NHS Prescription Services the impact of legacy ICT 1 AUGUST 2013 NHS Business Services Authority The National Audit Office scrutinises public spending for Parliament and
is independent of government. The Comptroller and Auditor General C&ag), Amyas Morse, is an Officer of the House of commons and leads
publicâ services Contents Summary 4â Part One 6â The National Audit Office's assessment of government's legacy ICT 6â
The NHS Business Services Authority 8â Prescription Services 8â The service model 11â Part Three 14â
Financial and performance analysis 14â Service and system performance 14â Financial analysis 17â Part Four 20â
4 Summary NHS Prescription Services: the impact of legacy ICT Summary 1 The NHS Business Services Authority (the Authority) is an arm's-length body of
the Department of health. NHS Prescription Services is one of the services supplied by the Authority. It calculates how much pharmacists,
GPS who dispense and appliance contractors should be paid as reimbursement and remuneration for medicines and medical devices dispensed to patients from NHS prescription forms
NHS Prescription Services: the impact of legacy ICT Summary 5 ï The newer CIP system, operational since 2007, has improved the speed and
6 Part One NHS Prescription Services: the impact of legacy ICT Part One The National Audit Office's assessment of
services to digital channels as per the'digital by default'strategy as set out in the
users of digital services have become accustomed. Additionally, the improvement of public services through their redesign can take longer
NHS Prescription Services: the impact of legacy ICT Part One 7 Subsequently the Cabinet Office issued further advice6 providing more detail on the
ï The prescription processing service operated by the NHS Business Services Authority using the 6 year old Capacity Improvement Programme system and its
8 Part Two NHS Prescription Services: the impact of legacy ICT Part Two The NHS Business Services Authority
2. 1 The NHS Business Services Authority (the Authority) is an arm's-length body of
the Department of health. It was established on 1 october 2005 and became fully operational on 1 april 2006. It brought together five previously separate NHS groups
Prescription Services 2. 2 NHS Prescription Services, which is one of the services supplied by the
Authority, calculates the remuneration and reimbursement due to pharmacists, GPS and appliance contractors for medicines and medical devices dispensed to patients
from NHS prescription forms. The Authority processes more than four million prescription items every working day and payments amount to around £9 billion a
services form a significant part of the role of the Authority, they are beyond the scope
NHS Prescription Services: the impact of legacy ICT Part Two 9 Prescription pricing ICT 2. 4 The Authority currently uses two ICT systems to process prescriptions:
aim is to transfer all remaining prescription services to the CIP system and decommission the legacy system
pharmaceutical services (Figure 1). The business rules for these customer groups have not yet been added to the CIP system
services, an alternative contractual arrangement set up in 2006 that is slowly being phased out Source: National Audit Office analysis
10 Part Two NHS Prescription Services: the impact of legacy ICT 2. 7 The Capacity Improvement Programme was started in 2005 and the new CIP
Prescription Services. Investing in enhanced electronic submissions through EPS could also be a significant tool in combating known prescription fraud.
NHS Prescription Services: the impact of legacy ICT Part Two 11 The service model 2. 11 Figure 2 shows the components of the prescription pricing service and defines
services and the EPS service was transferred to the NHS Commissioning Board from 1 april 2013 ï In 2011-12, there were 930 full-time equivalent staff operating the prescription
ï Services NHS Prescription Services calculates how much its customers should be paid as reimbursement and remuneration for medicines and medical devices
12 Part Two NHS Prescription Services: the impact of legacy ICT Figure 2 Prescription pricing service model
1. Information services are beyond the scope of this report Source: National Audit Office analysis
NHS Prescription Services: the impact of legacy ICT Part Two 13 2. 12 Figure 3 shows that where the legacy system requires manual input of line items
14 Part Three NHS Prescription Services: the impact of legacy ICT Part Three Financial and performance analysis
3. 1 In this part of the report, we analyse the investment the NHS Business Services Authority (the Authority) has made in the Capacity Improvement Programme (CIP) and
NHS Prescription Services: the impact of legacy ICT Part Three 15 Figure 4 Volume and breakdown of prescription line items
The number of line items processed by NHS Prescription Services has grown by an average of 5
16 Part Three NHS Prescription Services: the impact of legacy ICT Figure 5 Performance against accuracy target
NHS Prescription Services: the impact of legacy ICT Part Three 17 Financial analysis Expenditure on the prescription pricing service
3. 6 The Authority spent £40. 7 million on operating the NHS prescription services in
18 Part Three NHS Prescription Services: the impact of legacy ICT Figure 6 Comparison of forecast and actual savings
NHS Prescription Services: the impact of legacy ICT Part Three 19 central ICT contract and may not therefore represent the true costs.
20 Part Four NHS Prescription Services: the impact of legacy ICT Part Four Our enterprise analysis of the NHS
highlights a key finding and the scores we have allocated the NHS Business Services Authority (the Authority) as part of our assessment.
NHS Prescription Services: the impact of legacy ICT Part Four 21 4. 3 Less than 1 per cent of transactions are carried still out on the legacy system and
services and the EPS service was transferred to the NHS Commissioning Board from 1 april 2013 4. 5 The Channel Islands and the Isle of man currently use a different format of
10 NHS Business Services Authority Business plan 2012/13, available at http://www. nhsbsa. nhs. uk/Documents/NHSBSAANNUALREPORTS/NHSBSA BUSINESS PLAN -2012-13
11 NHS Business Services Authority Strategy 2012-2017, available at http://www. nhsbsa. nhs. uk/Documents/NHSBSAANNUALREPORTS/Strategy 2012-17. pdf
22 Part Four NHS Prescription Services: the impact of legacy ICT 4. 7 We consider that the paper-based scanning process is a legacy process, and we
NHS Prescription Services: the impact of legacy ICT Part Four 23 4. 11 The Authority has adopted an enterprise architecture approach to ensure
alignment of IT and business services, and the ICT strategy is in the process of being refreshed to improve consistency with the corporate strategy and business plan.
