To combat potentially unfair discrimination occurring in the European Union (the "EU") based on geographic location, contrary to the free movement of goods, services and people, on 22 March 2018, the Geo-blocking Regulations (the "Regulations") were introduced into EU law.
"Geo-blocking" is the general term for the practical and technical steps that suppliers of goods and/or services use in order to control what can be accessed by users in different geographic locations. Online traders often check a user's Internet Protocol ("IP") address to determine that user's geographic location and, based on their location, may restrict access to a specific website or redirect the user to a different website altogether.
A consequence of geo-blocking is the potential for unfair discrimination against customers of a specific EU member state, on the basis of her or his geographic location. Accordingly, EU nationals may be restricted from accessing the best offers, prices and conditions available across the EU. Such practice is contrary to the fundamental principles of the EU relating to the free movement of goods, services and people.
Although the Regulations entered into force in the EU on the 22 March 2018, they will only apply from 3 December 2018 to allow traders sufficient time put necessary provisions in place to ensure compliance. To combat the potential discrimination which can be caused by geo-blocking, the Regulations focus on the following:
1. Access to online interfaces
The Regulations expressly prevent traders from restricting customers' access to their websites based on a customer's geographic location. Further, a trader will not be permitted to redirect a customer from one version of its website to a different version of that website without the customer's consent. This should enable greater price transparency as customers will be able to compare prices across the EU.
2. Access to goods and services
2.1 Sale of goods
Whilst traders will not be obliged to deliver their goods cross border, customers in different member states will be entitled to purchase goods for delivery to a location within the trader's member state.
2.2 Sale of electronically-supplied services
Providers of electronically supplied services (such as cloud storage solutions) will not be permitted to impose different terms on customers in different member states.
2.3 Sale of services provided in a physical location
Providers of services which are supplied at a physical location within a member state (such as music festivals) will not be able to impose different terms on customers based in a different member state.
3. Discrimination relating to payment methods
Under the Regulations, traders are expressly prevented from discriminating between the range of payment methods that they accept, provided that:
- payments are made through electronic transactions e.g. bank transfer, credit and debit cards;
- authentication requirements are met; and
- payments are made in a currency accepted by the trader.
This means that a trader that accepts payment by credit cards will not be able to stipulate that the credit card is issued within a specific country within the EU. This reduces the obstacles which customers, within the EU, may face when purchasing goods and services.
Exclusions to the regulations
Notably, certain practices are currently excluded from the scope of the Regulations. In particular, the Regulations will not apply to:
- the application of different conditions of access relating to the provision of copyright content services such as music, e-books and software; and
- services that are excluded from the scope of Services Directive including financial, audio-visual, transport and social services.
However, the EU Commission is obliged to evaluate and assess the scope of the Regulations by 2020 at which point the Regulations may be extended to include such copyright content services.
The Regulations have been implemented in line with the European Commission's Digital Single Market initiative, through which it is seeking to reduce the barriers to online trade across the EU.
The EU Withdrawal Bill (the "Withdrawal Bill") as drafted, provides that EU legislation – both direct (EU regulations) and indirect (EU directives) – in force when the UK leaves the EU will continue to apply in the UK to help facilitate a smooth withdrawal. Adopting and incorporating EU law into UK law is intended to facilitate a smooth transition and reduce the number of amendments and laws that would otherwise be required to "fill the gaps" in UK law.
However, on 2 March 2018, Theresa May gave a speech in which she confirmed that the UK will not be a part of the EU's Digital Single Market on the basis that the UK will need to have the flexibility to rapidly adapt to new technologies. With this in mind, the UK could amend or repeal the provisions of the Regulations post Brexit.