DIGITAL SINGLE MARKET

Relevant Regulations for companies selling in the EU

The Digital Single Market (DSM) is a strategy established and pursued by the European Commission (EC). Its aim is “to ensure access to online activities for individuals and businesses under conditions of fair competition, consumer and data protection, removing geo-blocking and copyright issues.” The implementation of the strategy focuses on three dimensions: (1) enhanced access across the EU countries, (2) creating a levelled environment and legally established marketplace and (3) achieving economic growth. Therefore, the EU has taken a multitude of actions including a bunch of important and consequential regulations, most recently: The Geoblocking Regulation.

1. RLAH and Wifi4EU

In order to improve the availability of internet and the access during travels in the EU roaming charges where ultimately abolished with the Roaming-Regulation (Roam-Like-At-Home; Regulation (EU) 2015/2120, OJ. L 310 - 26.11.2015, pp. 1- 18). This should clearly ensure barrier-free internet access while travelling within the EU and has no further impact on businesses. In a similar way the Wifi4EU initiative wants to improve availability by providing Wifi hotspots in public spaces (libraries, railway stations).

2. General Data Protection Regulation

Great attention was paid to the succeeding General Data Protection Regulation (Directive (EU) 2016/679, OJ. L 119/1 - 4.5.2016, pp. 1-88), which is implemented with the BDSG from the 25.5.2018 and applicable in Germany. By means of a “duality of objectives” the data protection and free data traffic shall be guaranteed in a fully harmonized manner as already set out in the Data Protection Directive of 1995 (Directive 95/46/EC, OJ. L 281 - 23.11.1995, pp. 31-50). EU companies as well as foreign companies have to comply with the established rules. With this regulation, a first basic structure and regulation for the internet use within the EU is laid out, which, in addition to proper application following the published guidelines (Commission guidance on the direct application of the General Data Protection Regulation as of 25 May 2018, COM (2018) 43 final), will probably also require further steps (see 5. Other regulations/regulatory measures).

3. Portability Regulation

The Portability Regulation (Regulation (EU) 2017/1128, OJ. L 168, 30.6.2017, pp. 1-11) was published shortly before the Geoblocking Regulation. This regulation should prevent providers of online content services (film/music streaming etc.) from blocking their subscribers by utilizing Geoblocking measures. The consumption of the respective service during stays in a different EU country should be facilitated. Similar to the Roaming Regulation this step aimed at barrier-free internet availability during travel within the EU and limits the way companies are able to split the European market and only affects companies active in the sector.

4. Geoblocking Regulation

The Geoblocking Regulation (Directive (EU) 2018/302, OJ. L 60 I/1 – 28.2.2018, pp. 1-15) - adopted on 28.2.2018, entered into force on 23.3.2018 and binding as of 3.12.2018 -works on a completely new, content-related dimension. Thus the main goal is a synchronization of contents within the EU. In this respect, it does not rely on accessibility of internet while traveling, but on the content availability at permanent place of residence. For the DSM it seems essential to provide the actors with a common platformfor barrier-free exchange of (online) information and to force them not to artificially divide the markets by countries. On the other hand, this bears a huge encroachment in the commonly used practices of foreign and EU companies, which will have to adopt: 

As revealed by the E-commerce Sector Inquiry 67% of the 100+ Mio. Euro turnover companies utilize Geoblocking (see Graph B. 46 from the Sector Inquiry), while most (27%) of them use it for the sole purpose of refusing delivery followed by (22%) the refusal to accept payment (see Graph B. 48 from the Sector Inquiry).

Accordingly, those companies will have to ensure they comply with the following key rules set out by the new Geoblocking regulation:

• Geoblocking of websites/apps based on nationality, residence or place of establishment of the customer in order to deny access or redirect the customer to local websites is prohibited. Customers must be granted the decision which local site they would like to attend and be free to easily change this selection at any time.
• The use of varying general conditions for access to goods or services based on geo-data is not allowed. Notable implication regarding the online sale of goods: If a country is not delivered by the company, customers must be granted the chance to collect the products in a delivered member state (companies are still not obliged to deliver all member states).
• Payment conditions must not vary due to a customer’s nationality, residence or place of establishment.
  
  

While certain exceptions might exist, companies selling in the EU will have to start treating the EU as one market and clearly define their delivery areas. Furthermore, websites and Geoblocking measures must be checked for their compliance with the Geoblocking Regulation and when implementing the Regulation, close attention should be paid to compliance with other EU regulations (e.g. the General Data Protection Regulation, see Rothermel/Schulz in KuR 2018, pp. 444- 449).

5. Further regulations /regulatory measures

Following on from the Geoblocking Regulation, the Regulation on cross-border parcel delivery services (Regulation (EU) 2018/644, OJ. L 112 - 2.5.2018, pp. 19-28) strengthens the DSM in Europe. The interaction between the two consecutive regulations in particular raises interesting points. For example, the Geoblocking Regulation will enable the buyer to purchase products offered only in other Member States, and to arrange for the transport of the goods to the his home country. With improved “availability, quality and affordability of delivery solutions” (COM (2016) 285 final, under 1.1; similar now recital 8, 9 of the parcel delivery services regulation), the latter is likely to be a less challenging for European customers. Thus the solution granted by the Geoblocking Regulation would be a real and no longer purely theoretical alternative. Again this Regulation (similar to the Roaming Regulation and Portability Regulation) does primarily affect companies active in this sector. But it is these very regulations that enable the EU to lay out the basis for an expanded European digital marketplace: A barrier-free, synchronized platform accessible throughout Europe. All this leads to the outcome that companies will have to treat the EU as one big country.

But if the DSM and at the same time the trading volume continue to increase, further legal framework is required. Therefore, future steps of the EU are concerned, i.a., with uniform taxation of digital economic transport (see COM (2018) 146 final: Time to establish a modern, fair and efficient taxation standard for the digital economy), since the Geoblocking Regulation explicitly excluded the taxes (see recital 11 Geoblocking Regulation). In addition, the EC has already proposed a regulation to increase the Fairness and transparency of online platforms (http://europa.eu/rapid/press-release_IP-18-3372_en.htm) and an EU-wide code of conduct (http://europa.eu/rapid/press-release_IP-18-3370_en.htm). The latter is also a reaction to the recent data scandals and should mainly reduce disinformation, i. e. through mandatory fact-checkers. It is precisely these measures that companies will have to pay attention to, as they will have to implement the respective requirements.

6. Outlook for the Digital Single Market

During the current term of office the EC mostly pursues the DSM objective consistently and effectively. The planned revision of the Geoblocking Regulation (Art. 9 Geoblocking Regulation) and the elaboration of many future regulations and steps however fall in the term of office of a new Commission, as well as a new European Parliament. To what extent the EU will continue to follow the previous line therefore remains questionable. Entrepreneurs should therefore deal with any amendments to be made and make the necessary preparations as early as possible.

THIS PRACTICAL GUIDE MERELY CONTAINS A SELECTION OF INFORMATION ON THE TOPIC AND DOES NOT REPLACE LEGAL ADVICE IN A GIVEN CASE. NO LIABILITY IS ASSUMED FOR THE COMPLETENESS AND ACCURATENESS OF THE INFORMATION CONTAINED IN THIS PRACTICAL GUIDE.