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SMEs React to DSM Mid-Term Review

10 May 2017
by ESBA -- last modified 10 May 2017

On the 10th of May 2017, the Commission published its Mid-term Review on the Digital Single Market (DSM). ESBA welcomes this and sees the mid-term review as an opportunity to offer additional SME-relevant input and bring the needs of SMEs to the foreground.


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On the 10th of May 2017, the Commission published its Mid-term Review on the Digital Single Market (DSM). ESBA welcomes this and sees the mid-term review as an opportunity to offer additional SME-relevant input and bring the needs of SMEs to the foreground. In the past two years, the institutions have produced a high volume of legislative and regulatory output with a view to covering all facets of the DSM and moving towards its completion. While we recognise and support these efforts, and the stakeholder input that underpins them, we have our reservations as to the effectiveness and relevance of certain proposals. Moreover, we have concerns regarding the order in which interrelated proposals will most likely be introduced.

First and foremost, we would like to place emphasis on the proposal to address geo-blocking. This proposal was recently cleared of the committee stage in the European Parliament after IMCO adopted Rapporteur Thun's Report. ESBA maintains that the provisions relating to the applicable law, and how this can be determined in the context of so-called "passive sales", lack clarity and contribute to legal and commercial uncertainty. Moreover, confusion surrounds the provisions on post-sale services and obligations on the part of the seller. These short-comings have the potential to increase businesses' hesitation to sell online as well as to increase their compliance or even legal costs should they decide to do so. Obliging SMEs to sell before achieving the pre-requisite level of harmonisation elsewhere in the DSM is more likely to overburden them and decrease their competitiveness than to introduce them to a larger demand pool as claimed. We therefore call for substantive improvements on the geo-blocking proposal and a re-consideration of the time-frame for its introduction. As admitted in of the Commission's Review, the proposals on; digital contract rules, simpler VAT declaration procedures and affordable cross-border parcel delivery services can contribute towards eliminating the commercial pressures that cause geo-blocking. It is therefore of questionable logic that the proposal under consideration precedes those.

Secondly, we recognise the potential of online platforms in facilitating e-commerce and helping SMEs develop. Finding the right regulatory balance that levels the playing field and encourages fair competition is instrumental to achieving this twofold objective. We, much like the Commission's fact finding exercise, have identified platform-to-businesses (B2B) trading practices as an issue that requires further attention. We therefore call for increased transparency in platform-to-business contractual arrangements and terms & conditions for access. Moreover, we welcome the updated guidance on the Unfair Commercial Practices Directive which has the potential of better regulating certain platforms' gatekeeper role and their inherent conflict of interest when they compete with SMEs that they host. Moreover, non-personal data ownership and portability is subject to case-by-case contractual arrangements in the B2B context. Given the imbalance of bargaining power between large and small market participants, ESBA would like to echo the Commission's point for a clear framework for "access to non-personal data to foster fair and balanced access to, and use of, data." A systematic approach to data portability can increase legal certainty for SMEs when they engage with platforms and other business partners.

Finally, ESBA is in favour of any measure that can contribute to procedurally or substantively simplifying businesses' ability to establish an online or physical cross border presence. To this effect, we welcome the Commission's recent proposal for a single digital gateway which can help businesses reduce their administrative burdens when engaging in cross-border activities and bring the benefits of digitization to the process or establishing and running a business. The success of the gateway will lie in its ability to represent a true "one-stop-shop".

The European Small Business Alliance (ESBA) is a non-party political group, which cares for small business entrepreneurs and the self-employed and represents them through targeted EU advocacy and profiling activities.

ESBA - The European Small Business Alliance

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The European Small Business Alliance (ESBA) is a non-party political group, which cares for small business entrepreneurs and the self-employed and represents them through targeted EU advocacy and profiling activities.

European Small Business Alliance
Clos du Parnasse 3A
B-1050 Brussels
Belgium
Tel: +32 2 274 25 04

www.esba-europe.org