BACKGROUND

In May 2015, the European Commission (the “Commission”) announced a Digital Single Market Strategy for Europe to identify any business practices which could be hampering competition in cross-border e-commerce sales. Later that year in October, the Commission adopted the Single Market Strategy which introduced legislative action to address any unjustified geo-blocking and fight discrimination based on nationality or country of residence or establishment.

On 18 March 2016, the initial findings from a sector inquiry initiated by the Commission were published. The inquiry found that a high proportion of digital content providers are required to use geo-blocking technology by their suppliers and also a high proportion of retailers use geo-blocking to limit cross-border e-commerce activity.

THE PROPOSED REGULATION

On 25 May 2016, the Commission tabled a proposed Regulation (the “Regulation”), a three pronged plan to boost e-commerce across the EU and further implement its Digital Single Market and Single Market strategies. The Commission’s three pronged approach is as follows: tackling geo-blocking; promoting customer trust and confidence through better protections and enforcement; and making cross-border parcel deliveries more efficient and affordable.

  1. Geo-blocking

The Regulation seeks to ensure that consumers who are seeking to purchase products or services in another EU Member State (either online or in person) are not discriminated against due to access to prices, sales and payment conditions or restrictions, unless it is objectively justifiable, for example, VAT or certain public interest reasons.

It should be noted that this principle of non-discrimination is already established under the Services Directive and has been applied in certain sectors such as the car rental industry. However, the aim of this implementation of this proposal is to provide greater legal certainty to companies and consumers with regards to which practices are allowed and which are not.

  1. Increasing customer confidence in e-commerce

Measures are being taken to strengthen and extend existing consumer legislation. The Consumer Protection Cooperation Regulation was established in 2007 to support national consumer authorities when they address breaches of consumer rules in more than one country and will, pending the Regulation’s adoption, be revised. This revision will give national authorities greater powers to better enforce consumer rights and provide a single procedure where breaches have an EU dimension, which will be coordinated and overseen by the Commission. The Commission is also working on providing consistent enforcement of consumer laws across the whole EU, which will include the new rules on geo-blocking. Finally, the Commission is also publishing updated guidance on unfair commercial practices to respond to the challenges presented by the digital market place. This guidance clarifies the application of the Unfair Commercial Practices Directive.

  1. Improving cross border parcel deliveries

The Regulation will increase price transparency and regulatory oversight of cross-border parcel delivery services so that consumers and companies can benefit from affordable deliveries as well as more practical returns options. The main elements of the Regulation are increased regulatory oversight of all parcel delivery service providers, transparent and non-discriminatory price access and improved price transparency. It should be noted that the Commission is not proposing a cap on delivery prices and price regulation will be a last resort, where competition does not achieve the desired results.

NEXT STEPS

These proposals are the first stage in the EU legislative process. Next, the Regulation will pass to the European Parliament and national governments for adoption. It is likely that some parts of this proposed Regulation will take effect in late 2017, with the rest to follow in 2018. The Commission will then take stock of the progress made in 2019 and assess if any further measures are necessary.