In cooperation with the Dutch Presidency of the Council of the European Union, Ecommerce Europe held a high-level round table on the geo-blocking debate at the Permanent Representation of the Kingdom of the Netherlands to the EU on 26 April. The event gave attendees the opportunity to discuss and elaborate on the main features of the European Commission’s upcoming legislative proposal. This Ecommerce Europe initiative is the first round table of many to come, covering other e-commerce related topics.
Designed to facilitate a high-level stakeholder discussion ahead of the publication of the proposal on 25 May, the event was attended by representatives from the Dutch Permanent Representation to the EU, the Director for the Digital Economy and Coordination in the Commission’s DG CONNECT Mr. Gerard de Graaf, representatives from DG GROW, Members of the European Parliament Ms. Kaja Kallas and Ms. Julia Reda, and e-commerce/business stakeholders and a representative from BEUC, the European Consumer Organization.
DG CONNECT presents Commission’s plans on geo-blocking
In his opening remarks Mr. Gerard de Graaf reflected on the Commission’s position on the geo-blocking debate providing participants with a preliminary insight of the upcoming proposal. The Commission will only target unjustified geo-blocking practices, and Mr. de Graaf revealed that it would not address geo-blocking based on legitimate reasons resulting from constraints posed by the Single Market. He conceded that, while there are no physical borders in the digital economy, there are still considerable differences in VAT regimes, legal frameworks and the parcel delivery sector. That is why, in the view of Ecommerce Europe, such geo-blocking practices based upon legitimate reasons should continue to be considered acceptable and justified.
“Businesses want to sell. The more progress we make in eliminating burdens, the more reasons to geo-block will become unjustified”, declared Mr. de Graaf. In the Commission’s view, it seems that “unjustified” means where there are no legitimate reasons not to sell, so when there are no additional costs or complexities for the business. The proposal (probably a Regulation of 7 articles) will cover those services included within the scope of the Services Directive and the e-Commerce Directive including, amongst others, online and offline sales of tangible goods and services. The legislative proposal will focus on a few specific areas:
1. Online sales of tangible goods:
For this category of products, the trader will not be obliged to deliver the goods to the country of the consumer, given the potential high costs for shipping. However, the merchant will have to provide the consumer with the same delivery options that a local consumer has. In other words, the trader cannot refuse to sell if the consumer provides for a delivery address in a geographical area already covered by the shop, or if the consumer arranges the pick-up of the goods at a pick-up point of the shop. Apparently, the law of the country of the trader would apply in these cases. However, on this point, participants from the consumer and business side overall agreed that more clarification is needed on which law would apply in such transactions, especially with regards to the Rome I Regulation.
2. Ensure access to electronically delivered services
Consumers will no longer be discriminated against on the basis of their nationality or residence, meaning that they should be able to buy cross-border electronically deliverable services such as cloud services, data warehousing, website hosting, remote system administration, installation of filters, firewalls, banner-blockers etc. The Commission wants to ensure access to these services, because there is no need for physical delivery.
3. Service supply in the premises of the trader or in a location where the trader conducts its business
Merchants should not refuse to sell or differentiate in prices at the same point of sale (website) between consumers based on residence or nationality if the service/product is used/consumed by the consumer at the location of the trader. This is the case, for instance, of car rental services. The Commission’s idea is merchants will still have the freedom to set different prices across different websites of a shop but customers should be free to choose from which website they wish to buy.
Rerouting and non-discrimination in payments
The Commission also explained that automatic rerouting to another website on the basis of the location of the consumer is not a problem as such, however consumers should be given the choice of whether they wish to be rerouted or not. This might mean that the proposal will include a provision that web shops should seek for explicit consent of consumers prior to being rerouted.
Furthermore, the Commission argued that the proposal will tackle discrimination in payments. In practice, merchants will not be allowed to refuse payment instruments (i.e. credit or debit cards) issued in another country if they accept the same type of payment tool issued to consumers in their country. Also, according to Mr. de Graaf, online fraud should not be considered any more as an objective reason to geo-block, as with the Payment Services Directive 2 is supposed to solve this issue.
MEP Kallas: “People do not understand the artificial borders that exist online”
MEP Kaja Kallas declared that people do not understand the artificial borders that exist online and that today there are fewer and fewer justified reasons to discriminate. However, the general view among business representatives was that online shops are still facing overly burdensome regulatory barriers when selling goods and/or services cross-border. A number of participants in the round table insisted on the fact that the Commission’s proposal would probably fail in addressing the underlying causes of geo-blocking, which are mainly legal fragmentation across the EU, complicated and differing taxation systems and VAT rules in the EU and logistics-related issues.
Ecommerce Europe would like to warmly thank the Permanent Representation of the Kingdom of the Netherlands for hosting the event and all participants for their fruitful contributions and looks forward to more discussion rounds in the future.