In May 2016, the European Commission published proposals to prevent companies and online retailers, who sell in or into the EU, from engaging in 'geo-blocking' and other geographical restrictions. The European Commission is of the view that geo-blocking undermines online shopping and cross-border sales. According to the Commission, geo-blocking limits the opportunity for consumers and businesses to benefit from the advantages of online commerce. The proposed measures, if passed through the EU law-making process, could become law in 2017. We take a look at some of the key proposals.
What is geo-blocking?
Geo-blocking occurs when companies and online retailers apply certain barriers or impose restrictions on consumers based on their nationality or place of residence. Most internet users will be familiar with geo-blocking in terms of location-based restrictions on TV, music and movie streaming services. Similar restrictions are also seen in online shopping and e-commerce transactions, particularly in instances where a credit card with a specific country address is required.
Prevention is the best cure
Tackling geo-blocking is one of the elements of the EU's drive towards a Single Digital Market. According to a 2015 European Commission study, only 37% of websites allowed cross-border customers successfully complete an online purchase. Further to this, only 15% of consumers buy online from another EU Member State and only 8% of companies sell cross-border. The European Commission has raised this as a concern, since its goal under the Single Digital Market is to facilitate individuals and businesses seamlessly partaking in online activities regardless of their nationality or place of residence. The proposed measures are seen as a way of removing territorial barriers and fostering online cross-border trade.
Key proposals under the measures
Sale of products and services
The proposed measures outline specific situations in which there can be no justified reason for geo-blocking. In certain situations, set out below, customers from another Member State should be entitled to the same access to goods and services as local customers. These include:
sale of products without delivery; sale of electronically supplied services; and sale of services provided in a specific physical location. In such instances, geo-blocking will only be permitted in exceptional situations. According to the proposals, there would need to be strict national or EU laws...