Select Committee on European Union Minutes of Evidence


Examination of Witnesses (Questions 800 - 807)

WEDNESDAY 10 MAY 2000

MR COLIN GREEN, MR BEN ANDRADI AND MR IAN MORFETT

  800. But you also want the Government to make sure that there is no anti-competitive behaviour. You also want legislation which does not impose undue policing burdens on service providers. Do you not think there is some inconsistency in this? How do you see your way through? How do you think that government/industry agreements on self- and co-regulation can be made to stick without rubbing up against each other?
  (Mr Green) Perhaps I can address the philosophical question you are asking, and my colleague Ian Morfett can answer the specifics as to what it is we think needs to be done. What we are saying is that ex-ante regulation which prevents things happening because the regulator is worried about what the effects of them might be, will slow down the penetration and the pace of change because this is a phenomenally fast moving industry. Therefore, they should rely on the competition legislation, and this country now has really excellent competition law for the first time, to clamp down very quickly on anti-competitive practices, that the regulators are the last people who should try and guess which is the appropriate technology and try and control and regulate how it should happen. That is the philosophical difference between us and some other people relating to the regulations.
  (Mr Morfett) I agree that we might have a feeling of "cake and eat it" about it. We do believe that there is a framework which says you need a legal framework in which to operate and both the UK Government and Brussels have developed one and we are generally very supportive of it. We think it is the right sort of thing. As Colin has said, we believe that the Competition Act is not sector specific. It does not apply to a great deal of what we are talking about in e-commerce and therefore quite a lot of the heavy sector-specific regulation is unnecessary and will indeed inhibit it and that moves regulation somewhat to ex-post rather than ex-ante. We are also rapidly seeing the self-interest of companies that want to operate in this space driving them to come up with self-regulation measures so that that should take the lead and the fallback would be legislation or regulation. That would be the balance that we would look for. I will take the opportunity just to refer to one specific part of the European proposals and that comes back to the point about heavy burden monitoring and so on. A copyright directive is currently being discussed in Brussels. It could either be a tremendous success in providing companies who want to come on to e-commerce with the assurance of the clarity of the framework that they need, or it could be a significant burden or brake. The difference is that the liability for inappropriate illegal copyright should not fall with the intermediary but with the company that is transmitting it other than when they know that there is a copyright breach, in other words that they should not monitor in advance. We would see existing self-regulation of the Internet as a good example, in the sense that if a company were informed in appropriate circumstances of a copyright breach they would immediately take down the material. We see that with the Internet Watch proposals which is about child pornography on the Net. We would see a similar approach with copyright but it would require both self-interest and discipline amongst the companies that want to expand, and an appropriate copyright directive as a fallback framework.

Lord Woolmer of Leeds

  801. That leads us into the host country kind of issue, does it not? In your document at various points you put a plea in for a country of origin principle, moving it towards saying that consumers should be able to make choices about the legislative environment, although you never quite get to say that it might even be the home environment or the consumer. How do you see a balance being achieved between these two stances?
  (Mr Green) It is a difficult issue. There is not an easy answer. We favour country of origin because we think that is the only way currently for small businesses to come on to the e-commerce bandwaggon. Any small business, a five-man business or even a one-man business, runs the risk of dealing with a consumer in another country and having to deal with proceedings in that country may well be deterred from doing that. As far as the consumer is concerned we think that some of the industry concepts for giving assurances to consumers will help. The United Kingdom Government has suggested that there should be some kind of intergovernment discussions about facilitating claims across borders and we would support that. At the end of the day the consumer does have a choice. If businesses are required to state whether they are relying on their local law and jurisdiction or not, the consumer can then choose whether to deal with them. That will drive consumers either to brands that they know and trust or to businesses that are part of some kind of security system that gives them assurance, or to using credit cards if the credit cards accept parallel liability. There are a whole variety of ways in which the consumer can get protection, but if you move to country of residence or home country for e-commerce, basically I think you will deter a lot of SMEs. This is not a problem for BT. We can handle that because we have businesses throughout Europe. This is an issue which we think is critical for facilitating e-commerce amongst the small to medium enterprises.

  802. If you are a consumer you might be able to understand the argument, but if you are a consumer then you are almost bound to prefer to operate in the environment which is consistent with the culture and regulations of your own society, are you not?
  (Mr Green) If someone comes over from France and goes to Dover and goes into a shop and buys something, do they worry about the fact that if something goes wrong then they are going to have to raise a claim in the United Kingdom? Do they take that into account when they are buying? I do not know. It is not a lot of difference so long as the consumer knows.

  803. The Internet is global and if you are sitting in somewhere in the South of France and you are dealing with somebody in the United States or in China, it is not quite the same as someone coming over. The analogy you draw is that I should say to you, is not a terribly fair one in the complexity of cultural variations, that I sympathise with the problem but I do not think popping across the Channel is quite the challenge that people would face on the Net, is it?
  (Mr Green) So long as there is some requirement for the consumer to be told when he goes on to the site that it is a Chinese jurisdiction, he can make a choice. Most consumers in those circumstances in my view will go for the safe option or they know they are taking a risk.

Baroness O'Cathain

  804. It is caveat emptor, is it not?
  (Mr Green) Yes, but making sure they have the information to make an informed decision.

Viscount Brookeborough

  805. Is the issue of libel on the Net an issue for you or is it just an issue for the ISPs?
  (Mr Green) First of all we do have ISPs, so from that point of view it is an issue. It goes back to what Ian was saying, that if someone tells you that the thing is libellous and you know it is libellous and you do not take any action, I think it is reasonable for there to be some exposure, so long as, as in the United States, there is protection if you make a mistake. If you do not know that the thing is libellous and you have no means of knowing that it is, then, just as the Post Office is not liable for carrying an envelope which has something in which is libellous, we do not think that the transmission agency should be liable.

  806. When you talk about security and integrity of credit cards, yesterday I was listening to You and Yours on my way to the airport and I seemed to pick up from that that the integrity of credit cards was such that they were more vulnerable on hand-held telephones than they would be on PCs.
  (Mr Andradi) I do not know.

  807. I wondered whether it was more vulnerable.
  (Mr Green) Unless it is to do with the potential for interception it was greater on analogue than it is on digital to hack into it.

  Chairman: We did have some views expressed in America that that was the case. Gentlemen, we have still got more questions we would like to put to you but there is a limit to how long we can run. Again I would like to express our gratitude to you for coming along. You have also promised to let us have some further papers which we look forward to. Thank you very much indeed.





 
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