Digital Single Market: Commission's new e-commerce package

On 25 May 2016, the European Commission published a major new package on e-commerce. The package comes as the first step in the attempt by the Commission to tackle  so called ‘geo-blocking’ on the sale of goods and digital services, which has been ‘the talk of the town’ during last year or so. The proposal for a regulation addressing geo-blocking is supported by further proposals on increasing transparency of cross-border parcel delivery , strengthening the consumer protection co-operation framework and a Communication on a comprehensive approach to stimulating cross-border e-commerce.

The Commission has put forward its case for the introduction of a new digital e-commerce regime stating that although, the value of e-commerce in the EU is growing, its full potential has not yet been reached. Statistics show that only 15% of consumers within the EU purchase online from another Member State and a mere 8% of companies sell cross-border, while only 37% of websites allow customers shopping from another EU country to access their shops and services. Cross-border purchasing is often too complicated and expensive, but yet it is continuing to grow by 22% a year.

The Commission is taking a fairly subtle approach in drafting the Regulation on geo-blocking, acknowledging that although consumer’s should be afforded the right to access, this does not simultaneously translate to the imposition on traders the obligation to trade across the European Union.

The Commission does not state that geo-blocking is unjustified per se, rather it considers that there are situations where there can be no justified reason for geo-blocking or other forms of discrimination based on nationality, residence or location. For example, a trader of goods or online services is not allowed to use geo-blocking in the following scenarios:

• where a where consumer is able to organise a delivery him or herself; or
• where the customer buys a service which is supplied in the premises of the trader or in a physical location where the trader operates.

The proposal bans the blocking of access to websites and the use of automatic re-routing without the customer’s prior consent, which means that the customers will have more price transparency. This provision also applies to non-audiovisual electronically supplied services, such as e-book, music, games and software.

While the proposal applies to cloud services, data warehousing and website hosting, audio-visual services that are copyrighted are generally excluded from the scope of the Regulation.

Finally, the proposal provides for a principle of non-discrimination in payments. This covers situations where differing treatment is a direct consequence of: the location of the payment account; the place of establishment of the payment services provider; or the place of issuance of the payment instrument.

As stated above, the  proposal is supported by two further proposals on parcel delivery and consumer protection co-operation. The parcel delivery proposal increases regulatory oversight of all parcel delivery services providers, improved price transparency through the publication of the domestic and cross-border prices and the requirement that universal service providers offer transparent and non-discriminatory third-party access to multilateral cross-border agreements. Further, the revised Consumer Protection Co-operation Regulation provides for stronger enforcement mechanisms, whereby national authorities can work faster and more efficiently to address unlawful online practices.

Together with the recent proposals on online consumer contracts and the copyright proposals which are due to be published in September 2016, the Commission’s Digital Single Market package is starting to take shape. While the Commission is employing a strong consumer protection rhetoric, it is also acknowledging that a freedom to trade must remain, whereby traders cannot be forced to operate in the EU. It is recognised that there are still legitimate considerations, such as varying consumer law frameworks, as to why they may choose not to do so. Yet, the Commission is very clearly encouraging traders to engage more cross border, and getting the consumers to be aware of the price levels in other Member States.