Saturday, 15 September 2012

US online gambling regulation is “gaining momentum” as Department of Justice settles

PokerStars, the Isle of Man-based online poker company, has settled with US authorities over allegations of money laundering and bank fraud. PokerStars has confirmed it will pay $731 million (£466 million) to avoid any further prosecution in the US.

The deal includes a paragraph stating that PokerStars could potentially return to the US market, when online poker is legalised. The Chairman of PokerStars, Mark Scheinberg, said he is “delighted”.

“The deal appears to be a win for all parties”, said Lloyd Levine, President of Filament Strategies and a former Member of the Califonia State Legislature. “The players will get their money, the companies assets will be merged, and they will be given a clean start in the US market, the Department of Justice gets settlement money, and nobody has to go to court.”

It has also been agreed that PokerStars acquires the assets, and pays off debts, of Full Tilt Poker, a onetime rival that was also indicted on 15 April 2011, which became known as ‘Black Friday’. On that day the US Department of Justice (DoJ) brought criminal charges against executives of PokerStars, Full Tilt Poker and Absolute Poker, shut their websites to US-based players and seized funds. PokerStars will pay $547 million to the DoJ and $184 million to poker players outside the US who are owed money by Full Tilt Poker.

Levine stresses “the move to legalisation of internet gambling is gaining momentum.” Although he adds “things here are moving at a snail’s pace”, Levine emphasizes that “we have gone from no legalisation, to three states being legalised, and five more states and Congress discussing it.”

Linda Shorey, a Partner in the Harrisburg office of K&L Gates, thinks “there is a possibility of federal legislation being passed by Congress when it returns to work after the election.” Whether Congress will propose any framework for regulation “depends on the results of the November election”, Shorey said.

Levine explains the surge in enthusiasm for regulation because “obviously, money is a big factor. Governments at all levels are cash strapped and they see this as a way to bolster their budgets without increasing taxes.” Levine is convinced “were there not this much money involved it is likely the other efforts would have been a lot less effective.” He predicts “legalisation will happen eventually. Not this year, but perhaps late in 2013 or 2014.”

Michiel Willems © 2012 CP Publishing Ltd. London, UK.

Friday, 31 August 2012

Different levels of protection

Google should not have a duty to proactively remove copyright infringing material from You Tube once it has been re-posted, a French court has ruled. 

Such an obligation would breach European Union legislation, since it would be ‘disproportionate to the aim pursued’ for Google – the owner of You Tube –  to prevent copyright infringing videos from being re-posted. In those cases that Google has not been notified of any suspected illegal material and the location where it has been re-posted, the French Court of Cassation ruled it would not be compatible with EU law to impose ‘a general obligation [on Google] to monitor the images they store and search for updates online’.

The French ruling was welcomed by service providers and search engines. Especially since a district court in Hamburg, Germany, ruled earlier this year that Google should ‘proactively flag up infringing material by using existing technology’ and inform rights holders when material - that had earlier been classified as unlawful - popped up again. The German Judge said YouTube should actively use ‘Content ID’, a system that is able to identify copyrighted music and film content the video giant has been using in order to prevent the spread of illegal copies. Back then, in April, the German court said YouTube should not solely rely on rights holders using the system and proactively use it as well. 

The latest court ruling in France does follow last year’s decision by the European Court of Justice, that ruled that national courts have no powers to oblige internet service providers to use filter systems, such as ‘Content ID’. Such an obligation would breach ISPs’ ‘rights to freely conduct business and individuals’ rights to privacy, free speech and the protection of their personal data’, the ECJ decided. In its ruling, the ECJ merely followed the E-Commerce Directive, which states that service providers cannot be made liable for copyright infringing material that they have not created and a duty to monitor online content should not exist.

The latest ruling, in France, should be seen as another step in the further classification of anti-piracy rules and policies in the European Union. Although the E-Commerce Directive states clearly that a national court cannot impose a general obligation to monitor online content on a service provider, an obligation to examine an individual case is possible and permissible under the E-Commerce Directive, allowing national courts to order service providers to monitor in ‘a specific case’. 

Does this mean right holders can still go to court and force a provider of online content to remove copyright infringing material, despite the French and ECJ rulings? It seems so. But only after the rights holders have approached the provider and pointed out which material they believe is illegal. Although the French judge followed the European judges, the German court ruling has set a precedent for Europe’s largest internet market. Therefore, it may be clear that the EU still has a long way to go before clarity on this matter can be given. After all, if right holders turn to a German court it is likely Google will be ordered around, while in France this is not the case.

