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Geo-blocking is the practice used by online sellers to restrict or deny access to websites from other countries. For example, a consumer from another country may be rerouted from a brand’s main website to the consumer’s country specific website, or may be granted access to a website as a whole but is unable to access certain products or services, or is asked to pay with a bank card from a particular country.
Fashion brands and online sellers with multiple national websites often restrict or deny access to consumers in order to partition geographical markets or as part of pricing policies.
Geo-blocking is a widespread practice across the EU. Indeed, 90% of participants of the European Commission’s e-commerce sector inquiry and geo-blocking consultation responded that they had experienced geo-blocking when shopping online.
In an attempt to address these barriers affecting the European e-commerce market, the European Commission has proposed a new Regulation to ensure the consumers wishing to buy products (or services) in other EU member states are not discriminated against by reference to their nationality, country of residence, or establishment within the EU.
The proposed Regulation seeks to ensure that consumers will not be discriminated against in respect of access to prices, sales or payment conditions, unless there is an objectively justified reason for doing so. The three main elements of the proposed Regulation are:
Brands and online sellers who infringe the Regulation will be subject to penalties.
In addition, the proposed Regulation provides that agreements imposing obligations on traders, in respect of passive sales, to act in breach of the proposed Regulation will automatically be void.
Following approval by the European Parliament and the Council of Ministers, the European Commission envisages the Regulation coming into force in 2017.
Given the above, the clock is ticking for brands and online sellers within the EU to revise their distribution policies to avoid infringing the Regulation.