This staff working document fulfils the commitment made in the European Commission’s Communication “A coherent framework for building trust in the digital single market for e-commerce and online services” to report annually on the state of play of implementation of the action plan. It focuses on the 16 main actions undertaken by the Commission as part of the E-commerce Action Plan 2012-2015.

State of play of the action plan: the following are examples of the progress made in relation to some of the 16 actions one year after the adoption of the action plan:

1. Develop legal rules on cross-border offers of online products and services:

- the Regulation on the Internal Market Information (IMI) system was adopted in October 2012 and entered into force in December 2012, paving the way for the flexible expansion of IMI to further policy areas;

- in June 2012, the Commission adopted a “ Communication on the implementation of the Services Directive: A partnership for new growth in services 2012-2015 ” with a view to establishing guidance on the application of Article 20(2) of the Services Directive which enshrines the principle of non-discrimination of service recipients on the basis of nationality or country of residence;

- in its Communication of December 2012 on “Content in the Digital Single Market”, the Commission sets out its strategy for an effective digital single market in the area of copyright;

- the Commission adopted, in January 2013, a Green Paper launching a consultation on business-to-business unfair trading practices in the food and non-food supply chain.

2. Improve operator information and consumer protection:

- in December 2012, the Commission adopted, in line with its commitment in the Digital Agenda for Europe, the Code of EU online rights ;

- this action was included in the May 2012 European Consumer Agenda and is part of the recently adopted European Retail Action Plan ;

- in October 2012, the European Commission adopted the Communication “ Towards a comprehensive European framework on online gambling ”.

3. Reliable and efficient payment and delivery systems:

- the Single Market Act II announced that the Commission will propose a revision of the Payment Services Directive and a legislative proposal on multi-lateral interchange fees (MIFs) in Spring 2013;

- in November 2012, the Commission adopted a Green Paper launching a public consultation on the delivery of parcels, with special emphasis on cross-border issues and e-commerce needs with a view to identifying solutions to help improve cross-border parcel delivery.

4. Combating abuse and resolving disputes more effectively:

- in September 2010, the Commission put forward a proposal for a Directive on cyber attacks . The Council and Parliament reached a political agreement on a compromise text in June 2012. It is expected to be adopted shortly;

- in February 2013, the Commission and the High Representative for Foreign and Security Policy adopted a comprehensive Cyber-Security Strategy of the European Union entitled “ an open, safe and secure cyberspace ”. In parallel to the Strategy, the Commission has proposed a legislative initiative on a high level of network and information security across the Union.

5. Deploy high-speed networks and advanced technological solutions:

- in December 2012, the Commission adopted the new EU Guidelines for the application of state aid rules in relation to the rapid deployment of broadband networks;

- in July 2012, the Commission announced the outlines of a regulatory package to give a new impetus to the rolling out of high speed broadband networks;

- a legislative proposal on the cost reduction of deployment of high-speed electronic communications infrastructure was adopted in March 2013;

- the Communication " Unleashing the Potential of Cloud Computing in Europe " was adopted and published by the Commission in September 2012.

- the Radio Spectrum Policy Programme (RSPP) was adopted by Parliament and the Council in March 2012;

- the Commission adopted a Communication on the shared use of spectrum in September 2012 to ensure additional flexibility in spectrum authorisation and usage, as well as to foster innovation in wireless networks and services.

The European Parliament adopted by 604 votes to 45, with 15 abstentions, a resolution on completing the Digital Single Market.

The resolution stresses that in times of economic and financial crisis it is essential to take measures to stimulate growth and create employment, and emphasises that completing the Digital Single Market would be a crucial step forward in terms of achieving this goal. Although Members welcome the five priority actions outlined in the Commission’s communication ‘A Coherent framework for building trust in the Digital Single Market for e-commerce and online services’, they wish to put forward recommendations on the following points:

1) Small- and medium-sized enterprises (SMEs): noting that SMEs form the backbone of the European economy, the resolution calls on the Commission and the Member States to develop an action plan to promote the integration of SMEs into the digital value chains. It stresses the importance of developing a strategy to boost digital entrepreneurship in Europe, promote training for online traders and encourage SME development programmes focusing on innovative and dynamic SMEs from all sectors.

