In anticipation of the UK’s withdrawal from the European Union, the European Commission has released a Notice to Stakeholders on the impact of Brexit on the incoming rules on geo-blocking (the “Notice“).
The Geo-blocking Regulation (Regulation (EU) 2018/302) was adopted by the EU on 27 February 2018 and will apply from 3 December 2018 (see our blog here), prohibiting online sellers (from the EU, UK or any other third country) who direct sales to customers in an EU Member State from discriminating against customers elsewhere in the EU based on their nationality or residence. In particular, traders cannot re-route customers, block or limit access to their websites, apply different terms and conditions of sale or place restrictions on the means of payment they accept because of a user’s nationality or residence. The Regulation applies to both B2C and B2B sales.
The Notice suggests these protections will no longer apply to UK customers post-Brexit. It suggests that UK customers could be subject to various discriminatory practices by online traders, for example:
- UK customers wishing to access websites in the EU, could be blocked, limited or redirected to a specific version of a trader’s website which may differ from the website the customer initially sought to access;
- UK customers may face different terms and conditions to EU customers when purchasing goods and services from EU traders; and
- Individuals using UK-based payment methods may be denied the ability to complete a purchase or subject to different payment conditions to those applying to EU payments.
Meanwhile, UK traders would still have to abide by the Geo-blocking Regulation when selling goods or services to customer located in the EU.
We think this conclusion is likely to be wrong even in a “no deal” Brexit scenario.
Whilst the Notice is technically correct in that the Regulation itself will cease to apply directly to the UK, it fails to consider the impact of the draft EU (Withdrawal) Bill (the “Withdrawal Bill“), under which all EU regulations in force before the exit date will be transposed into UK law. The Withdrawal Bill also makes provision for any “deficiencies” in EU legislation to be corrected so it continues to operate effectively: for example, the definition of “customer” in the Geo-blocking Regulation could be extended to include UK citizens and residents.
Assuming that the Geo-blocking Regulation would be replicated in UK law, UK customers will therefore continue to benefit from the protections in the Geo-blocking Regulation as if the UK was still a member of the EU. Any trader selling into the UK will be prohibited from discriminating against UK customers when compared with EU27 customers.
Conversely, in the version of the Geo-blocking Regulation that will apply in EU27 jurisdictions, in the absence of a deal the UK will not be classed as a Member State and, from the withdrawal date (or end of any transition period), EU27 citizens and residents will no longer be protected from “geo-discrimination” between EU and UK customers. As a result, it may be possible for online traders to offer better terms to UK customers than EU27 customers without falling foul of the Geo-blocking Regulation.
Although the final outcome will depend on the terms of the Withdrawal Bill, as things currently stand, contrary to what the Notice suggests, Brexit may result in UK customers being afforded better protection from geo-blocking than EU27 customers.
The Notice can be read in full here and the Geo-blocking Regulation is available here.