Communications Act (e-Commerce) (EU Exit) Regulations 2020

Lord Clement-Jones Excerpts

Tuesday 10th November 2020 Grand Committee

[Lord Clement-Jones (LD) [V]]

My Lords, the ending of the country of origin principle on access to the EEA digital internal market in e-commerce is, I am afraid, the inevitable consequence of our regrettable decision to leave the EU and not to seek to stay in the internal market.

I agree with everything the noble Baroness, Lady Wheatcroft, said. I also want to draw attention to paragraph 12 of the Explanatory Memorandum relating to impact. It says:

“A full Impact Assessment has not been prepared for this Statutory Instrument because there is a low level of impact per business. A De-Minimis Assessment showed that ... there were annual time-saving benefits to certain UK businesses”.


For businesses which offer services to the EEA but not the UK, the Government estimate an annual time-saving benefit of circa £0.5 million. This is pretty breath-taking stuff, as I hope to demonstrate. The Government say that this is because they will no longer have to comply with UK legislation, as well as with the domestic legislation of the EEA state where the service is received. This is looking at it very much from the wrong end of the telescope. The Explanatory Memorandum goes on to say that for all businesses in scope:

“This will result in a small annual net direct cost to business of £0.6m over 10 years. Transition costs refer to the cost incurred by businesses when adjusting to new legislation, in this case the time that organisations will have to take to familiarise themselves with this new legislation.”


In their guidance on the e-commerce directive after the transition period, the Government say:

“The eCommerce Directive applies to ‘information society services’. These are defined as any service that is normally provided: for payment, including indirect payment such as advertising revenue … ‘at a distance’ (where customers can use the service without the provider being present) … by electronic means, and … at the individual request of a recipient of the service. This covers the vast majority of online service providers, for example online retailers, video sharing sites, search tools, social media platforms and internet service providers.”


As commentators have said, after the end of the EU transition period, service providers with a place of establishment within the UK will lose the article 3 protection and will need to comply with the relevant legal requirements within the “co-ordinated fields” of the directive in each EEA country in which they operate. UK online service providers may also become subject to “prior authorisation” schemes, such as licensing requirements, in EEA countries where they operate.

What assessment has been made of the amount of digital trade which will suffer from cost penalties as a result of the withdrawal of country of origin protection? The impact on online services could be immense. The loss of these protections will mean that cloud service providers based in the UK and providing services to customers across the EEA will need to consider and take steps to comply with the national rules applicable to their cloud services in each EEA country where they are available. Online advertising, online retail and online contracts as a whole will suffer. This SI was inevitable but it is not without severe consequences. Should there not have been a full impact assessment of the regulations? Has a profound impact assessment of any kind been done?

This is a grossly inadequate debate, without any understanding by the Government of the real impact of this SI on all those businesses engaged in the digital market. I agree with the noble Baroness, Lady Wheatcroft, about Ofcom. I look forward to the Minister’s answer to this and to the impact question.