24 Part Four NHS Prescription Services: the impact of legacy ICT 4. 15 Platform support is outsourced to the IT service provider (Capita), and application
NHS Prescription Services: the impact of legacy ICT Part Four 25 Figure 8 ICT performance against availability target
4. 19 The arrangements in place to manage the supplier services are adequate, with regular service review meetings taking place between the Authority's service delivery
26 Part Four NHS Prescription Services: the impact of legacy ICT People Our assessment Key finding Now Future
NHS Prescription Services: the impact of legacy ICT Part Four 27 4. 25 The IT service provider is responsible for the disaster recovery and perimeter
28 Part Four NHS Prescription Services: the impact of legacy ICT 4. 30 The proposed refresh of the scanner equipment is expected to increase the
NHS Prescription Services: the impact of legacy ICT Part Five 29 Part Five The lessons learned from the impact of legacy
enterprise analysis to draw out the key lessons the NHS Business Services Authority the Authority) has learned from the impact of legacy ICT on prescription services
Figure 9 and Figure 10 5. 2 This case study is an example of an organisation that identified issues with its
Prescription Services is growing and there is pressure to reduce costs and improve the efficiency of the prescription service
30 Part Five NHS Prescription Services: the impact of legacy ICT Figure 9 Enterprise analysis summary assessment
NHS Prescription Services: the impact of legacy ICT Part Five 31 Figure 10 Lessons from the prescription pricing service
32 Appendix One NHS Prescription Services: the impact of legacy ICT Appendix One Timeline History of prescription pricing systems
NHS Prescription Services: the impact of legacy ICT Appendix Two 33 Appendix Two Methodology Our methodology centred on the application of our business analysis toolkit.
34 Appendix Three NHS Prescription Services: the impact of legacy ICT Appendix Three Enterprise analysis framework
Ongoing costs Costs of the services are understood fully and managed against a budget and prioritised business demands.
NHS Prescription Services: the impact of legacy ICT Appendix Three 35 Decommissioning legacy All legacy systems have been identified and
Management of supplier services Outsourced services are managed actively and regularly market tested to ensure value for money,
36 Appendix Three NHS Prescription Services: the impact of legacy ICT Process Business processes Development or improvement of business processes is
NHS Prescription Services: the impact of legacy ICT Appendix Four 37 Appendix Four National Audit Office reports on government
38 Appendix Four NHS Prescription Services: the impact of legacy ICT Published client reports, focused on ICT
Shared services in the Research Councils, October 2011 Infrastructure 10 Department for Environment, Food and Rural affairs:
NHS Prescription Services: the impact of legacy ICT Appendix Four 39 People delivering and operating government ICT
services through the Business Reform Programme, July 2012 DP Ref 10184-001
ICT, E-BUSINESS AND SMES ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT 2 FOREWORD This report was undertaken by the Working Party on the Information Economy (WPIE), and
Digital products and information services...5 Skill upgrading...5 Intangible investments and assets...5 Information...
effective use of broadband services require policies that: promote effective competition and continued to stress liberalisation in infrastructure, network services and applications across different technological
platforms; encourage investment in new technological infrastructure, content and applications; and technology neutrality among competing and developing technologies to encourage interoperability
Digital products and information services These are an increasingly significant part of economic activity and they offer important
On-line provision of government information and services can increase the efficiency and coverage of public service delivery to small firms,
broadband-based services and content, provide demonstration and â€oepull-through†mechanism for small firms. Government demand aggregation to provide services can help spread new services more widely
Education, general government information and services, and provision of government services to businesses and citizens can all potentially benefit from the use of new high-speed infrastructure and
services, and should be given priority in government strategies Key Policy Recommendations •Move beyond policies for basic connectivity and ICT readiness to facilitate more widespread uptake
and use of complex ICT applications and e-business uptake by small firms. Target programmes where
there are demonstrated market failures (e g. R&d incentives, frameworks for standards, skill formation information and demonstrations on best practice
liberalisation in network services and applications. Where the needs exist, and without preempting private initiative or inhibiting competition, complement private investment with public financial assistance to expand
E-government services to enterprises should be used as a tool to improve efficiency of government interactions and operations with SMES
communications and quality of services for established and new customers Despite these advantages, rapid growth in businesses†purchases and sales over the Internet has
small-firm systems, network infrastructure and Internet-related support services. Lack of reliable trust and
consultation services and employee and management training to enhance ICT and managerial skills Policies have shifted over time as firms
the sale or purchase of goods or services conducted over the Internet, with the goods and services ordered over the Internet,
and payment and ultimate delivery of the goods or services either on line or off line.
The OECD€ s broad definition includes transactions conducted over computer-mediated networks, such as the Internet, EDI (electronic data interchange), Minitel and interactive
services or technologies can enhance the quality of a firm†s services to customers and attract new customers.
By collecting information on customers†needs, it can be used for product development or innovation. A home page with a direct link to
via e-mail, providing information about a company†s products, services and technologies via the corporate
include providing product information (56%),setting up a Web page (54%),purchasing goods/services 53%)and building customer connections (48%)(Scally et al.
Denmark and Norway also survey personal services 1. Beginning of 2001 for Internet use; purchases and sales refer to 2000, for Canada,
In mid-2003, e-Choupal services reached more than 1 million farmers in nearly 11,000 villages.
goods or services did not lend themselves to Internet transactions Figure 7. SMES in Europe:
Some SMES in transport services also consider that the Internet does not suit their industry.
If firms can access affordable outside ICT services, lack of ICT expertise within the firm is not
services for system maintenance can be dangerous because firms that conduct e-commerce have to live
If ICT support services, especially in an emergency, are needed to minimise the loss from a system malfunction, the e-commerce system of the firm
The existence of local ICT services is an important issue, especially for small offices in remote areas or emerging economies, where ICT services
are generally scarce and costly 21 Box 3. A magnet manufacturer†s e-commerce success Ni-roku is a Japanese magnet manufacturer with 12 employees,
Logistics services, e g. package collection and delivery, also matter. While they can be subcontracted to private delivery services, some may charge higher rates to small businesses because of
their location and/or small volume (Phillips, 2002. This is a real concern for small businesses, especially
those in remote districts where private package collection/delivery services may not be available at reasonable cost.
