On 25 May 2016 the European Commission published draft
legislation aimed at restricting the use of geoblocking and similar
practices by websites selling to into the European Union.
The European Commission has published1 a draft
regulation aimed at restricting traders from blocking access to
websites by customers from other European countries, preventing
geographic discrimination through use of different online terms and
conditions or refusal of means of online payment.
Key points are:
The regulation needs to pass through
the legislative process with the European Parliament and the
Council of Ministers, but is expected to be in force in 2017. It
will become immediately effective in all European Union states
without the need for national implementing legislation.
The regulation does not apply to
audio-visual services (e.g., Netflix, ebooks) as these are being
dealt with separately. Other electronic services, such as cloud
computing, will be covered from 2018.
It has extra-territorial effect. The
regulation applies to any website which sells to European
customers, regardless of the place of administration of the site or
location of the seller's business.
It applies to sales to both consumers
and businesses, although there is an exclusion for purchasers for
The provisions which outlaw
discriminatory terms do not apply where the seller also arranges
delivery of the purchased goods. This will take a large number of
sites outside the scope of this provision.
As the Commission has
acknowledged2, European anti-trust law does not prevent
unilateral geographical discrimination by suppliers who do not have
market power. Therefore, the proposed legal basis for the new
regulation is a European Treaty provision allowing measures to be
taken to complete the European internal market. The provision,
however, essentially deals with harmonisation measures, so its use
appears somewhat strange and may be open to challenge.
The Commission sees the internet as a powerful tool for removing
national trade barriers and completing the European internal
market, and is concerned by the relatively low level of
cross-border internet transactions3. The geoblocking
regulation is part of the emerging results of the Commission's
wide ranging investigation into ecommerce within the European
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