Bill Gates once noted that the internet would help achieve "friction free capitalism", putting buyer and seller into direct contact and providing more information to both about the other. He was right. Today, thanks to the Web, buyers are empowered to make informed choices, while sellers, particularly the small ones, are able to reach vast new markets.

Unfortunately, the European Union could put the brakes on this beautiful and blossoming relationship just as things are starting to get interesting. At the moment, a contract between a buyer and a seller from an EU country is subject to the consumer law of the seller's country, unless the contract was the result of a specific invitation by the seller. 

It is a straightforward arrangement for businesses trading or advertising online where the buyer makes the initial contact, but the EU could shortly reverse this rule so that almost any contract would be subject to the consumer law of the buyer's country. This complicated piece of legalese, known as "Rome I" would result in businesses having to comply with 27 different sets of consumer protection laws and insure against the additional risk and complexity of legal action.

Big business is concerned, but for small businesses this could spell an end to their brief dalliance with the internet. The costs and associated risks of complying with 27 different sets of consumer law would place e-commerce beyond their reach.

The European Commission believes this measure will protect the consumer. Ironically, by driving businesses away from the internet, consumers will be worse off as choice diminishes. But it's not just the Commission that is keen: only the UK and Luxembourg have voiced serious opposition to the proposal.

So how much will it cost? What impact might it have on growth, job creation and competitiveness? In short, we have no idea since no-one has conducted an impact assessment. One thing is certain: we won't be achieving "friction-free capitalism" anytime soon with proposals like this on the table.