On Monday 28 November the Competitiveness Council managed to obtain an agreement of political principle (general approach) on the new rules seeking to put a stop to unfair geo-blocking. Luxembourg and Austria, backed by Poland, voted against the compromise.
It should be pointed out that the draft regulation presented at the end of May obliges traders to make their goods and services accessible to all EU consumers, without discrimination in terms of access to prices, sales or payment conditions (see EUROPE 11558).
Under the terms of the compromise obtained on Monday by the Council of the EU, a trader will not be able to block or limit customers’ access to their online interface on the basis of nationality, place of residency or establishment. Neither will they be able to redirect customers to another online interface without obtaining the customers’ prior and explicit consent. The only exceptions possible will be those relating to objective reasons such as VAT, certain legal provisions of public interest or the existence of agreements limiting passive sales in compliance with competition rules.
Question of what law applies.
During the talks, all member states, with the exception of Luxembourg, Austria and Poland, supported the draft compromise proposed by the Slovak Presidency of the Council.
Nonetheless, the delegations we spoke to did not appear to agree on how the very controversial question of what law should apply should be interpreted. According to Austria and Luxembourg, only the law and jurisdiction of the consumer will apply, under the terms of the “Rome I” and “Brussels I b” regulations. According to another Member State, there is a possibility of applying a derogation to this principle when the trader advertises their products. The Slovak Presidency referred to a case-by-case assessment in this regard. One European source informed us that the law and jurisdiction of the consumer would apply if the company delivers in the country of the consumer (under the terms of the “Rome I” and “Brussels I b” regulations). It will, however, be the law and jurisdiction of the country where the company is established if the company is not delivering outside the borders of where it is established.
The compromise also explains that in cases of directed activity (advertising), it is the law and jurisdiction of the country of the consumer that will apply, irrespective of the place of delivery. Nonetheless, the simple fact of respecting the new rules cannot be considered as directed activity.
In answer to our questions, Etienne Schneider, the Luxembourg Minister for the Economy informed us, “If the delegations had really understood the provisions on what law is applicable, they would have voted against”. The Minister also criticised the lack of delivery obligation. The question of delivery is in fact tackled in a parallel proposal that exclusively focuses on the question of encouraging the publication of public pricelists for universal service providers, in an effort to increase price transparency and to highlight the role of national regulators in this domain. Minister Schneider regretted that, “The consumer will have to make the orders in another country or arrange a postal point themselves” and therefore concluded, “the proposal tackles the symptoms but not the disease”.
During the talks preceding the vote, the Netherlands, Ireland, United Kingdom and France backed the compromise and indicated that they hope that the text “remains unchanged”. Estonia, Germany, Lithuania, Latvia, Portugal and Greece said that they were disappointed with the result on certain sections. Estonia, Latvia and Portugal are concerned by the derogations allowed for passive sales. Estonia and Portugal also mentioned the question of what law should apply, while Lithuania criticised the provisions on competition law.
Consumers and SMEs sceptical
Surprisingly, consumers and traders did not appear satisfied with these provisions. The European organisation representing retail, wholesale and international trade (EuroCommerce) considers that the text does not offer sufficient legal guarantees to Small and Medium-sized Enterprises. It stated, “We had hoped that the text would be clear that a trader complying with the Regulation may rely on all the rules applicable in his country, including not only mandatory consumer protection law, but all the other rules including labelling, language, product safety, environmental and other standards”. The European Consumer Organisation (BEUC) also regretted that the member states’ political agreement does not ban “anti-competitive agreements between producers/distributors and retailers”.
It should be pointed out that at the request of Belgium and the Slovak Presidency, the Commission should publish guidelines for Small and Medium-Sized Enterprises on the application of the new rules.
European Parliament’s draft report expected 15 December
In reply to questions from EUROPE, the press service for the rapporteur, Roza Thun (EPP, Poland) responded to the vote by ministers by indicating that this agreement appeared “premature” insofar as it leaves a lot of questions unanswered, such as the relationship with “Rome I”, liability of the trader with regard to product safety, VAT and environmental rules. She added that the Parliament would be dealing with these issues. With regard to whether the rapporteur will call for a reintroduction of the goods protected by copyright, the press service for the MEP confirmed that Ms Thun was currently examining this question but that no decision had yet been made.
Some political groups are already supporting the idea of extending the regulation’s scope but it is too early for any of them to speak on this issue yet. Ms Thun considers that the regulation as proposed by the Commission and Council is very limited and that it does not meet consumers’ expectations. Its draft report will be published on 15 December 2016. The draft regulation can be consulted at: http://data.consilium.europa.eu/doc/document/ST-14663-2016-INIT/fr/pdf . (Original version in French by Sophie Petitjean)