European Union legislators have backtracked on plans to implement consumer rights legislation which could restrict cross border trade on the Internet.

The EU now plans to consult with industry in the autumn before putting draft laws to the EU Council.

A UK lobby group, led by Mike Pullen, an Internet lawyer at Dibb, Lupton Alsop, plans to take advantage of the Commission’s temporary retreat to put pressure on the UK government to have the legislation thrown out, or amended.

Earlier this month, the Commission was set to approve changes to the Brussels and Rome II Conventions which would make companies subject to the different commercial laws of all states in which they trade, rather than just the country in which they are based. (see Newswire 2 July)

As a result, Internet merchants operating legally in the UK could fall foul of the law unwittingly in countries such as Germany, where the use of special offers and promotions is restricted by unfair competition legislation.

While the legislation is intended to provide consumer protection, many fear that smaller companies would find it impossible to conform to multiple trading standards and could be prevented from selling online as a result.

Pullen, who first raised the alarm about the potential ramifications of the changes in the UK, said he was setting up an Internet Law and Jurisdiction Forum to lobby the UK government and would call on large companies to add their support to the push. The CBI and Advertising Association have expressed strong interest in supporting the Forum already.

The campaign was vital because whatever legislation was implemented would set the framework for ecommerce regulation in Europe for the next 20 years, Pullen said.

“This is not just about the Brussels Convention - this is the thin end of the wedge for ecommerce,” he said. “The Brussels Convention is the first shot in the restriction of ecommerce. This goes beyond giving consumers an equivalent level of protection."

“We hope that on the basis of consultation, the member states will see sense and realise that this has been a mistake,” he added.

The UK Institute of Directors has thrown its weight behind Pullen’s stance and also plans to lobby the government to have the legislation scrapped or changed.

“We’re concerned because the way it’s looking, they haven’t thought through the implications for businesses of having to learn lots of different consumer legislations,” said deputy head of the IoD policy unit, Richard Baron.

It made sense to adopt a model based on the laws of the seller’s rather than buyer’s country, because while online shoppers could choose where they wanted to buy, merchants were often unable to tell where their customers came from, Baron said.

The EU’s initial attempt to push the legislation through without industry consultation could be attributed to “cock up” rather than conspiracy theory, Baron added.

The EU’s decision on how to regulate the online market could have ramifications beyond Europe.

It is understood that the Organisation for Economic Cooperation and Development (OECD) is looking to establish its own ecommerce regulations and plans to base its model on that adopted by the EU.

No one at the EU was willing to comment.