DSM and E-Commerce – Opening Up Cross-Border Competition

shutterstock_145223074On 24 September the European Commission launched a public consultation into geoblocking and other geographically-based restrictions to shopping and accessing information in the EU. Every ecommerce business now has until the end of December to make their case on what constitutes justified geoblocking. Consumers and consumer groups, who have generally been critical of geoblocking, have also been invited to weigh in. Importantly, the consultation explicitly excludes geoblocking-related copyright or licensing practices.

Geoblocking is a clear priority for the Commission with Ansip taking the lead in ecommerce, with legislative proposals for both expected in the first half of 2016.

As the Commission has made clear, the consultation is looking into practices such as blocking access to websites or content, denying the possibility to purchase, or differentiating in prices on the basis of location. The consultation aims to ascertain whether any of these practices can be justified; whether they represent an obstacle to the integration of the Digital Single Market; how unjustified geoblocking can be addressed; and the eventual impact of policy instruments on consumers and businesses.

Companies who currently employ geoblocking will have to draft clear, compelling arguments based on hard evidence than can prove that abolishing geoblocking would be unsustainable for their business. This will be a difficult balancing act. Arguments for geoblocking have included higher costs associated with cross-border transportation and multilingual trading to legal and jurisdictional uncertainties. It is still an open question and something of a grey area as to whether admitting to discriminating against customers based on nationality or residence is or can be justified, and this is something that the forthcoming regulations will seek to clarify.

The Commission will want to balance the protection of consumers’ rights with helping businesses thrive. This is why it is crucial that traders develop a calibrated response to the consultation and engage early with European lawmakers and consumer groups alike. A failure to get it right will risk an end to many forms of geoblocking, which may have a disproportionally adverse effect on businesses for perhaps limited incremental benefits for consumers or for the completion of the Digital Single Market.

Jan Hueckmann is a consultant at FTI Consulting in Brussels.


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