Examination of Witnesses (Questions 1319
THURSDAY 8 JUNE 2000
M BENOIT BATTISTELLI,
M GILLES BREGANT,
M BERNARD SPITZ,
M HENRI BREUIL,
M GILLES D'ANCHALD,
M PHILIPPE LE
QUEMENT, M EDOUARD
M LAURENT PERDIOLAT
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
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
(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 Parliamenta
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.
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
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
(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
(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
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.
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
(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
(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
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.
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
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?
(M Perdiolat) There is nothing particular about online
services of this kind.
1337. There is no special protection for
(M Perdiolat) In France?
(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
1339. False information.
(M Spitz) False or true, it is promoting prohibited