping is clothing. On the other

hand, for example, online sales of events tickets have difficulty reaching their full potential due to

restrictive measures.

Our understanding is that online shopping is growing in popularity across most consumer goods

sectors. Indeed, a Forrester Forecast estimates that online sales will grow between 9% and 11% the

next five years in 16 different product categories. 32 External studies show that clothing is the

category of goods that is most shopped for online in the EU.33 Similarly, the French association for

distance selling recently published a study showing that apparel is among the three top category

products the most purchased over the internet in France : 45% of internet users bought at least one

item in that category in the last 6 months. 34

30

See for specific examples: Forrester Research: Depicting European Shoppers’ Complex Purchasing Decision

Path, November 2009. 31

Forrester, March 2010, Western European Online Retail Forecast, 2009 to 2014. 32

Forrester ForecastView, 2010 33

European Commission Staff Working Document: Report on cross-border e-commerce in the EU, SEC(2009)

283, published 5 March 2009, p. 5. 34

Le prêt-à-porter dans le top 3 des biens les plus achetés sur Internet, available ;

http://www.fevad.com/index.php?option=com_content&task=view&id=607&Itemid=985

15

A Forrester survey also found that clothing, together with books and event tickets, is among the top

three most commonly purchased products online. 35 Among mobile shoppers, electronics and

clothing are the most popular categories.36

Importantly, the growth in popularity of purchasing clothes, shoes and accessories online is

beneficial to the retail sector at large and does not come at the expense of offline stores. Indeed, the

internet affects more than just online sales: regardless of where they shop, 51% of European

consumers use the internet as some point during the purchasing process.37 A Forrester survey of US

consumers reveals that consumers who shop both offline and online make additional purchases in-

store to those products researched online. These consumers end up spending 14% more than online

window-shoppers (consumers who research but do not buy online) on the additional products. 38

Sales are thus maximized by offering consumers the choice of channel.

Despite growth across a wide range of product categories, the full potential of e-commerce is not

exploited. eBay believes the ECD plays an important role in allowing e-commerce to develop.

However, other legislation has erected barriers that stunt the full potential of e-commerce.

eBay’s own surveys reveal that online sellers are faced with various types of “red tape”. Indeed, 49%

of online businesses, surveyed in 2009 and using the eBay platform from the UK, faced bans to sell

online. We refer to Annex 2 for details on our survey results and to our answer under Question 37.

EXAMPLE: Ticket Resale

A field where the benefits of online selling are far from fully exploited is in respect of

ticket resale. Event organizers across Europe have sought to restrict the resale of event

tickets, citing terms and conditions attached to the original sale of the ticket which forbid

onward resale. This is highly detrimental for consumers who are no longer able to recoup

money on spare tickets for which refunds are rarely offered except in the case of

cancellation of the event. In other countries, only authorized resale is allowed, leading to a

reduction in competition and ultimately higher prices for consumers.

Examples of practices that event organizers engage in include:

� Seeking to void tickets which have been resold, leaving consumers unable even to

give the ticket away to friends and family if it does not sell

� Prohibiting unauthorized transfer of tickets or making it harder to do so by

requiring that tickets are personalized or include the photo ID of the original

purchaser

� Moving towards paperless ticketing technologies which also restrict transfer and

onward resale, leading to competition concerns about closed loop ticketing

systems where consumers are only able to resell a ticket via the original seller

� Capping the price of tickets sold on the secondary market, even though such

measures discriminate between different sellers and different ticket resale

services across the EU

35

Forrester, March 2010, Western European Online Retail Forecast, 2009 to 2014. 36

Study by Millennial Media and comScore, August 2010, available; http://www.millennialmedia.com/wp-

content/images/SMART/MillennialMedia-SMART-August-2010.pdf 37

Forrester Research, Depicting European Consumers Complex Purchasing Path (5 November 2009) 38

Forrester Research, Profiling the Multi-Channel Consumer (29 July 2009, updated 6 August 2009)

16

ISSUE 2: QUESTIONS CONCERNING DEROGATIONS FROM ARTICLE 3

QUESTION 34: In your view, is the derogation to the Internal Market clause covering contractual

obligations concerning contracts concluded by consumers, set out in the Annex to the Directive,

still useful, despite the development over the last ten years of Community and national legislation

concerning consumer protection? If yes, could you provide reasons justifying the maintenance of

such an exemption?

eBay believes that consumer protection is best served through harmonised European legislation,

rather than through the maintenance of the current derogation to the Internal Market clause.

For cross-border ecommerce to reach its full potential in Europe both consumers and businesses

need to experience legal certainty regarding their contractual rights and obligations. Unfortunately

the patchwork of existing national consumer protection provisions combined with Directive 97/7

based on minimum harmonisation do not provide the certainty required. Earlier in 2010, a poll of

German eBay sellers found that 67% of those questioned responded that cross-border trade is

hampered due to the uncertainty caused by differing consumer protection regimes.

This gap in the online Internal Market was addressed by the proposal for an EU Consumer Rights

Directive based on full harmonisation for rules for business to consumer distance contracts.