The Commission and Member States are called upon to:

implement the existing legislation in order to tackle barriers which hinder the growth of SMEs, such as high market entry costs, cost of building brand awareness in multiple countries, and IT system limitations; introduce measures aimed at offering financial support to innovative SMEs , through existing programmes such as the Competitiveness and Innovation Programme (CIP), the new Programme for the Competitiveness of Enterprises and SMEs (COSME) , and the Research and Innovation Programme ‘Horizon 2020’ , or through the creation of specific programmes, as well as the proposed regulation on venture capital funds.

2) Overcoming the remaining barriers in the Digital Single Market: the resolution underlines that fragmentation and lack of legal certainty are primary concerns in the Digital Single Market, and that inconsistent enforcement of rules in Member States needs to be dealt with in order to increase choice for consumers. According to Members, fragmentation is also partly due to the poor or late transposition of directives by Member States, a factor which should be subject to more rigorous scrutiny by the EU institutions. All relevant new single market legislation should be submitted to a Digital Single Market Test .

In this context, the Parliament formulates the following recommendations:

the rapid deployment of ultra-fast broadband is crucial for Europe’s global competitiveness, the development of European productivity and the emergence of new and small enterprises that can be leaders in different sectors, for example healthcare, manufacturing and the services industry; specific measures to be taken to ensure that SMEs can fully enjoy the potential of broadband in the fields of e-commerce and e-procurement; identify the existing barriers to cross-border delivery services , and appropriate actions to address them; Members consider it essential (i) to ensure innovative forms of delivery allowing greater flexibility in terms of choosing a time or place of collection or a possible pick-up point with no additional costs attached; (ii) to consider measures guaranteeing reasonably priced delivery to more remote or outlying areas; reduce administrative burdens by making it possible to use the system either of the country of the seller or the country of the buyer, in order to avoid duplication of procedures and confusion as to which rules apply, for both online retailers and online consumers; find solutions to the difficulties experienced by SMEs in relation to handling returns and shipping infrastructure problems , and to reduce the costs involved in the cross-border resolution of complaints and conflicts; examine the possibilities of simplifying and standardising VAT rules in the context of cross-border online transactions; Members stress, in this context, the importance of a “one-stop-shop” for VAT in order to facilitate cross-border ecommerce for SMEs; propose a revision of Directive 2006/112 in order to introduce a new category of electronically provided cultural content services which would benefit from a reduced rate of VAT; adapt the existing data protection legislation to new challenges and innovations in the area of present and future technological developments, e.g. cloud computing; propose and rapidly implement the European Strategy for Intellectual Property Rights with a view to adaptation to the online reality of the 21st century.

The resolution recognises the potential of cloud computing and calls on the Commission to propose without delay a European strategy on the matter.

3) Building confidence and trust in the Digital Single Market: Parliament recalls that e-commerce allows consumers to benefit from lower prices and a wider choice, but 60 % of websites are currently unsuitable for cross-border online shoppers, and consumer and business confidence in the digital environment is still low. It considers that access to reliable information and transparency should be enhanced, allowing consumers to compare not only prices but also quality and sustainability of goods and services online.

In this perspective, it formulates the following recommendations:

to develop and give adequate resources to effective instruments such as the Consumer Protection Cooperation (CPC) network , in order to ensure that online traders apply the EU rules on transparency and unfair commercial practices, thus affording a high level of consumer protection; the need for initiatives in the Member States to improve e-skills among the general public; to include a consumer accessibility element in terms of implementing a barrier-free environment and a full range of accessible services for people with disabilities in all Digital Single Market policies; to draw up a European charter of users’ rights that would clarify the rights and obligations of citizens in the information society; to create a European Trustmark , which would guarantee that a business operating online fully respects EU law; the simplification of licensing systems and the creation of an efficient framework for copyright; to contribute to the settlement of cross-border complaints and disputes by the adoption of the Commission’s legislative proposals for Regulations on the extra-judicial settlement and the online settlement of disputes; to promote the use of new technological developments for education and for the protection for minors , and to cooperate closely and efficiently in order to deliver a safe internet for minors; the further expansion of the broadband network and, in particular, the connection of rural, isolated and outermost areas to electronic communication networks.

4) Setting up the basis for a more competitive Europe: the resolution calls on the Commission and the Member States to provide new impetus to the European fast and ultra-fast broadband strategy by updating the relevant targets. It also emphasises the potential value for consumers and businesses of the digital switchover of public services , and calls on Member States to develop national plans to that effect.

