COMMISSION STAFF WORKING DOCUMENT 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

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 25.5.2016  SWD(2016) 173 final   COMMISSION STAFF WORKING DOCUMENT  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) 174 final}  
 
 
1.  Context and scope 

Policy context 

The Single Market and the Digital Single Market represent two of the Commission's top-ten 
priorities. On 6 May 2015, the Commission presented the Digital Single Market Strategy1 to 
make  the  Single  Market  fit  for  the  digital  age.  On  28  October  2015,  the  Commission 
presented the Single Market Strategy2 to create more cross-border opportunities for business 
and consumers. 

Both strategies consider that Europe's growth is restrained because businesses and consumers 
cannot  fully  exploit  the  economies  of  scale  which  are  offered  in  principle  by  the  Single 
Market. Where buying online has become normal for consumers, buying online cross-border 
remains  the  exception.  Only  half  of  the  companies  selling  online  do  so  cross-border.  When 
consumers face restrictions linked to nationality or residence in over the counter transactions, 
this creates mistrust in the Single Market. The two strategies thus announced legislative action 
to  put  an  end  to  and  prevent  unjustified  "geo-blocking",  i.e.  practices  used  for  commercial 
reasons by online sellers that result in the denial of access to websites based in other Member 
States,  or  to  the  products  or  services  sought  for;  or  where  different  prices  or  conditions  are 
automatically applied on the basis of geographic location. 

These  strategies  also  announced  several  legislative  actions  to  address  the  major  remaining 
barriers which still restrict cross-border transactions so as to make it easier for businesses to 
sell goods or services to nationals or residents from other Member States:  

 

the two proposed Directives on certain aspects concerning contracts for the supply of 
digital  content3  and  on  certain  aspects  concerning  contracts  for  the  online  and  other 
distance sales of goods4 will remove barriers due to consumer contract law differences 
by fully harmonising the law applicable to defective goods and digital content . 

  an  initiative  to  extend  the  Single  Electronic  Mechanism  for  VAT  registration, 
declaration and payment to all ecommerce supplies, allowing companies to handle all 
VAT affairs with their home country administration when selling to multiple Member 
states.5 
the VAT Action Plan adopted on 7 April 20166 envisages ways to simplify VAT rules 
for e-commerce in the context of the Digital Single Market (DSM) Strategy . 

 

  a proposed Regulation on cross-border parcel delivery, which will include measures to 
improve  price  transparency  for  European  deliveries,  including  for  prices  of  small 
shipments and to enhance regulatory oversight of the cross-border parcel markets.7  
  a  copyright  reform  that  includes  inter  alia  a  proposal  for  a  Regulation  on  ensuring 
cross-border  portability of  online  content  services8,  which  allows  users  to  access  the 
services  they  have  subscribed  to  in  their  MS  of  residence  while  temporarily  abroad, 

1  
2  
3  
4  
5  

6  
7  
8  

COM(2015) 192 final 
COM(2015) 550 final 
COM(2015) 634 final 
COM(2015) 635 final 
Inception 
http://ec.europa.eu/smart-regulation/roadmaps/docs/2016_taxud_002_iia_vat_en.pdf 
COM(2016) 148 final 
Adoption by the Commission scheduled for 18 May 2016 
COM(2015) 627 final 

"Modernising  VAT 

assessment 

impact 

for 

on 

cross-border 

e-commerce", 

2 

 
 
                                                            
and  an  upcoming  update  of  the  copyright  framework  in  order  to  facilitate  online 
distribution of TV and radio programmes across the EU.   

  a reform of  the Consumer Protection Cooperation Regulation9 in  order to  strengthen 

enforcement for problems regarding cross-border services.  

Nevertheless, companies may also refuse to sell cross-border for other reasons. In some cases, 
geo-blocking  appears  to  be  linked  to  agreements  between  suppliers  and  distributors.  Such 
agreements may restrict competition in the Single Market in breach of EU competition rules. 
The  Commission  presented  initial  findings  on  geo-blocking  of  a  competition  sector  inquiry 
into e-commerce10 relating to the online trade of goods and the online provision of services, 
identifying  practices  where  companies  geo-block  as  a  result  of  (vertical)  agreements.  For 
those  cases  where  companies  unilaterally  and  not  based  on  the  occurrence  of  additional 
complexities and cost refuse customers' access to commercial offers based on the residence of 
the  customer  and  otherwise  discriminate  based  on  nationality  or  place  of  residence  or 
establishment  ("unjustified  geo-blocking  and  other  geo-discrimination"),  the  two  strategies 
announced  specific  legislative  action,  because  it  will  not  be  reduced  by  any  of  the  other 
initiatives. It is also foreseen in the Commission Work Programme 2016. The present impact 
assessment relates to this legislative action. 

Scope of this impact assessment 

This impact assessment will examine geo-blocking and discrimination based on nationality or 
place of residence or establishment. 

Its scope is driven by two factors: a) in which services sectors do companies already benefit 
from a more integrated market, but nevertheless geoblocking occurs frequently and b) which 
cross-border transactions are already facilitated in the EU for the benefit of customers?  

