The online single market moves a step closer

Posted on 14 March 2018

The online single market moves a step closer

In late February 2018, the EU adopted a Regulation which, from December 2018, will prohibit unjustified geo-blocking. Its aim is to prevent the practice whereby online resellers either restrict access to their online interface or redirect buyers to an online reseller established in the buyer's country of residence.

The European Commission's report following its e-commerce sector inquiry found widespread use of geo-blocking. It felt this practice potentially limits online shopping and cross-border trade. As a result, combatting geo-blocking became central to the EU's Digital Single Market strategy.

The new geo-blocking Regulation seeks to limit unjustified geo-blocking, save where this practice is necessary in order to comply with legal requirements. From December 2018:

  • Customers based in one EU country should be able to purchase goods or services from a website established, operated and/or targeted at customers based in a different EU country;
  • However, traders will not be forced to deliver goods across borders if they ordinarily only deliver to customers based in the trader's country of operation. Customers will, in such circumstances, need to pick up the goods from an address in the trader's country of operation;
  • Traders can offer different deals in different EU countries, but customers from other EU countries must not be prevented from taking advantage of those deals.

Access to online content such as online television services, films, e-books, music, online games and streamed sports events is not covered by the new geo-blocking Regulation. However, in due course, the geo-blocking Regulation may be extended to cover such online content.

The geo-blocking Regulation also does not apply to the sales of tickets for the transport of passengers, as this activity is already covered by other EU legislation.

It remains to be seen how effective this new geo-blocking Regulation will be in practice. Whilst cross-border access to electronic services in the EU may be improved, the fact that a trader will not be obliged to deliver goods to an address outside their usual territory of operation (where they do not already offer such a service) may, in practice, limit its effectiveness. The new geo-blocking Regulation may also prompt traders to review their terms of trade and selling prices in different EU countries.

It is also not yet clear which bodies in the various EU countries will be responsible for the effective enforcement of the geo-blocking Regulation. Each EU Member State must designate a body responsible for "policing" compliance with the Regulation. Such bodies will need to have adequate resources otherwise their effectiveness will be compromised.

From a consumer's perspective, the new geo-blocking Regulation looks like a step in the right direction. However, consumers should not expect an immediate "sea change" when doing their online Christmas shopping in December. Change takes time to achieve, and there are likely to be numerous arguments along the way about whether certain restrictions on access to goods or services are permitted under the Regulation. 

Both the known unknowns and the unknown unknowns will take time to resolve, and the eventual Brexit Deal could affect how these rules apply, in practice, to businesses and consumers based in the UK. So, the advice is watch this space!