The availability of a wide range of Internet connections and other communication services preferably at competitive prices, is very important in that it allows small businesses to choose different and
appropriate services according to their specific needs and (initial) expectations from on-line activities Fixed telecommunication networks are likely to continue to serve as the primary means of
very rapidly growing and globally competitive IT and ICT-enabled services industry 23 Figure 9. Fixed and mobile phone growth in seven non-OECD countries and the
Developing countries with widespread access to telecommunications and network services i e. 40 mainlines or more per 100 people) are rare.
services. For low-income and rural populations, universal access programmes are needed to make adequate telecommunications available in areas where telecommunication operators cannot
%of total revenues to a fund aimed at providing services to those excluded from the market
higher percentage of firms in manufacturing, wholesale and business services receive orders over the Web
%Construction Retail Wholesale Manufacturing business services Distribute information on products Receiving orders Order confirmation Source: European commission (2002a
and business services: 910 Tourism In tourism, an area dominated by SMES in OECD countries, some small tour operators, hotels
expensive) services. Some small travel agencies, making the most of ICT, take advantage of direct on-line sales of (discounted) airline tickets
air tickets and other travel services, small firms offering best/better prices can win price-sensitive
and services, is not small: in the United states, over 64 million people used the Internet for travel planning, little changed from 2002 due to the slower growth of â€oewiredâ€
Use of Internet commerce among SMES in the retail industry is lower than in business services
level of services from better-known retailers, such as swift and reliable delivery of the purchased items
services, which customers may not receive from larger shops. Some small on-line book retailers have been successful by distinguishing themselves from others through specialisation in particular kinds of
worldwide by offering both specialised products and customised services (Box 5 33 Textiles Textile products,
products of services like tourism, which are intangible in nature and have a high information content,
-business strategies, awareness raising and consultation services, and management education and training Governments have used many policies to encourage the diffusion of e-business and Internet use
and communication services at competitive prices is particularly important, as this allows firms to choose
services appropriate to their needs. In particular, broadband, characterised by high-speed, â€oealways-on†connection and two-way capability, allows faster access and delivery of existing on-line services and new
applications and services such as streaming audio and video over the Internet with much higher quality.
In this context, an additional focus on the wireless network infrastructure and the rapid growth of Wifi are
incentives for new investment in broadband access and drive faster deployment of broadband services OECD, 2001c.
High-speed services are advantageous when priced on a flat-rate monthly basis and service is â€oealways on†(OECD, 2001b
can choose among various technologies and services for high-speed Internet access. While some large firms use directly connected leased circuits for broadband applications,
developing countries, multi-user services can be a very important tool for increasing coverage and use of
advanced services and could be supported where universal service is difficult to attain (see E-Choupal
awareness-raising and consultation services can be beneficial. Such initiatives can also encourage SMES to
and personalised services not provided by larger firms. On the cost side, open source software has been proposed as an economically viable solution for establishing
especially when consultation services are provided to help develop business strategies based on realistic assessments of benefits and costs
that their use of on-line services is secure, reliable and verifiable. Businesses need a legal framework that is
E-government, the provision of government services on line, has high priority in many OECD
transparency and expanded provision of information and services (OECD, 2002b. Examples include the provision of government services on-line, the simplification of administrative tasks such as value-added
tax administration and business tax lodgement and collection. These on-line activities can also have significant effects on small businesses as they need to ensure access to government services and obligatory
requirements and interoperability with these services, affecting their choice of systems and software Technology neutrality and the interoperability of a variety of network infrastructures and software is
essential when initiating e-government projects In addition, e-government activities have demonstration effects for SMES by providing them with
invoicing, supply chain management, inventory, logistics and delivery, after-sales services, and other crucial business functions such as knowledge management, and finance.
of e-business issues with links to related support services, seminars and workshops that demonstrate possible integration of ICTS and e-commerce into SMES€ processes are common (Table 2). Government
Some government programmes have included one-to-one consultation and support services to develop a customised e-business strategy.
Free consultation, including (limited) access to private services has been available in some countries, while some governments have covered part of charges.
conjunction with ICT and e-commerce awareness and business consultation services. This reflects the recognition of the importance for small business managers and employees of ICT applications and required
information and consultation services with off-line business support services. The Learndirect programme offers both on-line access to ICT training and off-line consultation with trained staff at local Learndirect
Commercial training services may be more sensitive to businesses†changing and specific needs and government training programmes need to
cooperate fully with commercially available services. Governments may also need to encourage a favourable business environment for provision of private ICT training services at a reasonable cost
Business management capabilities are becoming a new category of generic competency in the context of overall management of business processes, rather than ICT technologies alone.
At a state level, various training services are available. Business Information Centres and Small Business Development Centres provide free or low-cost up-to-date training.
and the development of niche products and services. Reduce discriminatory access to finance, and improve information regarding financing opportunities
training institution and commercial training services •Continue to ensure open, competitive telecommunication markets that offer a range of
interoperable technological options and network services (particularly broadband) of appropriate quality and price. This is a crucial factor in developing non-OECD countries
Article 20 (2) of the Services Directive...67 4. 3. 2 Access to capital for SMES...
4. 6. 1 Delivery services in an e-commerce environment...89 4. 6. 2 Delivery problems...
4. 6. 3 Parcel and express delivery services under the Postal services Directive...91 4. 6. 4 Market trends and enhanced application of the EU postal legislation...
