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Ireland: E-Commerce

Introduction

The Irish government is strongly encouraging the development of e-commerce. In July 2000 the government passed an e-commerce bill, signed with a digital signature, which sets out a formal legal framework for conducting business electronically. Considerably less legalistic and more business-friendly than the UK's bill, it enabled electronic signatures, dealt with contract issues, and proposed a new regime for domain name registration. It also protects the rights of businesses and individuals to use software programs that encode and decode electronic documents.

More than any other European country, Ireland has acted as a magnet for high-tech companies over more than the last ten years, due to a combination of its highly favourable tax regime, use of the English language and availability of a well-educated young population, among other factors. Although the country's very success has led to pressure on resources, the size of the technology community is such that it now acts as a draw in its own right, and it is hard to see how significant competition will arise. American companies in particular find Ireland attractive as a jumping-off point for their EU operations.

The Government's May 2001 package of e-commerce measures included extensions to international connectivity, but also provided for improvements to regional broadband infrastructure. As a result of the first call for proposals under the E-Commerce Infrastructure Measure of the National Development Plan, approximately IR£200m worth of infrastructural investment had been implemented by the end of 2002.

In November, 2003, Ireland's then Minister for Communications, Dermot Ahern signed into law new regulations dealing with spam, cookies, and other privacy issues relating to electronic communication. The European Communities (Electronic Communications Networks and Services) (Data Protection and Privacy) Regulations 2003 implemented the EU's new Privacy and Electronic Communications Directive.

The regulations contained provisions regulating the use of cookies and spyware, imposed restrictions on unsolicited direct marketing by phone, fax, e-mail, or SMS, and allowed subscribers listed in freely available directories to specify what personal information is listed. The new rules also require that subscribers listed in public directories are informed as to how their data can be accessed and used, and that mobile location data can only be used with an individual's consent.

In October, 2005, the Richmond District Court in Dublin handed down the first sentence under Ireland's anti-spamming law, in a prosecution brought by the Data Protection Commissioner.

Company 4's a Fortune was found to have sent unsolicited messages to members of the public in March 2004. Since November 2003 under SI 535 of 2003 [European Communities (Electronic Communications Networks and Services) (Data Protection and Privacy) Regulations 2003] the sending of unsolicited commercial mail from Ireland has in some instances been an offence.

The company, which operates what it calls an 'online casino-like cash game', made a total of 165,000 calls, all to O2 customers. The calls were mostly by auto-diallers that hung up after two rings. When recipients noticed a missed call on their phones, some of them called back to the landline number displayed. They were then put through to a recorded message which encouraged them to call a premium rate number and play a game to win money. The Data Protection Commissioner (DPC) argued that these callbacks constituted a message and as such came under the legislation governing spam.

4's a Fortune entered a guilty plea. The DPC said the company had been co-operative and there had been no recent complaints against it. The company was fined EUR300 for each of four complaints from mobile phone users who had received the missed call, plus costs of EUR1,000.

The judge in the case said she was surprised that no custodial sentence was available in the Regulations - although she added that it would not have been appropriate in the circumstances of this case.

In November, 2004, Ireland's then newly appointed Minister for Finance, Brian Cowen, announced that state aid approval had been received from the European Commission for two schemes aimed at helping new firms gain access to start-up capital.

Welcoming the EU's approval of the Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS), Cowen commented: "There is a strong business case for these schemes. Businesses, particularly small and start-up companies, often experience difficulty in accessing early stage development capital."

He added: "It is clear that there is a shortage of such finance in the pre- and early start up phases of new enterprises. The BES and the SCS will continue to play an important role in helping bridge this financial gap for such businesses."

However, the European Commission directed that Ireland make a small number of amendments to the legislation governing the schemes, and these changes meant that:

  • Qualifying companies must be Small and Medium Sized Enterprises (SMEs) within the European Commission definition in force for the relevant period;
  • Tax relief under the BES/SCS will be available for individual investments in companies registered in the European Economic Area but with an establishment in Ireland carrying out qualifying activities;
  • While a company may raise equity capital up to a general maximum of EUR1 million in the lifetime of the company, the schemes will respect the aid ceilings as set out in the European Commission's Guidelines on State Aid and Risk Capital so that a company may not raise more than EUR750,000 in any six month period from 5 February;
  • The following sectors will be formally excluded from the scheme: shipbuilding, European Coal and Steel Community sectors and non viable companies within the European Community Guidelines on State Aid for rescuing and restructuring firms in difficulty.

The schemes became effective from 5 February 2004 and in line with the Commission approval originally operated until 31 December 2006. On 6 September, 2007, Brian Cowen, Irish Minister of Finance, signed the Commencement Order bringing the schemes into effect from 1 January 2007 to 31 December 2013.

In summary, the Commencement Order and Regulations provide that as and from 1 January 2007, medium-sized enterprises may qualify if they are located in “assisted areas”. (Currently, the assisted areas are defined as all of the Republic of Ireland apart from Dublin, Kildare, Meath and Wicklow. From 1 January 2009, Cork City and county will be non-assisted, apart from Cork docklands). Medium-sized enterprises will benefit from the scheme if located in non-assisted areas only where they are in seed or start-up phase.

In 2003, Ireland introduced regulations governing unsolicited electronic communications, and these were updated in 2008 by Statutory Instrument No. 526 of 2008. Notable changes include:

  • An increase from €3,000 to €5,000 in the penalty for a summary offence in respect of a contravention of the regulation relating to unsolicited communications.
  • The creation of an indictable offence for a contravention of the regulation relating to unsolicited communications. Where the person tried is a body corporate the fine imposed may not exceed €250,000 or, if 10% of the turnover of the person is greater than that amount, an amount equal to that percentage. Where the person tried is a natural person, the fine imposed may not exceed €50,000.
  • Provision for the prosecution of an officer of a body corporate for an offence under the regulations whether or not the body corporate itself has been proceeded against or been convicted of the offence committed by the body.
  • In relation to offences concerning the contravention of the regulation relating to unsolicited communications if, in court proceedings concerning such offences, the question of whether or not a subscriber consented to receiving an unsolicited communication is in issue, the onus of establishing that the subscriber consented will lie on the defendant.

Data Protection Commissioner, Billy Hawkes said: "The signing of these Regulations by the Minister is an important and significant step in the fight against unsolicited communications for marketing purposes. I welcome the increase in penalties which have come into effect. I am confident that the strengthening of the law in this area will help me in my task to enforce the regulations concerning unsolicited communications. I want to take this opportunity to remind persons engaged in direct marketing activities that my Office continues to pay close attention to the whole area of unsolicited communications by telephone, fax, email and text message. The new regulations, together with the serving of a considerable volume of summonses by my Office in the past fifteen months, serve to send a strong message to all involved in direct marketing about the necessity of compliance with the law."

Concluding, the Commissioner said: "I want, in particular, to send a message to all involved in business to familiarise themselves with the law which applies to unsolicited communications for direct marketing purposes. Increasingly, in this period of economic downturn, my Office is receiving complaints about businesses making unsolicited contact with their past customers for marketing purposes. In many cases, such contact is unlawful and, if carried out by telephone, text message or email it may be a criminal offence. Ignorance of the law is not an acceptable excuse for non-compliance and I will have no hesitation in applying the full force of the new regulations to offenders."

See below for specific information on e-commerce in Ireland, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background.

 

 

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