European Commission moves to prevent e-commerce geo-blocking

The European Commission (the Commission) has suggested new proposals which will apply when consumers or companies buy goods or services online.

Background
In May 2015, the Commission issued its digital single market strategy (the strategy) which set out the following aims:

  • Better access for consumers and businesses to digital goods and services across the EU
  • Creating the right conditions and a level playing field for digital networks and innovative services to flourish
  • Maximising the growth potential of the digital economy

Geo-blocking is the ability of a business to charge different prices or refuse to supply goods or services depending on the geographic location of a consumer.

Facts
The new proposals cover the following three areas:

  • The prevention of unjustified geo-blocking and other forms of discrimination on the grounds of nationality, residence or establishment
  • Increased transparency of prices and improved regulatory oversight of cross-border parcel delivery
  • Stronger enforcement powers for consumer rights and guidance on what qualifies as unfair commercial practices in the digital world

The Commission intends to outlaw unjustified geo-blocking where it is used to segment the e-commerce market to the detriment of consumers by blocking access to websites in other EU member states. In effect, businesses are prohibited from providing different prices, products or services on the basis of a consumer's location unless restrictions on supply or price can be justified by specific law.

High delivery charges for parcels often deter consumers from making cross-border purchases. The Commission believes that the prices charged by postal operators for cross-border deliveries are often too high compared to domestic prices. The new proposals will increase price transparency and are intended to generate more competition between postal operators.

The new proposals will give more powers to national authorities to better enforce consumer rights. Where there is an EU-wide breach of consumer rights, the Commission will co-ordinate action by those national authorities. In addition, the Commission has published updated guidance on unfair commercial practices, including a new section on online sales.

Comment
The publication of these new proposals by the Commission is the latest step in its implementation of the strategy. Practitioners should take particular note of the changes which will prevent geo-blocking as this is used by many companies that sell across the EU.

By Nicola Broadhurst, Partner & Head of Franchising
First published in British Franchise Association Online, August 2016

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