Geo-Blocking Regulation: Stumbling Block or Building Block towards the Digital Single Market?

Already a while ago, on the 3rd of December 2018, the Geo-blocking Regulation (“the GBR”) came into force. The GBR’s goal is to realise the full potential of the EU’s internal market by abolishing obstacles put in place by traders and providing customers and businesses with more opportunities. To that end, the GBR prohibits unjustified geo-blocking and other forms of discrimination based on customers’ nationality, or place of residence and establishment.

The GBR is one of many proposals by the European Commission (“Commission”) that aim to facilitate the Digital Single Market (“DSM”) strategy. The DSM-strategy was proposed and implemented to bring down barriers, unlock online opportunities and further the creation of a true single market to allow EU customers to freely purchase goods and services cross-border. According to the Commission, the creation of the DSM would lead to €11 billion in savings for consumers when shopping online.

Interesting question is whether the Geo-blocking Regulation is indeed a building block towards the Digital Single Market – or not. Senior associates, Brona Heenan (Brussels) and Mariska van de Sanden (The Hague) wrote an article about the Geo-Blocking Regulation for the European Journal of Consumer Law (2020/2, p.269-290) in which they discuss this question more in-depth. Amongst others, the article includes:

Background of the GBR

A Commission survey showed that only 37% of websites sampled allowed shoppers to buy online from another EU country. These figures showed an established practice that was the opposite of everything the EU stands for: a market without internal frontiers. This practice had been established despite the fact that Article 20(2) of the Services Directive and competition law already prohibited geo-discrimination. What is the added value of the GBR compared to the already existing laws that prohibit geo-blocking and geo-discrimination?

Scope of the GBR

The GBR applies to unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or establishment. However, does the GBR also apply to purely domestic situations, does it cover business to business transactions and does the trader need to be established in a Member State of the European Union? It also goes into the service areas that are excluded from the scope of the GBR like transport services, retail financial services and audio-visual services.

The prohibition to geo-block, geo-discriminate and discriminate on payment terms

The GBR contains three main prohibitions; a prohibition (A) to geo-block, (B) to use different general conditions and (C) to use different payment terms (Articles 3, 4 and 5 GBR). Those prohibitions are discussed extensively including how to interpret them.

The consequences of violating the GBR

Discusses the impact of Articles 6 GBR (which declares passive sales restrictions, including geo-blocking, automatically void), 7 GBR (enforcement) and 7 GBR (assistance to consumers).

The GBR in practice

Discusses the state of play as regards the implementation of Articles 7 and 8 GBR and analyses whether there is any divergence between the Member States. Also goes into the impact of Brexit for the applicability of the GBR.

The interplay with consumer laws, including jurisdiction and enforcement

Customers who suffer loss as a result of a trader acting in conflict with the GBR will be able to make a claim directly against that trader in relation to that loss. Also, consumers will be able to consult their appointed consumer body for advice on whether their rights under the GBR are being infringed. The GBR does, however, not have any rules on international jurisdiction. How does it to be determined who has jurisdiction in the dispute? Also, which Member State has the responsibility of enforcement of violations in cross-border scenarios? Are any enforcement examples known yet?

The effects of the GBR on cross-border delivery

The GBR does not impose any obligation on traders to deliver goods across the border. However, what if a trader decides to deliver the goods cross-border? What implications does such cross-border delivery have from a consumer law perspective? Which consumer laws for example apply? How does the GBR impact consumers’ rights to remedy in case the goods sold are defective?

The interplay with competition law

Competition law also prohibits geo-blocking and geo-discrimination, although only if certain conditions are met. What is the added value of the GBR compared to competition law and vice versa? Discusses amongst others the Guess-, Nike-, Sanrio-, Pay-tv and Valve-cases in which geo-blocking practices have been fined under EU competition law.

Their conclusion is that the Regulation might not bring all the benefits as consumers might have hoped for, but that it is at least a good first step towards a true Digital Single Market. Especially if considered together with the other proposals of the Commission in the context of the Digital Single Market-strategy.

The article is available here.

Please note that the article was completed in Autumn of 2019.

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