European Commission launches its Digital Single Market Strategy for Europe

Last week the European Commission launched its Digital Single Market (DSM) Strategy, adopting a set of 16 targeted actions to create a “connected Digital Single Market” – one of President Juncker’s key priorities in the Commission’s 2015 Work Programme. The DSM Strategy will guide the Commission’s work over the next few years, and promises to introduce proposals to end geo-blocking, reform copyright, harmonise taxation, and review the Audiovisual Media Services Directive (AVMSD). The DSM Strategy was accompanied by several explanatory documents, including a Staff Working Document, a Communication and a Fact Sheet.

Speaking at the presentation on 6th May, Vice-President Ansip stated that the Commission wants to “launch a comprehensive review preparing for legal changes to tackle unjustified geo-blocking”.

The Staff Working Document takes note of the current barriers for consumers who wish to access their legally purchased content from abroad, and who are interested in accessing foreign media content. It highlights that for films, TV series and sports programmes, “restrictions to cross-border use often originate from practices aimed at exclusive territorial protection”.

Despite these concerns for the principle of territoriality, the DSM strategy also observes that it plays an important role in the audiovisual sector. The Factsheet comments that “the financing of the audiovisual sector widely relies on a system based on territorial exclusivity, which as such cannot be considered as unjustified geo-blocking”.

In its Communication, the Commission has promised to make a legislative proposal before the end of 2015 “to reduce the differences between national copyright regimes and allow for wider online access to works”. In addition to ensuring the portability of legally acquired content, the proposal will also ensure “cross-border access to legally-purchased online services while respecting the value of rights in the audiovisual sector”.

This sentiment was echoed by Vice-President Ansip during an exchange of views with the European Parliament’s CULT Committee on 27th April, where he emphasised he wants cross-border access to online content but does not wish to destroy territoriality or create pan-European licences. He declared “I’m in favour of the principle of territoriality but I’m not supporting absolute territorial exclusivity”.

In addition to these reforms, the Commission intends to introduce harmonising measures for certain exceptions and limitations under the copyright regime, to reduce national discrepancies under the current law. It proposes to implement harmonising measures for “important activities such as research, education, text and data mining”. The Staff Working document highlights that “adequate and well-balanced changes to certain of the existing exceptions would enable the relevant actors to fully grasp the opportunities of the digital age whilst meeting the requirement of an efficient protection of rights”.

The DSM Strategy also looks towards improving the enforcement of intellectual property rights, and promises to release a proposal in 2016 that will modernise the enforcement framework, “focusing on commercial-scale infringements (the 'follow the money' approach) as well as its cross-border applicability”. The Staff Working Document comments that “the fragmentation of rules in this area makes it cumbersome for the right holders to enforce their rights across the EU”. As such, in tandem with this renewed enforcement effort, the Factsheet specifies that the Commission will conduct assessments of online platforms, and “analyse the need for new proposals to tackle illegal content on the Internet”. It suggests the development of more rigorous procedures for removing illegal content and debates whether to require intermediaries to exercise greater responsibility and make more efforts in the way they manage their networks and systems – a duty of care.

VAT procedures on cross-border online sales are to receive an overhaul as well, with the Commission planning to release proposals in 2016. The Factsheet states that these proposals will include the extension of the current single electronic registration and payment mechanism to cross-border online sales of physical goods, the introduction of a common EU-wide VAT threshold, the inclusion of a single audit of cross-border businesses for VAT purposes in home country controls, and the removal of the VAT exemption for the importation of small consignments from suppliers in third countries.

Finally, the Commission has promised to announce a regulatory proposal for the AVMSD in 2016. The Commission has undertaken a REFIT of the current AVMSD, focusing on issues such as the roles/responsibilities of all market players, measures for the promotion of European works, advertising and protection of minors. The Commission will examine “whether changes to the current system of rules concerning broadcast and on-demand services should be adapted”, and whether the law’s “current scope should be broadened so as to apply to new services and players that are outside the definition of “audiovisual media services” given by the Directive”.

On 7th May, FIAD – in conjunction with Europa Distribution – released a press release in response to the DSM strategy. Although they welcomed its positive steps for European film distributors, they also expressed some concerns about the Commission’s plans for geoblocking and copyright.