E-commerce is developing at an unprecedented pace. More and more traders are using electronic shops to provide a variety of goods and services. The pandemic further accelerated this process, expanding the possibilities for concluding contracts in a digital environment—from the sale of groceries and clothing to insurance and services.
In this article, we will focus on one of the most important trends and regulations in European online trade—the ban on unjustified geo-blocking.
What is Geo-blocking?
Geo-blocking is a practice in which a customer's access to a trader's online interface is blocked or restricted (through technological or other means). This restriction is based on the customer's:
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Nationality;
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Place of residence;
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Place of establishment.
Usually, geo-blocking is applied as a unilateral decision by the trader to restrict access to a specific market. However, this creates artificial barriers to free cross-border contracting within the European Union.
Legal Framework and Basic Concepts
The legal framework for this prohibition is contained in Regulation (EU) 2018/302 of the European Parliament and of the Council. Its aim is to overcome unjustified geo-blocking and all other forms of discrimination within the internal market of the EU.
To correctly understand the Regulation, we must examine the three main terms it uses:
1. Customer
For the purposes of the Regulation, a customer can be:
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A Consumer: A natural person who is a national of, or has their place of residence in, a Member State of the EU.
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An Enterprise: A legal entity established in the EU that receives goods or services for end use. This means that the rules also apply to business-to-business (B2B) relations.
2. Enterprise
Although the Regulation does not provide an explicit definition, according to the case law of the Court of Justice of the EU, the concept is interpreted functionally as: "any entity engaged in an economic activity, regardless of its legal status and the way it is financed."
3. Trader
This is any natural or legal person (publicly or privately owned) who is acting for purposes relating to their trade, business, craft, or profession.
Important: The Regulation applies both to traders in the EU and to traders established outside the EU, as long as they sell goods and services to customers located within the territory of the Union.
When does the Regulation NOT apply?
The ban on geo-blocking does not apply in purely domestic situations—that is, when all elements of the transaction are confined to a single Member State. Example: A Bulgarian trader sells goods to a Bulgarian customer, where the order, delivery, and payment take place entirely within the territory of Bulgaria.
Rules for Redirection and Access to Websites
There is no barrier for a trader to maintain different websites for customers from different countries (e.g., .bg for Bulgaria and .at for Austria) with different content, prices, or promotions.
However, what does the law prohibit?
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The trader cannot automatically redirect the customer to another version of the site without their explicit consent.
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Even if consent is given, the original version of the interface must remain easily accessible.
Example: If the Austrian version of the site offers a wider choice of models or better prices than the Bulgarian one, the Bulgarian customer must be completely free to access the Austrian page and make a purchase from it under the exact same conditions.
Exceptions to the rule
Restricting access or automatic redirection is permissible only when necessary to ensure compliance with a legal requirement (national or European). In such cases, the trader is obliged to provide a clear and specific explanation of the reasons in the language of the online interface that the customer initially sought to access.
Offline Services and Delivery Conditions
The prohibition of discrimination also applies when the service is provided outside an electronic environment. Example: A Spanish website sells tickets for an exhibition in Barcelona. Every EU citizen has the right to purchase a ticket under the exact same conditions as local citizens.
Regarding delivery: If a trader generally delivers goods only within the territory of Italy, they are not obliged to organize international delivery to Bulgaria. However, the customer from Bulgaria has the full right to order the goods (without being geo-blocked) and pick them up from an address in Italy in the same way an Italian citizen would. The essential point is that there must be no discrimination in the refusal to sell itself.
Prohibition of Discrimination in Payments
According to Article 5 of the Regulation, geo-blocking is strictly prohibited concerning payments as well. Once a trader has announced that they accept certain payment methods (e.g., a specific brand of credit card or bank transfer), they cannot apply a different approach to customers simply because their card was issued in another Member State.
Of course, this does not override the trader's right to withhold the delivery of the goods until they receive official confirmation that the payment has been successfully completed.