On Tuesday 6 February, the European Parliament adopted a regulation to end certain types of geo-blocking and country redirects – banning the discriminatory practice that prevents consumers from purchasing products and services from a website based in another EU member state. This regulation, originally proposed by the European Commission on 25 May 2016, obliges retailers to give EU consumers the same access to goods and services regardless of their nationality, place of residence and place of establishment. The purpose of this regulation is to give consumers better access to goods and services in the internal market – breaking down national, discriminatory barriers to entry which may have previously existed.
E-commerce is growing rapidly, both in the EU and worldwide. However, this growth is being undermined by geo-blocking, country redirects and other restrictions imposed by online shops which, in the EU, limit the integration and functionality of the internal market. Briefly, geo-blocking occurs where retailers operating in one Member State block or limit access to their online interfaces by consumers wishing to engage in cross-border commercial transactions, or where consumers face different general conditions to access and buy goods and services from another Member State. By way of example, a European Commission study found that in only 37% of cases people were able to complete a purchase from another EU country – and more were restricted at other stages of the sale process e.g. by variations in the price of the goods and services.
The regulation outlines three situations where geo-blocking and other forms of discrimination will no longer be allowed (or where clear justification/consumer consent will be needed); those being the sale of (i) physical goods (where they are delivered in a member state to which the trader offers delivery or are collected by the consumer); (ii) online services e.g. cloud hosting; and (iii) entertainment services e.g. tickets to concerts. The regulation also prevents discrimination by retailers on consumers’ access to websites, automatic re-routing and payment conditions.
However, the regulation is not all-encompassing. It will not apply to services linked to copyright-protected content e.g. e-books, and certain financial, audio-visual, transport, healthcare and social services are also excluded. Importantly, the regulation does not impose an obligation to sell to consumers from all EU countries and does not harmonise prices, so retailers remain free to set prices in a non-discriminatory manner.
The regulation will be applicable nine months after publication, likely to be late 2018, and will be reviewed two years later, following an evaluation by the Commission on the impact on the internal market. This evaluation will consider whether copyrighted materials which are currently excluded from the regulation, e.g. e-books, should be included.
Make sure you check back for the latest developments in this area.