On February 28 Europe adopted the Geoblocking Regulation. The European Parliament, European Commission and Member States have collectively reached a final agreement. Discrimination of customers in e-commerce on the basis of their nationality, place of residence or place of establishment shall be prohibited. Streaming of copyright protected music, e-books, online games or software do not (yet) fall under the scope of the Regulation. Other services such as financial, audio-visual, transport, healthcare and social services are also excluded, in line with the Services Directive.
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 pursue their payments, can’t register on the website or are being blocked to buy goods because of a cross-border delivery. These practises restrict e-commerce within the EU internal market at the expense of consumers and companies.
What is exactly prohibited by the geoblocking Regulation?
The provisional agreement prohibits (price)discrimination in three cases: access to goods and services, access to online interfaces and for reasons related to 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.
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. This applies in three cases as well, namely 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. Unequal prices in Member States are prohibited, unless a price difference is undiscriminatory, for example justified by a difference in distribution or delivery costs. In case the trader doesn’t offer delivery to the Netherlands, he still needs to sell the product to the Dutch customer. However, the trader isn’t obliged to take care of delivery.
Unlike price discrimination, price differentiation will not be prohibited.
Relation to EU competition law
Justified restrictions on active sale in the context of the Vertical Agreements Block Exemption Regulation (nr. 330/2010) and the cartel prohibition (Article 101 TFEU) fall outside the prohibition on unjustified geoblocking. In case of a conflict with EU competition law, the geoblocking Regulation shall prevail.
When does my website need to comply to the new rules?
Do you want to know more about this topic? Please dont hesitate to contact the practice group Commercial or Head of the team Martine de Koning (Martine.de.Koning@kvdl.com). We are specialized in legal advice, contracts and litigation in the area of e-commerce, purchase, franchise, distribution, agency and competition.