Digital Single Market – Geo-blocking Regulations

This article is part of Ashtons’ series of explainers about the Digital Single Market strategy. Other articles are available about the portability regulations and copyright directive.

Under recently enacted legislation, Regulation (EU) 2018/302 (“the Regulation”), the EU has sought to tackle certain practices carried on by businesses, which have the effect of discriminating against its customers based on their nationality or place of residence or business.

As from 3 December 2018, all businesses trading within the EU have to comply with the Regulations, which are intended to ensure that all customers within the EU are broadly speaking able to purchase goods and services on the same terms.

Who is affected?

The Regulations apply to anyone trading (“trader”) with consumers who are nationals of, or reside in, the EU or with businesses based in the EU, where they receive any service or purchase any product within the EU as end users.

Prohibitions

The purpose of the Regulations is to prevent a trader from discriminating against its customers based on their nationality, their place of residence in the case of individuals, or place of business in the case of business customers.

Geo-Blocking

A trader must not, based on a customer’s nationality, place of residence or business:

block or limit a customer’s access to a particular website;
redirect the customer to another website from the one which the customer initially visited, which differs in terms of lay-out, use of language or contains any other variations specific to the customer’s nationality, place of residence or business, without the customer’s explicit consent.
Blocking or re-direction is not prohibited if the trader is doing so in order to comply with EU laws or laws in any relevant Member State, for example, if the supply of a particular product is banned. However, there is a requirement in that scenario to provide a clear and specific explanation setting out the reasons for the blocking or re-direction.

Access to Goods or Services

A trader shall not offer its goods or services to customers on different general terms including as to price and terms of access, based on a customer’s nationality, place of residence or business. This applies where goods are to be delivered to a location in a Member State (if generally offered) or are collected by agreement from a location in a Member State and to the provision of services (electronically) or other services to be received in a physical location in a Member State.

This does not mean that a trader is either required to harmonise pricing between Member States, nor does it place an obligation on a trader to sell or deliver into a particular Member State, but if say a German car manufacturer offers its cars for sale at a specific price through its German website then a French citizen is entitled to purchase through that website and collect the car from the manufacturer or arrange for delivery privately on those stated terms. Likewise a trader can offer promotions specific to individual Member States but such promotions must be available to all EU customers.

Again, this prohibition does not apply to the extent that an EU law or specific law of a Member State prevents the sale of goods or provision of services to particular customers or customers in a particular territory.

Payment Terms

A trader shall not offer different payment terms or means based on a customer’s nationality, place of residence or business where the payment is electronic, authentication requests are fulfilled and are in a currency the trader accepts.

By way of example, a website should not block a purchase being made by a particular payment method where the trader would normally accept that payment method, based on the location of the payment account nor seek to impose additional charges based on the location of that payment account.

It is worth noting that agreements restricting active sales are expressly not affected by the Regulations.

Enforcement

Whilst the Regulations emanate from the EU the responsibility for enforcement lies with bodies designated by each Member State, which in the case of the UK is the Competition and Markets Authority.

What should you consider?

In light of the Regulations it is important for all businesses to consider the manner and terms on which they offers their goods and services within each Member State. Businesses should ensure that the customer experience does not have the effect of discriminating between customers. This would include ensuring that customers have broadly unfettered access to its websites, ensuring payment terms do not vary between Members States and that the terms and conditions of purchase do not vary for different customers.