Consumers can no longer automatically be diverted to another website or be blocked from visiting a website abroad. The European Parliament reached an agreement on this issue and the ban will probably go in effect later this year.
“63 % of purchases abroad fail because of geoblocking”
Everyone who visits a website or web shop abroad, is often automatically diverted to the web shop of the country closest to his location. The content of many web shops abroad are therefore invisible and unreachable to European consumers. This results in limited cross-border shopping, particularly for e-commerce.
European Parliament has now decided to end this practice called geoblocking once and for all. Companies could in some cases recognize a surfer’s location and use that to deny certain content or to divert the user to another website. Even if there was no location were recognized, consumers could be blocked or diverted based on their address or credit card information, according to the EU.
“About fifteen % of consumers buys something abroad online, in another EU country. However, a study by the European Commission says that 63 % of attempts to buy something online in another EU country fail because of geoblocking or discrimination based on country or residence”, MEP Hilde Vautmans (Open VLD) told De Standaard.
Exception for Netflix and others
Geoblocking allowed companies to charge different prices based on their location, but that is no longer allowed. The European Commission already filed a proposal in 2016 to halt geoblocking and it has now finally voted on the issue. “A milestone for the internal European market”, Belgian MEP Anneleen Van Bossuyt (N-VA) said. Both the left and right are largely unified in their opinion on the matter.
The decision fits the EU’s goal to create a single market, with free trade as the prime objective. The European Union wants to stimulate cross-border shopping and international retail, because it believes this will strengthen European retailers and that they will be better able to cope with major competitors from other companies.
There is however one exception, for anyone who sells digital and audiovisual content, such as e-books, movies, music, computer games and more. Services like Netflix and Amazon Prime can still withhold certain content from certain countries and regions. Retailers can also not be forced to ship physical goods anywhere in Europe. The EU will reevaluate its exceptions in 2020.
Own consumer legislation to be applied
It is still possible to divert online users to local websites, but this has to be clearly indicated and consumers have to have the opportunity to refuse the referral. In other words, anyone who locates a cheaper product in Portgual, should be able to buy it as well.
Companies focused on international trade will be able to operate within their own country’s legislation, unless they choose to target a specific market: “a Belgian store will simply be able to apply Belgian consumer legislation”, it is said. Prior to the enactment of this new legislation, the European member states also have to formally approve it. The legislation should be enforced before the end of the year.
