Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 1319 - 1339)




  1319. I am Lord Brooke of Alverthorpe. I am Chairman of one of the House of Lords Sub-Committees which follows European legislation. We endeavour to scrutinise it and periodically we undertake quite extensive inquiries into particular aspects of policies which are developing. Since the beginning of the year we have been endeavouring to follow the development of the eEurope Action Plan which went to Lisbon in March and we are intending to produce a report during the early part of July on our findings. Our principal interest has been to try to look at the way in which information technology policy and e-commerce policy particularly have developed in Brussels to see whether the structures there are appropriate for the best development of such policies and in particular to have a look at the extent to which the Commission and the Council are able to co-ordinate the policies between the different DGs, and then in our report hopefully to make some comments on whether there are some beneficial changes we might recommend. Our report will go to the British Government who will then have a couple of months to reflect on it and they are then required to give their observations on the report and all the recommendations that we make. We hope then, probably during the early part of the autumn, that there will be a debate in the House of Lords on the substance of our report and on the Government's response to it. We have been taking evidence from a whole variety of people in the UK during the course of our inquiry. This has come in the form of written submissions from industry, from academics and so on. Also we have been taking what we call oral evidence. This is one such exercise this morning for which I would like to express our great gratitude to you for seeing us. Secondly, I am particularly grateful that you have been willing to bring the meeting forward for us which will enable some of our colleagues to go on to other engagements, and two of us, Lord Paul and myself, have to return to the House of Lords this afternoon for compulsory voting.
  (M Battistelli) We are very happy to welcome you here. We hope that by the end of the meeting you will find it has been useful to you and we are trying to do our best for that.

  1320. We have sent to you questions in advance which we trust will have been helpful. We will be taking a record of our discussions this morning. The intention will be that this evidence will then be part of the report. Before we produce it and publish it, it is our normal practice to send it to you to make sure that you are quite happy with the record that we have taken and the exchanges between us. It might possibly save some time if somebody gave an introduction in the first instance so that we do not go over history, unless you have briefed yourselves on the questions.
  (M Spitz) Of course this has been a pragmatic way because we did not know it and no government had a long experience in this field, so we have had to walk on our way. The first step was the decision of the Commissioner, M Francis Lorentz, who was formerly Chairman of BULL, the big company, and who is a specialist on the Internet and especially e-commerce, to take care of this through what is traditionally the administration report and to give his view on the subject and on how the state should deal with the problem. He wrote his first report in 1997. That was an introduction to the subject and it was really the starting point for the French Government on the issue. Then he was confirmed in his job and the task force has been built around him in a continuous process with a new report in 1998. Last year it was decided by the Government, especially by the Minister of Finance who was at this time Dominique Strauss-Kahn, to develop the information of the Government through what we call the task force, which is something of a euphemism in the administration because it is not a traditional structure. It is not bureaucratic. It has no guarantee for the future, no long term visibility, but it does have advantages to give more flexibility and more freedom to consider all the problems with a free view on subjects and no compulsory reasons because of some previous choices by anyone. We built a small team of people who are involved already on the issue but through other administrations like Gilles who is in charge of the subject here in the Ministry of Industry, myself (I am in charge of the subject at the Council of the State), and some permanent people also in the staff, like Gilles [Bre«gant] here, to support us and to build the vision. What are the main tasks of the task force? There are several of them. First of all you have the kind of support and advice to the Government with a special point which is to create a link between the private sector and the public sector. That is something very important to us. To give you an example of this, at the last fall the Ministry of Finance introduced what we call the law information society, which was a text which took into account a lot of various issues like electronic signature, protection of personal data, management of dot-com names and so on. These issues are very different. At the end of the day you have to consider different people, different companies. The Ministry took the first step and the task force was in charge to organise different debates on each single issue between the private sector and the public sector. We made a report at the end of this debate to improve the text, to give some priorities to the Government, to give the view from the private sector and so to improve the process. That is one part. We also have a responsibility in terms of a "technology watch" about the other countries, sometimes in having a relationship with the same kind of task force when they exist in other countries. Basically we also try to have a pedagogic task through participating sometimes in professional meetings, fairs and seminars to give in certain circumstances the viewpoint of the administration but also to help some people in the economy to take into account what is at stake in the new laws from the legal point of view and from an economic point of view.