1. 

The choice of the sectors:  

Major  steps  have  already  been  taken  to  remove  regulatory  and  administrative  barriers  for 
service  providers  across  Europe,  moving  towards  a  truly  integrated  Single  Market.  The 
Services  Directive11  and  the  E-Commerce  Directive12  are  the  key  instruments  at  European 
level facilitating cross-border trade for service providers in a large number of services sectors. 
The Directives cover online and, as regard the Services Directive,  offline retail of goods and 
services,  tourism  services,  entertainment,  business  services,  construction  services,  etc.  Both 
Directives contain lists of activities which are excluded from the scope, mainly because they 
are covered by sectors-specific legislation or are either non-economic or economic activities, 
which  are  not  easily  traded  across  borders.13  The  E-Commerce  Directive  introduced  the 

9  

10  

11 

12  

13  

Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on 
cooperation between national authorities responsible for the enforcement of consumer protection laws, 
OJ L 364, 9.12.2004, p. 1. 
SWD(2016)  70  final,    Geo-blocking  practices  in  e-commerce,  Issues  paper  presenting  initial  findings  of  the  e-commerce  sector  inquiry  conducted  by  the 

Directorate-General for Competition, preliminary report scheduled for mid-2016,  final report scheduled for early 2017. 

Directive  2006/123/EC  of  the  European  Parliament  and  of  the  Council  of  12  December  2006  on 
services in the internal market, OJ L 376, 27.12.2006. 
Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal 
aspects  of  information  society  services,  in  particular  electronic  commerce,  in  the  Internal  Market 
('Directive on electronic commerce') , OJ L 178, 17.7.2000. 
The  following  services  are  excluded  from  the  scope  of  either  the  Services  Directive  and/or  the  e-
Commerce  Directive:  non-economic  services  of  general  interest,  financial  services,  electronic 
communication  and  network  services,  transport  services,  services  of  temporary  agents,  healthcare 
services, audiovisual services, gambling services, services related to official authorities, social services, 

3 

 
 
                                                            
 
country of origin principle for providers of information society service14. The implementation 
of the Services Directive has removed thousands of disproportionate requirements imposed on 
service  providers  and  it  aims  to  prevent  the  introduction  of  new  ones  if  discriminatory  or 
disproportionate.  As  a  result,  for  the  services  covered  by  those  two  Directives  cross-border 
transactions are already facilitated in the EU. The scope of these two Directives is the result of 
a carefully reached political balance between Member States and the European Parliament.  

However, facilitating the provision of services across national borders is not enough for the 
establishment  of  a  genuine  Single  Market.  It  is  equally  important  to  ensure  that  those  who 
purchase  such  services as  customers  for  their  final  use  (end-users)  can make  full  use  of  the 
opportunities of the Single Market. Article 20 of the Services Directive expressly imposed the 
respect  of  the  principle  of  non-discrimination  on  companies  to  the  benefit  of  service 
recipients. 

To complete the aim of the two Directives the initiative will cover the issue of discrimination 
based  on  nationality,  place  of  residence  or  place  of  establishment  inter  alia  for  services 
covered  by  the  scope  of  these  Directives.  The  analysis  of  the  complaints  indicates  that  the 
majority  of  the  reported  situations  of  alleged  discrimination  occur  within  a  few  sectors 
covered by the scope of the Services Directive and, to some extent the e-Commerce Directive 
- retail of tangible goods (39%) and accommodation and leisure services (16%).15  

The  current  EU  passenger  transport  legislation  already  explicitly  prohibits  discrimination 
based on nationality and place of residence for three modes of transport (air tickets, bus and 
coach  transport  and  waterborne  transport).  The  Rail  Passenger  Rights  Regulation  does  not 
contain  such  a  provision,  but  the  Commission  intends to  insert  in  it a new  provision  on  the 
prohibition of discrimination with the similar content as the non-discrimination clauses in the 
other passenger rights regulations, in the context of the on-going revision. Thus the national 
authorities  in  charge  of  passenger  rights  which  are  already  operational  for  all  modes  of 
transport will be able to prevent carriers and travel agents from resorting to unjustified geo-
blocking and discriminatory payment.   

Other sectors are too specific or too sensitive in order to be included into this initiative. This 
concerns in particular health for which payment of health care services is subject to the 2011 
Patients' Rights Directive clarifying under which conditions social security institutions would 
pay.  This  also  concerns  financial  services  and  audiovisual  services  (media)  for  which 
supervision  by  public  authorities  in  Member  States  is  foreseen  and  such  supervision  set  a 
different  context  compared  to  services  which  can  freely  be  provided  under  the  Services 
Directive and the E-commerce Directive . As for gambling, Member States are only bound by 
the Treaty (freedom to provide services) and might under certain circumstances even prohibit 
consumers  to  access  such  service.  These  examples  explain  that  the  rationale  for  excluding 
sectors and activities from the Services Directive should be the same as for excluding those 
from the initiative for which this impact assessment is prepared 

For provision of retail financial services, where the location of collateral and the assessment 
of  risks  create  important  national  specificities,  issues  of  discrimination  when  accessing  the 
service (mortgage, opening of bank account, cross-border insurance) will be addressed in the 
follow-up  to  the  Green  Paper  on  retail  financial  services  from  December  2015.  However, 

private security services and services provided by notaries and bailiffs.  See  Art  2(2)  of  the  Services 
Directive and Art 1(5) of the e-Commerce Directive  
This means that Information society services should be supervised at the source of the activity, (recital 
22 of the e-commerce directive) 
See Annex 7. 

