Geo-blocking refers to practices used for commercial reasons by online service providers that result in the denial of access to websites based in other Member States or, where the consumer is able to access the website, they are still not able to purchase products or services from it. Sometimes the consumer will be re-routed to a local website with different prices or a different product or service. In other such cases, where the sale is not denied, geo-localising practices – where differing pricing structures are automatically applied based on geographic location – are often used to apply differentiated prices to consumers. Geo-blocking is one of several tools used by companies to segment markets along national borders (territorial restrictions). By limiting consumer opportunities and choice, geo-blocking constitutes a significant cause of consumer frustration and of fragmentation of the Internal Market.
Such unfair practices may involve sales of tangible goods, digital content online and provision of online services. They may result, among other reasons, from a unilateral decision by market players, or may be the result of agreements between undertakings to share the market, or of vertical agreements (for distribution rights on a territory). Geographically-based restrictions of supply and differentiations can sometimes be justified, for instance where the seller needs to comply with specific legal obligations or where costs associated with cross-border e-commerce (e.g. in terms of shipment) would be too high for certain types of companies. However, the Commission aims to put an end to unjustified online geo-blocking to ensure that EU consumers and SMEs can take full advantage of the benefits of a single market in terms of diversity and lower prices. Unjustified online geo-blocking as a commercial practice is incompatible with the Single Market.
The Commission will initiate action to put an end to unjustified geo-blocking. It will prepare proposals to tackle unilateral commercial decisions resulting in discrimination against the consumer based on residence. Actions include targeted change to the e-Commerce framework and clarification of the application of Article 20 of the Services Directive, or a review of Unfair Commercial Practices Directive. In parallel, the Commission will launch a Competition Sector Inquiry focusing on the application of competition law in this area.