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In early December 2018, the Geo-Blocking Regulation 2018/302
(the Regulation) came into force across the EU,
with the aim of creating a single digital market by banning
unjustified geo-blocking (the blocking of access to websites to
individuals based in certain territories) and other forms of
discrimination based on customers' nationality, place of
residence or establishment within the market. The introduction of
the Regulation may have a serious impact on how traders in the EU
operate their businesses. The Regulation applies in all Member
States (the impact of Brexit is considered briefly below) to:
"customers" (both consumers
and EU based companies) who seek to purchase goods or services
within the EU for the sole purpose of end use; and
"traders" who offer goods
and services in the EU, regardless of where the trader is
based.
However, it does not apply across all industries, and financial
services, transport services, and audio-visual services are all
excluded.
Key provisions
The Regulation deals with a number of provisions, although these
only apply to the extent that they do not conflict with the
applicable Member State's law:
Under the Regulation, traders:
must not block or limit
customers' access to other territories' online interfaces,
e.g. by blocking the French website, to customers in Germany.
Traders should only redirect customers to another online interface
with customers' explicit consent, (although blocking,
limitation of access or redirection which is necessary to ensure
compliance with dominant laws is permitted, provided it is
explained to customers);
must not apply different general
conditions of access to goods where customers seek to buy and have
those goods delivered to any location where the trader offers
delivery. Foreign customers must be able to purchase goods and take
delivery in the same way as local customers could;
make the payment types and currencies
they accept available without discrimination, where authentication
requirements are fulfilled; and
must not require distributors to
implement geo-blocking practices, although this does not affect
agreements restricting active sales (provided they are permitted
under EU competition rules), so suppliers may prevent exclusive
distributors from actively promoting and selling goods or services
outside an agreed territory. However, any provisions within
agreements imposing obligations which violate the Regulation, shall
be automatically void.
Member States are responsible for enforcement of the Regulation
and in the UK, the government introduced a new law setting out the UK's enforcement
regime. The UK's consumer protection rules have been extended
to provide the Competition and Markets Authority powers to apply
for court orders against traders requiring them to stop any
behavior which infringes the Regulation. Customers can also bring
civil actions against traders where they have suffered loss or
damage as a result of breach of the Regulation.
Next steps for traders
Traders who are concerned that services may be covered by the
Regulation should seek legal advice and should review their
existing distribution agreements, online terms and conditions and
website operations so that any necessary changes can be made to
ensure compliance with the Regulation.
Brexit implications
If a no-deal Brexit occurs, the Regulation will cease to have
effect in the UK from 29 March 2019. EU traders may then block,
limit or redirect customers from the UK, refuse UK based payment
methods, or impose different terms and conditions of purchase to UK
customers, which may be less favorable than those offered to EU
customers.
However, November's draft Brexit Withdrawal Agreement
provides for a transition period until the end of December 2020
(unless extended). If the Withdrawal Agreement is adopted, the
Regulation will remain in force in the UK until the end of the
transition period, following which the application of the
Regulation will be dependent upon the terms of any trade deal
between the EU and UK.
UK traders should remember that the regulation applies to all
traders operating within the EU, regardless of where they are
established. Therefore, any UK traders selling into the EU will
remain bound by the Regulation, regardless of Brexit terms.
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.
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Whilst political turmoil around Brexit continues, we have produced the following checklist for you to identify the aspects of your business which may be impacted by Brexit (in whatever form it ultimately takes).
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