The"Single Market Act"1 identifies information society services, including e-commerce, as one of the measures which can boost economic growth
Information society services (ISS) or online services can contribute to achieving crucial policy objectives in a number of ways
-Information society services are key to growth. Over the past decade, these new activities have generated jobs
increasingly large range of products and services for citizens and businesses located in isolated areas
and allow them to have access to an extensive range of services and products not easily
society services and e-commerce can contribute to meeting the demographic challenge of an ageing European population
services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) 6, e-commerce is limited still to less than 4%of total European trade.
retail services in the Internal Market for 2020.8 In addition, the Commission is using this Staff Working Document to present its evaluation of the implementation of the E-commerce
The analysis presented below covers information society services, defined as those services provided at a distance, electronically and at the request of a recipient of services against
remuneration10, and also the much wider domain of e-commerce transactions in goods and services. 11 Online retailing, online press, search engines, social networks, blogs, media
streaming, online gambling and e-health are included in our analysis. The main focus 5 E g.
Estia et Mà diamã trie//Netratings pour la FEVAD, Etude de l†impact environnemental de l†achat sur
of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce, hereafter ECD), OJ L 178/1, 17.07.2000;
retail services in the internal market for 2020â€, COM (2010) 355, OJ C 84/19, 17.03.2011;
development, both national and cross-border, of information society services;(2) issues concerning the application of Article 3 (4) by the Member States (administrative cooperation
services;( (6) the interpretation of the provisions concerning the liability of intermediary information society service providers;(
services"and is divided into two main parts. The first part contains an in depth analysis of the
services help to reduce the time spent on paperwork and increase activity online (reading newspapers, consulting bank accounts
society services. Following its adoption in 2000, the Directive has been complemented by other EU legislation, covering various aspects such as data protection and consumer affairs
The Internal Market clause aims to ensure the free movement of information society services between the Member States.
a. Each Member State must ensure that information society services provided by a service provider established on its territory comply with the national provisions
freedom to provide information society services from another Member State (Article 3 2) ECD The terms"information society services"and"coordinated field"are crucial for a proper
understanding of the Internal Market (or country of origin) clause 25 Forrester Consulting, produced by DIW-econ
The term"information society services"is defined not in the ECD but in the Transparency Directive 98/38/EC as amended by Directive 98/48. 29 The basic definition of"information
society services"covers any service normally provided, for remuneration, at a distance, by electronic means and at the individual request of a recipient of services. 30
•The definition of a"service"and"normally provided for remuneration"derives from Article 57, first paragraph, of the TFEU31,
services may be covered because they are provided by definition in situations where the healthcare professional and the patient (or two healthcare professionals) are not in the
society services and sets them apart from other services that are sent without a request from the recipient being necessary.
or television broadcasting services. 34 29 Directive 98/34/EC of the European parliament and the Council of 22 june 1998 laying down a procedure
"Pay-per-view"services to watch movies at the times indicated on the 10 This is a broad definition spanning a variety of online activities.
which the mechanism in Article 3 must allow information society services to be, in principle subject to the law of the Member State in which the service provider is established. 36 Article 2
providers or information society services, regardless of whether the requirements are of a general nature or specifically targeted at this sector.
screen or in a programme guide are provided not services"at the individual request"of a recipient because
and their services subject can guarantee the full effect of the free provision of those services.
In this request for a preliminary ruling on the question as to whether the provisions of Articles 3 (1) and (2) of the ECD have the
services and the competent authorities"the details of the service provider, including its electronic e-mail address,
where information society services refer to prices, to provide a clear and unambiguous indication of the prices,
posed particular problems in the context of"tell-a-friend"services. These popular services allow an internet user to enter the e-mail address of one
or more"friends"who then receive a standard message e g. inviting them to visit a particular website.
The Services Directive complements the rules on online commercial communications set out in the ECD. According to Article 24 (1) of Directive 2006/12352, Member States shall remove
Services Directive. 53 50 Directive 2005/29/EC of the European parliament and of the Council of 11 may 2005 concerning unfair
52 Directive 2006/123/EC of the European parliament and of the Council of 12 december 2006 on services in
Commission services do not have further reliable and detailed information on the practical application of the formation of contracts.
The ECD introduced a specific liability regime for three categories of services: mere conduit operators,"caching"providers
and hosting services. The details of the application of this regime are discussed in Chapter 3. 4
Regulation on Passenger Rights60 (2004), the Services Directive61 (2006) and the new Consumer Rights Directive62 (2011)( see Chapters 4. 2. 3 and 4. 4. 1
61 Directive 2006/123/EC of the European parliament and of the Council of 12 december 2006 on services in
professions according to Article 24 Services Directive69 has supplemented the provision of Article 8 of the ECD (see Chapter 4. 2. 2
•The ban on discrimination in Article 20 Services Directive (see Chapter 4. 3. 1
•Various new developments in the area of payment services (see Chapter 4. 5. 1
•New rules on the application of VAT to digital services (see Chapter 4. 8. 1
The results of the public consultation and the analysis of the Commission services show that
69 Directive 2006/123/EC of the European parliament and the Council of 12 december 2006 on services in the
the Commission services will increase their screening of the actual implementation and application of the ECD in the Member States (see
side, which includes information society services, using the new NACE Rev. 2 classification on economic activities.
The information society services financed by advertising but provided for free on the Internet are even more difficult to assess.
measuring the value of the Internet including services provided via the Internet The Commission services will,
together with the E-commerce Expert Group, explore means of improving (public) statistics on electronic commerce and of developing tools to collect
between Member States and the Commission services 3. 2. 1 Transparency Directive 98/48/EC Directive 98/34/EC70,
services. The Directive is intended to help avoid the creation of new barriers to trade within
The Directive requires Member States to notify their rules on information society services in draft form,
provision of information society services under primary or secondary EU law, the Commission and other Member States may submit a detailed opinion to the Member State
information society services under the Transparency Directive. Commission services will remain vigilant to ensure that unlawful barriers to online services are detected at the earliest
possible stage 3. 2. 2 Case-by-case derogations of Article 3 (4) ECD Article 3 (4) ECD contains a case-by-case limitation to the Internal Market clause.