Members regret that the EU is lagging behind with regard to fibre-based internet connections and calls on the Member States and the Commission, therefore, to accelerate the spread and adoption of ultra-high-speed broadband, and call for a European strategy for the large-scale deployment of FTTx (‘fibre to the x’).

Lastly, the resolution recalls that Parliament in its resolution of 20 April 2012 entitled “Competitive digital single market – eGovernment as a spearhead” underlined the importance for the facilitation of mass adoption of factors including legal certainty, a clear technical environment, and open and interoperable e-invoicing solutions based on common legal requirements, business processes and technical standards. The Commission is invited to assess the need for uniform, open Union-wide standards for e-identification and e-signatures .

PURPOSE: to define a coherent framework for building trust in the Digital Single Market.

BACKGROUND: a genuine Digital Single Market would generate new types of growth. The hitherto unrealised potential is enormous and would benefit all the territories and economic sectors of the European Union. In the G8 countries, South Korea and Sweden, the internet economy has brought about 21% of the growth in GDP in the last five years.

Nevertheless, the share of the internet economy in European GDP remains small . It was no more than 3% in 2010. Although the growth rate of e-commerce at national level is high, this new vector remains marginal at only 3.4% of European retail trade. It is less advanced than in the United States or Asia-Pacific and tends not to go beyond national borders ; cross-border activity remains low.

The Digital Single Market is far from achieving its full potential ; the cost of the failure to complete it is expected to be at least 4.1% of GDP between now and 2020, i.e. EUR 500 billion or EUR 1000 per citizen. The European Union cannot just resign itself to bearing the costs of a fragmented digital market after having set ambitious objectives for renewed, sustainable, smart and inclusive growth by 2020. Instead, it must set objectives that match the growth potential of online commerce and services, which could reach 15 to 20% of GDP growth by 2015 in the Netherlands and the United Kingdom, for example.

Boosting online commerce and services at European level requires firm and concerted action in line with the Digital Agenda for Europe .

CONTENT: this Communication constitutes a new contribution to the implementation of the Digital Agenda, since it establishes an action plan for the development of online services and, through the Annual Growth Survey, offers a response to the request from the European Council to submit a roadmap to achieve a Digital Single Market by 2015.

Five obstacles : this Communication identifies five main obstacles to the Digital Single Market and proposes an action plan to remove them:

the supply of legal, cross-border online services is still inadequate; there is not enough information for online service operators or protection for internet users; payment and delivery systems are still inadequate; there are too many cases of abuse and disputes that are difficult to settle; insufficient use is made of high-speed communication networks and hi-tech solutions.

Five priorities for an action plan: the solutions proposed in the action plan are not an exhaustive list. The plan places emphasis on strengthening a single harmonised framework for e-commerce and other commercial online services. It opens a new chapter on this subject in the digital approach for Europe, continuing the logic, of the Single Market Act , and is part of a wider commitment from the European Union aimed at boosting the economy and the information society, ranging from promoting online administration and digital literacy to standardisation and online security.

The five priorities of the action plan are as follows:

Develop the legal and cross-border offer of online products and services : in order to benefit fully from a Single Market for online services, consumers in all Member States must have legal access to a wide range of products and services, offered over the largest possible geographical area. To this end, the Commission will undertake the following key actions:

ensure that the Electronic Commerce Directive and the Directives protecting online consumers are correctly applied by improved administrative cooperation with the Member States, in particular through the extension of the Internal Market Information System (IMI), the Consumer Protection Cooperation network (CPC) and an in-depth evaluation study of the transposition and implementation of the Directive (2012); ensure that the European strategy for intellectual property rights is implemented rapidly and ambitiously, in particular by means of a legislative initiative on private copying (2013) and the review of the Directive on copyright in the information society (2012). The Commission will also report on the outcome of the consultation on the online distribution of audiovisual works and on the implications of the "Premier League" ruling; ensure that the rules on selective distribution are applied rigorously and fight unfair business practices . In parallel to this, ensure that access for citizens to online services is not undermined by anti-competitive practices.

