Embracing the digital age to overcome the challenges of COVID-19

How Belgian e-commerce booms and offers the necessary opportunities for your business

The current health crisis is increasingly impacting our social life and our economy. As of mid-March onwards, the Belgian National Security Council has taken the decision to close all non-essential stores in our country. Although there is a plan to ease the lockdown in the next coming weeks, the exit out of lockdown will be a phased exit. It remains unsure whether and to what extent businesses will be allowed to re-open on May 11th and the fear that it may only be temporary is very much present.

Businesses are forced to focus on alternative solutions, e-commerce is one of them.

E-commerce is booming

Already since last year, e-commerce has been booming in Belgium. According to the findings of the BeCommerce Market Monitor[1], Belgian shoppers spent 11.46 billion euros online in 2019, which is 0.9 billion euros more than in 2018.

With the COVID-19 pandemic, expectations are that e-commerce in Belgium will boom even more during the next weeks and months. The current situation positively affects the growing number of online sales in various sectors. By shopping online, people avoid mass contact and comply with the current social distancing requirements imposed by the public authority.

Companies are compelled to take responsibility and adapt their business to the ongoing circumstances. When your company is suddenly confronted with a situation like this, you are better prepared to deal with the associated challenges when you already have digital experience. But also for those who are not yet digitally engaged, now is the crucial moment to take the step towards e-commerce.

Below we highlight some of the most important legal aspects related to e-commerce a company has to take into account when transforming its (offline) business into the (online) digital environment.

  • Corporate law

From a corporate law perspective, the conversion of activities from offline to online should in most cases only have limited implications. As long as the corporate object as taken up in the bylaws of your company includes your e-commerce activities there are little to no major concerns from a corporate law perspective to include e-commerce activities next to – or in replacement of – the traditional offline business activities.

In addition, be sure that the right NACE-code for e-commerce activities is activated with the Crossroads Database for Enterprises before you commence your e-commerce activities. The correct registration of your activity is not only a minimum requirement for the deductibility of certain costs incurred in relation to the development of this business activity, it will also allow you to act in court as claimant or defendant in relation to any issues in relation to this activity and will protect you against fines for incorrect or incomplete registration.

The decision on whether to develop e-commerce activities within your existing legal entity or disentangle them under (new) separate legal entities is a matter that is mainly based on a (financial) risk mitigation assessment. Should you decide to set up a separate legal entity for this new activity the choice of the legal form is the first thing to consider.

  • Consumer law

Once your e-commerce platform is online, you have to ensure that your e-business complies with the relevant legislation, in particular consumer legislation. In Belgium, most of it is extensively regulated by Book VI (Market practices and consumer law) of the Code of Economic Law (“Code”). The Code contains a multitude of rules with regard to information that has to be provided to consumers before, during and after a purchase procedure. For instance: information relating to the methods of payment and delivery, the right of withdrawal, the provision of guarantees, etc. Therefore, clear and complete general terms and conditions are essential for your online business.

  • Data protection & e-privacy law

When ordering online, consumers leave their personal data when they place an order and/or create an account. Consequently, you may qualify as a data controller and you will have to comply with the rules and principles of the General Data Protection Regulation (“GDPR”).

In general, you will need to provide in a clear and comprehensive Privacy- and Cookie Policy. To ensure an effective protection of your consumers’ personal data, you will need to verify whether your IT system is state of the art and develop or complete internal data protection policies for your employees on how to safely process personal data.

You might also have to carry out a so called Data Protection Impact Assessment (“DPIA”) and enter into adequate Data Processing Agreements (“DPAs”) or Joint Controller arrangements with your service providers and/your partners. Where you would rely upon service providers or other partners located outside the European Economic Area (“EEA”) or any so called whitelisted countries to whom you would transfer personal data collected in the EU, you will have to provide in additional safeguards in line with the prescriptions set out by the GDPR in this regard.

  • Advertising law

Online advertising is, as offline advertising, subject to the general rules on advertising of Book VI of the Code. However, there are also specific rules stipulated in Book XII of the Code, for instance for sending electronic mail. According to the ‘opt-in’ rule, which protects the addressee against spam, you must first obtain permission before sending e-mails. However, the legislation does allow you to send your own consumers electronic mail about similar products or services, subject to an ‘opt-out’ option.

  • Intellectual property law

One of the logistical aspects of starting an online business, is creating a website. When you entrust someone with building a website for your company, it is important to understand what your rights are on this website. When building websites, intellectual property (“IP”) rights are involved. For instance, the source code of the website, created by the web developer, is protected by copyright. This means the developer has to give permission to make changes. In order to avoid misunderstandings regarding the ownership of the website it is important to have a proper contract, in which the rights and obligations of all contract parties are clearly defined.

In addition to taking into account the IP rights of third parties, you should also consider the online protection of the IP rights of your own business. IP rights are a business asset and are often even the most valuable business asset for a company. Any company presently doing or considering doing business online needs to assess what IP rights it owns and ensure that it is fully protected.

You will have to buy a domain name for your website. Domain names are not IP rights as such and consequently do not give you any ownership rights over that name; the only right you acquire is the exclusive right to use that name for the duration of the license period. Since domain names function on the internet as trade names, very often they integrate the company name. If you intend to use your company name as the domain name of your e-commerce website, it should be carefully examined in advance whether the name you intend to use is still available, both as a trade name as well as a domain name. When you choose your company’s trade and/or domain name, it is also important to ensure that the name is distinctive and not descriptive. A distinctive domain name will not only allow your future clients to more easily remember your website, but also for you to seek trademark protection. Any sign, such as words, numbers or logos, that distinguishes your goods or services from those of others in the market, can be protected by trademarks. Finally, most of your website, including the written material, design, images, data, etc. can be protected by copyright.

How can we help?

In case you would like to receive more information on the legal aspects of e-commerce or if you need guidance in starting up your e-commerce business, please do not hesitate to reach out to us. At EY Law we have lawyers who are experienced in digital regulatory law, digital IP and data privacy regulations, and who are happy to advise you on legal and regulatory aspects affecting your e-commerce business.

Our lawyers can help e-commerce businesses sell their products, services and digital content in a legally compliant way. This is true both for businesses who are new to e-commerce and going through digital transformation as they move into the online world, as well as for established e-commerce businesses as they look to engage with their customers in new markets or using new methods of online selling. Involving EY Law’s experienced lawyers early in the process can save time and reduce cost as it allows solutions to be built with compliance in mind.

[1] https://www.becommerce.be/market-monitor-2020-nl.

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