A leading Internet lawyer warned today that European ecommerce companies could lose competitiveness and even unwittingly break the law, if amendments to EU legislation are approved.
Before September the Commission is set to approve changes to the Brussels and Rome II Conventions governing Internet trading that would make companies in individual European countries subject to the different commercial laws of all states in which they trade, rather than just the country in which they are based.
As a result, Internet merchants operating legally in the UK could fall foul of the law in countries such as Germany, where the use of special offers and promotions is restricted by unfair competition legislation, Mike Pullen at London law firm Dibb, Lupton Alsop, has warned.
. The legislation would affect both companies that are actively targeting foreign markets and those which are only seeking local business, but whose Web sites can be accessed by foreign shoppers.
Many smaller companies would find it impossible to conform to 15 different sets of commercial laws and would therefore be prevented from trading on the Internet, Pullen said.
"There's a chance of being dragged into any one of 15 courts if there's a contractual dispute or a marketing problem," Pullen said. "Small companies can't afford to pay lawyers to check out 15 markets for them."
"It's a huge mistake and will slow down the development of ecommerce," he warned.
Pullen said the changes were contrary to the principles of EU law, which is intended to make it easier for companies to trade in all member states, providing they comply with the law in their home country.
The amendments also contradict the principles of the ecommerce regulatory framework being developed elsewhere in the EU, which centres on the principle of home country control.
The Commission had not consulted with industry about the amendments and approval of the changes appeared to be "a rubber stamp job" Pullen said.
He urged UK companies to petition the government to reject the legislation, which could be passed as soon as September.
"British industry should be lobbying hard to get the UK to withdraw from this," he said.
Sep Riahi, vice president of business development at Lastminute.com, the cut price travel Web site, said the legislation could make it difficult for European ecommerce merchants to compete with their US counterparts, which have no such hurdles to jump.
"If we have to deal with 15 layers of bureaucracy it would be a tremendous drain on our resources," Riahi said. "All it will do is hinder the opportunities for us to grow and leverage off the EU as a whole."
In May the UK Office of Fair Trading criticised the original EU ruling on the country of origin principle governing consumer rights, but the Department of Trade and Industry defended the ruling, saying it would clarify the legislation for consumers.
Source: VNU Newswire
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