Many experts believe it is now up to the European Commission to further tighten the rules and clearly specify what a ‘specific case’ is. Also, it needs to set out if there is any liability for re-posted material, as the French court said there was not. Too many questions remain unanswered, which means  right holders throughout Europe continue to suffer a different level of protection from service providers.

Michiel Willems © 2012 CP Publishing Ltd. Picture:

Wednesday, 29 August 2012

London 2012 “invaluable” for showcasing mobile payments

A record number of mobile and contactless payments have been made during the London 2012 Olympic Games, mainly due to Visa’s payments infrastructure, as one of the main sponsors of the London 2012 Games. But also other payment processors rolled out mobile payments options. 

More than 140,000 contactless payment terminals throughout the United Kingdom – including 5000 London taxis and 3000 point of sale locations at Olympic Games venues – have been used during the Olympic Games, one of the largest mobile and contactless payments schemes to date.

Jim McCarthy, Head of Products at Visa, called the London Olympics “a unique opportunity to showcase how technology is changing the way people shop, pay and get paid around the world”. McCarthy said the Games “have demonstrated the future of payments, a future where most consumers will rely on mobile devices, tablets and PCs to manage their daily financial lives.”

Samee Zafar, Director at Edgar Dunn & Co in London, thinks “the Olympics have helped raise its profile.” Although Zafar warns that “to make [mobile payments] reach critical mass, banks and retailers must be committed”, he stresses that “the potential is indisputable.”

Whether “the Olympics mean gold” for contactless payments, “still remains to be seen”, said Nathalie Moreno, Partner at Speechly Bircham in London, “but it has certainly proved to be an invaluable platform to showcase the benefits of the contactless system.” 

'Forcing consumers' to use mobile or contactless payments – like Olympic sponsor Visa  during the Olympics (it was only possible to pay with a Visa card at Olympic venues) “has the advantage of familiarising consumers to the new system and also gives consumers the chance to appreciate the new technology first hand”, said Moreno.

Zafar said: “The parallel I can draw from the Olympics is that just like team GB – with little investment in 1992 they got only one gold and in 2012 with sufficient investment and commitment they secured 29 gold medals – three things are needed to make contactless payments successful: investment, commitment, and patience.”

Moreno expects contactless payments will have “a long-lasting legacy” beyond London 2012: “People are warming up to contactless payments and have experienced how convenient it is.”

Michiel Willems © 2012 CP Publishing Ltd. Picture: /

Wednesday, 15 August 2012

BT ruling on network charges sets “a precedent” for telecoms industry

The prices that British Telecom has been charging its competitors for the use of its network are not justified, the UK Court of Appeal has ruled. The Court has rejected BT’s claim that the Competition Appeal Tribunal (CAT) had not followed European telecoms rules when it decided BT’s charges were unacceptable. CAT had previously ruled that ‘BT’s prices had served to distort the market to the detriment of its rivals and consumers’.

The BT Tower in London
 “This case has set a precedent which is good news for all in the industry – well, except for BT”, said Paul Stone, a competition and regulatory partner at Charles Russell. “This was probably BT’s last roll of the dice to try to avoid having to repay the overcharge.”

Ofcom ruled in 2009 that BT had overcharged its competitors £42 million for access to network services and said Britain’s largest telecom operator should compensate its rivals. “That decision has now been upheld by both the Competition Tribunal and the Court of Appeal”, said Stone. Although “it is open to BT to seek permission to appeal” to the Supreme Court, Stone thinks it is “unlikely that BT will be successful in gaining permission in view of the Court’s judgment”.

Jan Willem van den Bos, Partner at SNR Denton in London, said “there have been few people who thought the decision could go in BT’s favour”, but adds that “with this decision now in the bag, there are several similar regulatory disputes currently running that could go the same way. Scrutiny [of network charges] is likely to get more intense.”

Michiel Willems © 2012 CP Publishing Ltd. Picture:

Monday, 6 August 2012

UN: World leader Africa should harmonise mobile money laws

The East African Community (EAC) countries have been praised for their success in mobile money services but should make serious efforts to harmonise the different legal frameworks that cover the industry in the region, the United Nations Conference on Trade and Development (UNCTAD) has said.

UNCTAD has released a report titled Mobile Money for Business Development in the East Africa Community, which is a comparative study of existing mobile money platforms and regulation in the EAC countries, Kenya, Uganda, Tanzania, Rwanda and Burundi. The Report stated that Africa ‘is a world leader in offering mobile money services…with about 60 mobile money services already in place.’

