The geo-blocking regulation: is your business compliant?
From 3 December 2018, businesses operating in the EEA need to comply with the new Geo-Blocking Regulation1. In general, the Regulation prohibits businesses from unfairly discriminating against consumers or other businesses on the grounds of nationality, place of residence or place of establishment. In particular, the Regulation seeks to prevent the denial or limitation of access to goods and services sold online on these grounds.
The Geo-Blocking Regulation potentially applies to all businesses offering goods and services for sale in the EEA. It also potentially applies to businesses selling into the EEA from outside the EEA. However, the Regulation does not apply to transactions which take place solely within one Member State of the EEA.
The Regulation covers the sale of goods and services to both consumers and businesses, so long as the business customer is the end user.
Many retail businesses with an online function which currently use geo-blocking practices will be affected. Other examples of businesses which will be affected by the Regulation include providers of electronically supplied services such as cloud services, data warehousing and website hosting, and businesses which provide services in a specific location in the Member State where that business is located, such as hotels, sports events and car rentals.
There are some exceptions to the scope of the application of the Regulation. The Regulation will not apply to, among other things:
- Audiovisual services provided on the basis of exclusive territorial licence (e.g. broadcasts of major sporting tournaments);
- Retail financial services, including payment services; and
- Transport services, although the scope of this exemption may only apply to sales of tickets for the transport of passengers (existing EU law already contains broad prohibitions on discriminatory practices for this activity). The sale of travel packages and linked package arrangements is not within the scope of this exemption.
Steps to take
Businesses need to review their sales systems – in particular their online sales presence - and may need to remove any measures they have in place which restrict the access of customers on the basis of nationality, place of residence or place of establishment.
Generally, businesses need to ensure that they do not reroute customers attempting to access their territory-specific websites. Rerouting customers from one territory-specific website that a customer has tried to access to another territory-specific website will usually require the customer’s explicit consent. Even when this explicit consent is obtained, subsequent access to the territory-specific website which the customer originally tried to access must generally not be denied.
In cases where such geo-blocking may be required by EEA or national law, then a reasoned explanation of this should be displayed in the language of the website that the customer is blocked from accessing.
Businesses should also ensure that they do not apply different general conditions of access to goods and services, for reasons related to a customer’s nationality, place of residence or place of establishment, if the customer is seeking to:
- Buy goods which will be delivered to a Member State to which the seller generally offers delivery;
- Buy goods to be collected at an agreed location in a Member State in which the seller generally offers a collection option;
- Receive most electronically supplied services from the seller (e.g. cloud services or use of search engines); or
- Receive services in a physical location within the Member State in which the seller operates (e.g. hotel services or car rental).
Businesses may therefore need to review their delivery arrangements to comply with the Regulation. Specifically, they may need to ensure that they are able to accept orders from customers in all EEA Member States, although there is no obligation to provide delivery to Member States to which the business does not generally offer delivery.
In addition, businesses are free to choose the means of payment they accept for their goods and services.
However, if payment is:
- made by electronic credit transfer, direct debit or card-based payment instrument within the same payment brand and category;
- adequately authenticated; and
- in a currency the seller accepts;
then the seller may not apply different conditions for payment to customers on the basis of the customer’s nationality, place of residence or place of establishment, the location of the payment account, the place of establishment of the payment service provider or the place of issue of the payment instrument within the EEA. Businesses may therefore need to review the range of payment methods they accept, and ensure that these payment methods comply with the Regulation.
Enforcement of the Regulation will take place by enforcement authorities at Member State level. Sanctions for breach of the Geo-Blocking Regulation will vary between Member States, which will formulate penalties depending on what they consider to be ‘effective, proportionate and dissuasive’.
For further information please contact the authors of this briefing.
- Regulation 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.