E-commerce held hostage

Hardened veterans of the Advertising Association, Direct Marketing Association and other industry ginger groups will have been dismayed, though hardly surprised, by a recent French court ruling restricting Yahoo!’s right to trade.

It is, taken at face value, another nail in the coffin of free, cross-border trade – the cornerstone of globalisation – and a very big one at that. For this is not a ruling confined to the minutiae of a particular trade discipline, but one which effectively constrains all e-commerce, in whose expansion every branch of the marketing industry has an interest.

The immediate cause of the court ruling is somewhat arcane and springs more from a laudable desire to uphold human rights than any active interest in restricting international trade. Nevertheless, it’s easy to see how a dangerous precedent could be set. Suppose Yahoo! were to be fined &£9,000 a day for passively allowing French nationals to purchase something other than Nazi memorabilia on its US website. Suppose that ‘something other’ meant certain categories of toys, alcoholic drinks, or genetically-modified products, which just happened to run foul of French legislation at that time. In fact, let’s broaden the argument a bit further. Let’s also suppose that other countries, not necessarily within the European Union, were to take up the French lead and do likewise. Where would e-commerce be then?

Of course, the future need not be that dark. To begin with, the matter may be successfully appealed against in the French courts. Then again, there is reasonable doubt that a French court, or any other national court, could ever enforce jurisdiction over a US company and a US website without the say-so of a US court (it is very unlikely). That doesn’t alter the fact that this development is a tiresome impediment which, because of the uncertainty of remedy, will have a chilling effect on e-commerce.

However, worse is to come. Legislation at White Paper stage in the European Commission pipeline is expected to strengthen the hand of consumers by empowering them to use national legislation against overseas online companies operating within the Union. Should this go through, the resulting legal quagmire can only be imagined.

Ultimately, a more effective solution must be found to protect individual consumer rights than holding ecommerce hostage to the lowest common denominator of any national jurisdiction. It would be a great shame, after all, if the tangible benefits of e-commerce – among them, enhanced consumer choice, product availability and price transparency – were to become forever mired in red tape and legal sophistry. No doubt UK trade associations are bending their minds to this problem even as we go to print.

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