12 October 2018

Commission guidance on Geo-blocking Regulation and e-commerce

The EC's Geo-blocking Regulation comes into effect on 3 December 2018.

What's the issue?

The Geo-blocking Regulation aims to prevent unjustified geo-blocking (the restriction of online cross-border sales based on nationality, residence or place of establishment). It is part of the European Commission's Digital Single Market project which aims to facilitate cross-border online trade.

To recap, the key provisions provide that:

  • A trader may not restrict access to a regional interface. If a consumer is redirected to a local site, it must be done with their consent and they must retain access to the original site.
  • A trader cannot apply different general conditions of access to goods or services on the grounds of the customer's nationality, place of residence or place of establishment. This applies to:
    • the sale of goods without physical delivery outside the area served by the trader;
    • the sale of electronically supplied services; or
    • the sale of services provided in a specific physical location.
  • Different conditions for payment may not be applied across different Member States for reasons of nationality, place of residence or establishment.
  • The Regulation does not affect agreements restricting active sales or passive sales that concern transactions falling outside the scope of the Regulation.

The Regulation does not impose an obligation to sell across the entire EU and does not require traders to harmonise prices across Member States. It does, however, address discrimination in access to goods and services in cases where it cannot be objectively justified (for example because national laws take precedence).

What's the development?

The EC has now issued a series of Q&As by way of guidance to the application of the Regulation to e-commerce. These replace the March 2018 guidelines.

What does this mean for you?

The guidance is aimed at traders, consumers and enforcing authorities and intends to provide clarification around the legislation. Some of the questions asked have fairly obvious answers, particularly to those familiar with consumer law requirements, but they are worth a look for any business caught (or which thinks it may be caught) by the Regulation.

Read more

Some points to note:

  • The Regulation does not apply to the provision of transport, financial, gambling and audiovisual services.
  • The Regulation only applies where the goods or services are purchased for the sole purpose of end use. Traders are allowed to apply adequate methods to ensure this.
  • Online marketplaces where, for example, goods or services are sold by third parties, will be subject to the Regulation where they meet the definition of "trader". Where the marketplace does not act as a trader but acts in the name of or on behalf of another company which qualifies as a trader, it is the other company which is subject to the Regulation, not the online marketplace directly. A "trader" is "any natural person or any legal person irrespective of whether privately or publicly owned, who is acting, including through any other person acting in the name or on behalf of the trader, for purposes relating to the trade, business, craft or profession of the trader".
  • B2B transactions will be subject to the new rules where they are not individually negotiated and the transaction is for the sole purpose of end use.
  • Cloud computing services, data warehousing services, web hosting and the provision of firewalls, use of search engines, website supply, distance maintenance of software and equipment and remote systems administration across Member States will be covered.
  • Non-audiovisual electronically supplied services whose main feature is the access and use of copyrighted works (e.g. ebooks, software, streaming of music and videogames) are covered by the Regulation but are not subject to the prohibition on different conditions on the basis of nationality, residence and establishment (Article 4).
  • Consent to redirection to a specific version of a website need not be obtained on every visit, provided the original consent can be withdrawn and the original version remains easily accessible.
  • National rules which prevent a trader from selling goods or providing services to certain customers will take precedence over the prohibition on discrimination on grounds of location, provided those rules do not conflict with EU law.
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