Geo-blocking is the practice of preventing internet users in one jurisdiction from accessing services elsewhere based on the user’s geographic location. The European Commission wants to eliminate geo-blocking within the EU – and has taken a significant step forward in its plans to do so by clearing key votes in the EU legislative process.
By the end of 2018, we expect that online retailers will need to ensure that they phase out the use of geo-blocking across the EU except in limited circumstances.
These changes are part of a wider programme of reform affecting all businesses operating in the Technology, Media, and Telecoms sectors in Europe.
The European Commission launched its Digital Single Market (“DSM”) strategy in May 2015. We have written a number of articles following the DSM’s progress: at its inception, one year in, and in 2017 following a mid-term review.
The DSM strategy is broken down into three “pillars” and 16 “Key Actions”. Key Action 4 aims to end unjustified geo-blocking, which the Commission identifies as an obstacle to harmonized cross-border e-commerce, a reason for significant consumer dissatisfaction by limiting opportunities and choice, and a cause of fragmentation of the EU’s digital market.
The Commission undertook a consultation which showed that geo-blocking is increasingly common across the EU. Replies from more than 1,400 retailers and digital content providers from all 28 Member States showed that 38% of the responding retailers that sold consumer goods and 68% of digital content providers engage in active geo‑blocking directed at consumers located in other Member States. 63% of websites do not let shoppers buy goods or services from another EU country. Geo-blocking is especially prevalent for online sales of electrical household appliances and online reservations for leisure activities such as sports tickets.
In its 2018 Work Programme, a document that sets out what the Commission plans to achieve in terms of specific implementation of its key initiatives each year, the Commission mentioned specifically the pressing need to see through legislative proposals on unjustified geo-blocking.
Regulation on Addressing Geo-Blocking
The Commission’s proposed Regulation on addressing geo-blocking (the “Geo-blocking Regulation”) was voted through both the European Parliament and Council in February 2018 – and thus should come into force by the end of 2018. You can read our previous alert on the Geo-blocking Regulation here.
Currently, online customers are often blocked from accessing certain sites or rerouted to a page specifically aimed at their location, where they may be offered different goods or prices. The Geo-blocking Regulation will prohibit such blocking or redirection (without consent), essentially compelling traders who operate online to offer their goods or services to online customers in all Member States, and on the same terms as local customers. This will apply to:
- the sale of physical goods (however, a trader does not have to deliver the goods cross-border, so the consumer may have to travel to collect the goods from the trader’s Member State, or a Member State to which a trader already offers delivery in its general conditions);
- services that are supplied on the premises of the trader or in a physical location where the trader operates, e.g., hotel stays, sports events, car rentals, or music festivals; and
- electronically supplied services that are not protected by copyright, e.g., cloud services, firewalls, data warehousing, and website hosting.
Copyrighted content, audiovisual services and transport services are exempt from the Geo-blocking Regulation, although these exemptions will be assessed two years after the Regulation comes into force.
Once the Geo-blocking Regulation becomes law in the EU, online traders will be required to treat online shoppers from another EU country in the same way as local buyers. This means granting equal access to prices or sales conditions when they buy goods or services not protected by copyright. The new rules will also not allow traders to treat shoppers differently based on the place of issue of a credit or debit card (although traders remain free to accept whatever means of payment they choose).
Following its safe passage through EU Parliament and Council, the Geo-blocking Regulation will now need to be published in the Official Journal of the EU before the end of March 2018. It will enter into force on the 20th day following its publication in the Official Journal, and will apply nine months after this publication.