May 06, 2002, 9:27 AM — The lobbying worked. The European Commission has granted an exemption to all online activities from the most contentious element of a controversial law on cross-border disputes in the European Union Friday.
The Internet, marketing and publishing industries have lobbied long and hard against the proposed law, called Rome II, because they argue that it will make cross-border business too risky, and will ultimately fragment the internal E.U. market in communications.
The draft law states that the laws of the country where the injury occurred should apply in a cross-border dispute, rather than the laws of the country where the supplier or publisher is based.
However, it has granted the Internet and TV an exemption from this principle because activities such as e-commerce, online publishing and Internet marketing are governed by an existing E.U. law called the e-commerce directive, which rules that the laws of the country of origin should apply in a dispute involving Internet communications.
Likewise, the TV industry is governed by the TV Without Frontiers directive, which also stresses the country of origin in the case of a cross-border dispute.
"This regulation will be a general framework law and will not affect specific rules in some sectors," said a senior official from the Commission at a press briefing. He declined to give his name.
"We welcome the carve-out for e-commerce and TV from the Rome II draft, but we still have to worry about the defamation and unfair competition clauses," said Phil Murphy, a director of the Advertising Association in London.
"The draft law does a good job in preserving and solidifying the country of origin principle for e-commerce, but it is not good news for offline publishers," said Thomas Vinje, a partner at U.S. law firm Morrison & Foerster specialized in Internet-related laws.
The Commission launched Friday a six-month consultation on the draft regulation, which may include a hearing with interested parties, the Commission official said. "It depends how much interest there is," he said.
Murphy said the marketing industry would lobby hard during this time to preserve the exemption for e-commerce, but also to change focus of Rome II regarding defamation and unfair marketing practices.
The proposed law would allow Sweden to invoke its ban on advertising to children on foreign competitors, which Swedish law deems unfair. Germany could apply its ban on so-called aggressive promotional techniques such as three-for-the-price-of-two promotions and Belgium and France could prevent overseas competitors from putting their wares on sale outside the allocated days for sales.
Rome II has provoked sharp criticism from within the Commission itself because of its focus on the laws of the consumer's country. One official who insisted on anonymity said that the existence of a Rome II law as it is would make it very difficult for the E.U. executive body to take legal action against a member state for protecting its own industries from competitors from neighboring E.U. countries.
"The founding treaty of the E.U. enshrines the free movement of goods and services. How can the Commission take action against a member state that uses unfair marketing rules as a form of protectionism to discourage competition from beyond its borders? If we do the member state will tell us it is simply complying with the Rome II regulation," the official said.
