COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on adressing geo-blocking and other forms of discriminiation based on place of residence or establishment or nationality within the Single Market
Date: 2016-05-25
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: consumer protection, discrimination on the basis of nationality, electronic commerce, equal treatment, establishment, free movement of goods, freedom to provide services, goods and services, residence, single market

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   EUROPEAN COMMISSION  Brussels, 25.5.2016  SWD(2016) 174 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on adressing geo-blocking and other forms of discriminiation based on place of residence or establishment or nationality within the Single Market {COM(2016) 289 final} {SWD(2016) 173 final}  
 
 
Executive Summary Sheet 

Impact assessment for the Proposal for a Regulation on addressing unjustified geo-blocking 
and other discriminations based on place of residence or nationality 

A. Need for action 

Why? What is the problem being addressed?  
Customers,  notably  consumers  but  also  small  businesses,  show  an  increasing  interest  in 
shopping  cross-border.  However,  they  increasingly  experience  traders  operating  in  other 
Member  States  refusing  to  sell  to  them  or  adapting  their  price  as  a  consequence  of  the 
customer  being  from  another  Member  State.  In  2015,  a  Mystery  Shopping  Survey  revealed 
that  only  slightly  more  than  a  third  of  attempted  cross-border  purchases  were  successful 
(37%). There may be good reasons for not selling cross-border (e.g. differences in consumer 
laws,  VAT,  bottlenecks  in  cross-border  delivery  channels  etc.).  Nevertheless,  a  significant 
number of restrictions may be unjustified.   
What is this initiative expected to achieve?  
The objective of the initiative is to ensure non-discrimination against customers in the Single 
Market.  Several  root  causes  of  such  company  behaviour  are  addressed  in  parallel  e.g.   
Commission initiatives (digital contracts, parcel delivery, extension of VAT MOSS) under the 
DSM-  and  SMS  Strategy.  The  current  initiative  focuses  in  particular  on  situations  in  which 
there is no objective reason for a different treatment between foreign and domestic customers. 

What is the value added of action at the EU level?  
The  problem  is  typically  cross-border  in  nature  and  concerns  all  Member  States.  Presently, 
Member  States  and  their  national  enforcement  authorities  cannot  rely  on  a  sufficiently  clear 
legal  framework  to  ensure  enforcement  of  the  current  provisions.  Therefore,  for  reasons  of 
scale and expected effects the objectives can be better achieved by action at the EU level. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a 
preferred choice or not? Why?  
Increased transparency (option 1) will not achieve the objective. A ban on blocking access to 
websites and on automatic rerouting unless active consent is given (option 2) combined with a 
requirement  for  explanation  in  exceptionally  justified  cases  of  such  blocking  will  address  a 
part  of  the  problem.  The  preferred  option  (option  3)  is  focused  on  identifying  specific 
situations in which geo-discrimination cannot be justified (for tangible goods, if the customer 
arranges for cross-border transport; for services which take place in a physical location where 
the  trader  conducts  its  business,  and  for  electronically  delivered  services  where  no  delivery 
problem  persist).  Option  4  consists  of  setting  up  an  additional  list  of  justifications  for  geo-
discrimination in order to clarify the principles under Article 20 (2) of the Services Directive. 
This was rejected due to its complexity. Option 5 included a requirement that companies ship 
tangible goods cross-border and best achieved the objective, but was rejected on the grounds 
of imposing disproportionate costs on businesses.  
Who supports which option?  
Option 1 is supported strongly by consumers but some businesses have reservations. Option 2 
is  clearly supported  by consumers  and  agreed  by  businesses.  A  clear  majority  of  consumers 
support  option  3,  while  businesses  are  divided,  with  some  signalling  opposition  and  some 
showing  acceptance,  e.g.  in  the  case  of  transactions  where  the  customers  organise  delivery 
themselves. Option 4 is requested by some businesses in order to improve legal clarity, while 

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others  express  resistance.  While  consumers  in  principle  support  option  5,  it  is  strongly 
opposed by businesses. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?                                      

Based on the available data, e.g. example distance selling of electronic goods, one of the most 
popular  online  sales  categories,  the  net  effect  of  lifting  geoblocking  restrictions  imposed  by 
companies on cross-border sales can be estimated to be an increase of about 1.1% of the total 
market  size  (total  sales).  Most  of  that  trade  would  come  at  the  expense  of  a  reduction  in 
domestic  purchases,  mostly  in  domestic  offline  purchases.  The  net  trade  expansion  effect  is 
estimated  at  0.4%  only.  As  a  corollary,  price  decreases  are  estimated  at  -0.5%  offline  and  -
0.6% online, on average across the EU. No price increases are forecast for any Member State. 
If similar effects occur for all tangible goods, the total EU28 consumer surplus increase could 
be  0.8%  on  average  for  the  EU28,  with  variations  across  Member  States.  Nevertheless,  one 
has  to  keep  in  mind  that  the  baseline  will  be  affected  by  the  effectiveness  of  the  related 
regulatory initiatives. 

What are the costs of the preferred option (if any, otherwise main ones)?  
Abandoning automatic rerouting and requesting approval before rerouting visitors entails one-
off compliance costs but would concern only a small share of large websites (around 2% of 
websites which account for 7.5% of cross-border traffic). Other compliance costs would only 
occur  at  a  very  limited  level,  since  traders  would  simply  treat  foreign  customers  as  national 
customers, They could recoup incurred additional costs, such as relating to payment systems 
or other costs, in a transparent manner to the extent to which they are objectively justified.. 
How will businesses, SMEs and micro-enterprises be affected?  
This  measure will  cover all business, including SMEs and micro-enterprises. The only  extra 
burden would possibly be related to a small extra charge for payment services and the need to 
identify the VAT rate in the customer's country in the case of digital sales (the registration is 
handled through VAT MOSS). Under the new VAT proposal, this information will be easily 
available.  However,  for  companies  which  are  exempted  from  VAT  according  to  national 
legislation, this would be a considerable burden. They are therefore exempted from the equal 
treatment obligation. The total exclusion of micro and small businesses would not be a viable 
option.  
Will there be significant impacts on national budgets and administrations?  
Enforcement  will  be  carried  out  by  already  existing  structures  coordinated  under  the  CPC 
Regulation  in  respect  of  consumers  so  no  new  organisation  costs  are  foreseen.  There  were 
roughly  1500  complaints  over  eight  years  (2007-2015)  that  have  come  to  the  Commission's 
attention,  but  the  Commission  estimates  the  consumer  concerns  to  be  much  higher.  The 
Regulation  is  expected  to  clarify  the  obligations  of  traders  and  deter  bad  practices.  The 
increase in the annual workload of Member States is therefore likely to remain limited.  
Will there be other significant impacts?  
No. The measure applies to all traders selling to EU customers, thus not affecting international 
competitiveness.  

When will the policy be reviewed?  
A comprehensive evaluation should take place five years after entry into force. 

D. Follow up 

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