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Heavy fines for violating EU Geo-Blocking Regulation

April 2019 - EU & Competition. Legal Developments by GRP Rainer LLP.

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Regulation (EU) 2018/302, i.e. the EU Geo-Blocking Regulation, has been in force since December 3, 2018. It obliges merchants to allow cross-border shopping. Violations may be met with severe penalties.

The Geo-Blocking Regulation is supposed to prevent unlawful discrimination in online shopping on the basis of citizenship, residence or the location of an establishment within the EU internal market. What this means in practice is, among other things, that online merchants are no longer allowed to deny customers from another EU member state access to their website and redirect them to websites in their country of origin, with the latter often featuring different terms and prices or a different selection of products and services. We at the commercial law firm GRP Rainer Rechtsanwälte note that the Geo-Blocking Regulation is meant to put an end to this and ensure that the same terms apply to all EU citizens.

Violations of the Geo-Blocking Regulation may be met with severe penalties. A case in point is a decision of the European Commission from December 17, 2018 to impose a fine in the amount of almost 40 million euros on a fashion company. The European Commission claimed that the latter had acted to prevent consumers from other EU member states from viewing advertising and making purchases online. By engaging in this form of geo-blocking, the company was said to have violated EU competition law.

The clothing company in question designs and sells various fashion brands, and makes use of a selective distribution system when choosing authorized dealers. While this arrangement is legal under EU competition law, consumers have the right to purchase the goods from any authorized dealer, even those based in another EU member state. At the same time, authorized dealers are entitled to offer products that fall within the scope of the distribution agreement online as well as promote and sell the relevant goods across borders.

Anti-trust investigations were initiated by the European Commission as early as the summer of 2017 to look into whether the clothing company was obstructing retailers in their efforts to sell across borders within the EU’s internal market. The competition regulators concluded that obstruction was taking place by means of various measures, with this resulting in a compartmentalization of European markets according to the European Commission. This gave rise, for instance, to higher prices in many Eastern European countries than in Western European states.

When violations of European competition law occur, lawyers with experience in the fields of antitrust and competition law can offer advice.

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