European Commission launches consultation on geo-blocking and geographically-based restrictions

The European Commission yesterday launched two consultations as part of its Digital Single Market strategy: one focusing on geo-blocking and geographically-based restrictions when online shopping, and the second focusing on the role of online platforms (we discuss the platforms consultation here).

Why is the Commission interested in geo-blocking?

Geo-blocking is high on the Commission’s agenda because it is seen as hindering cross-border EU commerce and frustrating consumers. The Commission argues that “unjustified commercial barriers” exist in cross-border e-commerce, including situations where customers are charged different prices, or offered a different range of products, depending on where they are geographically located – discrimination which the Commission considers unlawful and contrary to the EU’s basic “free movement” principles.

The consultation is the latest in a number of developments in this area and gives the Commission the opportunity to engage with industry and consumers on the impact of geo-blocking across sectors and territories, as well as to seek views on future regulation.

Pay TV investigation

On 23 July 2015, the Commission sent a statement of objections to Sky UK and the ‘Big Six’ major Hollywood film studios, alleging that geo-blocking provisions in their licensing agreements infringe EU competition law. The provisions require Sky to geo-block access to films through its online and satellite pay-TV services outside the UK and Ireland – and may be mirrored in agreements with Sky’s competitors in Europe.

The Commission considers that these agreements eliminate competition between pay-TV broadcasters and give Sky absolute territorial protection. Without these restrictions in its agreements, Sky “would be free to decide on commercial grounds whether to sell its pay-TV services to such consumers requesting access to its services“. In other words, an agreement to geo-block may be anticompetitive.

A Commission investigation is also underway in respect of geo-blocking of PC video games.

Digital Single Market

Following the launch of this investigation, the Commission put geo-blocking at the top of its Digital Single Market strategy. Preventing unjustified geo-blocking is an explicit initiative, which forms part of the aim of achieving better access for consumers and business to online goods and services across Europe.

There is a sense from the Commission that competition law alone is not enough to tackle the perceived problem of geo-blocking – if there is no agreement and/or a company is not dominant, competition law will not bite. The consultation launched yesterday therefore gives the Commission the opportunity to explore how else geo-blocking could be regulated – for example, whether there should be a consumer right to buy goods and content from another member state.

What does the consultation cover?

The consultation contains two sets of questions: one to be completed by customers, the other to be completed by traders. It also distinguishes between businesses buying and selling goods.

The specific questions asked by the consultation aim to draw conclusions on the following:

• The types of geo-blocking that participants consider significant obstacles to the single market
• The importance of different types of geo-blocking in terms of their contribution to the “problem”
• Whether participants have experienced geo-blocking themselves as customers and if they have ever challenged the traders involved
• Whether participants have utilised geo-blocking as traders and how they justify doing so
• Whether participants feel that geo-blocking can be objectively justified in any circumstances
• Participants’ opinions on circumstances in which geo-blocking cannot be justified
• Participants’ opinions on what elements a policy response to geo-blocking should contain
• Whether participants feel SMEs should be exempted from any regulatory measures preventing geo-blocking
• The best policy instrument to introduce geo-blocking regulation at an EU level
• The impact that different types of potential anti geo-blocking measures would have on participants’ activities (positive or negative)

What next?

As with the consultation on platforms, the answers will feed into the Commission’s Digital Single Market strategy and will assist the Commission in forming its legislative proposals to end “unjustified” geo-blocking, which are planned for the first half of 2016.

The Commission is keen to hear from a wide range of industry players, including manufacturers, retailers, rights holders and service providers, as well as individual citizens. Submitting a response is an opportunity to have your voice heard – when is geo-blocking necessary? Are there justifications for it in your sector? Should it be regulated – and if so, how? Now is the time to influence future developments in this area.

The consultation, available here, is open for 12 weeks, closing in late December 2015.

We have a hub dedicated to the Digital Single Market here.