UK: Banks´ E-Commerce Network Gains Green Light

The growth of e-commerce won a boost on 1 August when the European Commission cleared the creation of a network for authenticating electronic signatures.

Eight banks set up the global Identrus system, which will also deal with other aspects of financial and e-commerce transactions. The banks and other financial institutions taking part in the network will operate as separate, competing certification authorities for secure e-commerce operations. Identrus required clearance by the Commission to check that competition was not being restricted in breach of EU law.

Participation in Identrus will be open to financial institutions that meet the Basle Committee’s capital requirements and other financial ratings. Each company can offer its own independently created applications using the Identrus infrastructure, in competition with others in the network. Each is free to set its own prices for authentication services, and end-users can choose any company in the network, regardless of whether this is their usual bank or not.

Identrus was set up under US law as a joint venture between Barclays, ABN-Amro, Bank of America, Deutsche Bank, Citibank, Chase Manhattan, Bankers Trust and Bayrische Hypo- und Vereinsbank. The number of equity owners in Identrus has since expanded to 21; no single company will have control over the network. Identrus will offer services such as authenticating the identity of partners in e-commerce transactions, electronic messages and contractual remedies against signature repudiation.

The Commission concluded that the Identrus system would not lead to any appreciable restriction of competition. It entails no foreclosure risk, as it is open to all companies that meet objective criteria, and will face competition by others in sectors such as financial services, postal authorities and telecommunications. Identrus participants are also free to join other such systems, and there are no adverse effects on input markets, the Commission said.