E-commerce law:
Geoblocking

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In recent years, the EU has taken several measures to increase free movement in digital markets. Among other things, roaming charges have been abolished and rules have been introduced that give consumers the right to access their streaming services, such as Netflix, HBO or Spotify, on holiday abroad in the EU. In December 2018, the EU introduced rules prohibiting unjustified geo-blocking.

Madeleine Kristoferson från Delphi

Guest blog:

Madeleine Kristoferson
Associate, Delphi Law firm
Tel. +46 8 677 54 00​​​​​​​
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The concept of geo-blocking and new rules

The concept of geo-blocking refers to techniques that prevent, for example, a website or other source of information from being made available in a certain geographic area.

I In December 2018, the EU regulation on measures to combat unjustified geo-blocking [1] (hereinafter ‘the geo-blocking regulation’ or ‘the Regulation’) became applicable. In short, the new rules mean that companies are banned from preventing access to websites due to a customer residing in another EU country. All customers who are citizens or residents of an EU country shall have access to all national versions of a company's website and shall be treated in the same way as domestic customers when ordering from the website. Even contractual terms whereby a reseller is forced to act in contravention of the rules on geo-blocking, for example by preventing customers residing in other countries from trading on the reseller's website, are not valid.

Geoblocking

The regulation applies to all companies offering their goods and services to consumers in the EU, irrespective of whether the company is established in or outside the EU. Consumers can be either private individuals or companies, provided that the goods or services are purchased exclusively for end use.

[1] European Parliament and Council Regulation (EU) 2018/302 of 28 February 2018 on measures against unjustified geo-blocking and other forms of discrimination on grounds of customer nationality, place of residence or establishment in the internal market and amending Regulation (EC) No 2006/2004 and (EU) 2017/2394 and Directive 2009/22 / EC.

What do the rules on geo-blocking mean?

Access to Websites

The rules on geo-blocking include a prohibition on preventing access to a website (or other so-called online interface, such as an app) due to nationality, residence or place of establishment of a client. The rules also include a prohibition of, for example, redirecting the customer to a version of the website which - by design, the language used or other characteristics that make it specific to customers with a particular nationality, place of residence or place of establishment - differs from the version of the website that the customer originally attempted to access.

Therefore, if the customer residing in Sweden enters .dk, the customer should not be automatically redirected to the Swedish .se version of the site. In order for such redirection to be permitted, the customer's explicit consent is required and the customer shall continue to have access to other national versions of the website.

Access to goods and services in other countries

According to the geo-blocking regulation, a company may, in some cases, not have different general terms and conditions of sale (e.g. net sales price and delivery terms) for its goods or services due to a customer's nationality, place of residence or place of establishment. This applies, for example, when the company sells goods delivered to an EU country where the company offers delivery or collection at a location agreed upon with the customer, or when the company provides services such as hotel nights, sports events, car rentals and admission tickets to music festivals or amusement parks, and the goods or services are received by the customer in the country where the company operates.

The geo-blocking regulation does not require a company to deliver goods to all EU member states, but only that it does not apply different conditions due to the nationality of a client, their residence or place of establishment. The regulation also does not require companies to apply the same conditions of sale, such as price and delivery terms, to all national versions of their website.

A Swedish customer should thus be able to access a company 's Spanish website and be able to order from the Spanish website under the same terms and conditions as those that apply to customers residing in Spain. However, the customer cannot require that an order be delivered to Sweden if the general terms and conditions of the Spanish website state a place for delivery within Spain only. In this case, the Swedish customer must arrange the transport from Spain themselves.

Non-discrimination on payment

The new provisions also prohibit the application, in certain cases, of different conditions for a payment transaction due to reasons relating to the nationality, place of residence or place of establishment of a client, the location of the payment card, the place of establishment of the payment service provider or the issuer of the payment instrument within the EU.

The rules mean, inter alia, that a company accepting credit cards of a given mark issued in a given member state shall accept the same type of credit card of the same mark issued in another member state.

Passive sales and the relationship to competition rules

What is passive sales?

Under competition law, contract terms in retail and distribution agreements prohibiting passive sales may be presumed to be anti-competitive and are thus normally unlawful. However, there may be exceptional situations where passive sales are not unlawful under competition law. Passive sales means meeting orders that individual customers themselves have initiated, as opposed to active sales related to the situation where a company actively marketed itself towards a particular area or specific customer group. Online sales are normally seen as passive sales.

A supplier may not prohibit its Danish dealer from selling to a Swedish customer who has voluntarily entered the dealer's website and ordered a product. For example, the prohibition of passive sales is equivalent to contract terms whereby the dealer undertakes to:

  • prevent customers from other areas from accessing the site
  • automatically redirect customers to the manufacturer's or other exclusive reseller's websites
  • to terminate a customer's online purchase as soon as his credit card shows an address that is not within the retailer's (exclusive) area.

However, according to the so-called vertical block exemption of competition law, a dealer may, under certain conditions, be restricted from actively marketing itself in an area (or to a customer group) which the manufacturer has reserved for himself or where another retailer has received an exclusive sales right.

How do the rules on geo-blocking relate to competition rules?

Under article 6 of the geo-blocking regulation, contract terms prohibiting passive sales are automatically void in so far as the contractual terms are covered by the regulation. The geo-blocking regulation does not affect the possibility of restricting active sales, the legality of which must instead be determined in accordance with the competition rules.

In those parts of the geo-blocking regulation, it takes precedence over competition law. This means that a contractual term contrary to the rules of the geo-blocking regulation regarding access to online interfaces, access to goods and services or non-discrimination in case of payment is void, even if the contract condition has been deemed compatible with competition law.

However, in the case of contracts concluded before 2 March 2018 and complying with the competition rules, article 6 shall be applied from 23 March 2020. The reason for this is to give companies time to adjust existing contracts.

Concluding remarks

As the geo-blocking regulation does not mean companies are obliged to deliver throughout the EU, the provision on access to goods and services may have the greatest practical significance in terms of electronically supplied services and services received by the customer in the country where the company operates.

In addition, the geo-blocking regulation contributes to increased price transparency in the EU. The regulation also reinforces the prohibition on restricting passive sales and contributes to the strengthening of the free movement of goods and services within the EU's digital single market.

Do's & Don'ts vid internationell lansering av e-handel

About Delphi

Delphi is a progressive law firm with expertise and deep business strategic understanding. By combining strong competencies and knowledge of business, we tailor our service, expertise and offerings to our customers' needs. Our customers are mainly located in Scandinavia, Europe and North America. We also cooperate with law firms around the world and often assist clients in international cases. We have a total of 195 employees, including more than 150 lawyers. Our offices are located in Stockholm, Gothenburg, Malmö, Linköping and Norrköping.

www.delphi.se/en​​​​​​​


This is the third article on e-commerce law.
​​​​​​​Read the other two articles here:

Partner and Attorney at Delphi, Agnes Hammerstrand, goes through some common mistakes and what to consider from a legal perspective before launching an e-commerce business internationally.
The EU's Digital Single Market Project – what does it mean? The lawyers Agnes Hammerstrand and Marielle Eide-Westholm explain the new consumer rules.

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