Widespread EU geo-blocking could become antitrust issue as EC probe online content providers

Contracts between EU suppliers and distributors that prevent consumers from buying goods and accessing digital content online could face closer antitrust investigations, the European Commission has said.

The commission released initial findings of its probe into the e-commerce sector with a paper that focused on geo-blocking – the practice of restricting access to internet content depending on the user’s geographical location.

The investigation found that geo-blocking is widespread across the EU. The findings came after a year-long inquiry into potential barriers to cross-border trade in electronics, clothing, shoes and digital content.

More than 1400 retailers and digital content providers from all 28 EU Member States were surveyed on their business practices.

68% of digital content providers said that they geo-blocked consumers situated in other EU Member States, depending on the user’s internet protocol (IP) address.

59% of content providers suggested that they are contractually required by suppliers to geo-block.

38% of consumer goods retailers said that they block consumers situated in other EU countries, especially by refusing to deliver abroad or accept foreign payment methods, and, to a lesser extent, by re-routing or blocking website access.

12% of retailers reported contractual restrictions on selling cross-border for at least one product category they provide.

European Competition Commissioner Margrethe Vestager said: "Where a non-dominant company decides unilaterally not to sell abroad, that is not an issue for competition law.

"But where geo-blocking occurs due to agreements, we need to take a close look whether there is anti-competitive behaviour, which can be addressed by EU competition tools."

Earlier this year, EU MEPs voted in favour of a set of resolutions to stop the geo-blocking of consumers’ online access to goods.

The commission said that if specific competition concerns with respect to geo-blocking or other issues are found, it could open case investigations to ensure compliance with EU rules on restrictive business practices and abuse of dominant market positions.

It intends to propose a legislative package in May to boost e-commerce across the EU.

The preliminary report on the e-commerce sector will be put to public consultation in mid-2016, with the final report scheduled for the first quarter of 2017.