December 5, 2016

Geo-blocking is a discriminatory practice that prevents online customers from accessing and purchasing products or services from a website based in another Member State.

The draft Regulation is intended to remove discrimination based on customers’ nationality, place of residence or place of establishment and to boost e-commerce.

The agreement was reached by qualified majority. It will serve as the Council’s common position to start negotiations with the European Parliament under the EU’s ordinary legislative procedure.

The main objective of the proposed Regulation is to prevent discrimination for consumers and companies on access to prices, sales or payment conditions when buying products and services in another EU country. Its scope is in line with the Services Directive (2006/123/EC), which excludes certain activities such as financial, audiovisual, transport, healthcare and social services.

The new rules will be in compliance with other EU legislation in force applicable to cross-border sales, such as rules on copyright and EU law on judicial cooperation in civil matters, in particular the Rome I and Brussels I regulations.

Under the proposed Regulation, traders will not be able to discriminate between customers with regard to the general terms and conditions, including prices, they offer on the sale of goods and services where the trader:

• sells goods that are delivered in a Member State to which the trader offers delivery, or that are collected at a location agreed with the customer;
• provides electronically supplied services, such as cloud services, data warehousing services, website hosting services and firewalls. This will not apply to services where the main feature is the provision of access to or use of copyright protected works or other protected matters, or the sale of copyright protected works in an intangible form, such as e-books or online music; and
• provides services that are received by the customer in the country where the trader operates, such as hotel accommodation, sports events, car rental, and entry tickets to music festivals or leisure parks.

Unlike price discrimination, price differentiation will not be prohibited, so traders will be free to offer different general conditions of access, including prices, and to target certain groups of customers in specific territories.

Traders will also not be obliged to deliver goods to customers in all Member States: they will be able to choose where to offer delivery.

The Regulation will prohibit unjustified discrimination in relation to means of payment. Traders will not be allowed to apply different payment conditions for customers for reasons of nationality, place of residence or place of establishment.

Traders will also not be allowed to block or limit customers’ access to their website for reasons of nationality or place of residence. If access is blocked, the trader will have to provide a clear explanation as to why.

Some exemptions permitted by EU competition law will remain valid. For example, where traders are bound by an agreement with their supplier requiring them to restrict passive sales (i.e. sales where the trader does not actively solicit the customer’s business), the new Regulation would not apply.

Negotiations will now start between the Council, the European Parliament and the Commission once Parliament agrees its position. To read the Council’s press release in full and for a link to the draft Regulation, click here.