Wednesday, 27 March 2019

DSM proposals approved by the Parliament

We have announced in December that the work on the DSM proposals (on digital content and on the sale of goods) was moving more smoothly and that we expected the first EP reading to take place in March 2019 (2019 forecast...). This reading took place yesterday, with the EP approving proposals for both directives and passing the ball along to the Council for their formal approval. Since the changes introduced by the Parliament have previously been discussed with the Council, this final approval should really be just a formality and we may expect these new Directives to start binding in the Member States within the next 3 years. 

A few remarks on digital content
Just a reminder, one of the novelties of the DSM proposals is the stipulation that consumers who pay with their data for access to digital content or online services will need to be provided with consumer rights just like paying consumers (Recital 24). However, unless the Member States stipulate differently, if the trader only collects metadata or where consumer gets access to digital content by exposing themselves to advertisements - these situations will not fall within the scope of protection of the directive. The Directive on digital content also provides for different remedies in case of non-conformity of the digital content (price reduction or reimbursement) than of goods (whether purchased online or offline), but the same longer reversal of the burden of proof (non-conformity manifests itself with in 1 year from the date of supply, with the possibility for the Member States to extend this to two years for goods) and a two year guarantee period (with a possibility for the Member States to extend this for goods). The Directive on digital content fully harmonises requirements for conformity, remedies for non-conformity or a failure to supply and the modalities for their exercise, as well as the modification of digital content or service, thus it adopts the model of targeted full harmonisation. The Member States retain however the right to regulate some matters related to lack of conformity of digital content, e.g. liability of third parties, such as developers of digital content who are not traders. Curiosity: recital 23 recognises e-vouchers as a digital representation of value, digital currency, which is a method of payment and therefore on its own is not a form of digital content. See the final text here.

A few remarks on sale of goods contracts
The Directive on the sale of goods fully harmonises requirements for conformity, remedies for non-conformity and the main modalities for their exercise, thus it adopts the model of targeted full harmonisation. It allows the Member States for example to elect to provide consumers with the right to repudiate the goods shortly after delivery or to regulate sellers' duties to warn. It will apply to 'smart' goods, that is goods embedded with digital elements (whether digital content or digital services), where the goods would not perform their functions without the digital content and where the digital content was provided as part of the same contract. Recital 49 changes the nature of assessment whether the seller is able to bring the goods back into conformity, as the new Directive will allow sellers to refuse to replace the goods or repair them when one of these two remedies is impossible and the other one could only be provided at a disproportionate case (contrary to the Weber and Putz approach to impossibility/disproportionality assessment). See the final text here.

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