EC sets out ecommerce terms

The EC released a draft directive on electronic commerce yesterday which aims to set up a single market for online services.

The legal framework - if approved by the European Parliament - will be based on the guiding principle that online transactions should be regulated by the country where they are initiated.

Europe currently has a wide variety of national regulations on information, many of which will be harmonised if the proposal becomes law.

Elizabetta Olivi, spokeswoman for internal markets commissioner, Mario Monti, told Silicon.com: "There are a number of uncertain areas at present, concerning the location of an online establishment and who is responsible for online content. We want to clarify all this to enable the free movement of online services across Europe."

The draft proposes to define the location of online services by their office space - rather than their server or Web site. So any Web site, including those that are free to consumers, must obey the regulations of its host country.

Internet Service Providers (ISPs) and other intermediaries will not be liable for online content if they act as "a mere conduit". There are also potential exemptions for content storers.

The draft directive has come under criticism from the US media, on the grounds that the regulations invite protectionism. But EC commissioner, Mario Monti, stressed that the directive is about harmonisation rather than setting up new laws. He said: "This proposal should ensure that the EU reaps the full benefits of electronic commerce by boosting consumer confidence and giving operators legal certainty, without excessive red tape."

The directive gives national governments the power to censor Web sites based in other countries - provided that the EC and the host country are notified in advance. In addition, marketing agencies must identify themselves every time they send an email to consumers, and any online agency should provide basic details of their identity and activities.

The draft directive will now be forwarded to the European Parliament and Council of Ministers. If approved, member states will be given a few years to incorporate it into their national laws.