Select Committee on European Union Written Evidence


Memorandum by Tesco Stores Ltd

1.  INTRODUCTION

1.1  Tesco has the biggest commitment to the Internet in the retail sector. We are using e-commerce to revolutionise our business-to-business dealings with suppliers, to improve efficiency and encourage innovation in the supply chain. We are also leading the way in offering home shopping to our customers, and have the largest Internet grocery business in the world. We use the new technology to meet real consumer needs—choice, convenience, value and price competitiveness.

  1.2  We already offer financial services online, and have expanded non-food products, such as books, gifts, homewares. Our goal is to be the number one electronic retailer in the United Kingdom. Of the 15 million online users in the UK in 1999, 20 per cent were already using the Internet for shopping. Tesco has just announced a further rollout of our home shopping service next year, to cover 90 per cent of the UK population and this is creating 7,000 new jobs.

  1.3  It is important to us that there is a joined up approach to regulation from national and European government departments. We would like to see a "light touch" to regulation that allows the industry to innovate and develop. There should be widespread consultation with industry on regulatory proposals. Consultation on a global basis will be required to provide legal certainty and protection for business and consumers. Below we have addressed the questions put by the Committee on which we have significant views.

2.  WHAT NEEDS TO BE DONE TO CREATE CONFIDENCE AND TO STIMULATE E-COMMERCE?

  2.1  It is essential that industry has confidence in the expertise of the institutions involved in the generation of policies and legislation governing e-commerce. Investment in e-commerce business will only be maximised in a flexible regulatory environment. Industry needs to be confident that investment will not be devalued by the imposition of unforeseen and onerous regulation.

  2.2  The nature of e-commerce demands that cross-border transactions are encouraged. This leaves no room for protectionism at national level. It is crucial to the development of e-commerce that the European institutions oppose national measures which serve to constrain the internal market.

  2.3  It is crucial that European institutions are "joined up" in their approach to developing e-commerce policy. To date responsibility for legislative development has devolved to a number of different Directorates within the commission. This risks inconsistency and confusion. Consideration should be given to introducing a single point of contact within the European Commission for e-commerce issues. This could serve as a co-ordinating function and would enhance confidence that matters under review are being treated in a consistent manner. This would also facilitate a coherent consultation process.

  2.4  It is appreciated that the pace of e-commerce development presents a challenge to institutions that are used to giving substantial periods of consideration to matters under review. Industry needs to be confident that investment in technology is supported by European institutions which are capable of keeping abreast of developments and can react in a flexible market-orientated manner.

3.  WILL CODES OF CONDUCT AND CO-REGULATION PROVIDE SUFFICIENT PROTECTION? IS THERE A CASE FOR INTERVENTION BY NATIONAL GOVERNMENTS AND THE EU?

  3.1  A strict legislative regime will stifle innovation and would not be in the best overall interests of business or consumers. Because of the nature of this new business we believe that a co-regulation approach is the only way forward. Any legislation should only take the forms of a framework that outlines the fundamental principles with which business should comply. The draft European directive on certain aspects of e-commerce encourages the development of codes of practice. We welcome this. The intention is that such codes would incorporate the core principles of the draft directive. The adoption of these codes by Member States will ensure a consistent approach throughout Europe.

  3.2  It is important that e-commerce is understood in a global context. The European market must not be restricted by onerous legislation that can only make it less competitive. The risk-benefit ratio for consumer protection has to be closely examined. It is essential that consumers must be offered a high standard of protection—and this is the natural response of Tesco to any such issues—but the measures must not be such as to discourage initial innovation and new competition, which in itself will bring great benefits to customers.

  3.3  The EU should facilitate a mechanism for cross-border dispute resolution. A system that has the backing of the European institutions would engender confidence in consumers. Intervention by national governments should be seen as a last resort mechanism. They should focus their attention on building consumer confidence in e-commerce and supporting business in the international arena. The national consumer associations are leading the way in monitoring the practices followed by e-traders. They are heavily involved in the generation of codes of conduct.

4.  DO THE INSTITUTIONS OF NATIONAL GOVERNMENTS, ON THE ONE HAND, AND THE EUROPEAN COMMISSION, THE COUNCIL OF MINISTERS AND THE EUROPEAN PARLIAMENT, ON THE OTHER, FUNCTION WITH SUFFICIENT FLEXIBILITY AND COHERENCE TO PROMOTE THE EU'S OBJECTIVES IN THE FIELD OF E-COMMERCE?

  4.1  We believe that flexibility and coherence could be improved both at a national and European level. It is understood that during a recent audit the European Commission identified 97 different legislative instruments concerning e-commerce. The work on these instruments is being undertaken by a number of departments. It is our experience that where there are a number of institutions involved in the drafting or review of legislation this can lead to inconsistency.

  4.2  A similar situation exists at a national level. A recent example concerns a proposal to amend an existing piece of European legislation. This legislation had major implications for business, yet business was not consulted prior to the submission of the UK response. We understand that the government department that received the document for comment did not alert the DTI that it was involved in the consultation. As a result, UK industry found itself having to undertake expensive and time consuming negotiations in Europe.

  4.3  Situations, as above, would not have arisen if the UK government did follow the joined-up approach that it advocates. There appears to be an absence of co-ordination which may be detrimental to UK based e-traders. If the UK is to become the leading centre for e-commerce it will need to make advances in the management of policy and legislation developments. We welcome the role of the e-envoy, who we assume will ensure maximum co-ordination between Government departments.

5.  SHOULD EXISTING EU INSTITUTIONAL STRUCTURES BE CHANGED, OR NEW ONES CREATED, TO IMPROVE POLICY DEVELOPMENT AND CO-ORDINATION?

  5.1  As indicated above we believe that there is an absence of co-ordination of policy development at an EU level. Whilst it is essential that industry is not faced with additional bureaucracy, consideration should be given to establishing a single point of contact at European level for e-commerce issues. We believe that the UK E-Envoy mechanism could be used as a model for this role. A team to take responsibility for co-ordinating policy development on all issues concerning e-commerce would enhance flexibility and hopefully result in faster response times. It is essential that the EU demonstrate that they have people with experience and the necessary expertise to deal with the challenges facing this business.

6.  HOW CAN STRUCTURAL CHANGE BE BROUGHT ABOUT FAST ENOUGH TO ACCOMMODATE TO THE GROWTH OF E-COMMERCE?

  6.1  We do not believe that significant change is required. Industry would not welcome the establishment of another structure that would introduce another level of bureaucracy. The appointment of a small team of experts, headed by the E-Envoy, who could co-ordinate the various initiatives at a European level would be a better route.

February 2000


 
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