Regulatory Outlook | Consumer Protection | July 2018

Written on 24 Jul 2018

Current issues

Geo-blocking Regulation

After considerable negotiation and consultation, the Geo-blocking Regulation has been passed and will stop most companies from preventing access to national versions of their websites within the EU.

The Regulation takes effect from 3 December 2018 and addresses “unjustified” geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment.

Underlying all the requirements of the Regulation is the principle of non-discrimination; meaning that, where a customer wishes to access and buy services from a national website, they should be treated in the same way as customers physically based in that Member State.

New Deal for Consumers: substantial reforms to consumer law, including GDPR level fines

Following a major evaluation of the EU consumer law directives, the EU announced its long-awaited “New Deal for Consumers”, which proposed the following key changes:

  • GDPR-level fines of at least 4% of turnover in the Member State(s) concerned;
  • measures to enable group actions for breaches of consumer law;
  • new consumer rights for contracts for free digital services;
  • harmonized remedies for unfair commercial practices;
  • rules for dual quality products;
  • more transparency for consumers in online marketplaces; and
  • the deletion of certain consumer rights.

The Commission is looking for these legislative proposals to be put in place by May 2019, though there is likely to be an implementation period that extends for some time after that.

In Focus: Brexit

Is any new EU legislation expected to come into force and effect before the end of the transition period?

The Geo-blocking Regulation takes effect from 3 December 2018.

The EU’s “New Deal for Consumers” proposals would require a new Directive and amendments to a number of existing Directives. The Commission is looking for these legislative proposals to be put in place by May 2019. However, even if that timetable can be achieved, there is likely to be an implementation period for the legislation that goes beyond the end of the transition period. If so, these significant changes in consumer protection would not automatically apply to UK businesses in relation to consumers that are based in the UK.

Is a new regulator needed, or do additional powers to be given to an existing regulator?

No. The Competition and Markets Authority will continue to have the main regulatory responsibility for consumer law.

Is there an existing “equivalence” or “recognition” regime for recognising Third Country regulatory regimes?

No.

Does current UK government policy mean that (subject to the terms of a future trade agreement between the UK and the EU) material changes to regulation or enforcement are likely post-Brexit?

It is hard to say. Although not solely focused on consumer law, Prime Minister Theresa May did call out ‘digital’ in particular during her Mansion House speech in March 2018 referencing that it “is a fast evolving, innovative sector … so it will be particularly important to have domestic flexibility, to ensure the regulatory environment can always respond nimbly and ambitiously to new developments.” However, whether this potential divergence will play out in reality is unknown, as is any related impact on ‘non-digital’ consumer law.

What should businesses be doing now to prepare for Brexit?

Where businesses are supplying goods, services or digital content to consumers in the EU, these arrangements will still be caught by much of the EU’s consumer protection legislation. UK businesses that deal with EU consumers will therefore still need to ensure that they comply with relevant new EU consumer protection law.

For businesses supplying UK consumers, without knowing what, if any, differences are going to arise between UK and EU27 consumer laws, at the moment they should proceed as normal.

It will be particularly interesting to see what stance the UK takes on the New Deal for Consumers, which may be indicative of the future direction of travel for consumer law in the UK. Will the UK seek to implement the new rules regardless of the fact that the Directive will not be automatically binding in the UK?  Or will the UK decide that this is the point in time that the regimes will diverge?

Dates for the Diary

3 December 2018 Geo-blocking Regulation takes effect.
31 May 2019 Target date for implementing legislation for the “New Deal for Consumers” to be put in place.