However, the UN Report also urged the EAC countries  to introduce and implement harmonised regulation that should focus on ‘consumer protection, registration and transasaction limits, regulatory collaboration and interoperability between operators’.

Harmonisation is desired ‘as mobile money grows bigger and draws in more sectors, and new regulators will have to join the fold.’ UNCTAD noted that ‘dialogue is largely happening at a national level, with Kenya often leading the way, owing to the success of M-Pesa and the fact they have somewhat longer experience than the other EAC countries’. UNCTAD called for the EAC to prepare guidelines on electronic transactions, e-signatures and authentication, data protection and privacy, consumer protection, and computer crime.

Michiel Willems © 2012 CP Publishing Ltd. Map: The Habari Network, Nystrom.

Thursday, 2 August 2012

Q&A Nathalie Moreno, Partner at Speechly Bircham

Following last month's article (‘payments reform under pressure’), Michiel Willems spoke to Dr. Nathalie Moreno, Partner at Speechly Bircham, about the impact of the Eurocrisis on the progress of the Single European Payments Area (SEPA).

What is the impact of the current economic climate/Eurocrisis on SEPA? Is SEPA ‘on hold’?
Opinions vary depending on the perception of the raison d’être of the European Union - some view the Eurocrisis worsening as a result of the absence of SEPA and there are others who are more cautious of the concept of establishing SEPA due to the uncertainty of the economic climate. As the markets fragment more it is difficult for many to reconcile a unified approach to enable efficient cross border payments. The current approach seems to be to carry on with the same plans as before the Eurozone crisis hit and build on this fragmented market. In my opinion, there are no current measures in place to note that seem to have taken on board the impact of the crisis.

Do you think the migration deadline of spring 2014 is still realistic?
It is hard to see the deadline of spring 2014 not being moved. The Eurocrisis is developing at such a rate in 2012 that nobody can predict what will happen, and the impacts of increased lending and bailouts to keep the Euro afloat will surely affect the ability of these economies to make a certain decision on the future of SEPA. SEPA’s focus is on payment harmonisation and modernisation but with all the turmoil of the Eurozone as a whole it is difficult to see how this can be kept a reality without the need for new and added thoughts on SEPA’s development process which keep up with key market developments.

What is the role of the European Green Paper, which called for an integration of card, mobile and online payments? What do you think of the Green Paper and its future in the current political, economic and regulatory climate?
The European Payments Council called the EU Green Paper “controversial”, because some of the Paper’s suggestions imply more costs for the industry at a time when huge regulatory costs are sweeping banks. Many would argue that the approach for an integrated market for card, internet and mobile payments has at its forefront the interests of the consumer. The driving down of costs of payments and increased convenience for consumers are after all the key benefits of market integration and greater benefit the consumer than the industry itself. There is a worry that regulatory intervention could hamper the banking sector’s competitiveness in the global marketplace and also lead to the lack of development and innovation in this space. However, some would argue that looking into and improving the ease of market access and entry of new players is beneficial to companies looking to enter the market.  This would benefit many companies that are not banks as it will focus on the banks’ monopoly of deposits and restricting access of information to these deposits. This area is rapidly developing and in the current economic climate many would argue that increased benefits to the consumer can be seen as a step forward for the banking sector to address the interests of their customers. The cost of change may be high now but may impact the sector with better financial terms in the future.

What about the impact of SEPA on the public sector?
The impact of SEPA on the public sector is something that should be explored more fully. SEPA’s objective to harmonise electronic payments within the Eurozone will greatly impact public sector organisations, helping to simplify payment and increase efficiency. In uncertain times like these, where many public sector organisations are facing budgetary cuts from their Member State governments, the benefits to this sector will be of great interest. The banking sector are preparing for the change by forming project teams to assist organisations with impact assessments to meet the required SEPA standards and the changes ahead. These are all topics that could be highlighted to this sector to increase awareness of how to meet their requirements and how these requirements could benefit them.

Thank you for your time. 

Michiel Willems © 2012 CP Publishing Ltd. Pictures: /

Wednesday, 1 August 2012

Comment - A Google Gesture

Search engine Google has offered to settle an ongoing antitrust investigation by the European Commission in an attempt to end possible proceedings against the web giant. 

Last month, Google’s chairman, Eric Schmidt, sent a letter to European Commissioner Joaquin Almunia, expressing his hope that a deal could prevent a fully-fledged and in-depth antitrust investigation, which could lead to hefty fines of up to 10% of the search giant's annual revenue.

