The European Commission has issued a press release announcing that the European Parliament, the Council and the Commission have reached a political agreement to end unjustified geoblocking for consumers wishing to buy products or services online within the EU. Geoblocking occurs when a customer is treated differently based on their nationality, place of residence or location – typically by denying them access to a website. This means that consumers in one EU member state cannot access certain goods/services available in another EU member state, segmenting the market, limiting cross-border trade and adversely affecting competition. A survey by the Commission found that in 2015 less than 40% of websites allowed cross-border customers to complete a purchase. The press release says:
For citizens this means they will be able to buy their new electrical goods online, rent a car or get their concert tickets across borders as they do at home. It will ensure that they no longer face [geographic] barriers such as being asked to pay with a debit or credit card issued in another country. For businesses, this means more legal certainty to operate cross-border.”
Geoblocking will be made unlawful by means of an EU Regulation which will be automatically binding on each EU member state. Geoblocking will be permitted where there is objective justification for such a practice. The Commission’s press release outlines three scenerios where no such justification will be deemed to exist. These are:
- The sale of goods without physical delivery – for example, a Belgian customer wishes to buy a refrigerator and finds the best deal on a German website. The customer will be entitled to order the product and collect it at the trader’s premises or otherwise organise delivery himself to his home (without the seller being involved);
- The sale of electronically supplied services – for example, a Bulgarian consumer wishes to buy hosting services for her website from a Spanish company. She will have access to the service and will be able to register and buy the service without having to pay additional fees that a Spanish consumer would not have to pay; and
- The sale of services provided in a specific physical location – for example, an Italian family will be able to buy a trip directly to an amusement park in France from the amusement park’s French website without being redirected to an Italian website.
The Commission makes it clear in its press release that the Regulation will “not impose an obligation to sell and [will] not harmonise prices. It does, however, address discrimination in access to goods and services in cases where it cannot be objectively justified (e.g. by VAT obligations or different legal requirements).”
The Regulation requires some further approvals – no timeline has been given for this. It will then be published in the EU Official Journal and come into force nine months later. This will give EU organisations the opportunity to adapt their business practices to become Regulation compliant. We will post a further update when the Regulation is published.