The Geo-Blocking Regulation 2018/302 (“Regulation”) has been applicable in the EU since 3rd December 2018. The Regulation aims to boost cross-border e-commerce in Member States by prohibiting unjustified “geo-blocking” and other forms of discrimination based on a customer’s nationality or geographical location.
But what is “geo-blocking” and what are the practical implications for businesses making online cross-border sales in the EU? Let’s examine the scope of the Regulation and consider the steps businesses should take to avoid falling foul of its restrictions.
What is Geo-Blocking?
“Geo-blocking” refers to the practices used by businesses to restrict online cross-border sales based on a customer’s nationality, place of residence or place of establishment. These practices include blocking access to websites from the other Member States or redirecting a customer to another website.
In addition to online sales, “geo-discrimination” can take place offline when consumers are physically present at the physical location of a business but are either prevented from accessing a product or service, or they are subject to different conditions due to their nationality or geographical location.
What businesses are affected?
The Regulation applies to all businesses that sell goods and services in the EU to consumers and to other businesses where they are end users. Businesses established outside the EU will be subject to the Regulation where they sell goods or services to customers in the EU.
Are there any exemptions?
Transport services, retail financial services, audio-visual services are all exempt from the Regulation. “Geo-blocking” and “geo-discrimination” are only possible in exceptional circumstances such as, where an EU or national legal requirement requires a business to block access to the goods or services (e.g. online services related to non-audio-visual works protected by copyright such as e-books, video games, music, and software).
What are the risks of non-compliance?
The Regulation does not provide for specific sanctions and it is for the Member States to ensure that appropriate measures can be taken against businesses that do not comply with the Regulation. It remains to be seen what measures will be adopted by the Member States.
What steps should businesses take?
Businesses must examine their online interfaces (e.g. websites, mobile applications) and their commercial agreements, including their terms and conditions of sale, to ensure that they are not discriminating against customers based on their nationality or location. As a minimum, businesses should do the following:
- Website access: Check that all your online interfaces are accessible and usable by customers in all Member States. Unless there is an objective justification for blocking access (e.g. a legal requirement under EU or national law), access must not be restricted.
- Redirecting access: Ensure that you do not automatically redirect a customer from one version of your website to another without that customer’s prior consent. Even where consent has been given, the customer must have the opportunity to return to the original website with relative ease.
- Order process: Make sure that your website and applications are designed to be “country neutral” and allow customers from any Member State to complete the order process. This may require you to consider whether entry fields for addresses and contact details are appropriate for all Member States.
- Payment terms: You should check that you accept the same payment methods across the EU. Whilst a business is free to accept whatever payment methods it chooses, it cannot automatically decline credit or debit cards from a different country. Payment may be declined where the authentication requirements of the payment provider are not fulfilled or where a customer seeks to make payment by a method outside the accepted range.
- Delivery: Make sure that a customer from a different Member State is entitled to delivery in your Member State on the same terms as a local customer. You can choose the conditions under which you want to deliver goods but you must make sure that customers are treated the same, regardless of their nationality or geographical location.
What about Brexit?
In a “no-deal” Brexit scenario, the Regulation will no longer have effect in the UK but it will continue to operate in the EU. This will mean that a UK business selling goods and services into the EU will be subject to the Regulation. However, if a UK business does not sell into the EU, it would not be subject to the Regulation and so it could apply different conditions to customers based on nationality or geographical location.
Businesses that make cross-border sales in the EU must review their sales models for any measures that restrict access to goods and services based on a customer’s nationality or location. Where such measures are adopted, they must be objectively justified.