On 27 February 2018, the European Council adopted a new regulation (Regulation (EU) 2018/302), better known as the 'Geo-blocking Regulation', which signifies another step in the extension of the EU's digital single market. This regulation is of particular significance to brands selling products or services online across multiple EU jurisdictions.
What is geo-blocking?
Geo-blocking refers to:
the blocking or limiting of an EU customer's access to a business's website, app, or other online interface based on their location; and/or
automatically re-routing the customer to a 'local' version of the business's website, which may have different content, products, services, prices, payment conditions, etc.
Impacts of the Geo-blocking Regulation
The Geo-blocking Regulation will prevent brands from carrying out these practices where they discriminate against customers based on their nationality, place of residence or temporary location, when they are selling:
electronically supplied services (though services providing access to copyrighted content such as music or video streaming are excluded, with the EU Commission reserving the right to review this position by March 2020); and
non-electronic services provided in a bricks and mortar store.
Brands may currently choose to market their products or services differently across different EU countries using country-specific websites, including offering different products or services at different prices or using different payment methods.
As a result of the Geo-blocking Regulation, brand owners will not be able to block or re-route (without the customer's explicit consent) a customer's access to a brand's website in a particular country. For example, a customer in the UK must be able to access any other version of the website (eg. the French language version directed primarily at French customers). The customer must also generally be able to purchase the products/services offered by any language or EU country-version of the brand website as if they were located in that EU country subject to certain additional rules depending on the products/services being offered. For example, a UK customer must be given the option to have goods delivered to the UK if the brand generally offers delivery to the UK, but the business would not be expected to deliver to UK if the brand does not ordinarily do so.
It's important to note that the Geo-blocking Regulation's purpose is to prevent discrimination based purely on location. It does not prevent a brand from offering different terms in different jurisdictions (including pricing to target certain groups of customers in specific countries) where the reason for the differences is not based on the nationality/geographic location of the customer and can be justified for other reasons.
Time to act
The Geo-blocking Regulation will come into force on 22 March 2018 but most of it will not apply in the Member States until 3 December 2018, giving businesses some time to consider the different practices they have in place, and how these will need to be amended.
At the moment, it's unclear how the Geo-blocking Regulation will operate as between the UK and the EU after Brexit because much will depend on any bilateral agreement or trade deal between the UK and the rest of the EU.
Nonetheless, businesses in the UK will have to comply with the Geo-Blocking Regulation for at least a limited period and so brands across all EU countries should start considering:
whether they currently have any geo-blocking practices in place;
if yes, whether they are included within the ambit of this regulation;
whether they can be objectively justified under the new regulation as not discriminating on grounds of nationality, place of residence or temporary location; and
if not, what amendments to the online interface, processes, or terms and conditions are necessary to become compliant in time for 3 December 2018?
For more information on this topic, please contact Vicky Reinhardt or your usual contact within Fieldfisher's Brand Development Team.
Co-authored by Alex Harbin.