In the last decade, the Commission services have received only 30 notifications mainly dealing with measures to protect consumers.
services of Member States may be a reason for the small number of measures adopted. Some
The Commission services will raise awareness about the obligation to notify draft measures They will also explore with the Member States ways in which to strengthen administrative
andthe Commission services make presentations on both new and ongoing legislative) initiatives relevant for the e-commerce sector
Commission services consider the expert group a good forum for the exchange of views experiences and best practices amongst the Member States and between them and the
Commission services will, together with the Member States, closely monitor the system of notifications and invite the expert group to reconsider
Under the co-ordination of Commission services, the CPC-Network enforcement authorities both screen a sample of websites in a given sector for compliance with EU consumer
and is carried out on an annual basis. Commission services will continue coordinating and monitoring the sweep activities carried out by the CPC-Network.
Commission services are also supporting the online enforcement capacities of the CPC-Network through financing
exemptions when they provide one of the so-called intermediary services set out in Articles 12 to 14 of the Directive.
imposing on providers of these services a general obligation to monitor content that they transmit or host.
the development of intermediary services, the societal interest that illegal information is taken down quickly, and the protection of fundamental rights82
what extent new services that have not been mentioned explicitly in these articles (e g because they did not exist at the time of the adoption of the Directive) are
several new services and activities have emerged that the legislators could not have foreseen, such as video-sharing sites, selling
platforms, social networks and peer-2-peer services. This section provides an overview of the interpretations that have been given to the definition of activities listed in Articles 12 to 14 of
the Directive, in particular as regards their applicability to services that are not explicitly mentioned in those provisions,
specific liability exemptions for information location services (search engine services) and hyperlinking services. Austria, Hungary, Spain and Portugal have adopted specific liability
exemptions for search engines according to which a company can benefit if it meets the conditions that hosting service providers are required to meet
has emerged particularly in regard to the application of liability exemptions to"new services "location tool services and hyperlinking services.
This has resulted in a degree of regulatory 85 Joined cases C-236/08 to C-238/08, Google vs.
clarify the status of these new services in view of often contradictory national case law. Some respondents, in particular right holders, asked for the exclusion of several new online
Where specific exemptions from liability for search engine services and hyperlinking services have not been included explicitly in national legislation,
these services have either been classified as mere conduit services, caching services or hosting services, or courts have
excluded them from the scope of any exemption. For instance •in the UK case"TV Links"(R v Rock and Overton), 86 the court without further
reasoning ruled that a hyperlinking website was a mere conduit activity that could benefit from the liability exemption of Article 12 ECD
•the Belgian court in the"Copiepresse"case (Copiepresse et al vs. Google Inc.)stated that the Dirwarn-Font not found:
website (recipients of ebay's services in terms of the E-commerce Directive) act under the authority or the control of ebay (the provider of an information society service in
its clients various services on the same site without losing the right to benefit from a
National jurisprudence on file sharing services also diverges. For instance •The Italian Court of Cassation102 considered that Piratebay, a peer-2-peer file sharing
guidance for determining whether certain services can benefit from a liability exemption First, recital 42 mentions that an activity should be"of a mere technical, automatic and
by L'Orã al, from paid internet referencing services (such as Google's"Adwords"."In parallel to this, L'Orã al had identified several infringements of its trademarks through/by the selling
that recital 42 would contain conditions for all intermediary services for benefiting from a liability
interest of all parties involved in the provision of information society services to adopt and
whose services are being used by a third party to infringe intellectual property rights Moreover, its Article 17 provides that Member States shall encourage the development of
products and services in Europe, COM (2011) 287 24.05.2011; available at http://ec. europa. eu/internal market/copyright/docs/ipr strategy/COM 2011 287 EN. pdf. The
The Commission services have been made aware of the following national laws (see Annex II of this Staff Working Document for a more detailed description
•The Finnish Act on provision of information society services (transposing the E -Commerce Directive) contains a detailed notice-and-takedown procedure for mere
•The Hungarian Act on certain aspects of e-commerce and information society services transposing the E-commerce Directive) provides for a notice-and-takedown for mere
•The Lithuanian law on information society services (transposing the E-commerce Directive) also provides for a notice-and-takedown procedure for mere conduit and
accessible and legal services on the Internet. Moreover, some intermediaries, in particular video-sharing sites, argue that right holders should favour"monetisation"over takedown
services (including entertainment, adult, health, gambling etc.)representing many societal interests. Stakeholders to be consulted include Member States, internet intermediaries, right
when providing the services covered by Articles 12,13 and 14, to monitor the information which they transmit or store,
in providing their intermediary services Respondents to the public consultation on e-commerce raised three main issues related to the
†all electronic communications passing via its services, in particular those involving the use of peer-to-peer software
services on offer, the actual access to products and services, the issues surrounding the conclusion of a contract, the payment and delivery of the products and services bought/sold
ending with redress if things go wrong. Finally, certain crosscutting issues are analysed which are relevant along this chain
the Commission services organised a workshop on"trust and confidence in the Internal Market"during the first Digital Agenda Assembly (June 2011.
context, buyers of goods and services provide †often without much thought-their bank or
advertising. 151 In situations where hosting services are requested to take down illegal material such as pirated or counterfeited works,
The ECD does not apply to questions relating to information society services covered by the
services is Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and
and services, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation
communications services or of public communications networks and amending Directive 2002/58/EC), OJ L 105/54, 13.04.2006;
marketing of its own similar products or services by the same provider. This opt-in system
"Commission services have issued a guidance document on the implementation of Article 5 (3 on cookies. 162
"The Commission services understand this in their guidance document as follows •The user concerned must be informed163,
laws have already been criticised for being unworkable in practice. 167 Commission services will closely monitor the process of transposition of the new eprivacy Directive in those
The development of the Internet and the increased supply of online gambling services are posing challenges for the co-existence of differing regulatory models, illustrated by the
http://ec. europa. eu/internal market/services/gambling en. htm 61 Member States prohibit the online sale of"over-the-counter"(OTC) medicines or medical
practitioners but internet services can provide quick and easy access to medicines in particular for chronically ill people, less mobile citizens, the elderly, working people or inhabitants of
Market for online health services. For instance, the recently adopted Directive on the application of patients'rights in cross-border healthcare177 establishes a Community framework
services through building confidence, bringing legal clarity, solving technical issues and facilitating market development. This Communication will be complemented by a Staff
services in the first half of 2012. Finally, the Commission will adopt by the end of 2012 its
Commission services will work closely with product testing and other organisations providing information on product quality comparisons/price/best value for money in order to make
and commercial blogs offer content and services to consumers for free, earning revenue by selling advertising space on their sites to businesses
both advertising space and their (own) services directly to consumers In all those business models, the use of search engines has become widespread.
services. Certain restrictions on advertising, such as on tobacco products, alcohol, gambling or financial services, are based on the principle of the protection of a general interest.
