It should shortly become more feasible for consumers to affect online cross-border purchases should a recently proposed law presented by the European Commission become binding.
The legislative package being proposed seeks to achieve a tri-fold objective: addressing unjustified geo-blocking and other forms of discrimination, making cross-border parcel delivery more affordable and efficient and boosting consumers’ confidence by ensuring the enforcement of their rights.
Online sellers sometimes use practices known as geo-blocking to deny access to websites to consumers in other member states or to prevent such consumers from purchasing a particular product or service. Rerouting a consumer back to a country-specific website is a common practice as it obliges consumers to pay with a debit or credit card from a certain country.
The Commission now wants to ensure that consumers are never discriminated against on account of their nationality or place of residence when they seek to purchase a product or service. The proposed law makes provision for specific situations when geo-blocking or other forms of discrimination cannot be justified. Thus, when a customer buys a product which the trader does not deliver cross-border to the customer’s member state, the said customer would still be entitled to delivery to a specified address in the country of the trader in the same way as local customers.
Similarly, a consumer who purchases an electronically-delivered service, such as cloud services, data warehousing or website hosting cannot be discriminated against on account of his nationality or place or residence.
The same applies to situations when a customer buys a product/service which is supplied in the premises of the trader or in a physical location where the trader operates, such as concert tickets, rental of summer accommodation and car hire. In all these cases, it is only where a national or EU legal requirement obliges the trader to block access by non-residents to the particular product or service – such as a legal prohibition to sell alcohol to non-residents – can geo-blocking or geographically-based discrimination be allowed.
While traders remain free to accept whatever means of payment they prefer, the proposed law includes a specific provision on non-discrimination once a decision by the trader is made. Different treatment is prohibited if three conditions are fulfilled, namely, that payments are accepted through electronic transactions by credit transfer, direct debit or card-based payment instrument; the trader can request strong customer authentication by the payer; and the payments are in a currency that the trader accepts.
In practical terms, this means that if a trader accepts payment via a MasterCard from Spain, then he is obliged to accept a payment via a MasterCard from Malta too. However, if a trader only accepts cards from a specific payment brand such as Bancontact in Belgium, he would not be obliged to accept German cards which only work within the Girocard payment brand.
The Commission is not proposing a cap on delivery prices at this stage
The proposed law will bind all traders offering their services/products to consumers in the EU, regardless of whether such traders are established in the EU or in a third country.
Another law which forms part of the legislative package being proposed seeks to increase price transparency and regulatory oversight of cross-border parcel delivery services. Consumers often complain that parcel delivery issues such as high delivery charges in cross-border shipping, discourage them from affecting cross-border purchases.
The newly-proposed law increases the regulatory oversight of all parcel delivery service providers. Parcel delivery providers that have 50 or more employees, or are active in more than one EU country, will be required to send national postal regulators basic information about their operations together with annual updates on volumes, turnover and the number of employees.
In this way, regulators will be able to monitor the operations of such service providers more effectively. The proposed law also ensures that there is more price transparency by obliging universal service providers to publish domestic and cross-border prices for a set of basic services, such as sending a 3kg parcel to another country. Postal regulators will be required to assess the affordability of such services and their conclusions will be published on a website. Universal service providers are also being required to offer transparent and non-discriminatory third party access to multilateral cross-border agreements, in particular those on terminal rates and this in order to stimulate competition in cross-border parcel markets.
The Commission is not proposing a cap on delivery prices at this stage. However, it has announced that it will take stock of progress made in 2019 and assess if further measures are necessary.
Another simultaneous legal initiative being taken by the Commission is that of revising the current Consumer Protection Cooperation Regulation. This regulation provides a legal framework to support national consumer authorities when they address breaches of consumer rules in more than one country. The proposed rules will endow national authorities with more powers in order to ensure that the rights being given to consumers are safeguarded.
Statistics show that only 37 per cent of websites allow customers shopping from another EU country to reach the final step or offer equally advantageous prices to all customers irrespective of where they are located within the EU. Such practices have no place in a truly single market as the EU boasts to be. It is therefore of the utmost importance that legislative measures which eradicate any effort by traders to create barriers to trade within the Union are enacted and effectively enforced.
mariosa@vellacardona.com
Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.