14  

15  

4 

 
 
                                                                                                                                                                                          
payment  difficulties  related  to  the  purchase  of  goods  and  services  are  addressed  under  this 
impact assessment. 

Regarding audiovisual services, for which the issue of territoriality of copyright is particularly 
relevant, a specific framework exists in the form of the Audiovisual Media Services Directive 
and  the  Satellite  and  Cable  Directive,  both  of  which  are  currently  under  review.  Non-
audiovisual content services (e-books, music, software, games etc.) also raise some questions. 
On the one hand, there is evidence that geo-blocking of these services occurs. Including these 
services  within  the  scope  of  the  measure  could  therefore  enhance  consumer  benefits. 
Moreover, the different treatment of the sale of the same content on physical carriers (physical 
books, CD, DVD, etc.) and their digital equivalent (i.e. e-books, music, etc.) would mean that 
the  geo-blocking  initiative  covers  traditional  physical  carriers,  while  not  addressing  similar 
problems existing with their digital equivalent. On the other hand, their coverage might raise 
some complex legal issues that need to be considered. For music, for example, providers will 
typically  have  obtained  multi-territorial  licenses  which  allow  them  to  serve  the  European 
market. Nonetheless, for some of the music in their catalogues, they may only have national 
licenses,  in  which  case  they  would  not  be  able  to  give  full  access  to  their  repertoire  to 
consumers from other Member States. In the case of e-books, a number of Member States16 
have implemented fixed e-book price laws. Providers of e-books, when selling to residents in 
those Member States, would have to respect the regulated e-book prices. In order to take these 
specific  aspects  into  account,  while  such  services  should  be  included  in  the  scope  the 
proposed legislation, their inclusion should not apply to the equal treatment obligation at this 
stage. The possibility of its extension to these services will be subject to a review.  

As a conclusion, the impact assessment is limited to the intersections of the sectorial scopes of 
the Services Directive and the e-commerce Directive. 

2.  The geographical and thematic scope of the transactions between companies and end users 

In  terms  of  potentially  discriminated  parties,  this  impact  assessment  covers  both  private 
individuals  (consumers)  and  businesses  when  they  act  as  end-users  of  a  given  product  or 
service. The impact assessment excludes, however, transactions where goods and services are 
purchased  by  businesses  for  resale.  Including  agreements  that  cover  sales  of  goods  and 
services  for  resale  in  this  initiative  would  effectively  touch  upon  widely  used  distribution 
schemes  between  companies  in  a  B2B  context,  such  as  selective  and  exclusive  distribution, 
which generally allow for manufacturers to select their retailers and to incentivise retailers to 
investment. These distribution systems are implemented through vertical agreements between 
undertakings  which  fall  under  EU  competition  law17.  However,  in  order  to  avoid 
circumvention  by  means  of  vertical  agreements  the  initiative  addresses  restrictions  in 
agreements which prevent traders from responding to unsolicited customer requests (passive 
sales)  within  the  scope  of  the  application  of  this  Regulation,  building  on  existing  EU 
competition law concepts.  

The initiative applies to all traders operating within the EU, in parallel with existing consumer 
protection  laws  such  as  the  2011  Consumer  Rights  Directive  and  the  2006  Consumer 

16  

17  

Fixed book prices (by law or business agreement) exist in Austria, France, Germany, Greece, Slovenia 
and  Spain.  Belgium  notified  the  Commission  about  its  plans  to  introduce  fixed  prices  for  e-books  in 
Flanders. 
Notably  Article  101  TFEU;  Commission  Regulation  (EU)  no  330/2010  of  20  April  2010  on  the 
application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of 
vertical  agreements  and  concerted  practices,  OJ  L  102/1,  23.4.2010,  ("Vertical  Block  Exemption 
Regulation") and the Guidelines on Vertical Restraints, OJ C 130/1,19.5.2010 

5 

 
 
                                                            
Protection  Cooperation  Regulation  (CPC  Regulation).  Remuneration  for  the  purchase  of 
goods  (retail)  or  services  where  the  payments  are  already  regulated  under  EU  law  for  the 
benefit of payees (traders) and customers is also covered by this initiative.  

