The EU has started to take the issue of online shopping seriously recently given that a 2006 study estimated 56% of Europeans shopped online. It’s a multi-million (or maybe billion?) Euro market so it’s not surprising that the EU’s actions have attracted the attention of interested parties. As I noted in February Karl Lagerfeld came to Brussels to meet on the issue of the selling of luxury goods over the internet (which is bad for brand-owners as it “cheapens” teh brand) . The EU has come to the conclusion that luxury brand owners such as Lagerfeld should be able to insist that distributors sell both online as well as in regular “real-world” stores, a poke in the eye for ebay. But it’s not made up its mind entirely and has opened a public consultation on the matter here.

In May the EU also highlighted that it will seek to harmonise rules for the selling of digital conent throughout the EU. This will mean (for example) that an EU consumer cannot be stopped from dowloading a song from another EU country because the licence does not cover sale in the consumer’s country (an extremely frustrating experience for me especially when trying to dowload new Belgian music on my Irish credit card). EU Information Society and Media Commissioner Viviane Reding stated “in the EU, consumer rights online should not depend on where a company or website is based. National borders should no longer complicate European consumers’ lives when they go online to buy a book or download a song” . “In spite of progress made, we need to ensure that there is a single market for consumers as well as businesses on the web.” I agree heartily - please hurry up!

European Commissioner Charlie McCreevy, has delivered a stinging criticism of the financial regulation system (over which the Commission, incidentally has significant oversight power). He accused them of having tolerated relaxed lending practices and the accumulation of unsustainable debt by households, individuals and companies. Mr. McCreevy said there would soon be Commission action regarding the regulation of hedge funds and private equities as well as limitation of Executive pay.

Internal Market Commissioner Charlie McCreevy
(Postscript on 28th Feb: I should have mentioend the High-Level Group on Financial Supervision in the EU, which was chaired by former Bank of France governor Jacques de Larosiere, published on Wednesday which made 31 recommendations on how to strengthen supervision of financial institutions and markets. You can read more details here. )

The European-quarter of Brussels where all the major EU buildings are based is  usually a fairly boring and dull place (with employees who often reflect the surroundings). The Berlaymont building, which houses the Commission, though a spectacular building itself, is but a speck  in a sea of nothing-much.  Today, however, the drabness of Europena was interrupted slightly as style-icon Karl Lagerfeld whisked in to to Berlaymont for a quick meeting on online shopping, before retreating back to Paris where he could live again with his type of spontaneous, creative and, errr - fashionable, people.

Still, he managed to look right at home as he made chit-chat with Dutch Commissioner Nellie Kroes about her recent ice-skating injury, which she assured him was just an accident. One wonders - Nellie is one of the most powerful and controversial of the EU’s Commissioners, not only because of her powerful portfolio (which is Competition policy), but also becuase of the full use she has made of her extensive powers in the area of anti-trust, merger oversight and restriction of state-aid to companies. Perhaps an irate company executive fresh from one of her regular huge fines (she has recently started breaching the €1 billion mark) finally took revenge?

In any case, back to Mr. Lagerfeld whose mind was far from any such malicious thoughts. Being the throughout gentleman he is, he even decried immiediately Nellie’s comment that she was too old for ice-skating. So why did he swap the artistic environs of Paris - the city of light - for a stuffy office in the most drab part of Brussels? Well the answer lies in those extensive powers that Nellie posseses. See, the EU, as part of it’s mission to facilitate full competition, is reviewing rules that restrict online retailers, such as Amazon, from selling certain luxury goods, such as Chanel (of which Mr. Lagerfeld happens to be chief designer).

Mr. Largerfeld is quite content with the rules as they are, as they help maintain a certain premium feel to their products as well as preventing counterfeits. On the other-hand the Commission is anxious to remove all market barriers to online shopping in the EU, thus allowing Europeans to shop cross-border and benefit from different levels of prices.

Mr. Lagerfeld is likely to be disappointed in his efforts as the Commission is likely to press ahead with abolising the rules. No doubt Mr. Lagerfeld is currently imagining with horror how his wonderful Chanel brand will be butchered and manhandled by every random person who may set up an online shop, perhaps asking how some bureaucratic rule could possibly trump this consideration?  That’s the distance between Paris and Brussels, Mr. Lagerfeld.

The EU is beginning to fret about recent economic protectionist impulses by Member-States and the Czech Republic has decided to act, as they currently hold the 6-month EU Presidency. They have called a special summit of EU leaders for later this month to discuss recent Member-State “protectionist steps and statements”.

This is especially a response to moves and calls by French President Sarkozy to repatriate production of French cars from Eastern Europe (for example countries like the Czech Republic!). UK Prime-Minister Brown also had a protectionist moment in 2007 when he called for “British jobs for British workers”, one year later this has caused industrial unrest in England where workers have taken him at his word and demanded that British workers be given preference in employment, something that is illegal under European law.

What Prime-Minister Brown actually meant is a matter of debate, but there is no doubt that this this comes at the most unfortunate of economic times for the EU. There are already criticisms that the EU has been largely absent from the debate on the Economic crisis and Sarkozy and German Chancellor Merkel have called for co-ordination measures to be discussed at the special summit called by the Czechs.

These moves are to protect the EU’s precious Internal Market (often referred to as the Single Market) which is the cornerstone of the EU and guarantees the free movement of people, goods, services and capital in the EU. If this most basic and successful aspect of the EU starts being eroded, there is little chance that the EU can continue to credibly assert itself as an economic actor.

In a related (and somewhat surprising) move, normally conservative and insular Switzerland (which is not a member of the EU) agreed in a Referendum yesterday to keep their labour-market open to all countriesof the EU, specifically extending that right to the new EU countries - Bulgaria & Romania. By doing this, it rejected right-wing fears of waves of immigration decending on Switzerland from these countries. It also retained its special economic relationship with the EU. A positive sign in these worrying times for EU freedoms.