Services Directive requires Member States to remove total bans in so far as such bans concern a particular form of advertising such as advertising over the Internet. 184 It has also been
The Commission services will continue to monitor and analyse the national regulatory and contractual developments in the Member States and the EU with a view to assessing their
concerning the provision of audiovisual media services (†Audiovisual Media Services Directiveâ€), OJ 15.4.2010, L 95/1, imposes advertising bans and restrictions for tobacco products, medicines on
services. All audiovisual commercial communications (TV and on-demand) must be readily recognizable not use subliminal techniques;
The Directive covers television, on-demand services and emerging advertising techniques. The question has been raised to what extent the commercial communications rules of the Audiovisual Media Services
Directive also apply to new services such as the online social networks 183 See recently for example the Ker-Optika judgment, Case C-108/09
184 See Case C-119/09, Sociã tã fiduciare nationale d'expertise comptable v Ministre du Budget, des Comptes
provisions (websites selling airlines tickets, online mobile phone services, websites selling consumer electronic goods •on 3 december 2009 the Commission published detailed guidelines aiming to provide
Article 20 (2) of the Services Directive There is a growing tendency for businesses to use the Internet to foster the sales of their goods
and services by exploiting the global availability of their websites. However, most online traders still serve a very limited number of Member States.
most frequent cases concern web shops that either refuse to sell items or services to residents
or sell identical items or services at a (much) higher price due to the consumer's country of residence.
that such practices exist for a wide range of services such as the sale of electronic goods
Article 20 (2) of the Services Directive189 prohibits discrimination on grounds of nationality or residence in B2c and B2b relationships.
In accordance with Article 20 (2) of the Services Directive, Member States have an obligation
by online traders falling under the scope of the Services Directive comply with the national
provisions implementing Article 20 (2) of the Services Directive The application of these national provisions will require a case-by-case assessment of the
Recital 95 of the Services Directive gives examples of such objective circumstances. Additional costs may be justified because of
Member States had to implement the Services Directive into their national legal orders by 28
Member States have implemented Article 20 (2) of the Services Directive through a provision in the horizontal law transposing the Services Directive
The Commission has received numerous complaints and queries from citizens who have encountered problems when trying to buy services in other Member States.
However, to the Commission's knowledge there have been very few cases of administrative application of the
189 Directive 2006/123/EC of the European parliament and of the Council of 12 december 2006 on services in
national provisions implementing Article 20 (2) of the Services Directive and as yet no instances of judicial application in any Member State190
implementation of Article 20 (2) of the Services Directive. Based on the outcome of this research, it will establish guidelines to assist national authorities on the proper application of
the national provisions implementing Article 20 (2) Services Directive (adoption in 2012 4. 3. 2 Access to capital for SMES
capital services in view of the existing multitude of national regulatory regimes and tax barriers 4. 3. 3 Domain names
However, the Commission services have received complaints from companies frustrated in their attempts to obtain TLDS because certain
freedom to provide information society services. The Commission services will monitor the establishment requirements for obtaining TLDS and their compatibility with the Internal
Market freedoms and other applicable EU acquis 4. 3. 4 Net neutrality Net neutrality is the principle according to
and IP routing guarantee a minimum quality to end-users for services that require a differentiated network speed (such as videoconferencing),
information society services, in particular when they are competing with the services of the internet provider (such as telephony or television services.
This can be done either by blocking certain services outright or by making it very unattractive to access them, usually by
using a technique called"throttling"that degrades network quality The Commission Communication on the open Internet and net neutrality in Europe193 reports
several instances of blocking of legal services (in particular of Voice-over-Internet-Protocol services by mobile internet providers),
but stresses that more exhaustive evidence is needed before policy conclusions can be drawn at the European level.
and services that have a distinct characteristic †independence from any physical medium. Music, films and books
text, books have become services which can be downloaded on to digital readers. Businesses have developed new business models to promote transactions in online digital goods
online content-related (legal) services are normally not available in all Member States and tend to concentrate in a limited number of Member States.
These services also tend to target specific territories and limit the possibility for consumers to use them across borders.
businesses face when they wish to provide cross-border digital content services which are copyright-protected, resulting in their needing toenter into licence agreements outside their
Karen Murphy v Media Protection Services Limited, judgment of 4 october 2011, available at http://curia. europa. eu/juris/recherche. jsf?
services, however, helps European citizens to better know and understand each other's cultures, to appreciate
and services in Europe, COM (2011) 287 final, 24.05.2011, available at http://ec. europa. eu/internal market/copyright/docs/ipr strategy/COM 2011 287 EN. pdf
sector as regards issues such as video-on-demand (Vod) services and cross-border broadcast services (2012
198 Proposal for a Directive of the European parliament and of the Council on certain permitted uses of orphan
Commission services. The Commission is also working on a review of the IPR Enforcement Directive 2004/48/EC, 204 inter alia identifying ways to create a
rise of news aggregation services. Commission services will continue to examine these issues in the light of new legal and technical developments
4. 3. 6 Grey markets In its application report on the implementation of Directive 98/84/EC (on the protection of
conditional access services) 205, the Commission noted that European citizens are restricted in their cross-border access to audiovisual services
whether this be on demand, Internet or satellite. The inadequacy of rules governing the provision of digital cultural goods,
Parliament and of the Council of 20 november 1998 on the legal protection of services based on, or
to forbid broadcasters from supplying cross-border services in order to protect exclusive licence agreements are unjustified anticompetitive
In 2012, the Commission services will publish a study on the economic potential of cross
-border pay-to-view audiovisual media services 4. 3. 7 Reuse of public information Public information can be defined as all the information that public bodies in EU produce
products and services and for efficiency gains in administrations. Overall economic gains from opening up this resource could amount to â 40 billion a year in the EU
products and services. Another key barrier is the lack of awareness of public organisations of
Murphy v Media Protection Services Limited, judgment of 4 october 2011, available at http://curia. europa. eu/juris/recherche. jsf?