Unfortunately, it appears that the fundamental principle of full harmonisation contained in the

proposal will be rejected by the Council and Parliament. The continued use of minimum

harmonisation would maintain the regulatory status quo. It would represent a major missed

opportunity to boost cross-border online trade within the EU: our experience is that consumers seek

greater choice whilst requiring certain safeguards in the increasingly unlikely event that problems

should arise. Failure to grasp this opportunity will leave consumers – especially those in smaller EU

Member States – short-changed by a failure to keep legislation apace with the digital world.

Other stakeholders are placing their faith in the success of projects such as the 28th consumer

contract law regime, a Common Frame of Reference, blue button, etc. However the success of these

projects is far from certain and, whilst the debate continues, legal uncertainty will remain and cross-

border e-commerce will be undermined.

QUESTION 35: Have you practiced or been subject to discrimination on the basis of nationality or

place of establishment / residence, or are you aware of such discriminations? If so, please indicate

the information society services affected and the reasons given to justify this discrimination?

There are justified reasons for why certain retailers might not be capable of selling across borders.

However, eBay survey results reveal that retailers are sometimes prohibited by their suppliers

from selling to customers in other territories. Almost a quarter of online businesses responding to

the survey had been restricted by their suppliers from shipping to customers outside the UK.

eBay provides a global marketplace and encourages sellers and buyers to take advantage of it by

trading across borders.

17

An effort to increase cross-border transparency and transactions is the eBay International Market. It

makes use of the .eu address (www.eBay.eu), and connects buyers in Europe with the eBay global

community of sellers. The aim is to provide consumers with the convenience of shopping across

borders in a simple and safe way, e.g. with the help of features such as language tools. This is an

illustration of how eBay continues to develop and provide tools to ensure e-commerce is as inclusive

as possible.

However, eBay’s role is not to compel retailers to offer cross-border services; there might be many

justified reasons why they do not want to do that, such as problems with postal services, VAT rules,

differing consumer rights, etc. (see also under Question 37).

But eBay is conscious that some retailers who want to serve consumers outside their own country

are restricted from doing so by their suppliers:

� eBay’s own survey of online businesses selling from the UK revealed that 24% had been

restricted from shipping to consumers outside of the UK.39

� Retailers have shared with eBay their experience of being pressured by suppliers to not

make listings on eBay visible to customers in other countries.

We have been told that these types of policies are mainly targeted at eBay shops because the

transparency on the eBay platform means that prices are easily visible across national borders.

In the course of DG COMP’s review of the competition rules on vertical restraints, eBay pointed out

to the Commission how some suppliers use distribution agreements to maintain geographical

division also on the internet. We were pleased to see that the Commission included in its Guidelines

on Vertical Restraints a list of examples of these types of online territorial restrictions. We would,

however, stress that this must not be viewed as an exhaustive list as suppliers will come up with new

ways of cementing geographical separation on the internet.

TREND

Omnipresent Consumers

The “omnipresent consumer” is a consumer who crosses multiple channels to perform a

single transaction and who is not confined to a stationary computer (e.g. PC or laptop). This

consumer is on the move and with his/her mobile device he/she can interact with retailers

regardless of time and location. This means that he/she has the ability to shop whenever

he/she wants and not only when sitting at his/her PC or near a store. Enter the phenomenon

of situational shopping.

The traditional retail model centred around pulling customers into a store. With the use of

mobile technology, success lies in following the “omnipresent consumer” and meeting his/her

needs at the time of her request.

Key to success lies in understanding and predicting consumer behaviour and demand.

Retailers will need the technological tools and the flexibility to try out new avenues.

39

eBay Online Business Index (UK), Summer 2009.

18

QUESTION 37: In your view, are there other rules or practices which hinder the provision or take-

up of cross-border online services? If so, which?

eBay welcomes the work that has been done by the EU to identify barriers to cross-border e-

commerce. The Commission produced two robust reports in 2009 on barriers to e-commerce and

suggestions as to how these should be addressed; the Consumer Markets Scoreboard of March

2010 (3rd

Edition) presents a comprehensive update on the state of cross-border e-commerce and

reiterates the conclusions of the 2009 Commission reports; and the European Parliament’s Report

on Completing the Internal Market for e-Commerce40

is a significant response to the Commission’s

2009 reports, detailing the role of online platforms in boosting cross-border e-commerce and

calling for the removal of identified barriers. It is now vital and high time to take this work further

by implementing the proposals of the 2009 reports.

In this context eBay would in particular emphasize the following barriers that need to be addressed:

Consumer Rights: The fragmentation of consumer rules and the legal uncertainty that this creates

for buyers and sellers on the eBay marketplace has been clearly identified as a barrier to cross-

border EU sales on the EU platform. A recent eBay survey of sellers in Germany found that 67% do

not sell into other EU states due to uncertainty over the application of consumer protection rules.

Thus, a clear majority of the retailers (83%) speaks up for a harmonisation of consumer protection

law and, as a result of harmonisation, 60 % of the retailers would intensify their cross-border trade.41

eBay is a strong supporter of the proposal to fully harmonise consumer protection law across the EU.

