Geo-blocking ban: what’s behind the new EU reg­u­la­tion

The first part of the major geo-un­block­ing campaign came into force on April 1, 2018 with the EU Porta­bil­i­ty Reg­u­la­tion. Providers of fee-based online content services such as Netflix, Spotify, or Amazon Prime are now required to deliver their services to the same extent and in the same quality even if a paying customer is tem­porar­i­ly in an EU member state that does not match up with the place of residence specified in the contract. Re­strict­ing the number of devices that can be used to access the content is also no longer permitted. So if you’re on vacation, doing business, or studying in another EU country, you can enjoy your en­ter­tain­ment services as you usually do.

At the end of 2018, the geo-un­block­ing reg­u­la­tion will of­fi­cial­ly become reality in e-commerce. To date, operators of online stores have had to make every effort to adjust cross-border sales struc­tures ac­cord­ing­ly.

By im­ple­ment­ing the geo-un­block­ing efforts, the EU is strength­en­ing one of its most important core ob­jec­tives: the creation and main­te­nance of free domestic trade. Geo-blocking has been a hurdle in this respect for years, which should finally be overcome by the Reg­u­la­tion (EU) 2018/302 adopted on 28 February, 2018. With few ex­cep­tions, online service and goods providers no longer have the pos­si­bil­i­ty of offering their services only to users from certain EU countries or to set con­di­tions for purchase, delivery, or payment for their services according to residence, shipment, or na­tion­al­i­ty, which has often been the case up to now.

The EU geo-blocking reg­u­la­tion takes effect on December 3, 2018.

The geo-blocking ban mostly applies to providers of fee-based online services. Since web stores in par­tic­u­lar have been using geo-blocking measures, these are now par­tic­u­lar­ly affected. Cloud service providers such as web hosting or online storage services must also get rid of existing regional or country-specific variants from their offers (costs, func­tion­al­i­ty, etc.) or lift the re­stric­tions in order to comply with the new EU reg­u­la­tions.

However, there are also a number of services and content that are exempt from geo-un­block­ing reg­u­la­tions, such as:

• Health services
• Financial services
• Social services that meet certain con­di­tions
• Trans­mis­sion of sport events
• E-books
• Video games

Similar to many current changes in the online world – such as the new General Data Pro­tec­tion Reg­u­la­tion taking effect – the geo-un­block­ing law also causes a lot of confusion and concern among website operators. It is not only a question of whether the ban applies to their own web services, but also to various other issues.

For example, many providers mis­tak­en­ly assume that the reg­u­la­tion means that they have to actively offer their own goods or services in all EU member states. However, this isn’t what the law states. You can continue to address customers in the EU countries of your choice, as long as you don’t redirect them to other sites with different con­di­tions to your site on the basis of their place of residence, their place of business, or their na­tion­al­i­ty.

There is also no oblig­a­tion to deliver to other member states. But if you do not offer to deliver your goods to a certain country, customers from this certain country have the right to order the goods and have them delivered to a place that is within your shipping range.

When it comes to pricing, you also have more freedom than it initially seems: for example, price dif­fer­ences caused by different value-added taxes are allowed. In principle, you are also not obliged to stan­dard­ize prices across the EU and can therefore even offer different net prices in different country stores, as long as this is done in a non-dis­crim­i­na­to­ry manner. How exactly you should justify these price dif­fer­ences, though, is still unclear. However, there will be EU Com­mis­sion guide­lines regarding this in the future.

Enforcing the geo-blocking ban is each member state’s re­spon­si­bil­i­ty, meaning that at least one competent authority has to be des­ig­nat­ed for this purpose. It is also necessary to lay down rules on the measures that need to be taken in case there’s an in­fringe­ment of the law. These must be “effective, pro­por­tion­ate, and dis­sua­sive.” In Germany, for example, the Federal Network Agency is the authority that will ensure that the rules are adhered to. Fines of up to €300,000 ($340,000) can be imposed for in­fringe­ments.

If you operate a fee-based web service and have been using geo-blocking tech­niques, you should start re­design­ing your project now. One of the most important tasks is to de­ac­ti­vate all geo-blocking tech­niques that deny or restrict users from other EU countries access to your service. You should also turn off automatic redirects to other sites based on the user’s IP. Although you can continue to use country versions of your website, customers may only be redi­rect­ed after they have given their consent (e.g. by clicking on a language selection menu). It is also important that a user can switch back to the original version of the website at any time.

As soon as you have adapted the technical area of your website to adhere to the geo-blocking reg­u­la­tions, you should take a look at your general terms and con­di­tions and any legal texts. Check whether these include any clauses that dis­crim­i­nate against users from other EU countries and – if this is the case – delete the relevant passages. If you offer goods or services at different prices for un­der­stand­able reasons (taxes, shipping charges, other national reg­u­la­tions, etc.), you should also explain this in the terms and con­di­tions.

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