  1321. That is very helpful. In a sense it provides the background for the first question.
  (M Battistelli) Question one has been largely already presented but maybe Gilles Bre«gant would like to add a few comments.
  (M Bre«gant) Maybe I can elaborate on the way that the French Government approaches all the electronic aspects because in fact what Bernard [Spitz] explained was the setting up of the e-Commerce Task Force. This is part of the broader topic which was issued by the Prime Minister in 1997. It encompasses the whole area of electronic applications for the Government. In this respect we also have a task force which is not represented here, which is called MTIC. It reports to the staff of the Prime Minister and it is in charge of putting all the administration online and promoting the usage of electronic technology within the administration. First, all this is totally transparent. There is a website which explains the progress of all these things and how it is incorporated within the administration area, and it provides some information about the progress of these initiatives. Concerning the strategic programme, there is a blueprint which was set up in 1997. We call it PAGSI (Programme for Action in Government for Information Society). The e-Commerce Mission is part of PAGSI and the online non-governmental services are also part of this PAGSI. We recently had a speech by the Minister in charge of Public Administration which heralded seven measures to accelerate the transfer of French administration towards the digital era. He announced on 26 May that the administrative portal, which is called AdmiFrance, will be re-vamped in the autumn and we will have a new version which will be more open to the local constituencies. Today it is a bit more centralistic. France also has more interests now public constituencies. Then we have a set of measures which were to give work to a deputy to study ways to facilitate information systems for simpler access for citizens. We are waiting now for his report. He is a Member of Parliament—a true Member of Parliament. We also have created a third measure inside every region.

  1322. May I interject? When will he report? What is his timetable?
  (M Bre«gant) I do not have this here but usually it is quite short, within two or three months. Within each of the 26 French regions we have somebody who is in charge of promoting the technologies. Today we do not have a task force within every region so we regionalise the task force and in every region there will be somebody in charge of this. The next measure is that we now have an intranet that links all the ministries and it is operational today. This is called AdER. We also want to put forward a portal for innovation to make sure that all the ideas from civil servants are taken into account to promote the information society. During June there will be a working group about information technologies to associate administrations, trade unions and citizens. This is quite new. In fact, we had all sorts of task forces but this is a more formal working group to get a sort of micro-Parliament on information technologies to progress these points. Lastly, we have a Minister who will act to accelerate the convergence of the information generation blueprints of each local area because they are a bit divergent and now they are in a position to accelerate things. These are the seven last measures we have here and we expect to have most of the Government's services online very soon. In fact, all ministries already are online but the main effort now is to put the local areas online.

Lord Paul

  1323. Should industry lead and government follow?
  (M Battistelli) The second question is a very general and philosophical one.


  1324. He is an industrialist.
  (M Battistelli) What I may say is that we have a tradition in France of public authorities trying to show the way when we consider that the market by itself is not in a position to do it. One of the best examples we can give in this field of telecommunications is Le Minitel which was developed as a public decision and through a public institution which at that time was France Telecom. We recreated the market in that example. I think that now, since we are a bit more complicated or more complex and we still consider that very much an advance, the public authorities have a part to play either to set the rules or to launch something, but it must very quickly be taken up by market and by private companies. If it is not the case it means that the orientation was not pertinent. This is a very general comment I can make on that complicated topic.

