Proposal for a directive on contracts for the supply of digital content – legal basis, subsidiarity and proportionality

The existing and upcoming fragmentation creates obstacles for businesses to sell cross-border because they have to incur contract law-related costs. Businesses are also uncertain about their rights and obligations. This has a direct effect on the establishment and functioning of the internal market and negatively affects competition.

When supplying digital content to consumers in other Member States, businesses are confronted with different mandatory consumer contract law rules. Contracts for the supply of digital content are categorised differently from one Member State to another. Depending on the Member State, these contracts are considered as sales contracts, as services contracts or as rental contracts. In addition, contracts for the supply of digital content are sometimes categorised differently within the same Member State depending on the type of digital content offered. As a consequence, for digital content, national rights and obligations as well as the remedies for consumers vary between Member States. While some of these national rules are non-mandatory and can be modified contractually by the parties, others are of a mandatory character.

Moreover, several Member States have recently enacted or started preparatory work to adopt specific mandatory rules on contracts for the supply of digital content. These national rules differ however in scope and content. It is also to be expected that other Member States will follow this trend.

The general objective of the initiative is to remove consumer contract law barriers in the online world and help to establish a genuine Digital Single Market for the benefit of businesses and consumers. Member States cannot on their own initiative sufficiently be able to remove the barriers that exist between national legislations. An initiative at EU level is able to better achieve this.

More specifically, the initiative aims to provide consumers with specific rights in a coordinated manner and to create legal certainty for businesses which want to sell their digital content in other Member States. When developing specific legislation on the supply of digital content, each Member State individually would not be able to ensure an overall coherence of its national legislation with other Member States legislations. An initiative at EU level would therefore help to ensure the development of specific consumer rights for digital content in a coherent manner.

The proposal (de) will not harmonise all aspects concerning contracts for the supply of digital content; among many other examples, rules on the conclusion of the contract will not be regulated. Instead, it will focus on harmonising at Union level only those targeted, key mandatory consumer EU contractual rights, which are essential in cross-border online transactions, and which have been identified as barriers to trade by stakeholders and are necessary to build consumer trust when buying online abroad. Moreover, the choice of the legal form of a Directive instead of a Regulation will have as a result considerably less interference into national laws as it will leave Member States freedom to adapt the implementation to their national law.

For instance, the proposal does not determine whether the contract for the supply of digital content is to be considered as a sales, services, rental or a sui generis contract; it would leave this decision to Member States. A Regulation would require a much more detailed and comprehensive regime than a Directive in order to allow its effects to be directly applicable.

A non-binding instrument such as a voluntary model contract would not achieve the objective to improve the establishment and functioning of the internal market. Traders would still be obliged to comply with different mandatory national rules of the consumer’s country of residence, when the latter provide for a higher level of consumer protection than the model contract, and would thus still face contract law-related costs.