Geo-blocking. Andrus Ansip, EC Vice President for the Digital Single Market
The NETmundial meeting, the World Economic Forum, the G7, and the OECD have all addressed questions of Internet openness and fragmentation to varying degrees. A number of factors long have been moving us away from the original engineering vision of the Internet, in which any willing end point was going to be able of exchanging data packets with any other willing endpoint.
Geo-blocking is a pernicious form of Internet commercial fragmentation, business practices that constrain or prevent certain uses of the Internet to create, distribute, or access information resources, which has significant social and economic costs, particularly on smaller and less powerful Member States, companies, and stakeholders.
The Commission proposed in May measures to address unjustified geo-blocking as part of a legislative package to boost e-commerce and with the objective of moving forward towards the integration of a truly Digital Single Market. Today the Council has agreed on a draft regulation to ban unjustified geo-blocking between Member States.
The draft regulation is intended to remove discrimination based on customers' nationality, place of residence or place of establishment and to boost e‑commerce. Geo-blocking is a practice that restricts access to content based on the user's location.
Peter Žiga, President of the Council and Minister of Economy of Slovakia stated: "Shopping online from another EU country in the same way as locals do is something that many citizens expect nowadays. The new rules to stop unjustified geo-blocking will improve considerably the e-commerce economy and give citizens access to a wider choice of goods and services. This can only happen if there is a guarantee of safety and trust for both buyers and sellers. With our decision today, which was reached just a few months after the proposal was tabled, we have paved the way for a rapid opening of negotiations with the Parliament and a potential close next year".
Geo-blocking: Internet Commercial Fragmentation
The main objective of the proposal is to prevent discrimination for consumers and companies on access to prices, sales or payment conditions when buying products and services in another EU country.
Its scope is in line with the Services Directive, which excludes certain activities such as financial, audio-visual, transport, healthcare and social services.
The new rules will be in compliance with other EU legislation in force applicable to cross-border sales, such as rules on copyright and Union law on judicial cooperation in civil matters, in particular the Rome I and Brussels I regulations.
Equal access to goods and services
Under the new rules, traders will not be able to discriminate between customers with regard to the general terms and conditions - including prices - they offer on the sales of goods and services in three cases. These are where the trader :
1. sells goods that are delivered in a Member State to which the trader offers delivery or are collected at a location agreed upon with the customer;
2. provides electronically supplied services, such as cloud services, data warehousing services, website hosting and the provision of firewalls. This does not apply to services where the main feature is the provision of access to or use of copyright protected works or other protected subject matter, or the selling of copyright protected works in an intangible form, such as e-books or online music;
3. provides services which are received by the customer in the country where the trader operates, such as hotel accommodation, sports events, car rental, and entry tickets to music festivals or leisure parks.
Unlike price discrimination, price differentiation will not be prohibited, so traders are free to offer different general conditions of access, including prices, and to target certain groups of customers in specific territories. Moreover, traders will not be obliged to deliver goods to customers outside the Member State to which they offer delivery.
Payment transactions
The regulation shall prohibit unjustified discrimination of customers in relation to the means of payment. Traders will not be allowed to apply different payment conditions for customers for reasons of nationality, place of residence or place of establishment.
Non discrimination for e-commerce website access
Traders will not be allowed to block or limit customers' access to their online interface (website, platform, etc.) for reasons of nationality or place of residence. A clear explanation will have to be provided if a trader blocks or limits access or redirects customers to a different version of the online interface.
The European Consumer Organisation, ECO, had regretted that companies often geo-block their services and offers erecting artificial barriers to prevent consumers in other EU countries accessing their services. Consumers find that they cannot watch films or sport events online if they are on a foreign website, or they find that they are prevented from ordering a product from another Member State or must pay higher prices for a service abroad because their access has been blocked.
"We believe discriminatory territorial practices should stop and we ask the EU to do two things: first, consumers should be allowed to access content such as sport events, music streams, movies and TV programmes from any provider in the EU. This would curb piracy, accessing the content from unauthorised sources, and help all consumers to enjoy Europe’s cultural diversity. Secondly, the rules preventing discrimination on the basis a consumer’s place of residence when selling goods or services need to be sharpened," ECO stated.
Geo-blocking, which prevents consumers to purchase consumer goods and accessing digital content online from a certain country, is widespread in the European Union. A survey has shown that 38 percent of retailers selling goods and 68 percent of retailers selling digital content said they geo-block consumers located in other EU Member States. It happens due to companies deciding they don’t want to sell abroad, but also because contractual barriers are set up by companies who want to prevent consumers from shopping online across borders.
So, geo-blocking widely frustrates the increasingly high expectations of European citizens to access culture, services and entertainment on a EU-wide basis. It makes hugely demanded content such as films and TV series inaccessible in a legitimate way, with a consequential rise in appeal of online piracy. However, it's not only about copyright and company management in trade, the persisting digital divide, different availability of bandwidth across the EU and significant difference in the purchasing power of European consumers have also a partitioning effect of the Digital Single Market.
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