Google’s move does not come as a surprise, since Almunia urged Google in May to ‘make concessions’ and ‘offer remedies’ in order to avoid an all-out antritrust investigation. The US search giant did not have many other options than to respond to Joaquin’s request swiftly, since the Commissioner had made it clear that if the internet company failed to respond Almunia would take that as a refusal to adjust its business practices, and the Commission would not shy away from sending a formal antitrust complaint to the US-based company.

Although Schmidt’s letter was not made public, Google said Schmidt addressed the ‘four areas of concern’ that the Commission had singled out last month. Almunia had said it would look into the unequal treatment of third-party vertical search links; search engines specialised in particular queries, such as travel searches. He would also consider investigating whether Google is systematically copying content – without authorisation - from those vertical search engines (such as travel and restaurant reviews). Furthermore, Almunia believes that Google’s AdSense unfairly excludes competing ad networks through exclusivity requirements in the agreements with its partners. Finally, the Commission is alarmed by Google AdWords’ terms and conditions, which impose contractual restrictions on software developers, preventing them from offering search terms across other platforms for search advertising. 

For Google, three of the four issues should not be too difficult to address, but a fair placement of the vertical search links in its search results is more problematic. It goes to the heart of Google’s ability to control its search experience and algorithm. And for a company that controls 90% of Europe's search traffic it will be hard to amend its business model in such a way that competitors and other search engines will not top the list without satisfying the European Commission. 

Furthermore, Google’s success can be partly explained through a practice called ‘predatory pricing’; offering products at a price that is below their cost of production. In many countries, such as France, this is outlawed, unless it can be objectively justified. Google is offering many of its products free of charge so it is therefore not surprising that many smaller web companies – such as Expedia and Trip Advisor - are eagerly awaiting the EC's response to Google’s letter. Their case will be that Google is not really prepared to make any sincere and fundamental changes, since that might mean the beginning of the end of the company’s European success.

However, Google surely has not forgotten what happened to computer giant Microsoft in March 2004: the EU ordered Microsoft to pay a fine of £381 million for abuse of its dominant position, the largest fine ever handed out by the EU to one single company. So far that is, because should the settlement offer fail, Google could face a fine up to $3.79 billion, a maximum of 10% of its global revenue last year. 

Michiel Willems © 2012 CP Publishing Ltd. Picture: / 

Wednesday, 25 July 2012

Britain “not in a position” to prevent Olympics match fixing

Experts have expressed their concerns that match fixing and sports fraud will pose a serious threat to the London Olympics, which are due to start this Friday in the British capital, since gambling businesses based offshore cannot be obliged to share information with sporting bodies, the UK Gambling Commission or the London Organising Committee for the Olympic Games (LOCOG).

Mike Morgan, of Squire Sanders, explains “the UK Government is not in a position to compel operators that fall outside of its jurisdiction to share information”, and the Government “can scarcely be blamed for the activities of offshore operators and bookmakers that fall outside of its jurisdiction”. He points out “more has been done to combat the specter of sporting fraud in preparation of these Olympic Games than any other”.

John Cloke, an Associate at DLA Piper in London, does foresee issues since “those who would seek to manipulate events are more likely to place their bets with bookmakers in a less well-regulated market.” London-based Andrew Danson, of K&L Gates, also stresses that “no [UK] legislation could obtain information from black market operators”.

The industry, meanwhile, has taken its own measures. Because of the “limited jurisdictional reach of the UK parliament”, as Cloke calls it, a number of betting companies issued a statement of intent on 26 June, pledging to report all unusual betting patterns to the Gambling Commission, to not knowingly take bets from anyone accredited by the International Olympic Committee (IOC), to offer a 24-hour reporting service, and suspend any bets if ordered to do so by the Gambling Commission.  

No doping test for corruption
Morgan called the statement “a commendable initiative” and thinks it “may well act as a deterrent from any individuals who seek to defraud the betting markets by manipulating a sporting event”. However, he stresses “that not all acts of sporting fraud are intended to defraud the betting markets. The aim may simply be to ensure a higher standing for a team or an individual. In such event, betting patterns are unlikely to reveal any suspicious activity.” Danson agrees: “Unfortunately, there is no doping test for corruption.”

Last January, it was announced that the IOC, the Gambling Commission, the Metropolitan Police, the UK Border Agency and a number of gambling operators will meet on a daily basis during the Games, to detect suspicious betting patterns, and to evaluate whether any athletes are intentionally underperforming for personal gain.

