On December 3rd 2018, the EU will enforce ‘Regulation (EU) 2018/302 of the European Parliament and Council.’
In a nutshell, this regulation prohibits the automatic redirecting of consumers to national websites when shopping online and outlaws other discrimination against customers on the grounds of nationality, place of residence or place of establishment.
The EU’s reasoning behind the implementation of Regulation (EU) 2018/302 is that the practice of geo-blocking limits the possibility of both consumers and businesses to benefit from the advantages of eCommerce. Indeed, research from a 2015 EU Commission survey found that only 37% of websites allowed customers shopping from another EU country to reach the final step up to the point just before pushing the order confirmation button.
In order to combat such scenarios, the regulation defines specific situations when there can be no justified reason for geo-blocking or other forms of discrimination based on nationality, residence or establishment. These are as follows:
Sale of goods without physical delivery
This ensures that where businesses do not deliver to a customer’s member state, they must now make products available for delivery or for a customer to collect. For example, a French consumer finds the best deal for a new camera on an Italian website. In this example, the customer will now be entitled to order the product and collect it at the trader’s premises or organise delivery himself to his home. (N.B Businesses are not, however, obliged by the Regulation to provide pick-up points if these are not offered in the home territory or to deliver outside of their normal delivery area where the merchant would not ordinarily offer such a possibility).
Sale of electronically supplied services
This part of the regulation relates to when a customer wants to buy an electronically supplied service, such as cloud services or website hosting, from a merchant in another Member State. Such customers will now be entitled to do so in the same way that local customers are.
Sale of services provided in a specific physical location
This concerns a situation in which a customer buys a service where the merchant operates and which is located in another Member State. Examples include such things as event/concert tickets, holiday rentals and car hire.
Another key heading under the regulation relates to electronic payments. This notes that whilst vendors are free to accept whatever payment methods they want, those methods that they do use must not exhibit any form of discrimination. I.e., differential treatment as a result of a customer’s nationality, location of payment account, location of payment account provider.
Differential treatment is prohibited if the following conditions are met:1. Payments are made through electronic transactions by credit transfer, direct debit or card-based payment instrument within the same brand and category;2. Authentication requirements are fulfilled3. The payment is in a currency that the merchant accepts
What happens in the case of non-compliance?
Businesses which fail to comply with the new regulation (as was the case with GDPR) will be subject to investigation and/or fines. In addition, businesses and consumers will be able to enforce their rights stemming from the Geo-blocking Regulation on the basis of any existing EU and national rules regarding such enforcement. To make sure that you are completely up-to-date with Regulation 2018/302, you can find useful information on the European Commission’s website.
Our company is B2B—does the regulation still apply?
Yes. The Geo-blocking Regulation applies to both B2C (business-to-consumer) and B2B to (business-to-business) transactions, where transactions take place on the basis of conditions of access that are not individually negotiated and it is for the sole purpose of customer end use.
If you’d like to learn more, then you find the full content of the regulation here.