This implies that traders established in non-EU countries but providing their services within 
the Single Market would be equally concerned. This is in line with legislation concerning the 
protection of consumers and payment services, which apply irrespective of where the trader is 
based,  and  creates  a  level  playing-field  between  EU  companies  and  non-EU  companies. 
Furthermore,  from  a  customer's  perspective  it  can  be  difficult  to  determine  whether  a 
company is established and excluding non-EU trader could result in relocation of activities in 
order  to  circumvent  the  rules  proposed  under  this  initiative.  To  avoid  an  extra-territorial 
application  of  EU  law,  the  legislative  initiative  would  clarify  that  it  only  applies  to 
transactions for goods and services offered and supplied and paid within the EU: consumers 
must receive the service or the good in the EU. For instance, the initiative would not apply to 
an  EU  consumer  renting  a  car  in  the  US,  or  to  an  EU  consumer  ordering  a  product  to  be 
picked up in Morocco. 

Legal context 

Direct  discrimination  based  on  nationality,  as  well  as  indirect  discrimination,  such  as 
discrimination  based  on  the  place  of  residence  or  establishment  or  similar  criteria  are,  in 
principle, contrary to the principles of the EU Treaty, as recognised by the settled case-law of 
the Court of Justice18. The same goes, therefore, for unjustified geo-blocking and other forms 
of geographically-based discrimination.  

The  principle  of  non-discrimination  has  been  implemented  on  cross-sector  level  by  Article 
20(2)  of  the  Services  Directive.  It  obliges  Member  States  to  ensure  that  companies  do  not 
treat  service  recipients  differently  based  on  their  place  of  residence  or  establishment  or 
nationality, unless justified by objective criteria. Recital 95 of the Directive refers to a long 
list  of  generic  justifications  which  companies  may  be  able  to  invoke.19  In  2012,  the 
Commission issued guidance on the application of Article 20(2) of the Services Directive  

The  e-Commerce  Directive  (2000/31/EC)  lays  down  the  country  of  origin  principle  for 
information society services and providers of such services.20 Member States may not create 
barriers for the taking up and pursuit of information society services by companies if provided 
from  another  Member  State.  It  does  not  include  a  non-discrimination  provision  creating 
obligations for service providers themselves. The  concept of an information society service, 
under  the  e-Commerce  Directive,  and  as  interpreted  by  the  Court  of  Justice21  means  any 
service  normally  provided  for  remuneration,  at  a  distance,  by  electronic  means  and  at  the 
individual  request  of  a  recipient  of  services.  Therefore  the  concept  of  information  society 
service covers a considerable part of today's e-commerce. The e-commerce Directive however 
does  not  include  a  non-discrimination  provision  creating  obligations  for  service  providers 
themselves.  

18  
19  

20   

21  

See for instance Case C-388/01, Commission vs Italy,  ECLI:EU:C:2003:30, points 13-14 
Recital 95 specifies that such objective criteria is for example additional costs because of the distance, 
different market conditions, extra risks linked to different rules in different Member States and lack of 
intellectual property rights . 
However,  the  e-commerce  Directive  does  not  affect  the  law  applicable  to  contractual  obligations 
relating to consumer contracts. 
See for instance Case C-291/13, Sotiris Papasavvas v O Fileleftheros Dimosia Etaireia Ltd and Others, 
ECLI:EU:C:2014:2209, points 26-30. 

6 

 
 
                                                            
The  Consumer  Rights  Directive22  has  fully  harmonised  certain  aspects  of  consumer  and 
contract law applicable to online sales by traders to consumers. According to Article 8(3) of 
the Directive, the trader selling through websites shall inform the consumer at the latest at the 
beginning  of  the  ordering  process  about  delivery  restrictions  and  which  means  of  payment 
that  are  accepted.  In  general,  European  consumer  law  covers  traders  established  in  third 
countries directing their activities to the EU.  

Under the current EU competition law framework with regard to vertical agreements passive 
sales  restrictions  (i.e.  provisions  in  agreements  which  restrict  a  retailer  from  responding  to 
unsolicited  requests  from  individual  customers)  are  generally  considered  restrictive  of 
competition pursuant to Article 101(1) TFEU and cannot normally be exempted under Article 
101(3) TFEU. Accordingly the Vertical Block Exemption Regulation23 qualifies passive sales 
restrictions  as  "hardcore"  restrictions  which  do  not  benefit  from  a  block  exemption  on  the 
basis of the nature of the restrictions and the fact that those restrictions are likely to produce 
negative  effects  on  the  market.  Those  so  called  "hardcore"  restrictions  are  generally 
restrictions "by object" when assessed in an individual case under Article 101 TFEU. Practice 
shows  that  restrictions  by  object  are  unlikely  to  fulfil  the  four  conditions  set  out  in  Article 
101(3) TFEU.  

As a result, the vast majority of passive sales restrictions in vertical agreements are unlawful 
under  EU  competition  law.  Only  in  very  exceptional  circumstances  can  passive  sales  be 
lawfully restricted in an agreement under EU competition law.24   

2.  Problem definition 

2.1.  The overall challenges of a Single Market without borders  
The  creation  of  the  Single  Market  is  one  of  the  cornerstones  of  European  integration.  In  it, 
more than 500 million citizens and more than 20 million companies of the EU should benefit 
from  free  access  to  goods  and  services  from  anywhere  in  the  Union,  with  increased  choice 
and lower prices. To date, efforts to complete the Single Market have been mainly focused on 
ensuring  that  companies  are  free  to  sell  goods  and  services  cross-border.  Thus  the  Single 
Market has widened the choice for customers who are increasingly searching cross-border for 
goods and services.  