Michiel Willems © 2012 CP Publishing Ltd. Picture:

Thursday, 19 July 2012

Experts not impressed by EU’s single patent system

Leaders of the European Union agreed on 29 June to create a single EU Patent System and to establish a European patent court, which will be headquartered in Paris with two specialised divisions in London and Munich. Most industry experts, however, have expressed their disappointment and concern about the deal.

Although Hiroshi Sheraton, of McDermott Will & Emery in London, called the agreement “a major breakthrough, after over 40 years of failed negotiations and discussions”, Mark Owen, of Harbottle, classified the document as “a huge piece of Euro-fudge. A solution which no-one can possibly think is perfect, or even nearly good enough.” 

James Boon, of Bristows, stressed “it is possible that in practice the new regime will encourage businesses to move out of Europe.”
“Having an EU wide trade mark and not having an EU wide patent is a weird position under EU intellectual property law, but whether creating one is a positive move, I don't know,” said Vanessa Barnett, Partner at Charles Russell in London.
The new European patent system should make it “cheaper” to get patent protection with unitary effect in most EU Member States and “the single court will allow disputes to be resolved once and for all for the entire continent, except Spain and Italy,” said Sheraton. “It will avoid complex, expensive and potentially conflicting multi-national litigation across different EU states.”
However, Boon said about the cost saving argument it is “likely to hold true for companies wishing to apply for a patent in a large number of states, but the new unitary patent may be no cheaper than applying for a European Patent and designating two or three key territories.” Owen went even further and called the “current solution a recipe for confusion and expense, precisely the two things the whole exercise was supposed to avoid.”

Owen fears “the EU patent will be too fragmented from the very start. The trouble is that engagement with the issue by politicians, national IP offices and the relevant professions has all come too late, and as a result reason and sense have been sacrificed.” Barnett does not think “an EU patent court would have sufficient depth of specialist judges or technical expertise resources to be able to deal with the range and volume of patent claims.” 

The European Parliament is expected to vote in the next few months on the agreement of the Council of Ministers.

Michiel Willems © 2012 CP Publishing Ltd. Picture: / /

Wednesday, 11 July 2012

Interview: Jake Berry MP

Michiel Willems spoke to Jake Berry, Member of Parliament for Rossendale and Darwen, and a former City solicitor, on the government’s role in developing and regulating the mobile phone industry, broadband issues and the future of the UK’s online infrastructure.

Jake Berry MP
How do you see the future of the mobile phone in the UK?
Already great strides have been made with the availability of many ‘apps’ giving mobile phones the flexibility of being more than just a communication tool. Indeed, one of the newer apps is to summon a taxi and have it arrive within minutes that takes you to the destination you have programmed and finally charges the cost to a credit/debit card and emails the receipt to the passenger.

What should happen to give mobile payments a breakthrough with the mass audience?
It is down to the banks and retailers to make a breakthrough with the mass audience. Without the participation of the majority of retailers and all banks it would not be viable. Costs and security issues would also have to be taken into account. As banks, retailers, phone manufacturers and many others are involved, there needs to be a common set of protocols and standards.

Do you think the current government is giving the telecoms industry the space to grow and develop?Yes, the British Government is undertaking a wide-scale review of the regulatory framework supporting the communications sector. The aim is to strip away unnecessary red tape and remove barriers to growth. The wider public interest will underpin the way we address these issues.

Do you think the Government should regulate the mobile industry more?
The Government is committed to the principle of independent regulation and will ensure that Ofcom has the right powers and duties to work in a way that gives businesses confidence in the regulatory system. It is crucial that the Government implements a deregulated framework suitable for the digital age and properly oriented towards growth is required in order to take account of the rapid pace of change in new communications technologies in the last few years.

How do you see the future of the internet?
Many of the most dynamic developments in broadband are in wireless devices and the development of very high data rates in mobility. Whether in the home or outside, consumers are enjoying services and content over devices which connect wirelessly.

Could give an example?
Grant Shapps MP, Minster for Housing, is calling on every social landlord to look long and hard at how they can help their tenants get online, from offering networks of public internet cafes to providing the technology to log on at home. The Minster for Housing said internet connectivity is considered by many to be the fourth essential utility, and should be a necessity, not a luxury. The Government is committed to helping demolish the unacceptable digital divide that is blocking social mobility for millions of council tenants.

