Geo-blocking: Agreement to remove barriers to e-commerce

Geo-blocking: EU ambassadors confirm agreement on removing barriers to e-commerce

 

EU ambassadors confirmed today an agreement reached between the Estonian presidency and the European Parliament to ban unjustified geo-blocking in the internal market.

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.

The agreement, which still needs final adoption by the Council and the Parliament, will remove barriers to e-commerce by avoiding discrimination based on customers’ nationality, place of residence or place of establishment.

“The end of unjustified geo-blocking will greatly enlarge the choice available to citizens when shopping online and will give a major boost to e-commerce. Consumers will be able to shop around for the best deals within the internal market. I want to thank the Parliament and the Commission for helping the Estonian presidency to bring the digital single market closer to reality.”

Kadri Simson, Minister of Economic Affairs and Infrastructure of Estonia

The main features of the agreement are the following:

Objective and scope

The future regulation will prevent discrimination for consumers and companies on access to prices, sales or payment conditions when buying products and services in another EU country.

Services where the main feature is the provision of access to and use of copyright protected content, or the selling of copyright protected works in an intangible form, such as music streaming services, e-books, online games and software, will be excluded from the scope of the regulation. But this will be subject to a review by the Commission.

Other services such as financial, audio-visual, transport, healthcare and social services will also be excluded, in line with the Services Directive.

The new rules are in compliance with other EU legislation in force applicable to cross-border sales, such as rules on copyright and Union law on judicial cooperation in civil matters.

Equal access to goods and services

Under the new rules, traders will not be able to discriminate between customers with regard to the general terms and conditions – including prices– in three cases. These are where the trader:

  1. sells goods that are delivered in a member state to which the trader offers delivery or are collected at a location agreed upon with the customer;
  2. provides electronically supplied services such as cloud services, data warehousing services, website hosting and the provision of firewalls;
  3. provides services which are received by the customer in the country where the trader operates, such as hotel accommodation, sports events, car rental, or entry tickets to music festivals or leisure parks.

Unlike price discrimination, price differentiation will not be prohibited, so traders are free to offer different general conditions, including prices, and to target certain groups of customers in specific territories.

Moreover, traders will not be obliged to deliver goods to customers outside the member state to which they offer delivery.

 

Payment transactions

Unjustified discrimination of customers in relation to payment methods will be forbidden. Therefore traders will not be allowed to apply different payment conditions for customers for reasons of nationality, place of residence or place of establishment.

Non-discrimination for e-commerce website access

Traders will not be allowed to block or limit customers’ access to their online interface for reasons of nationality or place of residence.

A clear explanation will have to be provided if a trader blocks or limits access or redirects customers to a different version of the online interface.

Passive sales

As a general rule, the new regulation will prevail in cases of conflict with competition law. But the right of suppliers to impose active sales restrictions will not be affected.

EU competition law distinguishes between passive sales (when sales are made in response to unsolicited orders) and active sales (when retailers are actively targeting customers). Passive sales restrictions are generally considered as an infringement to competition law whilst active sales restrictions are a common practise which stems from commercial freedom.

Review clause

The Commission will carry out a first evaluation of the impact of the new rules on the internal market two years after their entry into force.

The evaluation will include a possible application of the new rules to certain electronically supplied services which offer copyrighted content such as downloadable music, e-books, software and online games.

Entry into force

The Council and the European Parliament will have to endorse the draft regulation in the coming months. Following formal adoption, the regulation will be published in the EU’s official journal.

It will be applicable nine months after its publication.

Background

The Commission submitted the original proposal to the Council and the European Parliament on 25 May 2016.

It was presented together with supplementary legislative proposals on cross-border parcel delivery services and a review of the Consumer Protection Cooperation Regulation, with the objective of making progress towards the completion of a genuine digital single market.

The European Council has emphasised repeatedly the importance of the digital single market strategy and called for the speeding up of the implementation of the strategy, which includes the removal of remaining barriers to the free circulation of goods and services sold online and for tackling unjustified discrimination on the grounds of geographic location.

 

Source: Press Release of the Council of the EU – 703/17 – 29/11/2017