Many  buyers,  for  language,  cultural  and  proximity  reasons,  still  mostly  buy  goods  and 
services  in  their  country  of  residence.  Despite  this,  they  make  use  of  the  Single  Market  by 
travelling cross-border or by ordering from distance sellers, nowadays mostly online. As far 
as  travelling  cross-border  is  concerned,  35%  of  EEA  citizens  travel  at  least  once  a  year 
abroad25,  either  for  tourism26,  business  or  (if  living  close  to  a  border27)  in  search  of  better 
offers. However, thanks to the Internet, purchasing  at a distance has rapidly increased,  with 

Directive 2011/83/EU 

22  
23 Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty 
on the Functioning of the European Union to categories of vertical agreements and concerted practices, 
OJ L 102/1, 23.4.2010, Articles 4 (b) and (c). 

24 See Vertical Guidelines, paragraph 61.  
25  

of 

the 

“Roam 

impacts 

Those travelling spend on average 11.6 days per year abroad. BEREC International Roaming Analysis 
of 
2014, 
17  December 
http://berec.europa.eu/eng/document_register/subject_matter/berec/opinions/4826-international-
roaming-analysis-of-the-impacts-of-8220roam-like-at-home8221-rlah   
The  total  consumption  made  by  visitors  for  and  during  tourism  trips  was  estimated  to  187  billion  in 
2013 
40% of the EU population lives in border regions 

at  Home” 

(RLAH), 

Like 

26  

27  

7 

 
 
                                                            
online  sales  reaching  EUR  200  bn  for  goods,  with  consumer  electronics  and  appliances, 
clothing and footwear and media products the most popular items, and another EUR 70 bn for 
travel and tourism in 2014. Of this, on average 20% cross a border.28 53% of EU citizens buy 
online, but only 16% do so cross-border. 

When travelling abroad, customers would be surprised if they walked into a shop only to find 
that the trader refuses to sell to them or only at a different price because they are foreigners29. 
However,  in  the  online  world,  a  trader  refusing  to  sell  to  foreigners  or  only  doing  so  at  a 
different price is relatively common. IP-tracking allows websites to identify the provenance of 
the  visitor,  as  do  delivery  addresses  or  payment  system  information,  since  there  is  no  cash 
payment. As shown in the evidence below, customers frequently experience that traders based 
in other countries simply refuse to sell to them or change their price because of the country 
where they live or from where they want to access the service.  

Most  recently,  a  large  mystery  shopping  survey  (MSS)  analysed  approximately  10,500 
websites  in  the  EU,  which  were  visited  first  by  mystery  shoppers  as  domestic  users  and 
subsequently  as  cross-border  users  from  another  Member  State.  It  found  that  only  37%  of 
websites actually allowed cross-border EU visitors to reach the stage of successfully entering 
payment card details, i.e. the final step before completing the purchase  (see annex 6). Equally 
in the second half of 2015, an e-commerce sector inquiry conducted within the framework of 
EU competition law found that 36% of online retailers (out of more than 1000 online retailers 
in the EU who participated in the inquiry) stated that they do not sell cross border in at least 
one  product  category  in  which  they  are  active.  This  inquiry  also  showed  that  geo-blocking 
was practiced by companies of all sizes, although larger ones were more likely to do so. 

Regarding  consumer  experiences,  in  2014  a  representative  survey  of  final  consumers  found 
that 19% of cross-border online shoppers had experienced restrictions at one stage or another 
of the purchasing process.30 Similarly, 2015 Eurostat figures show that 10% of cross-border 
online  shoppers  were  restricted  based  on  their  nationality  or  place  of  residence  in  the  last 
twelve  months31.  These  orders  of  magnitude  of  the  problem  are  confirmed  by  a  number  of 
other sources (see annex 5). Moreover, the Commission services established and analysed a 
database of over 1500 discrimination-related complaints or enquiries received between 2008 
and 2015 through internal channels32. They reflect complaints and enquiries online and over 
the  counter  and  mostly  concern  the  sectors  of  retail  (39%)  as  well  as  accommodation  and 
leisure services (16%).  

