03 December 2018: The New Regulation on Geo-Blocking enters into Force

Practices include a denial of services or a redirection of potential customers to a localised version of the service or site based on the IP-address of the device used by the customers or not accepting payment methods based on the country of origin (eg with credit cards).

Although it might in some cases also be in the best interest of (potential) customers to be redirected to a localised service (eg as they are translated to the customers native language and provide locally specific information and contact addresses) the service providers and sellers also tend to offer their services and goods at different prices or under different conditions, depending on the customers’ location.

While such practices may to some extend be circumvented by the customers, for example by rerouting their internet traffic through a virtual private network (VPN), only a minor percentage of customers are aware of and employ these options. Meanwhile, for most of the customers this practice often leads to higher prices or at least excludes them from comparing services in different countries.

The European Union took interest in these practices in 2015 in its strife to extend the principles of the common market to digital goods and services (the digital single market) and resolved to regulate them. On the one hand these practises may to a certain extend interfere with free trade and compromise the European Single Market, on the other hand they also lead to price discrimination of customers based on their respective member state of origin.

After due consultation the EU-Regulation No 2018/302 on Geo-Blocking was passed on 28 February 2018 and will come into force on 03 December 2018, just in time for the ensuing Christmas trade.

The new regulation bans the blocking of access to websites and -services for reasons related to the nationality, the place of residence or the place of establishment of a customer. It also inhibits re-routing without the customer’s prior consent. Exceptions may be made, when service providers are otherwise legally required to do so, but customers still will have to be informed about the specific reasons for the re-routing.

Service providers may also not unduly deny their products or services to customers for reasons related to the nationality, the place of residence or the place of establishment of a customer, or offer them at a different price or under different conditions in different member states without proper reason. These reasons might also include shipping costs and service providers are not prohibited from offering their goods and services at different prices or under different conditions within the Union in general. However, conditions and prices have to be applied in a non-discriminatory manner.

Lastly, the regulation also prohibits service providers from applying different conditions on payments for the usual payment instruments for reasons related to a customer's nationality, location or the location or origin of the payment service provider or the respective payment instrument within the Union. Exceptions may be made for objective reasons, for instance if a payment confirmation is needed or when additional fees are charged by third parties, ie interchange fees.

The enforcement of these provisions shall be the responsibility of the member states, which shall designate the responsible agencies and have to provide for effective measures to ensure compliance.

This new regulation will increase price transparency for private and professional customers alike and enable them to compare the conditions of service of traders in different member states without additional efforts.

Service providers actively offering their goods and services within the whole European Union should take appropriate measures now. Namely, online service providers should revise their online sales policies. All customers should be able to access different national websites irrespective of their origin. Furthermore, differences in sales prices and payment conditions within the EU have to be revised and amended accordingly. Service providers should be able to supply objective reasons, whenever customers of different origin are treated divergently.

Please contact Dr Jens Steger if you have any further question or need further assistance.