Will the UK infrastructure be able to cope with increasing data demands?
The current Mobile networks were engineered to support a real-time voice service which supported roaming between cells. Today, devices such as Apple’s iPhone and iPad make very different demands on the network infrastructure, requiring operators to meet customer expectations of mobility, but with rapidly growing demands for data downloads.
Broadband infrastructure investment is vital in supporting the overall growth agenda. Rural and remote areas of the country should benefit from this infrastructure upgrade at the same time as more populated areas, ensuring that an acceptable level of broadband is delivered to those parts of the country that are currently excluded. Infrastructure sharing and new overhead deployment can play an important role in delivering superfast broadband that meets increasing data demands.

Do you embrace the concept of net neutrality?
Yes. The Internet has brought huge economic and social benefits across the world because of its openness and that must continue. Technology neutrality will be an essential criterion, as we believe a mix of technologies will be needed. It will be important that Government maintains its commitment to technology-neutral solutions for broadband.

Thank you for your time.

Jake Berry - Member of Parliament for Rossendale and Darwen
House of Commons
Twitter @jakeberryMP

Michiel Willems © 2012 CP Publishing Ltd. Pictures: /

Friday, 6 July 2012

Snooping, sharing and shifting

Many offices around the world sent their employees an urgent message on 6 June: ‘Please change your LinkedIn password immediately’, as the news spread that millions of accounts of the professional networking website had been hacked. 

Nearly 6.5 million LinkedIn passwords ended up in the wrong hands and were posted on an online forum by cybercriminals. And it was not only LinkedIn that was a victim of a the latest data security breach; the online dating website eHarmoney also admitted that nearly 1.5 million of its passwords had been stolen and music website also suffered a major password leak. 

Although the three companies invalidated the embezzled passwords and they were quick to send out instructions to their affected customers telling them how to reset their accounts, the damage had been done. Analysts say it is not unlikely that criminals have scrutinised and copied millions of accounts and will try the same passwords – in combination with the corresponding usernames, usually email addresses – on other popular websites, such as Gmail, Hotmail, Twitter and Facebook. After all, many people use the same email address and password for a range of websites.

Who is snooping?
Obviously, it was not LinkedIn’s best month since the company launched 10 years ago. And the password leak sent shudders through the industry: if this can happen to such a big and popular website, who says it won’t happen to smaller, less well-protected players?

Experts, meanwhile, are convinced the internet is increasingly becoming a dangerous data jungle. Data is being copied, transmitted and passed on to advertisers, credit card details are being sold, twitter, hotmail and gmail accounts used to send round viruses and spam, while login details are publicly available online. 

Without trying to scare away the average internet user, many fraud experts do admit protecting your login details and other sensitive data has become more difficult than ever before in the history of the internet. The number of cyberattacks, tens of thousands each single day, are quickly increasing and, worryingly, consumers are mostly not even aware an attack has taken place or data has been stolen or shared without their consent. Mass hackings like the users of LinkedIn and eHarmony experienced at the beginning of June are rare and do make headlines, but many industry experts warn about all those smaller attacks you never hear about. Who is snooping, sharing and shifting is increasingly becoming one big blur. Keeping the same password for months on end has become a convenience one cannot longer afford.

Michiel Willems © 2012 CP Publishing Ltd. Picture: / Original Artist 

Monday, 2 July 2012

Payment integration under pressure as Europe battles with Eurocrisis

LONDON - The financial crisis and the uncertainty about the future of the Euro put progress of ambitious European payment integration plans, such as the Single European Payments Area (SEPA), increasingly under pressure. 

"The Spanish bail out and discussions about deeper Eurozone integration may slow down SEPA," said Michael McKee, Partner at DLA Piper in London, while Mark Taylor, Partner with Hogan Lovells, thinks that “the focus and priority of regulators and governments is inevitably drawn elsewhere. There is a risk that this may lead to a slower rate of progress.”

According to Nathalie Moreno, of Speechly Bircham, “the impacts of increased lending and bailouts to keep the Euro afloat will surely affect the ability to make a certain decision on the future of SEPA”.
To make SEPA a success “we surely would need to ensure we have a Euro”, said Gareth Lodge, a Consultant at Celent. McKee agrees with Lodge: “There is no question that the SEPA project is fundamentally tied up in the future of the euro itself."

The crucial role that banks play in the development of SEPA raises concerns since “those banks who have heard of SEPA, and an alarming number still have not, are placing big bets as a way of capitalising on their strengths and their competitors weaknesses. Whilst others are simply trying to survive the month”, said Lodge. 