Problems  have  also  been  found  with  regard  to  firms  purchasing  goods  and  services  cross-
border.  A  2016  B2B  Eurobarometer  survey  of  4.200  companies  across  15  Member  States33 
reveals  that  firms  face  restrictions  as  well,  which  is  why  68%  of  firms  interviewed  are  not 

28  

29  

30  

31  

32  

33  

Gomez-Herrera,  E.,  Martens,  B.,  and  Turlea,  G.  'The  drivers  and  impediments  to  cross-border  e-
commerce in the EU', JRC/IPTS Digital Economy Working Paper 2013-02, 2013   
Nevertheless,  sometimes  this  does  happen,  but  typically  only  when  identification  of  the  customer  is 
required (e.g. registration for a discount card). 
European Commission, Flash Eurobarometer 397, 'Consumer attitudes towards cross-border trade and 
consumer protection', 2015   
Eurostat News Release 218/2015 - 11 December 2015 , 
http://ec.europa.eu/eurostat/documents/2995521/7103356/4-11122015-AP-EN.pdf/276b6a7c-69a6-
45ce-b6bf-488e975a8f5d 
ECCRS,  Your  Europe  Advice,  European  Consumer  Centres,  complaints  addressed  directly  to  the 
Commission, questions posed by MEPs and petitions to the European Parliament. 
European Commission, Flash Eurobarometer 434, 'B2B Geoblocking', 2016  

8 

 
 
                                                            
purchasing from abroad34. Among the companies having purchased goods and services cross-
border  (online  and  offline)  as  end-users  during  the  last  12  months  on  average  10%  have 
experienced  problems  carrying  out  these  purchases.  Smaller  firms  have  experienced  more 
problems than larger firms and microenterprises are the most affected. 

Geo-blocking  and  other  restrictions  based  on  nationality,  place  of  residence  or  place  of 
establishment should however not be confused with the emerging trend of dynamic pricing. In 
the  age  of  Big  Data,  firms  set  their  online  prices  based  on  a  wealth  of  customer  attributes, 
including  browsing  history,  operating  system,  and  previous  purchases/visits  to  the  website. 
This  impact  assessment  does  not  examine  variables  other  than  the  country  of  residence  or 
establishment  and  nationality  of  the  customer  used  by  companies  in  their  pricing  decisions. 
The reason is that only the latter is a point of reference assessing the equal treatment principle 
under  the  Treaty.  Information  about  place  of  residence  or  establishment  and  nationality  is 
either collected by directly asking customers to reveal it (e.g. choosing their country from a 
drop-down menu) or deducing it from proxy variables such as the IP address. 

2.2.  Unjustified geo-blocking and discrimination based on 

nationality, place of residence or place of establishment  

2.2.1. Situations concerned by unjustified restrictions 

Geo-blocking  and  other  restrictions  based  on  nationality,  place  of  residence  or  place  of 
establishment  can  be  justified  or  unjustified.  If  they  are  based  on  businesses  incurring 
significant extra complications and costs, for example because of the  existence of additional 
regulatory or other obstacles for cross-border sales, they are likely to be considered justified 
where  ther are proportionate. Otherwise, they constitute "unjustified geo-blocking  and other 
types of geo-discrimination".  

In  many  instances,  it  is  impossible  without  a  case-by-case  investigation  into  the  specific 
circumstances  whether  such  restrictions  are  justified  or  not.  However,  there  are  several 
situations  where  local  and  foreign  customers  are  in  a  very  similar,  if  not  identical,  position 
(i.e. the trader does not bear any specific cost linked to the nationality, place of residence or 
place of establishment of the customer; he does not have to arrange for cross-border delivery, 
pay VAT in another country or apply another Member State's consumer legislation):  

(1) Foreign customers are sometimes prevented from buying a physical good even if they are 
willing to pick up the product in the country of the trader or arrange themselves for the cross-
border  part  of  the  delivery.  For  example,  according  to  a  recent  survey,  32%  of  Western 
European35  international  online  buyers  have  –  for  a  variety  of  reasons  including  but  not 
limited to unavailability of shipping to home address - used a forwarding address to get goods 
delivered36,  indicating  significant  demand.  Yet  according  to  the  Mystery  Shopping  Survey 
26%  of  websites  do  not  allow  foreign  customers  to  proceed  to  the  stage  where  they  could 
organise such forwarding. 

(2) Foreign customers are sometimes prevented from buying electronically supplied services, 
such  as  cloud  services37,  even  though  delivery  costs  cannot  be  an  argument  for  not  selling 

34  

 See  Annex  10.  This  percentage  varies  between  Member  States,  from  only  19%  in  Italy  and  Poland  to  60%  in  Austria,  also  depending  on  the  sectorial 

composition of the firms surveyed in respective Member State. 

35  
36  
37  

Defined in the study as DE, FR, IT, ES , UK, NL, SW, IR, AT and CH 
Ipsos MORI 2015 for PayPal 
See also Consumer Conditions Scoreboard 2015, p. 82, column "online service" 

9 

 
 
                                                            
cross-border and the taxation implications of cross-border sales have already been subject to 
the facilitation mechanism of the VAT mini-one stop since the beginning of 2015. 