Commission services closely monitor the information and internet sectors to ensure that market players comply with EU competition law
Apple had made warranty repair services available only in the country where the iphone was bought, thereby potentially partitioning the Internal
provision of online press services being hampered allegedly by conditions set by certain "application platforms"."For instance, a major application store would require from online
The Commission services will closely monitor the e-commerce and other digital sectors to ensure that market players comply with EU competition law
areas such as healthcare services, passenger transport and gambling will be excluded The new rules of the Consumer Rights Directive will have to be transposed into national laws
healthcare services. Furthermore, it allows Member States to impose linguistic requirements on consumer contracts One special issue to note is the application of the Directive to digital content (data produced
The Commission services will closely monitor the transposition of the Consumer Rights Directive. They will also look into the most appropriate ways to ensure that businesses and
products, such as e-mail, social networks, music, films, e-books or e-learning services. Problems include incomplete or incomprehensible information, interrupted access to content and faulty products.
The retail market monitoring report"Towards more efficient and fairer retail services in the Internal Market for 2020"232 underlined the existence of unfair commercial practices
services in the internal market for 2020, COM (2010) 355 final, 05.07.2010; available at http://ec. europa. eu/internal market/retail/docs/monitoring report en. pdf
society services beyond retailing, for example, in the way sites can be referenced by search engines or how technologies can be slowed down or blocked.
regulatory framework for electronic communications networks and services, OJ L 108/33, 24.04.2002 available at: http://eur-lex. europa. eu/Lexuriserv/Lexuriserv. do?
services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorisation of electronic communications networks and
services, OJ L 337/37, 18.12.2009; available at: http://eur -lex. europa. eu/Lexuriserv/Lexuriserv. do?
also cover the cross-border functioning of certain other trusted services and provide legislation for the mutual recognition of electronic identification and authentication services
The tools proposed in the framework should be general and open to all sectors, especially where electronic identification is concerned.
major obstacle to the development of low value information society services such as online newspapers, music, movies, video games,"premium rate service",directories, and low priced
States by the Payment Services Directive241, affects consumers who, for example, may be subject to several surcharges for every plane ticket they purchase even if only one payment
services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and
repealing Directive 97/5/EC, OJ L 319/1, 05.12.2007 (hereafter †Payment Services Directiveâ€), available at
The Payment Services Directive243 (PSD) in its Articles 60 et sequ. addresses the liability for payments, especially in cases of unauthorized payment transactions, and
cost is borne by the providers of payment services. By contrast, the payer shall bear the
243 Payment Services Directive, OJ L 319/1, 05.12.2007 88 As regards the level of competition in the payments market,
The pricing of payment services is analysed from two angles, namely the relationship between the consumer and the merchant and the relationship
Commission services will, together with the European multi -stakeholder forum, take action to encourage the maximum use of e-invoices exchange
4. 6. 1 Delivery services in an e-commerce environment With the exponential growth and use of electronic means of communication, customers
Enhancing the trust in delivery services to promote consumers'overall confidence in using the electronic-commerce services can contribute to its further growth
While in the past the delivery of a letter or a parcel largely relied on the public postal delivery
talking about parcel delivery and express delivery services, which have traditionally been open to competition. 248 The European parcel and express market is today a highly
(ii) better range of services and (iii better quality and/or reliability of delivery services provided by alternative operators
4. 6. 2 Delivery problems Delivery emerges from the various consultations and studies as one of the the major obstacles
services are essentially (i) high costs,(mainly for cross-border trade), due to higher cross -border delivery prices in comparison to similar and/or equivalent domestic delivery services
ii) the refusal to supply in specific geographical areas,(iii) the unreliability of the delivery service, which can be reflected either in lower quality of service, delays in the delivery of
4. 6. 3 Parcel and express delivery services under the Postal services Directive The Postal services Directive256 addresses certain of these delivery issues indirectly firstly
Although parcel and express delivery services have been open to competition for some decades257, the Postal services Directive provides for a number of regulatory measures to
two types of services:(i)" basic"or"standard"parcel service which is part of the universal
parcel delivery services with added value, which are not directly subject to USO, but are nonetheless subject to some other regulatory requirements (e g. obligation to handle consumer
) The latter services are understood traditionally as comprising elements such as i) the collection at the premises of the sender,(ii) the handling of bulk parcels (parcels sent in
larger quantities),(iii) track and trace services and (iv) express (faster) delivery and/or guaranteed delivery times.
basic parcel services at affordable prices for all citizens on its territory at least five working days per week.
