Examination of Witness (Questions 981
WEDNESDAY 7 JUNE 2000
981. Mr Power, it is very kind of you to give
us your time.
(Mr Power) I am very glad to have the opportunity.
One of the things that has always impressed me is the great interest
that the House of Lords has taken in European affairs and in various
other jobs I have been in in the Commission it has always been
a pleasurenot just to say nice thingsbecause your
reports are always very well balanced. The non-political tone,
if I can say, that comes from the reports make them all the more
982. Thank you very much indeed. We are hoping
that we can maintain the tradition. As you have probably gathered,
we have been looking at e-commerce development generally but in
particular we are looking at how policy is developed here, how
it is co-ordinated, or not as the case may be, and we will see
if you can make some observations on that, but naturally, unavoidably,
we have had to move into wider issues and consumer topics have
cropped up and a whole range of other issues and some have fallen
in your area of activities. I hope we have managed to get the
questions to you.
A. Yes, indeed, I have seen them.
983. We are beginning to have a look at some
of the ways in which consumers can be protected, and I am thinking
particularly of the Web Trader scheme and the support being given
for that by your good selves. There are schemes in seven European
countries, as we understand it, six beyond the United Kingdom.
The primary purpose of these schemes is still to address the domestic
issues. Is this what your Alternative Dispute Resolution scheme
is primarily about?
A. Perhaps if I just situate things a little
bit more globally in terms of the approach that David Byrne and
we have been trying to put in place for the e-commerce area. This
all came out of the Brussels Convention first of all and if the
Brussels Convention is turned into European law how then would
this apply to e-commerce trade? A lot of the industry were saying
"oh, come on, we do not want to use courts in the customer's
country, this will only tie us up, we want the internal market
approach", namely home country control. The approach that
David Byrne has taken is "look, I cannot accept that consumers
cannot have access to their courts. That has to be the bottom
line. But, it should never be necessary for a consumer to have
to go to court, it is too expensive, it is too time consuming.
We must have a series of other measures in place so that the court
would only be the rarity". From that point of view what we
have tried to have is a series of other safety nets in place that
would solve most of the problems that could arise from problems
with electronic commerce. Here we have been focusing on what we
call preventative measures and then dispute resolution measures.
When I talk about preventative measures, these are issues such
as the Web Trust, having seals of approval or some kind of kite
mark that would appear on websites and a consumer would know "these
guys subscribe to certain codes of conduct, I can get my money
back or they will replace the goods", all of this type of
thing. The other aspect linked into the preventative measures
that we have been trying to do is we have been trying to encourage
the bank and credit card companies to bring in what they call
in the US the charge back, which you make reference to as well,
because under United Kingdom law they have to intervene for sales
of over £100 where there is failure to deliver. What we would
like to do is to see the credit card companies bring in something
to say "fine, we will", as they do very much in the
US, "take on the responsibility of sorting out the problem
if the consumer does not get the goods or is dissatisfied with
the goods that are supplied to them in using a credit card".
With these measures in place you would cover a huge area of the
problems that could arise. The next stage we have gone into is
the Alternative Dispute Resolution area whereby we have tried
to see what we can do to facilitate a range of measures that could
be put in place. We are not talking anything in terms of who is
providing good dispute resolution, the main thing out there is
that things are seen to be operating, they operate according to
a certain, if I can say, bottom line and then to see how this
covers the range of areas that a consumer is likely to encounter.
In some of the areas, for example like in financial services,
you find that already there is a very well defined set of dispute
resolution mechanisms in place; in other areas they are weaker.
As you know yourself, there are a number of actors out there who
are saying "look, we can set up a service, whether it is
a cyber tribunal or whether it is the International Court of Arbitration",
there is a whole range of parties out there saying "look,
we see a market for this and we are going to market some things
where as a company you would be able to subscribe to our service
and we would be able to provide online dispute resolution."
At the end of the day this would not prevent the consumer going
to his own national court but hopefully by having these types
of measures in place, the problem will be long solved before it
ever got there. David Byrne outlined all of this the last time
the Consumer Council met, which was in early April, and we have
now convened meetings and we have got various stakeholders involved.
