The EU moves forward on Geo-blocking rules

Published on 24th Jun 2016

The EU legislator is already working on a new proposed piece of legislation: a new framework for the use of unjustified geo-blocking policies. The main objective of the initiative is to ensure non-discrimination against customers in the Single Market. This proposal prohibits the blocking of access to websites and other online interfaces and the rerouting of customers from one country version to another.

One of the consequences of a thriving digital economy is that customers, notably consumers but also small businesses, have shown an increasing interest in shopping cross-border. However, they have increasingly experienced traders operating in other Member States refusing to sell to them or adapting their price as a consequence of the customer being from another Member State. As a consequence, surveys have revealed that only slightly more than a third of attempted cross-border purchases were successful. Thus, while there may be good reasons for not selling cross-border (e.g. differences in consumer laws, tax rates, bottlenecks in cross-border delivery channels), a significant number of restrictions may be unjustified.

This has been seen by the EU legislator as requiring particular and close attention as it may hamper the ultimate goal of the EU Single Market, which is to ensure that a non-discriminatory treatment is dispatched to all customers in cross-border transactions all across the EU. If overlooked from the businesses perspective, this regulation would amount to a restriction, to some extent, of their right to refuse a sale or provision of services, which is at the very core of their fundamental right to conduct a business. Refusals to sell or provide a service will have to pay attention to the provisions on non-discrimination limitations included in the regulation once it is enacted.

The text of the regulation itself provides four main sections which contain the policies to be implemented: (i) prohibition of the redirecting to other online interfaces than the one to which access was sought by the customer based on his/her nationality, place of residence or place of establishment, unless the latter has explicitly consented or the redirecting is performed as a consequence of an EU or national law requirement; (ii) prohibition of applying different conditions to sell or provide a service based on nationality, place of residence or place of establishment, where the seller does not deliver goods to the relevant country, nor any third-party does it on his/her behalf, where the main feature of the service provided is not the use of or access to copyright protected work, or where the service, other than the latter, is supplied to the customer by the trader in the premises of the trader or in a physical location where the trader operates, in a Member State other than that of which the customer is a national or in which the customer has the place of residence or the place of establishment, unless a legal requirement exists in the EU or national laws to justify the application of different conditions; (iii) prohibition of the adoption of discriminatory measures in relation to payment methods where the payee accepts the currency, the payment is done through electronic transactions by credit transfer, direct debit or a card-based payment instrument within the same payment brand, and the payee can request strong customer authentication by the payer; (iv) and as a closing section, agreements on passive sales shall be automatically void if they provide for acting in violation of the regulation.

Therefore, as described, the regulation goes on to deal with some hot topics which have long been claimed by customers across the EU. However, some areas of law would remain untouched such as the restrictions in relation to copyright protected work. In any event, the form of regulating the matter chosen by the EU legislator –setting strong bans on some courses of action– may make things easy for all stakeholders to come to common grounds.

It must be noted that the regulation is proposed to be equally applicable to individuals and companies who acquire goods and services within the Single Market. It complements other initiatives under the Digital Single Market and Single Market strategies and aims to create the right conditions for improved access to services for consumers and businesses across the Union.

Finally, close surveillance of the developments of the legislative procedure is very much recommended since the range of economic activities falling within the scope of the regulation is potentially huge and core for the EU economy. Likewise, a set of wise and agreed foundations that look into the future of digital economy will be largely appreciated by consumers in the EU, who have most probably been the largest group among the affected stakeholders.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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