Lord Paul

  1325. I think the purpose of this question was that the United States is much more business led and they have been very successful in it. Of course the French people are working always much more in close association with industry. How far do you see that eventually it will become business led or do you think that the Government will have to lead it for quite some time? You seem to have done a tremendous amount of work. Incidentally, thank you very much for speaking to us in English because it is making life easier for us.
  (M Battistelli) It is easier for us too because if we are saying things which are not correct it is not because we do not know what we are talking about but only our knowledge of your language!
  (M Spitz) Of course it is a very large question and it will not be solved in five minutes. I think only that perhaps as well the French are not supposed to speak any other languages than French; we have got that reputation but it is an old cliche«. I think that the idea that there is a barrier, a frontier, between industry on one side and the Government which tries to follow on the other side is also like a cliche«. I could return to the editorial of Time magazine but I just would say that there is a very pragmatic view. We have a tradition and a philosophy of taking things in charge, especially when there is also the problem of self-regulation. We are in favour of self-regulation but up to an extent we know there is a need for an arbitrageur who is legitimate to make the arbitrage. Even the Americans have discovered that when they disagree between themselves within the industry they need something, someone, to make that arbitrage. We have this tradition of doing it through the public service. When you see the evolution of a company like France Telecom, which was some years ago very state-minded and which is now turning to the market, I think that things are on the move and we probably try to find the best balance between the private sector and the public sector. The task force is a good example of this pragmatic view. It is not an administration, it is not a bureaucracy. It probably will not exist within five years. It is a transitional stage but it helps to create a link between the private and public sectors.
  (M Battistelli) I would say that I do not know if we are business led but we are more and more business oriented.


  1326. Some of us went across to Washington and the UK was well behind the development of e-commerce in the States. When we started the inquiry we went to Washington to try to use that in a sense as a benchmark from which to start having a look at what is happening in the UK. Without any doubt we were very impressed indeed with the nature of the relationship that is operating there between industry and federal officials. It is very difficult to define its nature but it was quite clear that the government's line was to let the private sector do it in the first instance, to try to solve the problems, and if the problems could not be solved there on a satisfactory basis for the citizen, it was presumably at the end of the line that the Government would then start to come in. This is why they have moved so quickly because there is this freedom there. I think they are now starting to encounter the problems in a number of areas, for example in privacy. There was complete freedom and there is now a backlash taking place among some citizens about the extent to which the private sector has access to information and can use it to their detriment and they are now having to respond to it. There is a convergence taking place in a sense between the European view and the American frontier approach. I think that is the best way of describing it.
  (M Battistelli) But even in the States, maybe in other fields, there is very strong commitment of the Government authorities to finance research and development programmes and so the public part is much more important than is usually presented.

  Chairman: The origins all came from the public sector.

Lord Paul

  1327. In their Small Business Administration they are giving money to small businesses.
  (M Bre«gant) We have a gap between the big companies and the small businesses. It is much smoother in the States because there you have the firms which are able to take decisions. In France I think concerning e-commerce the big groups see where they want to go and they do not need a government context in which to do it. They are more or less multinational and they manage their own firms. The government here is key for what I would call the evangelisation of the SMEs. They tend to rely on government labels of guarantee before they jump into the electronic bath. This is probably why we tend to drag the SMEs but the big groups have their own strategy now so they do it best.

Viscount Brookeborough

  1328. What is your reaction to Europe's progress? Do you entirely agree with the various different aspects of the E-Commerce Directive, and what do you feel about Brussels regulation and how it will affect e-commerce?
  (M Battistelli) I do not know if we entirely agree.
  (M Bre«gant) We generally agree with the directive. We think it is very valuable and we will try to transpose it very soon. In fact, we were hoping to have it approved by the Parliament recently because we would even have transposed it before it was agreed. Most of the points raised within this consultation are concerning this directive and we were ready to put the law to the Parliament before it was transposed, which is of course a very dangerous situation. We have done that in other situations and it creates trouble. We need this and we are happy with the directive. There was a question about the internal market, the home country principle. Of course I read that we wish to have better protection for the consumer. We would have liked to get the protection through the law for the consumer and we did not get that exactly. We just have an item in the law saying we could do worse than having this protection. Maybe I should turn to French because these are more legal terms. This is the directive and it has the following clauses. France agrees on the following: that within the European Union the law that should be applicable to the activities of either a service supplier or a vendor should be the law that is applicable in the country where the vendor or the supplier of services is established, and that the law that is applicable to contracts should be covered by private international law, the main principle being that the freedom for the different parties concerned should apply in allowing them to apply the law of the competent jurisdiction, therefore local law. The last paragraph is that France would have liked to add that when a contract is drawn up by a consumer the law that is applicable to this contract should not in any way prevent the consumer from being protected by the prevailing laws of the country of residence of the consumer. France did not obtain the preamble or a consideration on this particular point and says that the directive would therefore not have the opposite as a consequence; would not therefore go along the other lines. Relatively speaking we quite support the directive and we just have this point concerning the IPR. I think that the best solution is to give you the position because it is very complex. Here we may have some divergence.


