The EU commissioners ask for a friendly environment in online retailing

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A roundtable on online retailing with the interested private companies,
including online music providers, and consumers organisations took place at
the European Commission in Brussels on 17 September 2008 with competition
commissioner Neelie Kroes and internal market commissioner Charlie McCreevy.

Ms Kroes expressed her concern regarding the barriers in buying music
online: “Why is it possible to buy a CD from an online retailer and have it
shipped to anywhere in Europe, but it is not possible to buy the same music,
by the same artist, as an electronic download with similar ease? (…) Why
do pan-European services find it so difficult to get a pan-European license?
Why do new, innovative services find licensing to be such a hurdle?”

The commissioner believes there are many reasons for this situation,
including tax systems, consumer protection laws, guarantees and after-sales
service. One of the issues she wanted to discuss was related to the
competition rules for companies that enter into distribution agreements. She
expressed her intention to check out whether the provisions for Internet
sales were observed adding: “if I hear that these rules are not being
respected, then I will look into these allegations immediately. And if I
find any company to have breached the rules, I will ask the Commission to
act and punish the companies concerned.”

She added that consideration had to be given on whether companies should
exclude Internet-only retailers from their distribution system. “I have
heard today from companies who think that that is the best way to protect a
brand image. I have also heard from companies that use internet only
retailers but impose strict conditions on them. And I have also heard from
consumers who believe that consumers should have the right to choose.”

During the debate, the issue was considered as more complex as the rights
and the licensing agreements were more complicated. “The world is always
more complicated than we would like it to be. But that is no excuse for
inaction. Collecting societies and music labels have come a long way since
1851, the time of Bourget and his sugared water, but the world has changed
around them. Artists have changed, distribution has changed, and consumers
have changed. There is a perception, though, that the collecting societies
and the music labels have not” was Mrs. Kroes’ comment. She considers the
collecting societies have a vital responsibility in looking after the
interests of artists. “That is only right because music is a vital part of
our society and our culture. It always has been and it always will be. But
where regional monopolies are not necessary – in the online world – then I
want to hear more about whether the current system really helps the artists
and whether it serves the consumer.” She warned that the commission would
intervene if musicians, record labels and retailers were not able to
overcome their differences and produce a more consumer-friendly environment
for digital music distribution.

In his turn, McCreevy stated he had never thought ” the internet was going
to be such a stumbling block. This magical creation – invented by people who
hadn’t been born 50 years ago and developed by people, some of whom hadn’t
been born 25 years ago – has no natural physical frontiers or boundaries
like traditional markets. But somehow it has been trapped and parcelled up
by a whole series of barriers.”

In his opinion, it was worth considering “the idea that every single owner
of a copyright – from authors and composers to music publishers and record
labels – should license downloads individually through a collecting society
that has an exclusive mandate for each of the 27 national territories.”

Along with Apple and EMI, the meeting was attended also by Alcatel-Lucent,
Ebay, Louis Vuitton, Fiat and UK consumer watchdog Which? as the problems
of online retailing are not limited to music.

A commission report on the subject will be drafted later this year with Mr
Jagger’s and the others’ participation and the EU executive will require
responses to that report from stakeholders by 15 October 2009. Later on,
the European Commission will present its legislative proposals on Internet
retailing.

Mick Jagger in Brussels for online retailing chat (18.09.2008)
http://euobserver.com/19/26771

Competition commissioner Neelie Kroes’s closing remarks at Online Commerce
Roundtable (17.09.2008)
http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/08/437&format=HTML&aged=0&language=EN&guiLanguage=en

European Commissioner for Internal Market and Services Charlie McCREEVY’s
closing remarks at Online Commerce Roundtable (17.09.2008)
http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/08/439&format=HTML&aged=0&language=EN&guiLanguage=en