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23 February 2017

What would the restrictions on Geoblocking mean for you?

New EU legislation to change the position on geoblocking is now on the horizon, following approval from the European Council on a draft regulation. The EU’s targeting of geoblocking was foreseeable because the EU principle of free movement for goods and services is inherently at odds with this practice, whereby an internet user’s geographic location is a basis for determining the level of access they are granted to a web page or service. This can affect e-commerce within the EU because a customer may find that they are paying a different price for, or are completely blocked from, various varieties of online purchases, with the disparities introduced solely because of the customer hailing from or ordinarily being based in another Member State.

Although the regulation is not yet in its final form, with the European Parliament being the next to review it, the Council’s draft represents a statement of intent on the restrictions which will eventually be imposed on businesses.

The draft regulation prohibits three broad types of discrimination by traders against customers who are legal persons and are purchasing for end use rather than resale. These are as follows:

  1. Discrimination as to the online interface for commercial transactions which is imposed on a user, for reasons related to nationality or to place of residence or establishment – e.g. picture previews of items being unavailable when accessing a website from an IP address linked to a different Member State.
  2. Discrimination as to conditions of payment for reasons related to nationality, place of residence or establishment, or the place where the payment originates – e.g. refunds being significantly delayed to those making purchases from foreign bank accounts.
  3. Discrimination as to conditions of access for reasons related to nationality or to place of residence or establishment.

Category 3 (Conditions of access) is only prohibited for a set of specified situations, namely:

  1. The customer is buying goods for delivery to or collection in a Member State which is included as an option generally available to the trader’s customers. An example of discrimination in this case could be guaranteeing delivery within the UK within a reasonable period but failing to offer a similar right to customers outside the UK.
  2.     The customer receives a service supplied electronically and the main feature of the service does not relate to supply of, sale of, access to or use of copyright-protected works. An example of discrimination in this case could be  restricting access to certain features of a cloud service provided by a French company so that the full service is only available to French users whose nationality is also French.
  3. The customer is using a service that is not supplied electronically, and this is occurring within the Member State where the trader operates. An example of discrimination in this case could be a German car rental service charging higher rates to customers based outside Germany.

The draft regulation specifically confirms that while price discrimination is being targeted, price differentiation is not – a trader can still impose different prices for different groups of customers or across different territories.

What businesses should consider, then, is whether their offering treats customers differently on the basis of their nationality or where they reside. There are carve-outs to the prohibitions as outlined above, but the general position is that when a consumer is in a Member State that is not their home Member State, their customer experience should still be the same as that of the locals around them.

This legislation is part of a wider push to create a Digital Single Market across the EU, which can also be seen from the upcoming measures to end roaming charges for those using their mobile phones in other member states, and to ensure that subscribers to digital subscription services are not denied previously-accessible content once they venture out into the wider EU. As this drive continues, companies which have some digital aspect to their business are gradually being steered towards more consistent treatment of customers travelling within the EU.

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