  1329. The debate has been taking place this week.
  (M Spitz) We have a different philosophy of the law between the United States and us. They consider that this is a free market and this is the consumer law which is that you make a contract and you respect the right of the contract, whatever the contract is and whatever the mistakes you make. We consider that we have to support the consumer who is not able to take into account all the consequences of the contract. It is more or less the same asymmetrics that we find in the IPR which is that we have this tradition of droits d'auteur as compared with the copyright system. Again it is a difference of view from a broader position.
  (M Bre«gant) Anyway, you probably know the situation. The French position on the IPR directive is to reinforce the exclusive rights of the authors or exclusive copyrights and to limit exceptions to the list of copyrights, and to set up specific clauses, technical clauses, which would therefore cover the application of these exceptions. In a sense your position is slightly different and there is a discussion also about all these technical points. There is the debate about time shifting I understand. We cannot say much more about this. It is an open issue of course, but maybe it is a cultural problem.


  1330. It is taxation as well. That is currently being examined. Was there an announcement yesterday on taxation?
  (M Battistelli) I would like to ask you a question which is not exactly on the same topic but is what we call in France the patentability of software. Do you have a position on that in the UK or is it a topic which is controversial, because we think that Europe has to progress on that and in order to take the positions the United States are developing very quickly and with their own rights they are more and more closing the markets so we will be happy (maybe not now) to have more information on that.

  1331. We will write to you on that. Again, we are aware of the problem that the United States are putting copyright wherever they can on almost everything.
  (M Battistelli) Especially on business resource which is going to be closed even further.

Viscount Brookeborough

  1332. The Brussels Convention and regulation will obviously be a very difficult way for consumers to correct any wrongs. Are you happy that alternative dispute resolutions (ADR) will maybe have a big part to play?
  (M Bre«gant) We would like to promote the ADR aspects. That is a point where we think we can make much progress and support the ADR reference. We need to find an area and location for discussion to make this progress because there is a difference in the approaches to law. Here in the Ministry we favour the ADR approach.


  1333. These are quite big cultural changes for you as well, are they not?
  (M Bre«gant) Yes, but also times are changing.
  (M Battistelli) France is changing.

  1334. It is an experiment for us too.
  (M Bre«gant) We acknowledge that there is no way to get into trials standing with something on the Internet. We have to find something which is more flexible. It is a point where we would like to find a solution and probably the transatlantic solution because most of the problems today are transatlantic with all these web sites on the other side of the Atlantic. This is a point where we do not plan to boycott it.

Lord Faulkner of Worcester

  1335. I want to follow up the last question about protecting consumers and the issue of financial services advertising on the Internet. We have a particular problem in Britain where there are people who are promoting shares by using Internet chat rooms and they are giving what is in effect fraudulent company information which encourages people to buy and then these people unload their own shares. It is an illegal practice but it is something the British Government is concerned about and our new financial regulator is looking at that too. I wonder if I can ask you if that is a problem you have encountered?
  (M Perdiolat) Not especially. We are addressing this problem. Is it a question of an applicable role for online services?

  1336. Yes.
  (M Perdiolat) There is nothing particular about online services of this kind.

  1337. There is no special protection for—
  (M Perdiolat) In France?

  1338. Yes.
  (M Perdiolat) No. It is the banking law in France. There is protection for credit rates but not for the Internet. There is no such protection. It is addressed by the consumers' court for rates, for advertising, for the conformity of advertising with the proposed service.
  (M Spitz) I would just like to understand what exactly is happening in the UK. Are you targeting unofficial information which is provided by people working in companies and providing information?

  1339. False information.
  (M Spitz) False or true, it is promoting prohibited information.

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