A new Geo-blocking Regulation has been introduced in the EU to reduce barriers between member states. This law prohibits the automatic redirecting of consumers to national websites when shopping online and outlaws other discrimination against customers on the grounds of nationality. With a breach of the Regulation, it could result in a business facing enforcement actions and fines, so businesses must take note and ensure they are ready comply with the new law.
The Geo-blocking Regulation - what does it mean?
The so-called Geo-blocking Regulation (its wordy full title is ‘Regulation (EU) 2018/302 of the European Parliament and the Council on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market’) was published earlier this year and will apply in the EU from 3 December 2018. It is the latest in a series of initiatives that form part of what the European Commission calls the ‘Digital Single Market Strategy’.
Broadly, the Regulation is intended to make it easier for customers and businesses to shop around across the EU by prohibiting practices that discriminate on the grounds of nationality. The main points of the new Regulation are as follows:
Businesses who fail to comply with the law may undergo an investigation or be subject to fines and directions to end infringement. The Regulation will also be enforced alongside consumer protection laws in each of the member states of the EU.
Of course, no UK observation on EU law is complete without mentioning Brexit. The impact of the UK’s withdrawal from the EU is as yet uncertain, but businesses selling across the EU will certainly need to comply with the Regulation when doing so. Whether UK customers and consumers can continue to benefit from the Regulation is as yet uncertain and may depend on the nature of the UK’s post-Brexit relationship with the EU.
What opportunities arise from the Regulation?
Individual consumers, as well as business customers, will benefit from the Regulation. It provides such customers with an opportunity to challenge business practices and possibly to seek better prices or trading conditions than were previously available from suppliers, particularly if consumers and customers had previously been excluded based on nationality or geographic location. Businesses may therefore find it more difficult to justify maintaining different pricing in different areas of the EU.
For businesses, it also gives them an opportunity to review their practices to ensure that they comply with the new law. Although it might be tempting to see this as a burden, it can be helpful to have an opportunity to spring (or autumn) clean. This can both ensure compliance, but also establish whether there are commercial opportunities that can be revisited. For example, are current supply structures maximising opportunities across the EU? Are there jurisdictions where it may make sense to deliver? Will harmonised prices bring benefits? And if there are areas with differential prices, it can be useful to revisit the commercial rationale for these.
Of course, the change brought about by the Regulation also provides opportunities for business advisers. The rules preventing geo-blocking on websites are relatively clear but it is going to be much harder for suppliers to determine the distinction between lawful and unlawful differential pricing and whether a particular practice amounts to unlawful discrimination. Until there are cases providing greater guidance, uncertainty will remain. Advisers (whether within or outside your business) can help businesses navigate these Regulations, and provide support for any resulting actions that need to be taken, for example the renegotiation of contractual arrangements.
Therefore, although the Regulation presents some challenges, there are also opportunities arising for EU consumers and businesses.
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