There is a group of people now working on this whole area of trying
to put together an inventory and perhaps a set of guidelines that
would apply to the area of kite marks, Web Trustmarks and Alternative
Dispute Resolution mechanisms, the idea being that by late autumn,
probably around October, we will have some recommendations from
this group as to whether or not specific Community measures are
needed in this area. When I talk about specific Community measures,
what we have more in mind is a recommendation rather than something
in the form of hard legislation. The area is moving so fast and
to have hard legislation I think we would be on to some of the
next generation of problems before we would have something like
that. What we have been trying to do basically is a pragmatic
approach, to see what is out in the market, how the market is
developing and how we can act as a catalyst in bringing this together
in a way where we can say "look, by and large things are
well looked after, things are developing in such a way that the
consumer can have a degree of confidence in doing business over
984. So the target is the autumn?
A. I would say the target is October at the
latest. There is a whole set of meetings that have been set up
and we are working to try to bring all of this together in the
autumn. That is within the EU. There is the other question which
you have raised, which we will come to, in the wider international
context because obviously we cannot just sort out something in
the EU, we have to do something with the US and take this forward.
985. Could I just ask you about the stakeholders.
You said the stakeholders are meeting. We have had one or two
complaints from some consumer interests that, in fact, they do
not get as good a hearing as they feel they ought to have in Brussels.
Are they part of the stakeholders?
A. Yes, they are very much so. In our particular
area we are responsible for consumers as well so, naturally, they
would be inside our door. How they might feel being addressed
in some of the other areas, I am not in as good a position to
appreciate. I am not trying to sell you the Commission or anything
like this but one of the things that has struck me, and I have
worked here in the Commission for the last 17 years, is that this
is a Commission that is working extremely well together. The individuals
in this Commission have a good rapport between them. In terms
of internal co-ordination between the individual commissioners,
that is particularly good. Erkki Liikanen, who is the main person
responsible for e-commerce and relations between Liikanen and
Byrne are good. Byrne is going out there to try and bring this
part of the e-commerce jigsaw into place, that is fine, that works
well. Liikanen knows what is going on. Liikanen's services are
involved in the work we are doing, we are equally involved in
what they are doing. Now, whether individual stakeholders feel
"Well, we are not getting a look in" at some other part
of what the Commission is doing, I am not in a very good position
to give you any advice on.
Chairman: I am going to move on to wider links
with the US but I think we will leave that for a moment and stay
986. Just one second on self-regulation on legislation.
Is it your opinion that self-regulation will work? The banks after
all, if they give a business the right to use and trade on their
cards, they must have vetted it to some extent. Therefore, if
you bring legislation in it will take a year or more to do so.
Is it your opinion that ultimately it will be self-regulation?
A. Ideally for us self-regulation would be the
right way forward if it works but you have a big cultural difference.
Self-regulation is well recognised in the United Kingdom, it is
less well recognised in other parts of Europe. There we have to
be a little bit more cautious in terms of whether it will solve
everything or not. This is where I come back to the idea that
if there are good Web Trustmarks, people will recognise and say
"Here is a company, that is a kite mark", or whatever
it is, and recognise it, they will have confidence. That is one
side of it. That is a self-regulation.
987. That is a PR exercise, is it not? The people
will want to find confidence in it, they will be looking for it
providing that they are aware of how to find it.
A. I think there are two aspects to this. One
is that if you look at experience in the United Kingdom, I think
75 per cent or 80 per cent of companies that are using the Web
Trustmarks are small or medium sized companies, which is what
you would expect because they are the companies who are not known.
They need to have some security, you are doing this, you see something,
"Oh yes, that is good, I am reassured". The bigger companies
are going to trade on their own name, they are not going to need
the back up of that. If you are looking for what e-commerce is
going to bring for the small and medium sized enterprises, it
will open up cheaperhopefullyaccess to markets and
things like that. That is what it is aiming to do. Equally that
is what the consumer needs. The second aspect is if we get the
credit card companies to undertake chargeback. If they can bring
in something, you have covered a huge degree of concerns of consumers.
988. I noticed on the seven countries we have
got, we have not got Ireland.
989. I am just wondering about the others. Is
there a reluctance to come on board or is it just a new concept
you are not able to embrace yet?
A. No. I think one of the things is you do not
have very well developed consumer groups in a lot of Member States.
