EU prepares to end geoblocking in online sales of goods and services

Websites will have to offer the same goods and services to customers wherever they live in the EU

Whether they're delivered in parcels or in data packets, goods and services should be available to all European Union citizens wherever they live.

That, in a nutshell, is the purpose of a long-promised host of new legislative proposals unveiled by the European Commission on Wednesday as part of its plan to make the EU a "digital single market."

Among the proposals is a ban on unjustified geo-blocking, or using a citizen's location as an excuse not to deliver digital services or sell them physical goods.

But forcing companies to deliver without discrimination "is like putting a sticking plaster on a broken leg," according to John Higgins, director general of industry lobby group Digital Europe.

That's because geoblocking is a symptom of the problem, not the cause, he said. Despite decades spent harmonizing legislation across EU member states, the 28 countries still have different laws on copyright, consumer rights, tax and electronic waste disposal -- not to mention different languages, living standards and consumer habits.

"If we really want to develop a digitally powered single market the EU needs to address the root causes of the fragmentation," he said.

The Commission wants to put an end to practices such as charging different prices for theme park tickets depending on the country of origin of the buyer, or showing visitors to an online store different product ranges depending on where they live.

It also wants to reduce disparities in shipping costs by increasing transparency and competition in the market for parcel delivery services. Sending a parcel across a national border -- even an internal EU one with no customs barriers -- can cost five times as much as sending the parcel on a comparable journey within the same country, while the cost of sending a parcel from Spain to the Netherlands can be two-and-a-half times that of sending the same parcel the other way.

But the Commission's draft law has some curious gaps.

It seeks to eliminate geographical sales discrimination by making businesses sell online to all-comers, and to cut the cost of cross-border deliveries -- but does not mandate that businesses deliver goods ordered online everywhere in the EU.

For example, under the draft law, Belgians will be entitled to order a refrigerator on a German website and collect it at the trader's premises or organize delivery themselves to their home -- but the German website will have no obligation to deliver to Belgium.

When it comes to payment, too, some kinds of de-facto geographical discrimination will be allowed. If a website accepts, say, Visa cards, it must accept them wherever in the EU they were issued. But it will still be allowed for a Belgian website to only accept payment via the country's national payment card system, Bancontact, effectively preventing residents of other countries from buying anything.

Some hope that market forces will be just as effective as regulation when it comes to breaking down national barriers to delivery: Amazon.com is hoping to recruit more small businesses to its fulfillment platform by handling many of the cross-border logistical platforms for them.

The Commission's proposed regulation is far from becoming law. It still needs the support of member states' governments, meeting as the Council of the EU, and of the European Parliament. That could happen by some time next year, although the Commission suggests some provisions not take effect until July 2018, to give businesses time to prepare for the changes.

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Peter Sayer

IDG News Service
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