Geo-blocking occurs when a business prevents or limits access to goods or services to consumers based on their geographical location. Geo-discrimination occurs when the same goods or services are offered to consumers on different terms based on their geographical location. The Commission’s proposed regulation on geo-blocking is intended to provide legal certainty about which practices are permissible and which ones are not, and to disincentivise traders from online discriminatory practices. The proposed regulation covers three main elements:

Sale of products and services. Except where a strict national or EU legal requirement obliges a trader to block access to the offered products or services, geo-blocking or geographical discrimination will be banned in the following three scenarios:

Access to websites. Blocking access to websites or the use of automatic re-routing without the consumer’s prior consent will be banned.

Non-discrimination in payments. Discriminatory payment methods based on consumers’ geographical locations will not be permitted.

The proposed regulation does not cover services which are, or will be, subject to sector-specific legislation (that is, transportation services, retail financial services and audiovisual services) or which are not easily traded across borders.

The Commission has previously held back from regulatory intervention in the parcel delivery services market. However, inconvenience and high delivery prices prevent many traders and consumers from buying and selling online. The proposed regulation on cross-border parcel delivery services is intended to:

The Commission has also indicated that legal instruments may be put in place to ensure compliance.

The Commission has also proposed revisions to the existing consumer protection framework under the Consumer Protection Cooperation Regulation (2006/2004/EC) as the digital market has developed significantly since it came into force. However, only a limited number of national enforcement authorities are equipped to address online breaches. Under the proposed revised regulation on consumer protection, national authorities will be able to:

The enforcement of consumer laws will remain within the competence of member states.

Unfair commercial practices are also being tackled. The Commission has published updated guidance to clarify the application of the Unfair Commercial Practices Directive (2005/29/EC) (the UCP Directive) (http://ec.europa.eu/justice/consumer-marketing/files/ucp_guidance_en.pdf). The guidance does not amend the existing legislative framework but it further illuminates how EU court and enforcement decisions may apply to the e-commerce sector.

The Commission has stated that it developed the proposed regulations in a manner that will limit additional regulatory and administrative burden. However, the real impact of the proposals on businesses will become clearer as the draft legislation is finalised.

Legal certainty. The principle of non-discrimination is already established under the Services Directive (2006/123/EC) but it has been difficult to apply in practice partly because the legislation passed under the Services Directive has, so far, been sector-specific. The proposed regulation on geo-blocking will cut across sectors (except those sectors already subject to legislation), providing greater clarity on which discriminatory practices are permissible and which ones are not.

The guidance on the application of the UCP Directive draws from case law of the European Court of Justice and from national courts and administrators to provide guidance on the proper application of the UCP Directive within an e-commerce context. Businesses will benefit from this clarity when considering whether their e-commerce practices are compliant with EU law.

Costs. The Commission emphasised that the proposed regulation on geo-blocking does not create an obligation to sell or deliver across the EU and so the resultant burden to businesses should consist mostly of one-off adoption costs. These costs will vary across businesses and may include the cost of protecting intellectual property (IP) across borders. Large parcel delivery businesses may also have additional compliance costs but the Commission does not expect these additional costs to be significant.

Enhanced regulatory oversight. National regulatory authorities will be better equipped to regulate the e-commerce market through the pooling of resources and enhanced enforcement powers. This is likely to result in quicker and more targeted investigations, which may lead to increased enforcement action against digital businesses.

IP protection. Large businesses often devote considerable resources to protecting their IP internationally. SMEs may, however, have a greater IP risk exposure since they are unlikely to have protected their IP on a pan-European basis, especially where their business strategy did not contemplate EU-wide trade. The digital single market strategy indicates that the existing framework for enforcing and protecting IP rights will be modernised. Businesses will need to evaluate whether their existing IP protection is sufficient until these proposals are finalised.

Business strategies. Businesses that currently rely on geo-blocking or geo-discriminatory practices to maximise profitability may need to consider alternative business models if these practices are not justifiable under the proposed regulation on geo-blocking.