Euro in jeopardy?
Regarding the EU Green Paper, published in February and calling for an integrated market for card, internet and mobile payments, Moreno believes that “as the markets fragment more it is difficult for many to reconcile a unified approach to enable efficient cross border payments”.
“SEPA is more and more political”, said McKee. That is “why the Green Paper raises issues about mandatory completion times and about SEPA governance; a coded threat that the Commission, European Central Bank and Member States want to wrest more control of the [SEPA] project from the banking industry." Moreno agrees with McKee: “There is a worry that regulatory intervention could hamper the banking sector’s competitiveness in the global marketplace and also lead to the lack of development and innovation in this space.”   

There are also concerns whether the SEPA migration deadline of February 2014 is still realistic: “There will be more than a handful of banks and corporates who will miss the deadline. The questions then are how many, by how much and how long are they given,” said Lodge.

Michiel Willems © 2012 CP Publishing Ltd. Picture: /

Wednesday, 27 June 2012

Interview: Lin Junqiang, of the Chinese Central Government

As the online commerce market in China is rapidly expanding, businesses and consumers are demanding an update of the country's complex regulatory framework. A range of decrees, regulations and provincial frameworks are currently in place, regulating issues such as domain names, internet surveillance and monitoring, electronic signatures, telecommunications, online content control, contract law, IT security, internet access and copyrights.

Although the need for an update to the existing rules, and one central law, is rapidly growing, the complex legal framework that regulates e-commerce activities in China will not be updated “for another five years”, according to LIN JUNQIANG, Deputy Director of the Information Centre at the Industry and Commerce Ministry, part of the Chinese Central Government in Beijing. JUNQIANG spoke exclusively to Michiel Willems in Shanghai.
How are e-commerce activities in China regulated?
Although there is no specific e-commerce law, other laws are suitable and provide a framework for e-commerce. The Government and the provinces have the right to make different regulations for different provinces. The most difficult aspect of monitoring online business is being able to get evidence to prove an online business is providing fake products, as people can easily withdraw their site and online registration. 

Copyright is a big issue in China, and the rest of the world, indeed. What action has been taken to tackle copyright infringement?
Let me give you an example, the illegal Beijing market has been closed so there are no fake products being sold there now, although there are still fake products online.

Are internet service providers responsible for the websites they offer?
Providers of internet connections have a duty to assist the Government, to close websites if the Government asks them to, but internet service providers cannot do the job alone as it is very difficult to monitor the whole online space.

What does the Chinese Government monitor?
That is the most difficult issue right now. We are currently trialing an approach in a number of different provinces. The approach is aimed at making sure that all citizens’ online registration details are correct. We will then spread this approach across the nation gathering correct online registration information to a central government database, at which point we will gather feedback on the approach.

Are there rules for online advertising in China? And what happens if an advertiser goes too far?
There is no law on this matter, but we do have e-commerce institute regulations that deal with these issues. If an advert goes too far then the advertisement law applicable to traditional ads will be applied to the online ad and the Government will get involved.

And what happens then?
There are several steps to take: a warning is given to pull the advert offline, a fine or penalty can be issued and if that does not work, the issue can go to court and the offender sued.

What about personal information being shared and sold to advertisers?
China is different than the UK. Information protection is not a duty of the Chinese Government. Banks and similar institutions are responsible for protecting consumer data and the technology to do so is advanced. The Government has two roles in protecting private information. Firstly, it develops laws to protect private information, and secondly, the Government will take action against companies that disclose private information, which occurred recently on a national scale.

How does the Government deal with cyber crime?
The Chinese Government does not have a duty to protect personal information; third parties have that duty. Neither does the Government have a duty to guarantee the safety of a website.

If a product bought online is delivered to a consumer’s home and it turns out to be faulty, do any laws protect the consumer?
In China the payment method protects the consumer. A third party keeps the money during the transaction so if the product is faulty the money will not go to the supplier but back to the customer. There is also another way to pay, once a product is bought online a delivery driver brings the product to the customer who then checks the product and if they are happy with the item, they pay the delivery driver who then passes the money on to the supplier.

Is the spur for the new e-commerce legislation in China due to the rise in e-commerce or a reactionary move due to the problems faced by illegal online activity?
A bit of both. The Government wants to develop a new e-commerce law because of the fast increase in e-commerce and with that the increase in e-commerce related problems. Chinese businesses see a rise in law suits and there are more and more user complaints.

I understood you have been on a number of business trip recently, to learn from other countries?
That is right, China has started looking at other regulatory systems around the world to learn.

Which countries are you looking to learn from?
In the last twelve months we visited Japan, Germany, the UK and the US to research the approach to e-commerce regulation. E-commerce is more developed in Germany and the UK than elsewhere in Europe. The law systems are different, so we made sure we went to developed countries to learn from them.