Delivery Services: eBay’s survey of online businesses in Germany and the UK shows that problems

with postal and delivery services are among the top four barriers for cross-border e-commerce. 42%

of UK eBay sellers surveyed said that improvements to the postal services should be a key feature of

the UK Government’s flagship “Digital Britain” programme; more than 60% of surveyed German

eBay sellers said that the costs associated with shipping prevented them from offering products to

consumers outside Germany. Not surprisingly, rural firms are in even more need of reliable postal

services. eBay’s research shows that 47% of rural online businesses want improved postal services.42

Also a Forrester study points to inefficient handoffs between national postal services being one of

the “road blocks” to cross border online selling. 43

Upstream Power: SME retailers in particular often find themselves in a dependency relationship

with their much more powerful manufacturer/supplier: they depend on reliable supplies for their

livelihood and they normally need certain popular brands in order to attract consumers (and then

drive them down the tail). This puts SME retailers in a weaker negotiation position vis-à-vis the

manufacturer/supplier with respect to contractual terms, e.g. under what conditions the products

can be sold online. Indeed, eBay’s own survey reveals that half of the surveyed UK online businesses

experience pressure from manufacturers/suppliers with regard to limiting online sales. See Annex 2

for details.

40

(2010/2012(INI)), 7 September 2010, rapporteur Pablo Arias Echeverria 41

eBay Online Business Index (Germany) Spring 2010 42

eBay Online Business Index (UK) Autumn 2009 43

Forrester (March 2010), Western European Online Retail Forecast 2009 to 2014.

19

CASE STUDY

“We have 4 or 5 suppliers that would threaten future orders if we sold online. One

company actually dictates a price to sell their products at, and if we are seen to sell lower,

then supply has been restricted until we explain our position and resolve it.

Others only allow us to sell on our own website, not on online marketplaces, which makes

life a lot harder for consumers because they want to be able to shop around easily. Some

suppliers can be pretty intimidating – they know the power they have over small

companies like ours.”

Sporting equipment retailer, Yorkshire44

Court Practices 1 (Orders) EU competition rules dictate that retailers must be allowed to sell on the

internet. A manufacturer cannot discriminate against online channels by making it more

cumbersome for retailers to set up and operate an online shop – this applies regardless of type of

online channel (independent website or third party platform). Unfortunately, in some instances,

court injunctions against online platforms, whose services are used by retailers for an alleged

infringement, allow the manufacturer to do just that. That is the case where the court orders the

online platform to cease listing certain products of a particular brand without distinguishing the

status of the seller (authorised, non-authorised) nor the product (legitimate, second-hand, illegal).

See Annex 6 for examples.

Court Practices 2 (Jurisdiction) The Brussels I Regulation 44/2001, which seeks to ensure

predictability and that jurisdiction is attributed to the court which is objectively the best placed to

assess a case,45 does not contain any connecting factors specific to internet cases and has therefore

led to different approaches by national courts.46 The Brussels I Regulation does not sufficiently

prevent courts from assuming wide reaching jurisdiction based on mere access by internet users in a

particular territory. The great benefit of the internet is its borderless nature and easy access from

everywhere. Rules on jurisdiction must not impede this benefit nor discriminate against online

activities by effectively imposing a general requirement on websites to take active steps to prevent

access by consumers situated in certain Member States in order to avoid a broad exercise of

jurisdiction.

44

eBay Online Business Index (UK) Summer 2009. 45

Case 21/76 Bier v Mines de Potasse d' Alsace [1976] ECR 1735, see for instance paras 11 and 21; Opinion by

Advocate General in Case C-168/02 Rudolf Kronhofer v Marianne Maier and others, [2004] ECR, p. 1-6009,

para 34. 46

We understand the Commission is currently reviewing the Brussels I Regulation but that the issue of internet

connecting factors is not discussed.

20

It must be made clear to all parties operating on the internet where legal proceedings can and

should be brought. A harmonized EU regime could build on the WIPO Joint Recommendation

concerning the protection of marks, and other industrial property rights in signs, on the Internet.47

The Commission could be asked to consider what should be the relevant criteria for establishing

jurisdiction in cases of intellectual property claims in relation to internet activity. This could include a

reference to factors such as whether the user is actually serving customers in that Member State,

whether he is offering after-sales activities in that Member State, etc.

47

As adopted by WIPO at the Thirty-Sixth Series of Meetings of the Assemblies of the Member States of WIPO,

24 September to 3 October 2001, Publication 845, available at: http://www.wipo.int/about-

ip/en/development_iplaw/pub845-toc.htm#TopOfPage According to the WIPO Joint Recommendation, the

use of a trade mark on the internet shall constitute use in a Member State only if the use has a “commercial

effect” in that Member State. Article 3 of the Joint Recommendation lists a number of factors to assist a

competent court or authority in assessing “commercial effect”.

21

ISSUE 3 (PART 1): CROSS- BORDER COMMERCIAL COMMUNICATIONS, IN PARTICULAR FOR THE

REGULATED PROFESSIONS

QUESTION 38: Are you aware of any mechanisms in your Member State which guarantee that

unsolicited commercial communications can be identified in a clear and unambiguous manner by

the addressee?

The principle forms of internet-based unsolicited commercial communications are advertising and

email. eBay Inc. entities do not, as a practice and policy, send unsolicited commercial email.

Therefore, within the countries where eBay Inc. entities are data controllers, we are not aware of

mechanisms currently in use that clearly indicate to the recipient that an email is unsolicited.

As far as online advertising is concerned, eBay has self-imposed regulations for labeling ads

delivered according to preference-based systems, Through its Ad Choice Programme48, eBay has

been one of the pioneers and innovators in creating the standard that is being increasingly adopted

today for such labeling. Our system identifies each advertisement received by a user based on their

preferences and contains a link to further information and the possibility to opt-out of the program.

QUESTION 39: Do measures exist in your Member State which guarantee that the service provider

who sends unsolicited commercial communications by email regularly consults "opt-out" registers

(in which natural persons who do not wish to receive this type of communication can register)? If

so, are these registers respected?

We are not aware of nationally or provincially managed “opt-out” registries for unsolicited

commercial email. However, eBay maintains its own opt-out registries for users who have

withdrawn consent to receive commercial communications (again we don’t partake in unsolicited

commercial communications) and provides users with notification preference pages that enable

them to set and maintain more specific communication preferences. These registries and

preferences are always respected in our execution of email marketing campaigns, because we

believe respecting these preferences and using these registries are key to successfully building trust

and loyalty with our community.

48

For more information on AdChoice preference settings page, see

http://cgi6.ebay.co.uk/ws/eBayISAPI.dll?AdChoiceLandingPage&partner=0; eBay also displays a prominent link

on the customised advertisements it serves, allowing users to access information about AdChoice (and any

partners that might be involved) and to set their preference

http://cgi6.ebay.co.uk/ws/eBayISAPI.dll?AdPreferenceInterstitialPopup&partner=0

22

QUESTION 40: Is the legislation of your Member State sufficiently clear on the criteria making it

possible to determine if a commercial communication can be regarded as unsolicited or not?

EU legislation is quite clear as to what constitutes unsolicited commercial email; the cornerstone of

the distinction whether a communication is solicited or unsolicited is notice and consent.

Nonetheless, we would welcome more consistency amongst Member States as to what constitutes

consent. We would further welcome greater clarity across the Member States on what distinguishes

commercial from transactional from relationship communications. For instance, is an invoice for a

software product that contains a link to an ungrade program/subscription commercial or

transactional or does it depend on placement and prominence? eBay would welcome guidance on

the latitude to combine elements of the three into a single communication.

QUESTION 41: Is the 'acquis communautaire' (European law) on unsolicited commercial

communications and national regulations well-adapted to new forms of commercial

communications?

The acquis communautaire is well placed to cater for new forms of commercial communications in

principle. This is because the key legislation, such as Directive 95/46/EC, is based on the principle of

technology neutrality. It is crucial to maintain this principle in new or revised legislative measures.

Problems arising from the application of EU legislation have been as a result of certain Member

States’ implementation thereof; eBay encourages the Commission to maintain work to foster

consistency in the core rules’ application, based on key principles such as technology neutrality.

23

ISSUE 5: INTERPRETATION OF THE PROVISIONS CONCERNING INTERMEDIARY LIABILITY

QUESTION 52: Overall, have you had any difficulties with the interpretation of the provisions on

the liability of the intermediary service providers? If so, which?

eBay sees no need for a fundamental revision of the ECD and therefore strongly opposes the

reopening of this Directive. As we explain in the introduction, we see the ECD as the key legislative

framework responsible for the growth of European e-commerce. Having said this, we would

welcome greater clarity from the Commission on the issues we raise below in our responses and, in

particular, as set out in Annex 6.

We believe the ECD, including its provisions on the liability of intermediary service providers, has the

potential to provide the flexible and stable framework required for intermediaries to effectively

exercise their role of intermediation. However, eBay has experienced difficulties with Articles 14 and

15 of the ECD, in particular when applied in conjunction with Trademark Legislation (notably, the

Trademark Directive 2008/95/EC, Community Trademark Regulation 207/2009, Enforcement

Directive 2004/48).

We believe greater clarity could be accomplished by way of the forthcoming Commission

Communication on electronic commerce. A Commission Communication could (i) bring clarity to

certain existing provisions, and (ii) establish supplementing concepts and principles. 49

QUESTION 53: Have you had any difficulties with the interpretation of the term "actual

knowledge" in Articles 13(1)(e) and 14(1)(a) with respect to the removal of problematic

information? Are you aware of any situations where this criterion has proved counter-productive

for providers voluntarily making efforts to detect illegal activities?

eBay has indeed experienced problems with the interpretation of the term ‘actual knowledge’. A

broad notion of knowledge is not in the interest of dynamic e-commerce. It easily leads to an

excessive “precautionary principle” with regard to the removal of online content. The detrimental

consequence is not only a chilling and disruptive effect on competition and trade, it may also have

a deterrent effect on the service provider’s willingness and ability to provide and develop its

services.

We refer to Annex 6 for an analysis and examples of the difficulties with the term “actual

knowledge” eBay has experienced.

49

We view the function of this Communication in light of Article 17 of the Treaty on the European Union (TEU)

states “[t]he Commission shall promote the general interest of the Union and take appropriate initiatives to

that end. It shall ensure the application of the Treaties, and of measures adopted by the institutions pursuant

to them. It shall oversee the application of Union law under the control of the Court of Justice of the European

Union.”

24

QUESTION 54: Have you had any difficulties with the interpretation of the term "expeditious" in

Article 14(1)(b) with respect to the removal of problematic information?

eBay does not consider it appropriate that a specified time limit is established for what is

“expeditious” action to remove or disable access to content. Nevertheless, certain guidance to

national courts could be provided, exemplifying what factors impact on the expeditiousness of an

act to remove or disable access to content.

The fact that the ECD does not provide a definition of the term “expeditious” means in practice that

it is for each Member State to decide the exact scope of Article 14. This easily leads to legal

uncertainty.

However, eBay does not consider it appropriate that a specified time limit is established for what is

“expeditious” action to remove or disable access to content. What is “expeditious” will depend on

the particularities of the individual case, e.g. whether the alleged illegality is blatant or ambiguous,

the duration and dimension of the alleged infringement, etc. Nevertheless, guidance to national

courts could be provided, exemplifying what factors impact on the expeditiousness of an act to

remove or disable access to content.

QUESTION 55: Are you aware of any notice and take-down procedures, as mentioned in Article

14.1(b) of the Directive, being defined by national law?

To our knowledge, only Finland and Lithuania have taken the opportunity to implement a “notice

and take down procedure”.

Article 14 allows Member States to establish procedures for removal of illegal information, known as

notice-and-take-down procedures, but leaves their introduction to the Member States.

QUESTION 56: What practical experience do you have regarding the procedures for notice and

take-down? Have they worked correctly? If not, why not, in your view?

Although not legally obliged, eBay has created a highly efficient notice and take down system

under its Verified Rights Owner (VeRO) program. The success of VeRO program depends on the

cooperation from rights owners as they possess the expertise required to correctly identify illegal

versions of their own products. Any problems with the functioning of this system are related to a

lack of understanding or willingness of the key stakeholders to properly use it.

We refer to Annex 6 for more details on our practical experience with anti-infringement measures.

QUESTION 57: Do practices other than notice and take down appear to be more effective? ("notice

and stay down” "notice and notice” etc.)

A procedure for removal of illegal information should balance various interests in a fair manner. A

notice and stay down system is disproportionate and does not meet this requirement. A notice and

notice system, on the other hand, balances the different interests of the parties.

25

It is disproportionate to require the internet service provider to ensure that notified content is not

uploaded again – which would be the consequence of a notice and stay down system. A provider

simply does not have the capacity for such surveillance. Furthermore, this approach goes against

the very objective of the ECD. The system of distinguishing between the real content owner and

those intermediaries that only provide technical services, like access, hosting or caching, is at the

heart of the ECD liability regime. By implementing a notice and stay down system this central

element is practically annulled.

A provider should not be placed in the position of deciding who is correct on an issue of law that is

dividing courts and commentators. By applying the notice and notice system, the internet service

provider would not have to make judgments it does not have the expertise for nor the capability to

make.

QUESTION 58: Are you aware of cases where national authorities or legal bodies have imposed

general monitoring or filtering obligations?

See below under Question 67.

QUESTION 59: From a technical and technological point of view, are you aware of effective specific

filtering methods? Do you think that it is possible to establish specific filtering?

Practice shows that the capability of filters to effectively and cost-efficiently detect illegal offers on

the Internet is dramatically overrated. Filters are by their nature expensive and blunt instruments.

A filter can only flag items containing certain words, but it cannot determine the illegality of an

item.

We refer to Annex 8 for more information on filters.

QUESTION 60: Do you think that the introduction of technical standards for filtering would make a

useful contribution to combating counterfeiting and piracy, or could it, on the contrary make

matters worse?

We argue strongly against any attempt to prescribe by legislative or any other means the use of

particular technologies or filters.

Online platforms are not static environments because products, licenses, brands and user behavior

change over the course of time. Filters constantly have to be altered and improved in order to keep

up to date with recent developments, including attempts to reverse engineer or circumvent them.

QUESTION 61: Are you aware of cooperation systems between interested parties for the

resolution of disputes on liability?

eBay’s VeRO program is a cooperative tool for addressing what is effectively disputes between

rights owners and sellers.

26

Upon a notification by a rights owner of an alleged illegal listing, eBay promptly removes the

challenged listing; eBay notifies the seller that the listing has been removed and advises the seller as

to the reason for the removal.

eBay CONTRIBUTION

Sellers that have listings removed from eBay are directed to the relevant rights

owner’s “About Me” webpage for information about why their listings were removed

and how they can avoid positing infringing listings in the future. eBay encourages all

rights owners to create an “About Me” webpage on the eBay website to inform eBay

users about their products, intellectual property rights and legal positions. The

content of these pages is the sole responsibility of the rights owners.

QUESTION 62: What is your experience with the liability regimes for hyperlinks in the Member

States?

Hyperlinks serve an important function as information tools. They constitute an indispensable tool

for managing the endless amount of information on the internet. Constraints on their use, e.g.

through a liability regime, must therefore be well-thought through and particularly justified.

As the ECD deliberately does not provide a liability regime for hyperlinks, it is not surprising that the

Member States have developed their own rules in order to cope with this issue. Some Member

States have implemented a hyperlink exemption model similar to those for host providers, whilst

others apply general principles of civil and criminal law. Needless to say, these inconsistencies create

legal uncertainty.

Any liability regime for hyperlinks must recognize that:

� For links created by a third party - there can be no obligation on a service provider to

monitor links created by a third party

� For links created by a service provider - creating a hyperlink does not necessarily imply the

actual knowledge of the content of the website to which the hyperlink takes the clicking user

(e.g. the content can change and this cannot incur liability)

This is particularly important in the context of hyperlinks as part of ads hosted by a search engine and

triggered by a keyword (e.g. Google and its AdWords service), which commonly contain a link to third

party websites.

QUESTION 63: What is your experience of the liability regimes for search engines in the Member

States?

The same principles raised under Question 62 with regard to linking apply to search engines.

27

Search plays an important role in the consumer purchase process. The majority (57%) of consumers

begin their online research on a search engine.50 Furthermore, figures indicate that consumers go

online earlier and earlier in their purchase decision process. Between 2004 and 2008, the percentage

of consumers going online without having made any decision about what product they were looking

or almost doubled – from 15% to 28%.51

SEARCH AS THE ONLINE ACCESS POINT

Searching is the online equivalent to strolling down the high street without a clear

destination or browsing a department store: it is an access point. A consumer putting

in, e.g., the keywords ‘prada handbag’ might not necessarily be looking for just a

PRADA handbag but something in that category – think how department stores

usually have a whole range of handbags on the entry floor, the consumer heads for

the sign ‘PRADA’ because she knows that she will find plenty of different handbags to

choose from. Allowing rights owners to restrict such informative use online would be

the same as preventing consumers from navigating on the high street or in the

shopping mall with the help of signs of well-known brands.

QUESTION: 64: Are you aware of specific problems with the application of the liability regime for

Web 2.0 and "cloud computing”?

eBay is not aware of specific problems.

As long as the web 2.0 develops as fast as it is doing at the moment, the adoption of legal rules

seems not to be a realistic option. Moreover, the existing rules seem to be appropriate to handle the

challenges of the web 2.0 so far. Therefore, at the moment there seems to be no need for a liability

regime for Web 2.0 and “cloud computing”.

QUESTION: 65: Are you aware of specific fields in which obstacles to electronic commerce are

particularly manifest? Do you think that apart from Articles 12 to 15, which clarify the position of

intermediaries, the many different legal regimes governing liability make the application of

complex business models uncertain?

Our experience is that there are still obstacles to e-commerce in most everyday (branded)

consumer goods. We witness particular resistance against two types of online retailing formats:

“pure players” and online platform users. This is especially detrimental to the evolution of e-

commerce as these types of online retailers are often at the forefront of – indeed driving –

development.

We refer to our responses above under Questions 29, 35 and 37 as well as Annex 2 for more details.

50

2010 Social Shopping Study, E-Tailing and PowerReview, May 2010.

51 Nielsen NetRatings, HitWise; Jupiter Research “US Retail Consumer Survey” Volume 1 2008

28

THE BENEFIT OF PURE PLAYERS

E-commerce can exist as a stand-alone service and is not only an add-on to existing

traditional physical retail services. Indeed, “pure players” (i.e. retailers who trade

solely online) are in many ways the market forces who have predominantly driven

innovation and growth in online retail to date, rather than physical or multi-channel

retailers.

We regret that the new EU competition rules on vertical restraints give

manufacturers an initial right to impose “brick and mortar requirements” on their

distributors. However, we welcome that the rules forcefully warn against foreclosing

“pure players” and thereby preventing consumers from taking advantage of the

benefits these retailers may offer in terms of lower prices, more transparency and

wider access. Competition authorities are encouraged to enforce competition law in

situations where large part of sectors is affected by “brick and mortar requirements”.

QUESTION 66: The Court of Justice of the European Union recently delivered an important

judgement on the responsibility of intermediary service providers in the Google vs. LVMH case. Do

you think that the concept of a "merely technical, automatic and passive nature" of information

transmission by search engines or on-line platforms is sufficiently clear to be interpreted in a

homogeneous way?

eBay urges the Commission to use the forthcoming Communication to clarify that the ECD Recital

42 concept does not apply to hosting services. We regret that the Google vs. LVMH case has given

rise to confusion as to what type of information society services the concept of “merely technical,

automatic and passive nature” applies to.

The “merely technical, automatic and passive nature” concept is found in Recital 42 of the ECD.

Importantly, Recital 42 is part of a sequence of recitals that together offer some more details on the

liability framework as established in Articles 12 to 14 of the ECD. The liability framework applies to

three different and distinguishable information society services: mere conduit, caching and hosting.

Recital 42 only covers the services of conduit and caching.

See Annex 7 for a more detailed explanation.

QUESTION: 67: Do you think that the prohibition to impose a general obligation to monitor is

challenged by the obligations placed by administrative or legal authorities to service providers,

with the aim of preventing law infringements? If yes, why?

As we detail in Annex 6, there is a real danger that the fundamental prohibition of general

monitoring obligations in Article 15(1) is undermined because of how some national courts

impose injunctions on intermediaries. This is a very worrying development with potentially far-

reaching highly negative consequences for the development of legitimate e-commerce and other

online services.

29

In addition to the examples we provide in Annex 6, the case SABAM vs. Netlog (C-360/10)

demonstrates that national courts are in need of clear guidance in this respect.

In SABAM vs. Netlog, a Belgian court has referred a question to the Court of Justice of the European

Union for preliminary ruling. That question describes one type of injunction that always amounts to a

direct breach of Article 15(1).52 At stake in the SABAM vs. Netlog case is the very competitiveness and

effectiveness of an online Single Market.

QUESTION: 68: Do you think that the classification of technical activities in the information

society, such as "hosting", "mere conduit" or "caching" is comprehensible, clear and consistent

between Member States? Are you aware of cases where authorities or stakeholders would

categorise differently the same technical activity of an information society service?

There is in particular one general misconception among national courts: namely, to overlook that

Article 14 is primarily concerned with the hosting service – not the hosting service provider as such.

The ECD focuses on specific activities (services), and by doing so it has the necessary flexibility to

remain future-proof against the development of new business models.

A failure to distinguish between the service and the provider might result in a narrowly defined

liability framework, incorrectly excluding certain service providers. Moreover, failure to acknowledge

that a service provider may engage in several different types of services – some hosting, some not –

and still benefit from Article 14, might impede the very development of online services.

We refer to Annex 6 for more details.

QUESTION: 69: Do you think that a lack of investment in law enforcement with regard to the

Internet is one reason for the counterfeiting and piracy problem? Please detail your answer.

In general, the share of counterfeit sales via platforms compared to legitimate sales is minimal -

substantially smaller than in the off-line world. Online platforms suffer as much from

counterfeiting as rights owners, as it erodes consumer trust. As such, they are strongly

incentivised to tackle the counterfeit problem. eBay invests substantially in its anti-fraud systems.

A strategy that focuses on law enforcement with regard to the internet will never get to the

bottom of the problem of counterfeiting for the simple reasons that counterfeiting predates the

internet and counterfeit goods are made and primarily distributed offline. We need to tackle the

supply and demand cycle of counterfeiting through a global and coordinated approach.

52

Referred question: “Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and

2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection

of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before

which substantive proceedings have been brought and on the basis merely of a statutory provision stating that:

"They [the national courts] may also issue an injunction against intermediaries whose services are used by a

third party to infringe a copyright or related right", to order a hosting service provider to introduce, for all its

customers, in abstracto and as a preventive measure, at its own cost and for an unlimited period, a system for

filtering most of the information which is stored on its servers in order to identify on its servers electronic files

containing musical, cinematographic or audio-visual work in respect of which SABAM claims to hold rights, and

subsequently to block the exchange of such files?”

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The manufacture, physical distribution and demand for counterfeit goods have their roots in the

physical world. Online solicitation of counterfeit goods is just a reflection of a wider and more

pervasive offline problem. It is important to recognise that the internet has not created the problem,

nor has it substantially increased the scale of the counterfeiting issue. It has simply changed some of

the patterns of counterfeiting and increased the visibility.

Offline channels play a much larger role in the distribution of counterfeits than online channels.

The BASCAP Research report on Consumer Attitudes and Perceptions on Counterfeiting and Piracy

(2009) finds that only 11 % of counterfeits are bought online, compared to 54% in regular stores. On

eBay’s platforms, the share of listings suspected of being counterfeit is less than 0.2% of all listings at

any point in time.

Only by disrupting the cycle of supply-and-demand will the spread of counterfeiting be curtailed –

rather than just hidden from view:

• On the supply side, the 2008 OECD Report illustrates that there are some very important

factors upon which the internet has little or no influence. Comprehensive anti-counterfeit

strategies should therefore prioritise the fight against offline production of counterfeit

goods and accompanying logistical operations by the counterfeiters.

• On the demand side, consumers need to be educated about counterfeits sold through all

channels. Rights owners, along with support from governments, are best adept at

messaging the potential consumer base to reduce the demand in fake goods as well as

explaining how to spot and avoid fakes. eBay works with rights owners on awareness

campaigns and encourages rights owners to communicate their messages to consumers

on the eBay marketplaces, e.g. with their own “About Me” webpages

The limited means available to law enforcement agencies world-wide should in eBay’s view be

focused on the fight against the source of counterfeits – often in third countries – and the cross-

border trade in large quantities of often dangerous counterfeit products (e.g. fake medicines, car

parts, toys, tools, cigarettes and chemical products) by organised criminal groups. Governments must

work together with stakeholders in order to eradicate the roots of counterfeiting across all aspects of

the counterfeiting supply chain.

However, enforcement against counterfeiting must not stand in the way of or be used as a means

to jeopardise the development of e-commerce and the online trade in perfectly legitimate goods.

E-commerce provides consumers with greater choice and benefits than ever before, it is a driving

force of the EU economy and cross-border trade is a growing part of that. Its potential should not be

stifled. This is particularly important for the more than 350,000 small and medium sized enterprises,

great sources of employment in the EU, that use eBay as a platform for the sale of their goods -

goods, which are perfectly legitimate and partly sourced abroad.

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ISSUE 7: THE RESOLUTION OF ONLINE DISPUTES

QUESTION 74: What knowledge do you have of on-line dispute settlement systems (legal and

extrajudicial) in your Member State or in other Member States?

eBay Inc. companies have implemented their own dispute resolution tools, which have proved

popular and successful with users. We believe these tools have helped to create additional trust in

our services, especially the content we host on our marketplaces platforms.

PayPal Buyer and Seller Protection:

PayPal is an online payment service provider. Its Buyer and Seller Protection programmes offer clear

information to users about when they will be protected.

See, for example, https://www.paypal-marketing.co.uk/safetyadvice/ProtectionForBuyers.htm and

https://www.paypal-marketing.co.uk/safetyadvice/ProtectionForSellers.htm.

It ensures that if a problem cannot be resolved between a buyer and seller, PayPal’s customer

support teams will be able to make a decision on the case, based on the clear policy communicated

to users.

eBay’s Dispute Resolution Tools:

eBay facilitates online dispute settlement processes for transactions on eBay marketplaces.

In those unfortunate cases involving non-delivery of ordered items (“item not received”) or

“significantly not as described” items that are delivered, eBay offers a process via its platforms to

report a problem, enabling buyers and sellers to communicate to resolve the problem. Most

problems are solved in this member-to-member communication phase. Where an issue is not

satisfactorily resolved at this stage, and in order to further facilitate consumer trust without the

need for a user to resort to a legal complaint against the other user, eBay’s own protection

programmes can be used to close the dispute. Information gathered in the process for the filing of a

dispute will enable a customer service representative to ascertain whether the buyer or seller was at

fault and therefore if compensation will be paid by eBay.

QUESTION 75: To your knowledge, are the financial costs, the necessary processing time and the

facility to solve a traditional dispute (personal data theft, non-delivery of ordered services, fraud,

non-payment, misleading advertising, illegal copy etc.) equivalent if the resolution takes place on-

line or off-line? If not, can you explain the reasons for any differences?

It is difficult to give a clear answer to this question, because there are several relevant factors in

calculating the associated and comparative costs between on- and offline dispute resolution. Put

simply, resolution costs are driven by the volume of problems reported, the service provided to

facilitate the resolution of a problem (process costs), as well as the cost of possible compensation

paid to a user (payout costs).

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Online dispute resolution tools give consumers easy access to a tool for reporting a problem.

Reporting offline to a relevant authority or a central service location will usually require more time

and greater effort on the part of the consumer; thus the number of reported problems and the

associated costs are likely to be lower. However, while the offline service provider’s costs relating to

dispute resolution will be lower, the indirect costs as a result of customers losing trust in that

company may prove to be ultimately higher.

QUESTION 77: Do you take the view that the services of on-line disputes settlements (judicial and

non-judicial) where these exist have improved victims' rights in European society? If so, how? If

not, how can these services be improved?

eBay firmly believes that online dispute resolution mechanisms can give consumers an efficient

and straightforward means to safeguard their rights. eBay’s positive experience with its own

systems means we continue to promote - and where possible improve – our tools, which remain

popular with both buyers and sellers on our platforms.

eBay notes a study carried out for the European Commission by the Study Centre for Consumer Law,

Centre for European Economic Law, Katholieke Universiteit Leuven, dated January 2007. The study,

entitled “An analysis and evaluation of alternative means of consumer redress other than redress

through ordinary judicial proceedings”, concludes that online dispute resolution (ODR) can present

significant advantages compared to litigation and ordinary ADR.

The study lists several advantages for consumers:

� First, in ODR, the procedure can be initiated and exercised from any location. The only

condition is that parties have access to the internet. In an international context this is a

major advantage.

� Second, the speed of communication is extremely high, both in relation to discussions and

document exchange. This keeps the procedure short, often even shorter than in normal

ADR. Where hearings can be left aside, small value claims can especially be dealt with fully

online in a quick and effective manner.

� Following on from the first and second advantage, there is a third: procedural costs can be

kept relatively low. This feature is however not absolute, as in online mediation for example,

the mediator can ask a large fee.

In addition, according to a 2001 E-Com Research Project of the University of Geneva, entitled “Online

Dispute Resolution: The State of the Art and the Issues”, as concerns access to justice, it is actually

often so that the only feasible dispute resolution system is online dispute resolution. In this sense,

ODR has been identified as a fundamental aspect of consumer protection, as litigation and the

common forms of ADR do not meet the needs of customers, predominantly because of distances in

cross-border cases and disproportionate costs.

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A main difference between ODR and ADR is the absence of physical contact in ODR, which can be

considered as an advantage or a disadvantage, depending on the case. Certain cases require direct

confrontation, whereas in other conflicts direct contact could be counterproductive or too menacing

to enable a settlement to be reached.

How to improve ODR services:

According to the Leuven University study referred to above, an ODR service needs three

fundamental characteristics to be successful: trust, convenience and expertise. To ensure that

consumers have the desired confidence, it is important that the ODR service offers its clients clear

and satisfactory information. Legislation should make sure that besides the general information in

line with Directive 2000/31/EC, services offer specific information concerning costs, impartiality,

success rates, etc.

There are two main categories of technological criteria which an ODR service should meet: to

enhance both accessibility for the user to the system and trustworthiness in the system’s operation.

Accessibility comprises such criteria as visibility, party control, traceability, and availability.

Important barriers such as language differences between the parties should also be remedied.

To prove its trustworthiness, an ODR service should be able to guarantee authentication, security,

confidentiality, anonymity and privacy. The European Commission's recommendations on principles

applicable in out-of-court settlement of consumer disputes are also relevant in relation to ODR.

eBay EU Liaison Office

Brussels, 5 November 2010

For further information, please contact:

Stefan Krawczyk, Senior Director and Counsel Government Relations Europe, eBay

T.:+ 32.2.788.97.57

E : skrawczyk@ebay.com

Hanne Melin, Legislative Counsel Europe, eBay

T: +32 (0)2 788 97 15

E: hmelin@ebay.com

Maija Haas, Senior Manager Government Relations Europe, PayPal

T: +32 2 788 9741

E : mhaas@ebay.com

Claire Vasile, Manager Government Relations EU, eBay

T: +32 (0)2 788 97 16

E: cvasile@ebay.com