On 3 December 2018, the Geo-blocking Regulation came into force across the EU. This Regulation is designed to prevent unjustified geo-blocking and other forms of discrimination based on nationality, place of residence or place of establishment. The Geo-blocking Regulation is also another measure towards the EU's strategic goal of a digital single market.
In this briefing, we explain geo-blocking and outline the application and key rules of the Geo-blocking Regulation. We also provide some insight into recently introduced domestic legislation that will support enforcement of the Geo-blocking rules in Ireland.
What is Geo-blocking?
Geo-blocking refers to practices used by online traders to restrict online cross-border sales based on nationality, residence or place of establishment. This could, for example, involve using a computer's IP address to determine a user's geographic location and then blocking that user from accessing websites in a different location (including goods and/or services sold on that website).
Who does the Geo-blocking Regulation apply to?
The Geo-blocking Regulation applies to traders offering goods or services (whether online or offline) to consumers that are a national of, or have their place of residence in, a Member State, regardless of whether the trader is established in the EU or a non-EU country. As a result, a US based website that aims goods or services at private individuals that are resident in the EU will be obliged to comply with the Geo-blocking Regulation.
The Geo-blocking Regulation's application is more limited in a B2B context but it still applies to traders offering goods or services to entities established in the EU for the sole purpose of end-use (i.e. where it is not the intention that the EU entity will re-sell, transform, process, rent or sub-contract the goods or services). As a result, the Geo-blocking Regulation will not apply to goods and services offered to commercial intermediaries and certain industries are also exempted from the application of the Geo-blocking Regulation, including:
- Transport services (EU transport legislation already explicitly prohibits the types of discrimination covered by the Geo-blocking Regulation for air flight transport, bus and coach transport and waterborne transport).
- Financial services/retail financial services.
- Audiovisual services (this includes the provision of access to broadcasts of sports events which are provided on the basis of exclusive territorial licences; non-audiovisual copyright protected content such as online television, music streaming, software and e-books are also exempted).
What rules are introduced by the Geo-blocking Regulation?
In general, the Geo-blocking Regulation introduces an obligation on traders to treat EU customers in the same manner when they are in the same situation, regardless of the customer's nationality, place of residence or place of establishment.
More specifically, the Geo-Blocking Regulation focusses on:
- Access to websites: traders cannot block an EU customer's access to their websites or re-route an EU customer away from a particular website without that customer's prior consent. For example, if an Irish costumer wishes to access the German version of a website, the website operator will not be able to re-direct the customer to the Irish version of its website unless the customer explicitly consents to this. Even if the customer does explicitly consent, the original German version of the website should still be accessible.
- Access to goods and services: traders cannot apply to EU customers different general conditions (including price and T&C's) of access to goods and services based on the customers' nationality, place of residence or place of establishment. Traders can have different prices on websites aimed at different jurisdictions but an EU customer cannot be confined to buying from the website aimed at its jurisdiction. This restriction applies in respect of electronically supplied services (e.g. anti-virus software) and services provided in a specific physical location (e.g. a sightseeing tour). It is also designed to allow EU customers to buy goods from traders that do not deliver to the customer's Member State provided that the customer is willing to pick up the good from the trader's premises or a location that is delivered to by the trader.
- Non-discrimination in payments: a trader is entitled to accept whatever payment means it wants but the Geo-blocking Regulation prohibits traders discriminating within the range of payment methods they do accept on the basis of an EU customer's nationality, place of residence/establishment, the location of the payment account, the place of establishment of the payment services provider, or the place of issue of the payment instrument.
Geo-blocking Regulation in Ireland
The Geo-blocking Regulation allows Member States to set up their own enforcement regime provided that it is effective, proportionate and dissuasive. The European Union (Unjustified Geo-Blocking of Consumers) Regulations 2018 were very recently enacted to introduce such an enforcement regime in Ireland.
For B2C issues, the Irish Regulations designate the Competition and Consumer Protection Authority (the "CCPC") as the body responsible for the enforcement of the Geo-blocking Regulation in Ireland. The CPCC has made clear that its initial focus will be to help businesses understand their obligations under the Geo-blocking Regulation. In this regard, the CCPC has developed a geo-blocking guide for businesses. The European Consumer Centre Ireland is also designated as the body to provide practical assistance to consumers regarding disputes under the Geo-blocking Regulation.
For B2B issues, the Geo-blocking Regulation will be enforced by the Irish courts. As a result, B2B traders will not benefit from the same regulatory guidance that the CCPC is making available to B2C traders and may wish to seek legal advice.
The Irish Regulations also introduce fines of up €5000 and/or imprisonment for a term of up to 12 months for traders that fail to comply with the Geo-blocking Regulation.
The Geo-blocking Regulation is being welcomed by customers but does present challenges to many traders inside and outside the EU. In order to comply, these traders now must ensure (amongst other things) that their websites do not automatically re-route EU customers to local websites and that the T&C's, prices and payment methods applying to their goods/services do not discriminate against EU customers. Undoubtedly, compliance with the Geo-blocking Regulation comes with cost to traders but by achieving a good level of compliance, traders may be able to benefit from the underlying goal of the Geo-blocking Regulation – a more open and larger pan-EU market in goods and services.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.