And what were your findings? Are there lots of differences between the countries?
Certainly, we noticed a lot of differences. While the US has a very general, broad system, Japan is very detailed. There are common problems. Comparatively the US has a much more general framework than Japan and Korea, who have more detailed and strict legislation. Japan is very detailed, the US is more flexible.

So, would China lean towards a more strict or flexible model?
Related to our constitutional system we would go for a more detailed approach. China will opt for a more detailed framework, based on the Japanese model but then with a Chinese approach.

When do you expect to have the legislation complete?

Not for a long time. In China, we first make the regulations and then the law. It will take a long time, at least another five years. In the meantime the regulations can control the situation until the law is ready.

So the regulations will be temporary until you have developed the law?
We will keep the regulations until the law is made. If some regulations are in conflict with the new law, the regulations will be scrapped.

How do you see the future of the e-commerce market in China?

There is a developing trend in e-commerce across the globe. All countries are facing the same sudden increase, so it is necessary to develop nationwide regulation to control the illegal behaviour that comes with this increase. We are currently researching e-commerce and the regulations in countries like the UK to complete this business area. The Chinese Government is trying to find technical methods to solve these problems and that is why we are communicating with people in the UK who are doing the same job and who are facing the same problems.

Thank you for your time. 

Michiel Willems © 2012 CP Publishing Ltd.Pictures: / / / /

Tuesday, 26 June 2012

China in need of new laws as “monitoring the internet is very difficult”

SHANGHAI - The complex legal framework that regulates e-commerce activities in China will not be updated “for another five years”, according to Lin Junqiang, Deputy Director of the Information Centre at the Industry and Commerce Ministry in Beijing, who spoke exclusively to Michiel Willems in Shanghai. 

Junqiang said “it will take time” before China will have agreed on new legislation. Although the Chinese Government is planning to “bring in a new law, as there is currently no [central] law”. Junqiang stressed “this will take time” and any new “legislation will not be ready another five years”.

Currently, a range of decrees, central government regulations and provincial frameworks regulate issues such as domain names, data protection, consumer rights, electronic signatures, telecommunications, online content, e-contracts, IT security, internet access and copyrights. As the Chinese market is expanding rapidly, a growing number of businesses, consumers and investors are demanding an update and simplification of the country’s complex regulatory framework.

Junqiang said a new law is needed because “China is facing a range of challenges. The current regulations can not keep up with the rapidly evolving technology. Chinese businesses see a rise in law suits and there are more and more user complaints.”

Therefore, China has started “looking at other regulatory systems around the world to learn”. In the last twelve months Junqiang and a delegation of government officials have visited Japan, Germany, the UK and the US to research the  approach to e-commerce regulation. “We noticed a lot of differences”, said Junqiang. “The US has a much more general framework than Japan or Korea, Japan is very detailed.” China will opt for “a more detailed framework, based on the Japanese model but then with a Chinese approach”, Junqiang said, adding that this is necessary because “monitoring the internet in China is very difficult”. 

Junqiang stressed that “internet service providers have a duty to assist the Government.” Service providers in China “have to close websites if the Govermnent asks them to, but providers alone cannot do the job as it is very difficult to monitor the whole online space.”
Junqiang said that, until the new law is ready, “the [current] regulations can continue to control the situation”.

Michiel Willems © June 2012 CP Publishing Ltd. Picture:

Wednesday, 20 June 2012

Cash payments in UK more common in 2011

Consumers are increasingly using cash to make payments in store in order to keep track of their spending, the British Retail Consortium (BRC) said on 8 June. 

“Customers are more likely to be paying with cash”, said Tom Ironside, Director Business and Regulation at the BRC. “They have less money. They are buying things only as and when they need them, and spending less each time.”

The use of cash in 2011 was up by 5.7% compared to 2010. The BRC based its figures on 9.5 billion transactions in British shops. Tom Ironside: “In 2010 financial worries were putting people off running-up debt and they turned away from cards. Now times are even tougher.”

The figures come only weeks after the Court of Justice of the European Union, on 24 May, rejected a legal challenge by MasterCard that the European Commission’s decision to classify cross-border transaction fees as uncompetitive. The fees are charged by a cardholder's bank to a merchant's bank for each card transaction. MasterCard had agreed to lower its charges in 2009 but the EU Commission believed Mastercard had not gone far enough. 

Michiel Willems © 2012 CP Publishing Ltd. Picture: