Just before the most intensive holiday online sales period, businesses need to implement changes ensuring customers have equal access to goods and services regardless of their nationality, place of residence or place of business. From 3 December 2018, the Geo-blocking Regulation (2018/302) applies throughout the European Union.
We wrote about this proposal earlier (text only in Polish), but due to the commencement of the bans and changes to the adopted final regulation, we come back to the subject.
When does the regulation apply?
The scope of application of the regulation is stated negatively, which means that it applies whenever there is no exemption. The final regulation differs in this respect from the draft, which explicitly enumerated the situations where the regulation would apply.
However, the regulation sets out two key criteria for determining whether the prohibitions set out in the regulation apply in a given case.
First, the regulation applies to transactions other than purely domestic transactions, and thus, in general, concerns transactions of a cross-border nature, i.e. where crucial elements are located in at least two EU countries (for example, when a Polish customer orders goods from a German online shop).
Second, the regulation applies in principle to all activities, with the exception of excluded activities, such as audio-visual services (e.g. access to broadcasts of sporting events), financial services (e.g. granting loans), health services (e.g. dental treatment), and transport services (e.g. sale of airline tickets), among others. Transactions involving the sale of IT equipment, clothing, footwear, books or cosmetics, as well as electronically supplied services (e.g. website hosting or cloud services) and non-electronic services (e.g. purchase of tickets to an amusement park, hotel room rental, cosmetic services or, it appears, plastic surgery not provided for the purpose of assessing, maintaining or enabling recovery of the patient’s health), are examples where the regulation applies.
It should also be stressed that although this act is commonly referred to as the Geo-blocking Regulation, the prohibitions provided for in it are not limited to e-transactions only, but also apply, to the extent appropriate, to transactions carried out at fixed points.
In principle, the regulation prohibits three categories of activities based on the criterion of discrimination on grounds of nationality, residence or place of establishment (collectively referred to below as “location”).
Firstly, geo-blocking is not allowed, i.e.:
- Preventing or restricting a customer’s access to a website or application
- Redirecting the customer, without his consent, from the website he is trying to access to its equivalent for customers from another country
due to the client’s location criteria, e.g. based on the client’s computer IP address.
This type of geographical blocking can only be used if it is necessary to comply with legal requirements, in which case the seller must explain the reasons for its use to customers.
Differences in accessing goods and services
The regulation prohibits differentiating the general conditions of access to goods or services (thus, for example, net prices) based of the customer’s location criteria, if the customer intends to:
- Purchase goods that are delivered or received in the country to or in which the seller offers delivery or collection (e.g. the price of IT equipment for a Polish customer buying at a French online or brick-and-mortar shop must not be higher than for French customers)
- Use electronically supplied services, excluding services which provide access to and use of copyright works or other items protected by intangible means (e.g. a Greek customer may use a hosting service, cloud service or data warehouse provided by an Italian undertaking under the same conditions as customers from other EU countries, including customers in Italy or established there)—the copyright exemption means that conditions for access to films, music, e-books, software or video games can still be differentiated
- Make use, at the place where the seller operates, of services other than those provided electronically (e.g. a Czech customer can buy an entry ticket to an amusement park in Spain under the same conditions as customers from other countries).
It should be noted that this prohibition does not preclude the application of different general conditions of access to goods and services in different countries or within a single country if they are offered in a non-discriminatory manner. This means that an undertaking operating in several EU countries does not have to offer the same goods at the same price to customers in each of them, nor does it have to apply the same conditions of sale of goods in its brick-and-mortar shops and online shops. However, if it applies different conditions of access to goods or services, it must do so in a non-discriminatory manner. So, for example, an offer in a retailer’s showrooms in Spain and Poland may differ in price, but the price of the goods offered in the showroom must not vary depending on where the buyer comes from.
It is also worth noting that the regulation does not oblige the seller to comply with non-contractual national legal requirements for the goods or services in the customer’s country (e.g. product labelling requirements).
Differences in payment terms
Where the seller accepts payment by specific means, it may not differentiate between the terms and conditions of an electronic payment transaction made in a currency which it accepts because of the customer’s location or his payment account, the place where the payment service provider is established, or the place of issue of the payment instrument. Thus, for example, a Portuguese merchant cannot refuse to accept US dollar payments with a Visa-branded payment card issued in Poland if he accepts (i) payment card transactions of that brand and (ii) in that currency.
The member states will carry out enforcement of the regulation through their designated authorities. In Poland, such an authority has not yet been designated, but a draft act from the Council of Ministers stipulates that it will be the president of the Office of Competition and Consumer Protection (as of 4 December 2018, under Art. 1(2) of the draft Act Amending the Competition and Consumer Protection Act and Certain Other Acts).
Meanwhile, at the EU level, the European Commission is required to assess every 5 years the impact of the regulation on the internal market and cross-border e-commerce. On the basis of the Commission’s reports, the regulation will be amended as necessary.
Significantly, the first evaluation, to be carried out by 2020, will examine the scope of application of the regulation and determine whether it should also apply to electronically supplied services whose main feature is to ensure access to and use of copyright-protected works if the service provider has rights in relation to relevant territories.