All Member States ensure that basic parcel services, in most cases meaning over-the-counter parcel services, 258 are guaranteed as part of the universal service
obligation. 259 Article 3 (3) of the Postal services Directive enables Member States to implement derogations from the minimum requirements for USO.
guaranteed on the basis of Article 3. Parcel services which are part of the USO do not
These added value services are covered not by the USO requirements of Article 3 257 See for example Chapter 4. 3. 3.,ITA/WIK 2009
258 It is known that basic parcel services usually indicate services where customers hand in the parcel at the post
services and express (faster) delivery and/or time certain delivery. E g. as regards the delivery to home
additional services such as track and trace are provided often only by express and courier companies 93
mandatory for the universal postal service and interchangeable services, many Member States go beyond this minimum
and extend the complaint mechanism to services outside the USO. 262 Although the Postal services Directive entrusted to Member States the task of organizing
-end logistics services or track and trace services are offered increasingly as value-added delivery services. The tracking of an item is a key feature for retailers
and customers using electronic-commerce Many operators are introducing flexible delivery systems, such as local stores or automatic
express and parcel services, especially in terms of the products offered. Parcel operators have improved their transit times
'services, whilst express operators have introduced lower-cost products targeting customers less sensitive to delivery time
customers with added value in the form of pre-delivery services (e g. presentation of available
improved services, both in terms of the quality of service as well as pricing With regard to the efficient application of existing regulatory tools, Commission services are
working on a number of initiatives 265 Service provided by some delivery service operators, where parcels can be collected
and collection services and later on insert the collected parcels in postal delivery networks 267 In contrast to parcel consolidators, online parcel brokers (e g. parcelbroker. co. uk) are involved not at all in
The Commission services are conducting a sectoral study, with the help of an external consultant, regarding the cross-border provision of parcel delivery services, with a specific
focus on the alleged price differences between cross-border and domestic parcel services. This will allow Commission services to better measure one of the issues mentioned in the
consultation (high costs of delivery. Based on the results of this study, and together with other delivery issues identified above,
Commission services will prepare the Green Paper on parcel delivery as the final leg of e-commerce services,
with specific focus on its cross-border aspect. The Green Paper should provide for an informed overview of the issues identified, and
possibly go further, and should include all stakeholders involved (e g. delivery operators; e -retailers; customers;
In this regard, Commission services will envisaged, as by Article 22 of the Postal services Directive, further promote cooperation among national regulatory authorities both within the
Parliament on 9 september 2010268, Commission services has organized the first Postal Users Forum for 12 december 2011.269 The forum encouraged users to reflect on their experience
with postal delivery services and identify possible shortcomings that would call for further initiatives In 2012, Commission services will prepare a report on the application of the USO derogations
by Member States with a view to identifying their scope, with specific focus on basic parcel
services, and their impact on the delivery of items that originated in e-commerce transactions Commission services will continue not only to monitor the developments on the quality of
delivery services as well as consumer satisfaction, but will also encourage Member States to introduce further quality of service improvements,
and promote best practices In summary, the Commission services will: 270 •prepare a Green Paper on cross-border delivery,
with specific focus on e-commerce -originated traffic (2012 •continue to monitor the correct transposition and application of the Postal services
services (January 2012 •prepare a report on the application of the USO derogations by Member States (2012
While e-commerce offers a wide range of services, and many facilities, its development is still
The Commission services will encourage the ECC-Net to take a more proactive and preventive approach towards key business sectors that have significant cross border exposure
services in the Member States. To do this, the Directive gives every judge the right to invite
The Commission services will carefully monitor the transposition of the Mediation Directive in the Member States and use the Commission's powers under the
online legal services are underdeveloped and in many cases nonexistent Simplified court procedures or"small claims procedures"exist in almost all Member States
Commission services will conduct an assessment of the application of Regulation (EC 861/2007 by 2013.
services offered on the Internet In the cases of Hotel Alpenhof and Peter Pammer302, the basic question at issue was whether
The consumer found fault with the hotel†s services and left without paying his bill.
example when it offers its services or its goods in several Member States designated by name
For electronic services, there is currently a problem of distortion of competition within the EU. When these services are provided by an EU supplier to final consumers in the EU, their
place of taxation is the Member State where that supplier is established. Consequently businesses can take advantage of this situation by establishing in those Member States
The situation is different as regards electronic services provided by non-EU suppliers, given that the current rules already provide for VAT to be collected and
Directive 2008/8/EC of 12 february 2008304 sets new rules regarding electronic services. As from 2015, electronic services provided by an EU supplier to a nontaxable person (e g final
consumer) will also be taxable at the place where the customer is established. If the customer
In order to avoid new administrative burdens, all suppliers of electronic services will have the possibility to make use of the MOSS as from 2015
This should facilitate the selling of electronic services throughout the EU There remains the question of VAT rates.
or services, depending on the Member State of taxation 303 Proposal for a Council Directive amending Directive 77/388/EEC with a view to simplifying value added tax
supply of services, OJ L 44/11, 20.02.2008; available at: http://eur -lex. europa. eu/Lexuriserv/Lexuriserv. do?
goods and services. For example •There is an increasing demand for access to information on companies in a cross
such as the classification of e-commerce services or the development dimension of e -commerce. The Commission has also been involved in the discussions within the Internet
Commission services will further intensify the bilateral and multilateral discussions on e -commerce and other online services through global cooperation in particular in the context of
1. Loi du 11 mars 2003 sur certains aspects juridiques des services de la sociã tã de
2. Loi sur certains aspects juridiques des services de la sociã tã de l'information â€
services de la sociã tã de l'information, certaines dispositions de la directive 97/7/CEE concernant la vente à distance des biens et des services autres que les
services financiers Reference:( (SG (2000) A/11994 http://www. legilux. public. lu/leg/a/archives/2000/0096/a096. pdf
Hungary Transposition deadline: 01/05/2004 1. 2008. Ã vi XLVII. tã rvã nya fogyasztã kkal szembeni tisztessã gtelen
of which the Commission services have become aware Characteri stics M S Finland France*Germany Hungary Lithuania UK Portugal Spain Sweden
services HADOPI Act Access Impediment Act (repealed ACT CVIII of 2001 on certain aspects of e
services Law on information society services Terrorism act 2006 /Digital Economy Act 2010 Articles 14-18
Decree-Law 7/2004 Royal Decree on the functioning and operating of the IPR Commission
Article 20 (2) of the Services Directive 4. 3. 2 Access to capital for SMES
4. 6. 1 Delivery services in an e-commerce environment 4. 6. 2 Delivery problems 4. 6. 3 Parcel and express delivery services under the Postal services Directive
Parcel delivery as part of the Universal Service Obligation (USO Postal users'protection measures 4. 6. 4 Market trends and enhanced application of the EU postal legislation
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