Geoblocking, which is the practice of denying access to websites, content or online services based on the geographic location of the user was the focus of the first round table discussion at the Consumer and Competition Day held in Luxembourg last month.
Despite the possibility for European consumers to buy goods or services they need online, only 15 per cent make their purchases online in EU countries other than their country of residence.
Geoblocking is considered one of the barriers hindering consumers from fully exploiting the benefits of electronic commerce. Consumers are confronted with location clauses that prevent access to digital content from different countries.
In a video message during the conference, Vera Jourova, Commissioner for Justice, Consumers and Gender Equality, said the laws that prevent geoblocking need to be better enforced.
In fact, geoblocking breaches the principles of the internal market, which forbids discrimination on the grounds of nationality or place of residence for access to a service within the EU. Johannes Laitenberger, director general, DG Competition, said that according to studies carried out in this area, if all suppliers’ restrictions were to be removed, online selling would increase by 10 per cent.
Geoblocking may take several forms. For instance, a person is denied access to a website because the user’s IP address is from a different country.
Geoblocking also takes place when bank cards from other countries are not accepted as a method of payment. Geoblocking is sometimes used by suppliers to enforce price discrimination, forcing users to buy products from the local agent rather than directly from the manufacturer or mother company. In such instances, consumers are re-routed to another website or to the local agent where the consumer resides.
Another form of geoblocking occurs when delivery of goods is not available in the consumers’ home country. Copyright law also generates geoblocking. Hence, in order to abolish this barrier there is the need to create common copyright laws.
From the perspective of European businesses, Guido Lobrano, deputy director, Business Europe, explained that businesses do not always want to discriminate but they often have no choice.
He said: “Geoblocking is the consequence of dysfunctionality in the internal market.”
There are different elements, beyond the businesses’ control, contributing to geoblocking, such as additional costs for traders to deliver products in specific countries. This would increase the price of the product that would make it unattractive to cross-border consumers.
Other factors include different interpretations by member states of European legislation, the existence of different rates of VAT in different member states and different currencies in countries not members of the eurozone. Mr Lobrano also mentioned the different standards in different countries that make it very difficult for companies to offer the same product at the same price.
odette.vella@mccaa.org.mt
Odette Vella is senior information officer, Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.