EU policy makers should endorse online merchants’ right to economic and contractual freedom in the ‘geo-blocking’ debate

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In light of the current discussions on ‘geo-blocking’, Ecommerce Europe wants to draw the attention of European legislators to the importance of recognizing online merchants’ fundamental rights to economic and contractual freedom and freedom of entrepreneurial activity based on reasonable grounds. This also means that an individual company may decide not to sell or deliver to a consumer in another Member State or apply a different price for the same product sold online.

“European policy makers should take into account that consumer differentiation – based on location – does not mean consumer discrimination per se. A differentiation in price and conditions can be justified under the so-called ‘objective criteria’ of Article 20.2 of the Services Directive,” declared the Secretary General of Ecommerce Europe Ms. Marlene ten Ham. “Nevertheless, Ecommerce Europe believes – in principle – that consumers buying products and/or services online should not be subject to restrictive business practices when there are no grounds for the seller to do so,” Ms. ten Ham added.

How geo-blocking should be defined and how to deal with it

In its newly published position paper, Ecommerce Europe stresses that new legislation on geo-blocking is not strictly necessary, given that unjustified practices could also be addressed by better enforcement and clarification of already existing legislation, particularly Article 20.2 of the Services Directive (the principle of non-discrimination). Should new legislation emerge, however, Ecommerce Europe urges the European Commission to base this on an appropriate definition of geo-blocking, ensuring that only unjustified practices will be forbidden.

Thus, a new legislative proposal should focus mainly on the issue of geo-blocking stricto sensu, or ‘in the strict sense’. In the view of Ecommerce Europe, this occurs when access to a web shop is totally blocked based on the location of the consumer without legal justification – age restrictions for minors, for example – or when a consumer is forcibly rerouted without having the choice to go back to the website which he or she prefers. In principle, Ecommerce Europe considers the above-mentioned practices as unjustified, unless the trader has legal grounds to use them.

Practices that should not be considered geo-blocking stricto sensu

Ecommerce Europe does not consider it geo-blocking stricto sensu when an online merchant reroutes consumers while giving them the option to return to the initial website if they prefer to do so. Online merchants mostly reroute to give consumers a better, tailor-made shopping experience – for instance, in their own language and currency. Ecommerce Europe views this practice as personalization, not discrimination.

Differentiation in price and conditions for the online sale of the same product or service – based on the location of the consumer – should also be considered justified if supported by objective reasons, such as differing legal frameworks across the EU or fraud risks linked to online payments. Ecommerce Europe thus asks European legislators to create, in consultation with the e-commerce industry, a clear set of guidelines on which practices are always allowed and justified. This would create more legal certainty for online merchants and, in turn, boost the growth of cross-border e-commerce.

An obligation to sell to every EU consumer?

Ecommerce Europe understands that a policy option being considered by the European Commission is to oblige online merchants to sell to everywhere in the EU, but with the right for the trader not to deliver everywhere. European policy makers should pay careful attention to the effects that this obligation would have on the e-commerce sector. In practice, it could only work if the online trader is obliged to sell to every consumer in the EU, with the caveat that the consumer accepts having the product delivered within the geographical area covered by the merchant. In any case, Ecommerce Europe considers that forcing online merchants to deliver everywhere in the EU would be a nonsensical and unreasonable option.

For a detailed overview of Ecommerce Europe’s recommendations on geo-blocking, please click  here  to read the full position paper.

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