Geo-blocking and other geographically-based restrictions undermine online shopping and cross-border sales by limiting the possibility for consumers and businesses to benefit from the advantages of online commerce. In 2015, a Commission survey found that only 37% of websites actually allowed cross-border customers to reach the final step before completing the purchase by entering payment details.
The problem equally affects consumers and businesses as end users of products and services and exists both in the online environment and in real-world situations.
The regulation on addressing unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market defines three specific situations when there can be no justified reasons for geo-blocking or other discriminations based on nationality, residence or location:
- The sale of goods without physical delivery. Example: A Belgian customer wishes to buy a refrigerator and finds the best deal on a German website. The customer will be entitled to order the product and collect it at the trader's premises or organise delivery himself to his home.
- The sale of electronically supplied services. Example: A Bulgarian consumer wishes to buy hosting services for her website from a Spanish company. She will now have access to the service, can register and buy this service without having to pay additional fees compared to a Spanish consumer.
- The sale of services provided in a specific physical location. Example: An Italian family visits a French theme park and wishes to take advantage of a family discount on the price of the entry tickets. The discounted price will be available for the Italian family.
This regulation was part of an e-commerce package together with a legislative proposal on cross-border parcel delivery services and a legislative proposal to strengthen enforcement of consumers' rights.
Other elements of the regulation
Furthermore, the proposal bans blocking of access to websites and the use of automatic re-routing if the customer has not given prior consent.
The regulation also provides for a non-discrimination rule in payments. While traders remain free to offer whatever payment means they want, the regulation includes a specific provision on non-discrimination within those payment means.
The regulation does not impose an obligation to sell and does not harmonise prices. It does however address discrimination in access to goods and services in cases where it cannot be objectively justified (e.g. by VAT obligations or different legal requirements).
Timeline of the regulation
The new rules will start applying on 3rd December 2018, nine months after the publication of the Regulation in the EU Official Journal, to allow in particular small traders to adapt.
Within two years after the entry into force of the new rules, the Commission will carry out a first evaluation of their impact on the internal market. The Commission will also include in its evaluation an assessment of the scope of the Regulation, including of the possible application of the new rules to certain electronically supplied services which offer copyright-protected content such as music, e-books, software and online games, as well as of services in sectors such as transport and audio-visual.
What is geo-blocking?
Companies and online retailers apply barriers and impose restrictions to consumers on the basis of their nationality or place of residence. Some examples are:
- blocking access to websites across borders;
- denying the possibility to complete an order, to purchase goods or to download content when accessing a website from abroad;
- denying delivery or shipment across border;
- providing different prices and conditions depending on nationality, country of residence or location of the customer.
There might be justified reasons for traders not to sell cross-border, such as the need to register at the tax authority in the country of destination, higher shipping costs or costs arising from the application of foreign consumer law. While outside barriers create additional complications and extra costs for the trader, differences in the treatment of customers are based on objective criteria.
However, discrimination between EU customers based on the desire to segment markets along national borders, in order to increase profits to the detriment of foreign customers, is considered as unjustified geoblocking.
- Press release - Joint statement by Vice-President Ansip, Commissioners Bieńkowska and Gabriel following the European Parliament's vote to end unjustified geoblocking
- Regulation (EU) 2018/302 on addressing unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market