Regulatory Issues for Global E-Tailers: Marketing Implications

Academy of Marketing Science Review, 2001 by de B, Heiko, Little, Michael W

Marketing Practice

Certain promotional restrictions apply in some EU countries that do not apply in the U.S. One such example is Germany where EU booksellers are not allowed to offer large discounts on local web sites. The different EU member states have their own often different restrictions on advertising and content for a web site. Determining which laws apply in each EU country is potentially prohibitive and costly to any retailer promoting their products or services across borders. Fortunately, a new directive by the EU establishes that if companies comply with their home-country rules, they can offer their services online anywhere in the EU without the risk of breaking any other member country's laws. It has to be noted that in this case the "home country" is determined by the location of the main (technical) support activity for a web site that may not coincide with the country where the firm maintains its head office. The directive further specifies that such web sites must provide information on any sponsorship and on where the provider is based. This directive is to be incorporated into law by all member states by the end of 2001.

How might this affect a U.S. e-tailer? As in so many of these cases, it is not very clear. If the firm has no (main) web site in the EU, this directive may not apply at all, or if is deemed applicable by local governments, than its U.S. (home country) rule should apply. If the e-tailer does have a main web site in the EU, it is more likely that it will be subject to EU rules. Of course, such laws are not in effect yet, which still begs the question as to whether local laws apply. There are no clear or easy answers here but it seems likely that the more permanent the e-tailer's presence is, e.g. through web sites and nexus, the more likely it is that it will be treated as if it were an EU firm.

Self-policing and scrutiny of web content by providers is essential. For example, a French court in Paris required Yahoo to pay a fine for hosting auctions of Nazi-related paraphernalia, that was illegal in France, even though it was posted only on its U.S. site and not on its French site. More

significantly, Yahoo was given a deadline to make their U.S. site inaccessible to French web users. In another case in France, however, the court rendered that another ISP could not be held responsible for a U.S. web site with similar content. Although these cases pertain to ISPs and not e-tailers per se, the implication is that any provider or supplier of web site information anywhere may be held liable for its contents (Telecom 2000). Whether this is enforceable, is another matter.

International marketing practices resulting from e-commerce between the EU and the U.S., will be subject to different regulations in the different countries. If a web site is used for more than one country, this may cause problems for the seller. Either web sites have to be modified to conform, or the countries will have to come to some agreement on their differences. Some of these may eventually be resolved by an international body (Financial Times 1999).