(3) Despite the trader having the required rights for the relevant territories, foreign customers 
are  sometimes  prevented  from  accessing  electronically  supplied  non-audiovisual  copyright 
protected  content  services.  A  study  of  the  largest  provider  of  downloadable  music  revealed 
that  cross-border  access  was  not  or  only  to  a  very  limited  extent  possible38.  In  the  recent 
Commission's competition inquiry, 44% of music providers respondents answering stated that 
they  are  required  to  geo-block39.  The  reasons  behind  these  restrictions  (e.g.  availability  of 
licences)  are  yet  to  be  analysed  by  the  inquiry.  According  to  a  recent  study  on  the 
geographical  market  segmentation  in  the  EU  e-books  market,  European  consumers  face 
different  access  restrictions  based  on  their  residence.  Overall,  these  differences  in  access 
mainly seem not to be driven by objective legal reasons related to the EU copyright regime40. 

(4)  Customers  moving  to  another  country  to  receive  the  service  at  the  location  where    the 
trader  operates  are  sometimes  charged  prices  which  differ  from  those  applied  to  domestic 
customers, such as when staying at a hotel, renting a car, going to a sport event or shopping in 
a  cross-border  region.  Large-scale  web-scraping  studies  showed  that  European  consumers 
continue to face price discrimination when booking rental cars across the EU.41  For example, 
consumers from Germany accessing the non-country specific EU website (.com or .eu) of the 
car rental company got offered in 13% of cases higher price than consumers from Italy with 
no possibility to see the lower price available to other consumers. On average, the difference 
in price is 11€, but can get up to 134€. Similar effects can be observed on the same website 
when comparing consumers in the UK and Netherlands to those in Germany: 16% of prices 
are  higher  for  the  UK  consumers,  with  the  average  price  difference  being  8€,  and  13%  of 
prices  are  higher  for  the  Dutch  users,  with  the  average  difference  being  32€,  although  the 
exchange rate is the same in both situations. Overall, the study detected price differences on 
the non-country specific EU website against users in all Member States, ranging from 6% of 
prices for Austrian users to 16% for UK users, with most Member States falling around 10% 
of  prices.42  Similarly,  a  citizen  who  moves  temporarily  to  another  Member  State  (without 

38  
39  
40;  
41  

42  

https://ideas.repec.org/p/ipt/decwpa/2015-04.html 
http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html 
https://ideas.repec.org/p/ipt/decwpa/2015-13.html;  
Martens  and  Milkians  (2013),  'Large-scale  Web-scraping  Evidence  on  EU  On-Line  Price  Differences 
Driven by the Country of Purchase'.  
Study  of  March  2016,  covering  19  national  branches  (Austria,  Belgium,  United  Kingdom,  Czech 
Republic,  Denmark,  Spain,  Finland,  France,  Croatia,  Hungary,  Ireland,  Italy,  Lithuania,  Netherlands, 
Poland, Portugal, Sweden, Slovenia, Luxembourg) and the non-country specific EU website of one of 
the  largest  European  car  rental  companies.  The  car  rental  options  were  checked  for  25  locations 
(airports in capital cities of 25 EU Member States) and for 9 different date ranges, covering holidays 
and  workdays  in  order  to  account  for  seasonality.  On  each  website,  the  default  search  options  were 
chosen, which do not include add-ons like insurance, etc. Each website and location/date combination 
was queried from computers with IP addresses in all 28 Member States. Thus, the price discrimination 
was  detected  based  on  users'  IP  addresses.  For  each  user,  around  6000  quotes  for  rental  cars  were 
scraped from each website. The web scraping study was performed for the Commission in March 2016 
by Prof Christo Wilson, Northeastern University, USA. 
Discrimination of consumers has not been detected in terms of availability of offers. Consumers from 
all Member States can in addition to the non-country specific website access and purchase on any of the 
country-specific  websites  of  the  same  car  rental  company,  where  no  price  discrimination  has  been 
detected. Prices of the same offers (i.e. same rental location, dates, car types and other parameters) may 
differ among websites (incl. all country-specific and the non-country specific website), but none of the 
country-specific websites modifies the price based on the IP address of the consumer. 

10 

 
 
                                                            
 
 
taking  up  residence  there)  may  face  higher  prices  or  different  conditions  compared  to  local 
residents. 

In these cases, differences of treatment can be considered in principle as being unjustified. 

2.2.2. Unjustified Restrictions at different stages of the purchasing 

process 

Unjustified  restrictions  based  on  nationality  or  place  of  residence  or  establishment  of  a 
customer take place at various stages of a purchasing process, presented below. 

The results of the public consultation conducted in autumn 2015, discussions organised by the 
Netherlands Presidency at the Informal Competitiveness Council at the end of January 2016,  
and  the  outcome  of  a  stakeholder  workshop  held  in  Amsterdam  on  18  February  2016  with 
more than 80 key stakeholders and representative organisations from consumers and from the 
business community (see annex 2) and many other stakeholder contacts underlined that it is 
important to assess each of these stages in order to fully comprehend the problem. 

