E-commerce in EU: contradiction to idea of common market

 

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08.03.2018

The European single market is characterised by the free movement of goods, services, capital and labour, but the same is not true of e-commerce. Merchants operating in one member state will block their online services or allow limited access to their goods and services for consumers and businesses in other member states. To fight these widespread and discriminatory practices, the European Commission has submitted a proposal for a Regulation of the European Parliament and of the Council on addressing geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC. Early fruits of the draft Regulation are expected in 2018. This article explores some of the obstacles to e-commerce and the changes the new Regulation will bring.
 
Online shopping is very popular with EU nationals – 68% of Internet users or 57% of EU nationals did their shopping online in 2017. And this shopping is not restricted to their home country – one third of online shoppers purchased goods and services from other member states in 2017.
 
Common restrictions on e-commerce
 
When shopping online from websites of other member states, consumers and businesses are likely to face restrictions that prevent them from making a purchase – discrimination based on nationality, place of residence, or place of establishment (known as geo-blocking). 63% of websites do not allow purchases from other member states, thereby artificially fragmenting the EU internal market. Consumers are facing countless restrictions in the digital environment, for example:
  1. A Belgian consumer wants to buy a book from a German site, adds the item to their basket, and clicks the Buy button only to see the message You are being redirected to the Belgian page of this site. Thus, when in Belgium, the consumer is unable to buy the book from the German site, and on the Belgian site the book is either unavailable or available at a higher price.
  2. A Czech consumer wants to book a hotel in Finland, selects the best fit in the centre of Helsinki and is ready to make a prepayment, but the Finnish site does not accept credit cards issued in the Czech Republic.
  3. An Estonian consumer orders a sports bag from an Italian site, but there is no delivery to Estonia, and the closest country it can be delivered to is Poland.
 
A solution at EU level: implementing a new Regulation
 
To fight online geo-blocking and to encourage a single digital market, the new Regulation will prohibit merchants from setting up discriminatory general terms, including for pricing, payment, and delivery.
 
Also, to improve the availability of information about goods and services on the internal market and to enhance transparency, including prices, merchants will be prohibited from denying consumers from different member states a complete and equal access to their websites through technological measures. Such measures are technologies used to determine the consumer’s physical location according to their IP address, GPS coordinates, or payment details.
 
Thus, adopting the new Regulation means that an Italian family will not be redirected to an Italian site and will be able to buy a trip to a French amusement park from a French site, while a Bulgarian consumer will be able to receive goods from a German site in Bulgaria.
 
Will all the obstacles be eliminated?
 
Despite significant benefits the new Regulation has to offer, not all of the obstacles associated with geo-blocking will be eliminated.
 
Geo-blocking is common among television and radio streaming service providers. For example, the Danish minority in Northern Germany have limited access to television programmes in Danish. However, adopting the new Regulation will not solve this problem because the Regulation does not apply to streaming service providers.
 
Likewise, the new Regulation will not affect service providers that sell, provide access to, or allow customers to use copyrighted material in intangible form, such as e-books, computer games, and online music.
 
The good news is that the European Commission is to review the proposed Regulation in late 2020. Let us hope that the lack of rules on copyrighted material and its implications will not be ignored.

 

 
Contacts
Elina Andrijevska
elina.andrijevska@pwc.com
Tel: +371 67094400
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