Geo-blocking is a system which restricts a user's access to the internet based on their geographical location. This undermines the concept of the single market among Member States, one of the core values of the EU, as it limits the consumer's ability to benefit from the advantages of online shopping and cross-border sales within the EU.
As of 3 December 2018, Regulation 2018/302 of 28 February 2018 (the "Geo-blocking Regulation") will be applied in order to put an end to unjustified geo-blocking as part of the European Union's Digital Single Market Strategy. The Digital Single Market Strategy strives to create an online single market where;
"The free movement of goods, persons, services and capital is ensured and where individuals and businesses can seamlessly access and exercise online activities under conditions of fair competition, and a high level of consumer and personal data protection, irrespective of their nationality or place of residence."
In order for such objectives to be achieved, strategies such as geo-blocking must be regulated and curtailed as much as possible.
The new Geo-blocking Regulation addresses unjustified geo-blocking by setting out three cases where there is no justified reason to implement online restrictions or to discriminate based on location or nationality within the internal market.
- The sale of goods without physical delivery.
This means that any consumer within the EU is entitled to purchase goods online from retailers based in another Member State and either collect it at the trader's premises or organise for delivery themselves to their own home.
- The sale of electronically supplied services.
In this case, for example, a French consumer will be able to purchase online services from a German company without paying fees over and above those which would be payable by a German consumer. Such online services may include website hosting services.
- The sale of services provided in a specific physical location.
This category captures amongst other things the online purchase of concert tickets or rental accommodation which will be located in another Member State to that of the consumer. In this case the consumer is entitled to equal treatment to those consumers located in the Member State where the service is provided.
The Regulation also bans the blocking of access to websites of other Member States and automatic re-routing. An example of automatic re-routing in practice would be a situation where a consumer who is located in Ireland wishes to visit the French website of an online retailer in order to purchase a product because it is sold at a cheaper price than on the Irish version of the website. Before the geo-blocking Regulation, the consumer in Ireland could be automatically rerouted to the Irish version of the website without having given consent. When the Geo-blocking regulation comes into force, when an Irish consumer visits the French website they will have to give consent before being re-routed to the Irish version of the website.
A non-discrimination rule in payments is also provided for whereby the means of payment must be the same regardless of the consumer's location, as long as the payments are made through electronic transactions, in a currency the trader accepts and necessary authentications are required and fulfilled.
It is important to note that following strong lobbying from the film and television industry, online audio-visual services will be exempt from the Geo-blocking Regulation. Therefore, online audio-visual and V.O.D (Video on Demand) service providers can continue to impose geographical restrictions on consumers within the EU who wish to view their online content. This will affect consumers who subscribe to services such as Netflix and Hulu. Users of these services will already be aware that the content available to view on these websites differs from country to country, even within the EU.
Reasons for this exemption may include the strict licensing agreements involved in distributing audio-visual content and the impact geo-blocking would have on the financial model for film and TV productions. In the film and TV industry a lot of value is placed on online distribution rights for films and TV shows and if the territorial exclusivity that a distributer in a particular Member State enjoys is undermined, this could result in the distributer attaching less commercial value to the project. This would also result in producers or possible investors having less of a financial incentive to invest in smaller productions.
There is a separate regulation, the Online Portability Regulation, which has been applicable since 1 April 2018, which allows users to access content when they travel within the EU in the same way they access it in their home Member State. This allows Irish Netflix users to continue to watch their favourite content while travelling, even if it is not normally available in the Member State in which they are travelling. While this Regulation does not totally remove geo-blocking from the audio-visual and V.O.D. industries it is a step in the right direction towards making these services more freely available across the EU.
The Regulation is subject to its first review by the Commission by 23 March 2020 and then every five years thereafter. The first review and those thereafter will evaluate the impact and scope of the Regulation on the Internal Market and may allow for adaptations in relation to those services which are included and exempt from the regulations at present.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.