The new provision on the banning of unjustified geoblocking in online sales is at the heart of the EU Commission’s aspiration and effort to create a real Digital Single Market within the European Union.
The term “geoblocking” stands for any type of technical or contractual discrimination based on the nationality or residence of a customer. It is a common phenomenon on today’s Internet. Users are often rerouted and offered differing conditions and prices depending on their IP address.
The core aim of the now finalised regulation is to prevent discrimination for consumers and companies in the context of access to websites, prices, sales or payment conditions when buying products and services in another Member State. However, there are meaningful exceptions to the new anti-geoblocking regime – in particular copyright works and sales with no cross-border element.
Legislative Process
We have followed the progress of the Commission’s initial proposal for an anti-geoblocking regulation (COM (2016) 289) very closely. In particular, the difference between justified and unjustified geoblocking occupied the initial debate. For example, geoblocking may be legitimate in order to safeguard a movie or other content being watched online only within the territory the service provider has actually obtained a license for.
Throughout the legislative process, the scope and reach of the regulation were heavily debated. Eventually, an amended draft regulation sailed through the EU Parliament on 5 February 2018, with a great majority of 557 parliamentarians in favour of the bill (press release). Meanwhile, the Council has also adopted the text the Parliament has voted for (press release). It did so without suggesting any further changes. You can download the final text here.
The new regulation should be published in the Official Journal of the European Union by late March and will come into force nine months later. According to Article 9, the Commission will conduct an impact assessment two years after the regulation is introduced.
Impact on Business
The actual impact of this new regulation is far and wide. Any merchant and any market player offering online goods or services within the European Union will be affected. The terms & conditions currently in use, as well as any type of website rerouting, need to be reviewed against the new law. The Regulation will also impact strategic decisions on whether to adopt a single pan-EU marketing approach and website gateway, or multiple jurisdiction-specific offerings. To be clear, the new regulation does not mean that the same goods or service must be offered at the same price and condition throughout Europe. However, thought will need to be given to which criteria might justify price differences and differing T&Cs in future.
