On the 20th of November the European Commission, Parliament and Council of the EU reached a compromise on the text of the Geoblocking Regulation. The agreement, which still needs final adoption by the Council and the Parliament, will remove barriers to e-commerce by prohibiting discrimination based on customers’ nationality, place of residence or place of establishment. Streaming of copyright protected music, e-books, online games or software do not fall under the scope of the Regulation.
What is geoblocking?
Geo-blocking is a discriminatory practice that prevents online customers from accessing and purchasing products or services from a website based in another member state. A survey executed by the European Commission shows that more than half (63%) of online shops in Europe do not let customers buy from another EU country. Customers, for example, can’t make payments, can’t register on the website or are being blocked to buy goods that require a cross-border delivery. These practices restrict e-commerce within the EU internal market at the expense of consumers and companies.
What is prohibited by the Geoblocking Regulation?
The provisional agreement prohibits (price)discrimination in three cases: access to goods and services, access to online interfaces and payment. Traders are not allowed to block their website or redirect customers (unless a customer has explicitly given its consent to do so) and are not allowed to apply different payment conditions on the basis of nationality, place of residence or place of establishment.
Equal access to goods and services:
A trader shall not apply different general conditions of access to his or her goods or services, for reasons related to the nationality, place of residence or place of establishment of the customer. Where the customer seeks to:
- receive services, such as car rental or hotel accommodation, in a physical location within the territory of a Member State where the trader operates;
- receive electronically supplied services such as cloud services or data warehousing services, and
- buy goods that are delivered to a location in a Member State to which the trader offers delivery or are collected at a location agreed upon with the customer.
A Dutch customer, for example, may not be restricted to buy online from a trader established in Germany, if the trader offers delivery to the Netherlands. The price has to be the same, unless a price difference is not discriminatory, for example if it is justified by transport or other delivery costs. In case the trader doesn’t offer delivery to the Netherlands, he still needs to sell the product to the Dutch customer but he does not have to deliver the product to the location of the customer in The Netherlands. Some expect that parcel delivery services will see this as a new business opportunity.
Price differentiation, contrary to price discrimination, in general terms and conditions and the like, will not be prohibited.
Relation to EU competition law
Active sale restriction in the meaning of the Vertical Agreements Block Exemption Regulation (nr. 330/2010) and the cartel prohibition (Article 101 TFEU) fall outside the prohibition on unjustified geoblocking. The Geoblocking Regulation shall prevail in case of a conflict with EU competition law.
When does my website need to comply with the new rules?
The regulation is expected to be formally adopted in the course of 2018. Entry into force takes place 9 months after publication in the EU Official Journal. For further details, see the press releases of the European Commission and the Council.
Do you want to know more about upcoming changes? Please dont hesitate to contact the practice group Commercial or Head of the team Martine de Koning (Martine.de.Koning@kvdl.com). We are active in legal advice to and litigation for companies in the area of e-commerce, purchase, franchise, distribution, agency and competition.