Digital technologies and the internet are transforming commercial activities around the globe, and play an increasingly important role in every line of business. While the European Union (EU) has been successful in establishing a physical single market by removing barriers in the "offline" world, fragmentation and obstacles in European digital markets remain. Companies with activities in sectors affected by the Digital Single Market (DSM) Strategy need to bring their operations in line with the new rules and policies. As this process may entail risks as well as opportunities, companies are well-advised to be proactive and seek advice so that their next steps can be appropriately identified and the correct actions taken.
White & Case will keep you informed of the latest developments in this space, as well as equip you with the tools you need to respond appropriately to the changes that ensue.
The DSM Strategy, comprising 16 initiatives, is built upon three pillars: Access, Environment, and Economy & Society.
Making the single market fit for the digital age has been a continuous goal of the EU. In addition to numerous past initiatives, in 2014, the European Commission identified the completion of the DSM as one of its key political priorities. The DSM is the EU's attempt to make the single market freedoms "go digital". The DSM promises to bring invaluable benefits to existing businesses and create opportunities for new start-ups. In an inclusive DSM, companies will be enabled to seamlessly access and exercise online activities in a market of over 500 million people.
On 6 May 2015, the Commission adopted its DSM Strategy, an ambitious set of actions for the completion of the DSM through legislative and policy reform. The DSM Strategy, comprising 16 initiatives, is built upon three pillars (Access, Environment, and Economy & Society):
- Pillar one: Focuses on achieving better access for consumers and businesses to online goods and services by removing existing barriers preventing cross-border online activity.
- Pillar two: Seeks to establish a modern, efficient and affordable technical environment as well as the appropriate legal framework in which digital operations can prosper.
- Pillar three: At the heart of the third pillar, lies the idea of ensuring that digital technology is a driver for growth, not only for businesses and consumers but also for governments.
The DSM initiatives will bring changes to many sectors as they aim to address a variety of issues in relation to e-commerce, copyright, telecoms, audio-visual media, online platforms, big data, protection of personal data, and cybersecurity, as well as standardisation and e-government. The breadth and depth of the DSM Strategy, as well as the timeline envisaged for its completion, are bound to have a considerable impact on companies with activities in the EU, regardless of the country in which they are established.
To date, there has been significant progress in relation to initiatives under all three pillars, with the first proposals—relating to e-commerce and copyright—presented in December 2015. Having been called upon by the European Parliament to deliver promptly on all DSM Strategy initiatives, the Commission is determined to submit all its legislative or policy recommendations by the end of 2016.
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The European Commission outlined specific initiatives to achieve a Digital Single Market by modernizing EU copyright rules, establishing a copyright regime that is more suited across jurisdictions.
On 15 September 2016, after more than a year of information-gathering and analysis, the European Commission published a voluminous report (291 pages) of preliminary findings from its large-scale e-commerce inquiry (the "Report"). The Report offers few clear answers to the latest hotly-debated topics in e-commerce and competition law. However, it does suggest that certain practices will come under the microscope in future, including in particular geo-blocking, selective distribution systems or restrictions on the use of price comparison tools (all of which, in the Commission's view, prevent the emergence of a Digital Single Market) and suggests that now is a good time for companies to review their European distribution agreements in light of its findings. The Commission further flags certain licensing practices (such as splitting rights according to technologies, bundling of on-line rights with rights for other transmission technologies), as creating barriers to entry for new providers of digital content.
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