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The Geo-blocking Regulation (EU) 2018/302 (the “Regulation”) is now in force across the European Union (including the UK). Traders selling goods and services to customers within the EU need to ensure they are aware of the new Regulation, as changes may need to be made to business websites and other online interfaces in order to comply with the Regulation.
The Geo-blocking Regulation
The Regulation came into force in December 2018 in all EU member states. Its aim is to address unjustified geo-blocking: where a trader in one EU member state blocks or limits the access to their online interfaces to customers accessing from other EU member states. It also covers other methods of discrimination which are based on a customer’s nationality, location of residence or place of establishment.
The hope is that this Regulation will encourage cross-border commerce.
Applicability of the Regulation
It is important to note, initially, that there are some activities the Regulation does not cover. These include: audio-visual services (such as streaming films), transport and retail financial services. In addition, the Regulation only applies to cross-border situations. For example, a UK trader selling to a UK customer would not be caught by the Regulation.
Traders
A trader is defined in the Regulation as any natural or legal person who acts for purposes relating to that persons trade, business, craft or profession. A key point to note is that the trader does not need to be established in the EU to be subject to the Regulation. What matters is whether they offer their goods and services to customers within the EU.
Customers
The definition of customer is a consumer who is a national or resident of an EU member state or an undertaking established in a member state (which means businesses fall under the scope of the Regulation). It should be noted however, that the Regulation does not apply when the customer is not the end user of the goods or services they are purchasing.
Brexit
The impact of Brexit will be quite different for customers and traders. For customers in the UK, at the withdrawal date, they will no longer be able to rely on the Regulation for protection. For UK based traders however, the Regulation will continue to apply to them if they operate within the EU; it does not matter that they are not based in the EU themselves.
Prohibitions under the Regulation
The following types of activities are covered by the Regulation and traders should ensure that they are complying with the requirements.
Access to online interfaces
One of the key intentions behind the Regulation is market transparency: that is, that consumers should be able to access and, if they wish, compare, goods and services availability and price across the EU.
A trader cannot block or limit the access of a customer to their online interface (e.g. website or other mobile applications) on the basis of their nationality, place of residence or place of establishment. This also covers the inability of a trader to reroute the customer to a different version of their website, which the customer did not try and access, without their explicit consent or because they have to in order to comply with EU law.
By way of example, a consumer in France cannot be geo-blocked from accessing a trader’s website for customers in Italy, even if that trader also has an online interface intended for customers in France. That customer should not be automatically re-routed to the trader’s French website.
Traders should also note that even when a customer does give their consent to be rerouted, they must have easy access to the previous version of the website and that the customer needs to be able to withdraw their consent at any time.
Delivery
Traders can choose which countries they deliver to and there is no obligation under the Regulation to deliver to different member states. However, the trader cannot choose which EU countries they sell to on the basis of a customer’s nationality, place of residence or establishment. An example of how this works in practice is if on a UK website the trader offers delivery to the UK, then a French customer has the right to access the UK website and get the goods delivered to an address in the UK. They cannot though, demand that the product be delivered to France if the trader does not offer delivery there.
Payment
Again, traders can choose which methods of payment they will accept. However, they are not allowed to apply different conditions on payment on the basis of: the customer’s nationality, place of residence or establishment. They also cannot discriminate based on the location of the payment, the place of establishment of the payment service provider or the place of issue of the payment instrument. This applies when the following conditions are met:
- The payments are made electronically by a credit transfer, direct debit or card based payment which falls within the same brand and category;
- Any authentication requirements have been fulfilled; and
- The payments are in a currency which is accepted by the trader.
It should be noted thought, that the Regulation does not prevent traders from withholding delivery of the goods or the provision of services until they have confirmation that the required payment has been made.
Restrictions of passive sales
Traders will need to be aware that if in a commercial agreement there are passive sales restrictions that infringe the Regulation, these will be void automatically. There will be a transitional period in relation to this Regulation, as there are a few instances where passive sales restrictions are permitted and these new rules can in some cases exceed the current framework for competition law.
What next?
If your business does operate across more than one EU territory, or if you are looking to offer cross-border goods and / or services, care should be taken to ensure that you comply with the Regulation.
Keep in mind the restrictions on geo-blocking / automatic re-direction of consumers to territory-specific online platforms.
For more information on the Geo-blocking Regulation please contact Tom Torkar in our Commercial Team.
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