EC Report: Geo-Blocking to Control Costs or Fraud Acceptable

March 21, 2016

EC Report: Geo-Blocking to Control Costs or Fraud Acceptable Two-thirds of European digital content providers block cross-border online sales into certain other EU member states, according to a report from the European Commission. While not as prevalent, nearly 40 percent of physical goods retailers engage in the same practice. As part of an ongoing initiative to foster cross-border e-commerce between its member states, the European Commission last year launched an investigation into the e-commerce sector to quantify the prevalence of geo-blocking and evaluate if there is a competitive basis to investigate certain companies. The EC’s final report will not come until this summer, but the Competition Committee released an initial report of its findings on Friday.

The report indicated the EC mostly is concerned about contractual agreements between companies that result in geo-blocking digital content or physical goods. Perhaps allaying the fears of many businesses, regulators noted many legitimate reasons a company might refuse to sell into another country. The costs incurred to expand an online business cross-border were identified as one such reason in the report, as was the fact that a company’s online payment provider might refuse to accept payment from IP addresses in certain countries to reduce fraud. Companies that are refusing orders from certain countries because of contracts with suppliers or other agreements, however, could face investigation for violating antitrust rules.

“Where a non-dominant company decides unilaterally not to sell abroad, that is not an issue for competition law,” said Margrethe Vestager, commissioner in charge of competition policy. “But where geo-blocking occurs due to agreements, we need to take a close look whether there is anti-competitive behavior, which can be addressed by EU competition tools.”