EU Geo-blocking Regulation now in force
3rd December 2018
What does the Regulation do?
The Geo-blocking Regulation (the “Regulation”) was adopted by the European Union as part of its Digital Single Market Strategy, to prevent businesses from discriminating against customers based on their nationality, place of residence or place of establishment.
The key target of the Regulation is technological (and other) barriers imposed by traders which limit or prevent access to e-commerce websites (or certain parts of a website). One way in which this is commonly achieved is by re-directing a customer (based on an IP-address or other identifying data1) to a specific website or part of a website.
Some traders would argue that this practice is justified; for example to redirect a customer to a website (or mobile application) which lists products or services in the correct currency and with local delivery options. However under the Regulation (and in absence of a permitted justification2) a trader will be required to make goods or services available (at the same price and under the same delivery arrangements) as are available to other customers in the territory in which the trader operates. Importantly this does not necessarily require the traders to deliver goods (or non-electronic services) cross-border or to register for VAT in another member state3.
When will the Regulation apply from?
The Regulation is directly applicable and will apply in all member states from 3 December 2018 without the need for further implementing legislation.
Who does the Regulation apply to?
The Regulation applies to all traders trading goods and services in websites, online market places or mobile apps within the EU. This means that the trader does not have to be established within the EU – only that the trader must be operating a website which trades within the EU market.
The Regulation applies to both business-to-consumer and business-to-business transactions where the customer is a national of or resident in - or in the case of a business - established in the EU.
A website (or mobile application) cannot be designed in a way that restricts EU customers from easily completing orders.
What goods and services does the Regulation apply to?
The Regulation covers the sale of all types of goods and there is no exemption for any specific category of goods (although certain categories of goods may be restricted in certain countries, such as alcohol4).
The Regulation also covers the sale of online digital services, including cloud services, data warehousing, website hosting and the provision of firewalls, use of search engines and internet directories5.
Some activities that are already subject to particular customer protection rules are excluded from scope of the Regulation, such as retail financial services, healthcare services or other social services and transport and audio-visual services6. The Regulation would therefore not apply to cross-border access to pay TV services, which is the subject of an ongoing European Commission competition investigation into infringement of the law on anti-competitive agreements.
What does this mean for your website?
A website (or mobile application) cannot be designed in a way that restricts EU customers from easily completing orders or which discriminate against customers based on nationality, place of residence or place of establishment.
In practice, this means that customers should not be automatically redirected to another version of the online interface or be prevented from ordering from a version of the online interface that is different from that of the country of their residence, nationality or establishment.
Businesses may need to consider the functionality of their website and any adaptations needed so that customers from one EU member state can easily place orders from the website of another EU member state (for example “check-out” functionality).7
Businesses will also need to ensure that their payment processes do not (intentionally or inadvertently) discriminate against customers based on their nationality, place of residence or establishment8.
What are the consequences of non-compliance?
Each Member State is required to:
- designate a body responsible for enforcement of the Regulation
- lay down rules setting out the measures applicable to infringements of the provisions of the Regulation
- designate a body responsible for providing practical assistance to consumers in the case of a dispute between a consumer and a trader9
The UK has not yet designated a body for the above purposes nor has it informed the European Commission of the measures it intends to apply in respect of infringements. We expect that the Competition and Markets Authority (“CMA”) may be designated as both the UK’s enforcement and consumer body and that possible sanctions that may be imposed on traders who infringe the Regulation could include a statement of objection and/or a fine. The CMA has recently issued fines against traders that have been found to engage in other anti-competitive practices of between circa £800,00010 and £2,300,00011 .
What should your business be doing?
In order to avoid the risk of potential sanctions, businesses should take action before the Regulation comes into force on 3 December 2018 to ensure they are not engaging in unjustified geo-blocking, including:
- Reviewing access to websites: businesses should check whether their current online interfaces require modification to avoid, amongst other things, blocking or limiting access, auto-forwarding of customers without explicit consent, or declining payment with credit cards issued in other member states. Reviewing current general terms and conditions: review general terms and conditions applicable to sales for consumers and businesses who are end users for potentially discriminatory terms.Reviewing distribution and other supply agreements: check these agreements for any passive sales restrictions that might be unenforceable under the Regulation or otherwise under European law.
- Reviewing current general terms and conditions: review general terms and conditions applicable to sales for consumers and businesses who are end users for potentially discriminatory terms.
- Reviewing distribution and other supply agreements: check these agreements for any passive sales restrictions that might be unenforceable under the Regulation or otherwise under European law.
What will happen after Brexit?
Whilst we cannot predict what the situation will be after the UK’s exit from the EU, subject to any transitional arrangement that may be contained in a possible withdrawal agreement, customers residing (or established) in the UK may not benefit from the Regulation after that point without agreement. This would mean that traders operating a UK version of their website may be able to restrict, block or redirect UK customers to their UK website.
The Regulation will continue to operate in the EU. UK traders who wish to continue operating in the EU will continue to be bound by the provisions of the Regulation when dealing with EU customers. This means that a UK trader will not be able to discriminate between customers in different EU member states on the basis of their nationality, place of residence or establishment.12
If you have any queries in respect of the application of the Regulation to your business, please contact Craig Rogers, Gayle McFarlane, Ros Kellaway, Carolyn Sullivan or your usual Eversheds Sutherland contact.
 Recital (6) and Recital (18) ofthe Regulation in respect of “technological measures”
 See Article 5(2) and Recitals(1), (2) and (22) of the Regulation as well as Directive 2006/123/EC
 See for example Recital (23) andRecital (25) of the Regulation
 See also footnote (2) above –objective justification.
 Article 4 of the Regulation
 Refer to Article 2(2) of theService Directive 2006/123/EC for a full list.
 Recital (19) of the Regulation:“In order to ensure the equal treatment of customers and to avoiddiscrimination, as required by this Regulation, traders should not design theironline interface, or apply technological means, in a way that would, inpractice, not allow customers from other Member States to easily complete theirorders”
 Refer to Articles 1(6), 5 andRecitals (32) and (33) of the Regulation
 Article7 of the Geo-Blocking Regulation