A lot will change for online store providers from December 3, 2018. This is because the European Union’s Geo-blocking Regulation(Regulation (EU) 2018/302) will then come into effect. The following article shows exactly what is changing and what precautions need to be taken.

What is geoblocking?

Geoblocking is the targeted forwarding, blocking or restriction of access to content based on the assignment of the Internet user to a specific country and the legal situation applicable there. For example, if content is freely accessible in the USA but protected by copyright in Germany, geoblocking allows the user to block access to this content in Germany by assigning the user’s IP address. For a long time, this was the case with music titles on the YouTube platform. These were blocked for German users due to GEMA’s exploitation rights. Another example: the live stream of public broadcasters can only be accessed via a German IP address.

Geo-blocking and online stores

However, geo-blocking is not only used in the representation of copyright interests. It is also used in the area of online stores. If a user from abroad, for example from Italy, accesses a German online store and the provider offers both a German and an Italian online store, the IP address is read and the user is forwarded directly to the Italian online store.

What is regulated by the Geo-blocking Regulation?

The Geo-blocking Regulation intervenes at this point and puts a stop to geo-blocking in online stores. According to Recital 6, the aim of the Geo-blocking Regulation is to..,

[…] to prevent discrimination based on customers’ nationality, place of residence or place of establishment, including geo-blocking, in cross-border transactions between supplier and customer in relation to the sale of goods and the provision of services in the Union.

This means that the automatic redirection, blocking or access restriction described above is to be abolished in principle by the new Geo-blocking Regulation in connection with online stores. In future, customers will be able to choose for themselves which version of the online store they wish to access.

The customer must not only expressly agree to use a different language version than the “original” version. They must also be able to return to the version they originally used without great difficulty, in particular to withdraw their prior consent (recital 20). The freedom of choice of the consumer, or in this case the customer, which is always upheld in EU law, therefore exists.

According to the regulation, “customer” should also include companies as well as consumers. The B2B sector should also be explicitly covered if the customer is a company established in a Member State and uses services or purchases goods within the Union and exclusively for end use or intends to do so.

Geo-blocking should only continue to be permitted in exceptional cases. This applies to cases in which Union law provisions or national provisions that comply with Union law would otherwise conflict. This always becomes relevant when copyright-protected works are offered or made available (see YouTube example). The provider must then clearly explain to the customer, in the language of the online user interface that the customer previously wanted to access, why access is being blocked, restricted or forwarded.

Do I still need multilingual online stores at all?

The Geo-blocking Regulation does not prevent a provider from operating different country stores. In principle, these may also be based on different, i.e. country-specific, general terms and conditions. This applies in particular to the different determination of net sales prices. It can therefore still be attractive to operate multilingual online stores with different general terms and conditions.

Nevertheless, the exceptions listed in Art. 4 (1) of the Geo-blocking Regulation must also be strictly observed here. In cross-border situations, the supplier must also offer the goods or services under the same conditions if the customer wishes to do so,

• to purchase goods and collect them themselves or have them delivered to a location agreed with the supplier to which the supplier generally delivers according to its general terms and conditions,
• to obtain electronically supplied services from the provider that do not constitute or provide access to copyrighted works (examples: cloud services, data warehousing, web hosting, the provision of firewalls and the use of search engines and internet directories (recital 24)) or
• to receive services other than electronically supplied services from a supplier at a physical location in the territory of a Member State where the supplier operates (examples: Hotel accommodation, sporting events, car rental or tickets for music festivals or amusement parks (recital 25)).

The conditions in all general terms and conditions used must therefore be the same.

What precautions do I need to take for my online store?

If multilingual online stores are operated on the website, it must first be checked from a legal perspective whether the geo-blocking prohibition applies or may be upheld as an exception, for example when offering copyrighted content.

The next step is to set up technical options that take into account the customer’s consent to be redirected to another online store as well as their freedom of choice. According to recital 20, the provider should not be obliged to obtain the customer’s consent every time. Once a consumer has given their explicit consent, including by indicating a preference in a personal user account, this explicit consent should be considered valid for all their future visits to the same online user interface. In particular, the data protection-compliant use of cookies can be considered here.

At the same time, the general terms and conditions should also be reviewed in order to avoid a collision with the provisions of Art. 4 para. 1 Geo-blocking Regulation.

Action by the store operator required

Online store providers need to take precautions and make technical changes by December 3, 2018. The provisions of the Geo-blocking Regulation can probably be classified as market conduct rules within the meaning of Section 3a UWG. If the regulation is not complied with, there is therefore a fundamental risk of being warned by a competitor under competition law.

At the same time, there should be no reason to panic. Apart from the technical and legal conversion of your own website, there are hardly any changes to come in terms of the scope of services as a provider. No provider is now obliged to conclude a transaction with every customer (recital 18), let alone forced to deliver to the entire EU. Providers may continue to limit their service radius to the countries of their choice. According to recital 23, delivery beyond this can be made at the customer’s expense.