According to the European Commission, 38 % of online retailers use "geoblocking", a technique that basically hinders or totally blocks purchases from abroad.
Mainly digital content issue
Since May 2015, Europe has been investigating "geoblocking". "This technique prevents European consumers from buying goods and digital content online from another EU country", a first report states. A survey with 1,400 companies shows that 38 % of web shops surveyed (mainly sellers of shoes, clothing, sporting equipment, consumer electronics and digital content) uses some form of geoblocking.
“Usually, geoblocking is used by refusing shipping abroad", the European Commission says. "Other methods are refusal to accept foreign payment methods and, to a lesser extent, rerouting or website access blocks." Often, the web shop owners choose to geoblock, but in 12 % of the cases the restriction to not sell abroad comes from a supplier. For digital content, like pictures, eBooks and music, that number grows to 68 %, nearly 7 in 10.
Breach of competition legislation?
"The information gathered as part of our e-commerce sector inquiry confirms the indications that made us launch the inquiry: Not only does geo-blocking frequently prevent European consumers from buying goods and digital content online from another EU country, but some of that geo-blocking is the result of restrictions in agreements between suppliers and distributors", Margrethe Vestager, European Commissioner in charge of competition policy, said.
The question remains whether these policies are acceptable and the answer is not as straightforward: “Where a non-dominant company decides unilaterally not to sell abroad, that is not an issue for competition law", Vestager said. In short: you cannot force a small web shop to trade across borders against its will.
"Where geo-blocking occurs due to agreements, we need to take a close look whether there is anti-competitive behaviour, which can be addressed by EU competition tools." In other words, this type of deals could hinder an internal market's competitiveness and that is a breach of EU legislation. Whether that is actually the case, will have to decided on a case-by-case basis.