On 25 April 2017 the European Parliament’s Committee on Internal Market and Consumer Protection (IMCO) voted to approve amended draft legislation to ban unjustified geo-blocking in business-to-consumer relationships. A separate vote on the opening of institutional negotiations with the European Commission and the Council of the EU was also approved.
Geo-blocking refers to practices whereby customers in one Member State are prevented from purchasing or accessing goods or digital content from retailers or content providers located in other Member States. This can be achieved by preventing customers from accessing websites located in other Member States, automatically re-routing customers to different websites based on their location or refusing delivery or payment based on a customer’s location or delivery address.
In March 2016 the results of an inquiry into the e-commerce sector, which was launched on 6 May 2015, were published. These results showed that 38 per cent of the respondent consumer goods retailers and 68 per cent of respondent digital content providers geo-block consumers located in other EU Member States.
Based on the findings of the inquiry, a three-stage process then began in order to prepare for the commencement of the ‘ordinary legislative procedure’ under which it is expected that three-way talks between the Commission, the Council and the Parliament will result in legislation to restrict geo-blocking.
(i) First, a draft Regulation was presented by the Commission to the Parliament and the Council on 25 May 2016.
(ii) Second, the Council reviewed the draft Regulation and, on 28 November 2016, agreed a general approach that will form the basis of its future negotiations with the Commission and the Parliament. Although it largely preserved the Commission’s drafting, the Council clarified that theRegulation will only apply to unjustified geo-blocking.
(iii) The IMCO votes on 25 April 2017 represent the third stage in the process. IMCO, like the Council, reviewed the draft Regulation. It, however, has made some more substantial amendments in order to establish its negotiating stance.
The draft Regulation approved by the Parliament
The draft Regulation sets out certain scenarios in which geo-blocking will be prohibited. In such circumstances, online sellers will not be able to discriminate against consumers elsewhere in the EU in their general terms and conditions (including those relating to pricing) on the basis of their nationality, place of residence or even their temporary location.
The result of this is that buyers from a different country to the seller would, without paying a higher price, be able to:
Buy goods (e.g. household appliances or clothes) even when the trader does not deliver them in the consumer’s Member State of residence, if there is an option to collect the goods at an agreed location in another EU country (the proposal does not introduce an obligation to deliver across the EU);
Receive online from the trader services not protected by copyright, such as cloud services, firewalls, data warehousing and website hosting; and
Make a booking outside the consumer’s place of residence (e.g. hotel stays, sports events, car rentals, music festivals or leisure park tickets).
Moreover, automatic re-routing to another website will not be permitted unless either the seller has obtained the customer’s prior consent or an EU or national provision (such as one relating to the protection of minors) makes such re-routing necessary.
Key amendments to the original draft Regulation proposed by the IMCO are that:
Non-audiovisual copyrighted content (i.e. e-books, e-music, games and software) will also be within scope if the trader has the right or a licence to use such content for the countries concerned;
There are stronger safeguards to protect a retailer’s freedom to offer only certain payment means and to limit the risk of fraud or non-payment;
The retailer is not required to comply with the laws of or use the language of a Member State into which it does not intend to sell its products or services; and
The retailer does not have to obtain consent every time a customer visits the same website.
Responses and analysis
Rapporteur for the IMCO, Róża Thun, expects that the legislation will result in consumers having “better access to goods and services online” and that “for traders it will be less burdensome to sell to consumers from different member states”.
Some sectors remain, for the time being, outside the scope of the draft Regulation despite the IMCO’s amendments. These include audiovisual services (such as the broadcasting of sports events that are provided pursuant to exclusive territorial licences) and financial, transport, electronic communication or healthcare services.
However, within three years of the Regulation’s entry into force, the Commission must re-assess whether these areas should be covered in the future. Audiovisual services is arguably the area that will most likely be re-assessed by the Commission given that it was covered in the initial draft and that Commissioner Margrethe Vestager has spoken out against geo-blocking in this area. For example, in a speech in Berlin on 26 March 2015, Commissioner Vestager said: “I, for one, cannot understand why I can watch my favourite Danish channels on my tablet in Copenhagen – a service I paid for – but I can’t when I am in Brussels”.
Consumer groups have similarly called for the legislation to cover audiovisual services. Responding to the IMCO votes, the Director General of the European Consumer Organisation (BEUC), Monique Goyens, commented: “[n]ow EU legislators need to go the extra mile and also ban geo-blocking for films, sport and TV”.
Other concerns about the draft Regulation have been raised by bodies such as EuroCommerce, the association representing the retail sector. Its Director General, Christian Verschueren, said: “[w]e appreciate the Parliament’s work in improving the text, but regret that what was a flawed proposal remains an imperfect one”. EuroCommerce’s main criticism appears to be one of legal uncertainty in relation to delivery. It notes, for example, that even with amendments by the IMCO, the draft Regulation is still unclear on practicalities such as additional costs incurred by shipping returned or defective products.
Ms Thun’s negotiating team now has a mandate to begin negotiations with the Council and the Commission with the aim of reaching an agreement on the final legislation. It is expected that the talks will result in further amendments to the draft Regulation as the institutions consider their differing approaches and the concerns voiced by interested parties.
Speaking in a press conference after the vote, Ms Thun stated that the first trialogue will occur later on this month and was hopeful of the agreed Regulation being adopted by the end of July.