The Irish one is not very well resourced. On the other hand, in
Ireland there is a huge development of online dispute resolution
and they are very, very far advanced in setting up cyber tribunals
and things like that. On the other hand, they are finding certain
solutions themselves to another part of the problem. In areas
like Spain, Portugal, Italy and even France, the consumer associations
are very divergent. In France they are politicised for various
historical reasons, so you do not have the same kind of centralised
strong consumer associations you find in the United Kingdom, you
find in the Netherlands and in Belgium. The Belgians, with the
United Kingdom, have been doing a lot of work with the Portuguese
and with others in terms of helping to bring them along, forming
alliances, which I think is extremely useful in terms of the sharing
of expertise that is needed.
Chairman: That is helpful. Thank you.
990. Data protection is obviously an important
issue and linked with that are discussions with the US Government.
Can you tell us how those discussions are progressing and whether
you feel they are going to expose Europeans to additional risk
A. I am not the expert on data protection. This
is in Fritz Bolkestein's area. My feeling is, one, there will
be agreement on this. I think that is going to be signed. For
various reasons people want to have that. The safe harbour approach
will be there. Our own consumer associations are very sceptical
about the safe harbour approach basically because they feel it
is not going to be enforced, there will be all kinds of problems.
At the same time you have to give the benefit of the doubt at
this stage. The Americans have signed up, they are going to sign
up in terms of how they will enforce it. It is one of the areas
also where there has been spill over from the EU to the US. In
the area of data privacy, data protection, there were not large
concerns in the US. There are now starting to be greater concerns
in the US. The FTC is having to address the issues involved in
this and I think this whole discussion has woken them to the need
that they are going to have to be more vigilant in terms of the
surveillance of this operation. For the moment the jury is out
but I am sure the agreement is going to come into effect.
991. Following on from that to smart cards.
There is tremendous resistance in the United Kingdom against anything
approaching an ID card and in Ireland as well.
Viscount Brookeborough: What do you feel about
that? Do you think that we can develop along those lines?
992. How many Member States have got ID cards?
A. I think nearly every other Member State has
993. You do not have them in the Republic?
A. We do not have them in the Republic. The
Republic and the United Kingdom do not have them. After living
here for long periods of time and I am used to now carrying ID
cards, they are very practical things to have.
997. And on the smart card?
A. Going on to the smart card, it is going to
be a difficult debate but, for example, let us take the health
care area, here there is a big move on, the Italians are developing
systems, others are as well, in France, developing systems of
keeping basic information on smart cards. Now, as people start
to move around this starts to have a certain advantage. Also there
are concerns about confidentiality and things like this, for example
if you are going on holiday, or if you are going to spend time
in other Member States, carrying basic information with you that
will give you quick access to services, where you go along, get
your card and if you have to present yourself for medical care
or something in another area you have certain entitlements that
are readily available, maybe a very short medical, things that
the doctor can download and have a look at. At the same time you
have to balance out what are the individual's concerns in carrying
such information. Personally I think it is a false concern, I
think it will come in time because people will see the usefulness
Chairman: We were all advised to fill in form
E111 before we came but I suspect that none of us have done it.
You did, did you?
Viscount Brookeborough: Of course I did, you
told me to.
998. That could be European wide, could it not,
on a card?
A. Of course, yes. Then you are into various
technologies because you are after certain compatibilities and
things. Look at what the banks have done with the automatic tellers,
the ATMs. It is now very handy to be able to go in no matter where
you are, put in your little card and download money. We are not
talking of huge leaps in brain surgery here in this sense in trying
to develop something.
999. You did talk about the fact that you are
looking at this question of consumer protection over £100,
like the UK Act. Have you got any idea of the total costs of this
if that is there, and will it be online?
A. At this stage there is certainly an interest
on credit card companies' behalf. It is clear that they got pushed
into it in the States from a series of measures that happened
in the 1970s where there were certain court decisions on things
like this and they were all involved in such a way that made them
go down this track. It costs them money to do it in the States
and they were not initially enthusiastic about having to go down
this line in Europe as well. I think they see a certain commercial
interest in doing it and I hope that they will come around to
offer something in that light. How they do it themselves, it would
be up to them whether they would offer an online dispute resolution.
I assume if it is cheaper they will do it, they will offer dispute
resolution online rather than handling paper and things like that.
I saw a figureit was quite high, I am just trying to rememberthere
was quite a high cost. The average cost was something like $50
or $60 for handling each complaint in the US. In that sense there
is a certain cut-off for them in terms of what they would pursue.
As of yet they have not come up with any firm undertaking that
they are prepared to do it on a wider basis.
1 QQ 994-996 contain answers given in confidence and
have been deleted. Back