April 21, 2019

April 19, 2019

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Restricting trading restrictions: the Geo-Blocking Regulation

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.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

James Stuart, UK, SPB, IP
Partner

Stuart is a partner in our Intellectual Property & Technology practice in Birmingham. He advises on a wide range of commercial and IT contracts, including major distribution, logistics, outsourcing, shared services and joint ventures.

He has particular expertise in advising on the procurement and supply of IT systems and IT outsourcing arrangements as well as website and software development, hosting and licensing, software as a service (SAAS), open source software, cloud computing, e-commerce and data security matters. In addition, he drafts and advises clients on contracts for...

44-121-222-3645
Katie Rogers IP Lawyer Squire PB
Associate

Katie is an associate in our Intellectual Property & Technology Practice Group and advises on a broad range of commercial contract and data protection matters. Katie also has experience working on large commercial transactions.

+44 121 222 3135