2) Improve operator information and consumer protection : both providers and users of online services must be able to access or receive sufficiently complete and reliable information on their activities. In particular, consumers must have their rights protected and be assured that their personal data will be used appropriately. The Commission will engage in the following key actions:

improve training for online traders in their obligations and the opportunities offered by the Digital Single Market, in particular through the Enterprise Europe Network with the assistance of the European Consumer Centres Network (ECCNet) as regards issues relating to consumers, and through the publication of a special guide (2012); through dialogue with the stakeholders, develop codes of good conduct, good practice guides and guidelines giving consumers access to transparent and reliable information allowing them to compare more easily the prices, the quality and the sustainability of goods and services (2013-2014); adopt a “ European Consumer Agenda ” putting forward a strategy and initiatives to place consumers at the heart of the Single Market, including digital issues, in particular by empowering consumers and appropriate protection of their rights (2012); present a European action plan for online gambling which will focus on administrative cooperation, consumer protection and the development of a legal market (2012); through the implementation of the Directive on falsified medicinal products , ensure adequate protection for patients purchasing medicinal products online primarily by contributing to the creation of trustmarks which identify sites providing the public with legal offers of medicinal products through distance sales (2013-2014).

3) Reliable and efficient payment and delivery systems: too often, a lack of confidence and a limited choice of payment method prevent or discourage consumers from paying online and therefore from fully benefiting from e-commerce. Almost 35% of internet users do not buy online because they have doubts concerning security of payment

As regards the delivery of online purchases, consumers must trust that they will receive their order easily and at a reasonable cost, without excessive delay and in satisfactory condition. Yet 10% of people currently do not buy online because they are concerned about the cost of delivery services, in particular cross-border delivery, and about service quality.

The Commission intends to:

develop a strategy for the integration of the markets for payments by card, internet or mobile phone , on the basis of a Green Paper adopted at the same time as this Communication; based on a Green Paper, initiate a consultation in 2012 on parcels delivery , in particular cross-border, drawing on the results of the study on the costs of cross-border postal services, with a view to identifying possible solutions to the problems encountered by businesses and consumers.

4) Combating abuse and resolving disputes more effectively : in general it is still too rare for illegal activities to be effectively stopped and for illegal content to be removed or removed promptly enough.

The mechanisms to stop abuse and illegal information must therefore be made more efficient, within a framework which guarantees legal certainty, the proportionality of the rules governing businesses and respect for fundamental rights. In view of the growing volume of statutory and case-law in the Member States, it now appears necessary to set up a horizontal European framework for notice and action procedures . In parallel to this, the Commission will revise the Directive on the enforcement of intellectual property rights in 2012 in order to combat illegal content more effectively . It is therefore necessary to facilitate the settlement of online disputes . The Commission will soon adopt a legislative initiative on the settlement of business-to-business disputes. Lastly, the Commission will in 2012, propose an overall strategy on internet security in Europe aimed at better protection against cyberattacks in the EU . The establishment of the European Cybercrime Centre by 2013 will play a particularly important role in this context.

5) Deploy high-speed networks and advanced technological solutions: the deployment of high-speed communication networks is a sine qua non for the development of online services. However, compared with its competitors, the EU, which set itself ambitious objectives in the digital agenda, is lagging behind in terms of investment in the new generation telecommunications infrastructure which it urgently needs. The Commission will undertake the following actions:

strengthen and facilitate the development of information and communication structures in 2012 by i) in the context of the Connecting Europe Facility , preparing guidelines for the preparation of broadband infrastructure projects; ii) in the context of the European Cohesion Fund , drafting guidelines for smart specialisation strategies which must be implemented in order to benefit from regional funding,(iii) in the context of the regulatory framework on electronic communications, adopting a recommendation on access-pricing schemes in the wholesale market in order to stimulate investment in fibre deployment, and adopting a review of the 2009 guidelines on State aid for broadband networks, and (iv) adopting a guide on cost reduction techniques for construction works with the aim of reducing them by half; adopt an overall strategy on cloud computing in order to stimulate that sector and provide the legal certainty which economic operators need (2012); adopt a Communication on spectrum-sharing , including a strategy for the promotion of shared access to the spectrum in the Single Market and allowing a structured political debate on the economic, technical and regulatory issues surrounding the various methods of spectrum-sharing (2012).

The European Commission will follow developments in online services closely and will report on the progress achieved with the implementation of this action plan by publishing annual reports. It will organise a stakeholder conference in 2013.