EU threatens significant fines for unfair online trade practices

By Foo Yun Chee and Bart Biesemans

BRUSSELS, Nov 11 (Reuters) - Companies resorting to unfair digital trade practices to push people to buy more or target children with personalised advertising risk fines of as much as 6% of their annual global turnover under a new European Commission draft law.

"Our consumer protection rules will help ensure that businesses compete on the merits of their products and services, not on their ability to exploit consumers or their ability to evade the rules," said EU justice chief Michael McGrath.

"We are not making it harder to do business, we are making it harder to do business unfairly," McGrath told a press conference on Wednesday.

The proposed Digital Fairness Act (DFA) aims to give consumers more rights but has been criticised by some businesses because of overlaps with existing laws and a proposed plan to keep children safe from online dangers.

The DFA, part of a crackdown requiring Big Tech and online platforms to do more to police their platforms, would need to be agreed with European Union countries and the European Parliament in the coming months before it can become law.

The proposed law wants to ban dark patterns, which encourage people to spend more than they otherwise might, and gambling features such as pay-to-win and pay-to-progress that encourage overspending, especially among children.

It would require companies to give users the option to turn off addictive designs of digital products and influencers to be more transparent about commercial content.

It also takes aim at pricing practices such as dynamic pricing where ticket prices fluctuate based on real-time demand, which has triggered criticism from consumers, and subscription traps, which the Commission said cost consumers billions of euros yearly.

A plan to revise separate legislation called the Consumer Protection Cooperation Regulation would empower the Commission to investigate big cases in several EU countries and also hand out fines up to 6% of a company's global annual revenue.

Lobbying group BusinessEurope criticised the draft law.

"The Digital Fairness Act should make the existing framework more coherent, predictable and effective," BusinessEurope Director General Markus J. Beyrer said.

"Instead, it risks introducing unnecessary obligations and overlapping requirements that undermine legal certainty and run counter to the EU’s simplification agenda," he said. 

(Reporting by Foo Yun Chee; Editing by Bart Meijer, Alexander Smith and Sharon Singleton)