The EU's regulation against geo-blocking enters into force

From 3 December 2018, all traders who sell cross-border to customers within the EU must comply with the EU Geo-Blocking the Regulation (the "Regulation").[1] Unless permitted by EU or Member State law, traders are no longer allowed to block or limit access for end users to their online interfaces, such as websites or apps, on the basis of that customer’s EU nationality, place of residence or place of establishment.

The Regulation has had a convoluted birth and is less extensive in scope than originally conceived. Nevertheless there are certain key provisions which all traders need to comply with.

Objective and scope

The Regulation is part of the EU’s Digital Single Market strategy, and aims to improve trade between Member States. It applies to all traders (including those established outside EU Member States) who sell cross-border to customers in EU Member States. Under the Regulation, ‘customer’ means any EU national, resident or business established in the EU, who purchases goods or services as an end user.

For reasons connected with other legislation, other economic interests and other EU initiatives, the Regulation does not apply to transport services, retail financial services, gambling activities or healthcare services.

Also, because of the requirement not to conflict with copyright laws, the Regulation does not apply to services the main purpose of which is to provide customers access to copyright-protected works in intangible form e.g. via online TV, music streaming or e-books.

The requirements

The Regulation requires that traders do not discriminate against customers because of their nationality, place of residence or place of establishment within the EU in the following contexts:

• Access to online interfaces

• Traders may not block or limit a customer’s access to its online interfaces, such as websites or apps.
• Traders may not automatically redirect customers to a different interface without the customer’s explicit consent. Even where the customer has given consent, the original interface must remain easily accessible. For example, a UK customer accessing a retailer’s German website, cannot be redirected to a UK version of the website without their consent.
• Traders can only deviate from these provisions if EU or Member State laws permit them to, and in any event, they must clearly explain these reasons to the customer in the language of the interface that was originally accessed.

• Access to goods or services

• A trader may not apply different general conditions of access between EU nationalities to:

• Goods sold in any EU Member State where the trader already offers delivery, or where goods may be collected from a location agreed individually with the customer.
• Electronically supplied services, such as website hosting, cloud services or data warehousing.

• Services provided in a specific physical location such as hotel accommodation or car rental.

• There are, however, a number of carve-outs, the most important of which are that:

• The Regulation only applies to sales to end users. Resellers are not protected.
• Traders are not required to offer delivery services to customers where they would not normally do so; however, customers are entitled to order a product and collect it at the trader’s premises or arrange for delivery themselves.
• Traders are permitted to offer differing conditions to customers in different EU Member States, or to certain groups of customers, by way of targeted offers, memberships or differing general conditions of access, which can include country-specific interfaces. However, they are not permitted to do so in a way that discriminates on the grounds of nationality, place of residence or place of establishment. This means that if a customer chooses to move to a different interface that is targeted, for example, at another nationality, they must be free to do so.
• For the sale of books, a trader can apply different prices to customers in certain territories, as far as they are required to do so under any Member State law that complies with EU law.

• Non-discrimination for reasons related to payment

• A trader is free to accept whatever payment means they wish, but cannot apply different conditions based on nationality for a payment transaction, where:

• the payment is made through an electronic transaction by a bank transfer, direct debit or a card-based payment within the same brand and category;
• authentication requirements are fulfilled; and
• the payment is in a currency that the trader accepts.

• For example, if a trader accepts payments using a brand of debit card in one EU Member State, it would not be able to refuse to accept a debit card payment from a customer of the same brand based in another EU Member State. Traders would not however be required to accept a credit card issued by that brand, because it relates to a separate category of payment.

Interface with competition laws

Under the EU’s rules on business-to-business distribution agreements, it is generally acceptable to prohibit distributors from making so-called ‘active sales’ (where they approach the customer) outside of their allocated territory or customer group. The Regulation makes clear that it does not apply to those active restrictions.

However, traders must be permitted to make so-called ‘passive’ sales (where the customer approaches them) outside of their allocated sales territory or customer group. The Regulation supports these rules by making automatically void any provisions in distribution agreements that could oblige traders to decline cross-border passive sales in breach of the Regulation.

Enforcement

Member States are required to enforce the Regulation at a national level. In the UK, the Competition and Markets Authority is the responsible authority and can apply for court orders or accept undertakings from traders requiring them to cease any infringement of the Regulation. Customers who suffer loss as a result of a trader infringing the Regulation are able to bring a direct claim against that trader.

Other EU Member States may impose significant fines or restrictions on traders who infringe the Regulation. These may vary significantly from State to State.

Brexit

In the event of a ‘no deal’ Brexit, the UK Government has confirmed that the Regulation would not apply in the UK. However, so long as UK traders are selling to EU customers, they will still have to comply with the Regulation. If the UK-EU draft Withdrawal Agreement is approved, the Regulation will apply in the UK until the end of the transition period on 31 December 2020.

[1] Regulation (EU) 2018/302 of the European Parliament and of the Council, 28 February 2018