2.2.2.1.  Lack of transparency 

Customers are particularly frustrated if they receive no information about restrictive practices. 
Under  the  Consumer  Rights  Directive,  consumers  should  receive  at  the  beginning  of  the 
purchasing  process  information  about  delivery  restrictions  and  the  accepted  means  of 
payment. However, the investigations regularly show that a large number of websites does not 
comply43  with  this  obligation.  Furthermore,  there  is  no  obligation  for  traders  to  provide  an 
explanation for such restrictions to consumers. The outcome of the public consultation shows 
that  27%  of  respondents  who  asked  for  an  explanation  have  never  received  one  from  the 
trader about the reasons why they refused to sell or why they charged higher prices based on 
the place where the consumer lives (see annex 2).  In all the complaints received directly or 
indirectly by the Commission services (see annex 8), 92% of cases do not mention any type of 
justification given by traders. 

2.2.2.2.  Lack of access to websites and rerouting 

In  the  three  situations  mentioned  above  (see  section  2.2.1),  as  well  as  in  cases  where 
geoblocking may be justified, customers are also confronted with the situation that access to 
the website or to an application is blocked or that they get automatically rerouted to another 
website. Geo-blocking of this type is often based on technological ways of using the location 
of the customer as a proxy, such as IP-tracking. 

The 2015 online mystery shopping survey found that only 2% of websites completely block 
access or automatically reroute visitors from another Member State, which however account 
for  7.5%  of  cross-border  online  traffic  in  the  survey  sample  (see  also  annex  6  for  more 
details). This hinders in particular the development of cross-border price comparison sites, as 
they are not able to scrape information on prices in other Member States. 

11 

 
 
                                                            
 
2.2.2.3.  Unjustified refusals to sell or selling under different 

conditions  

There are many examples  where traders refuse to sell or charge higher prices depending on 
the  customer's  place  of  residence  or  establishment  or  nationality  even  though  local  and 
foreign customers are in a very similar, if not identical, situation (i.e. the trader does not bear 
any  specific  cost  linked  to  the  nationality  or  place  of  residence  or  establishment  of  the 
consumer; they do not have to arrange for cross-border delivery, pay VAT in another country 
or, if there is no directing of activities to consumers in that Member State, the trader does not 
need  to  comply  with  more  stringent  mandatory  consumer  contract  rules  of  the  consumer's 
Member  State)44.  Traders  use  different  techniques  to  identify  the  place  of  residence  or 
nationality  of  the  customer  through  information  on  the  delivery/billing  address,  but  also 
information about passport, ID card or company registration number (VAT number), and the 
country  of  issuance  of  the  payment  card,  the  credit  card  number,  the  country  where  a  bank 
account is based or again by the IP-address. It may simply be impossible for the customer to 
enter  his  complete  details  online  –  the  postcode  format  may  only  accept  a  limited  range  of 
postcodes, or the country field may be a scroll-down list with a limited choice, etc. The 2015 
online  mystery  shopping  survey  (see  annex  6)  found  that  27,6%  of  websites  do  not  allow 
foreign  visitors  to  reach  the  stage  of  having  successfully  registered  in  order  to  initiate  a 
purchase (including both justified and unjustified refusals).   

In  three  specific  situations  described  below,  differences  of  treatment  based  on  residence  or 
nationality can be considered to be unjustified:  

(1)  When  foreign  customers  are  prevented  from  buying  a  physical  good  even  if  they  are 
willing to pick up the product in the country of the trader or arrange for the cross-border part 
of the delivery.  

(2) When foreign customers are prevented from buying electronically supplied services, such 
as  cloud  services,  even  though  delivery  costs  cannot  be  an  argument  for  not  selling  cross-
border  and  the  taxation  implications  of  cross-border  sales  have  already  been  subject  to  the 
facilitation mechanism of the VAT mini-one stop since the beginning of 2015. 

(3) When customers move to another country to receive the service at the location where the 
trader  operates,  they  are  sometimes  charged  prices  which  differ  from  those  applied  to 
domestic customers, such as when staying at a hotel, going to a sport event or renting a car in 
a cross-border region.  

2.2.2.4.  Refusal of foreign means of payment 

The Mystery Shopping survey shows that for cross border shoppers who reached the payment 
stage, approximately a quarter of websites (26%) did not accept/offer their means of payment 
or it was not possible to successfully enter their payment card details. According to the 2016 
B2B Eurobarometer companies facing problems did so when they indicated that they wanted 
to pay with a bank account located in another EU country (19%) or with a credit/debit card 
issued in another EU country (15%).  

This  suggests  that  the  payment  element  of  a  transaction  is  probably  a  regular  source  for 
transaction  refusals.  Internet  retailers  may  refuse  transactions  based  on  considerations 

44  

For  the  reasons  explained  in  the  assessment  of  options  (see  option  3),  even  if  there  is  directing  of 
activities to other Member States, in some specific cases, difference of treatment should be prohibited . 

12 

 
 
 
                                                            
connected with the payment itself. However, they may use elements of the payment (country 
of issuance of payment card, IBAN number) as an 'indicator' of the location of the buyer to 
refuse a transaction on other grounds. 

2.2.2.5.  Refusal to deliver 

Even if consumers have managed to proceed in the purchasing process, they often fall at the 
last hurdle. The 2015 online mystery shopping survey showed that out of the 72% of websites 
which  allowed  visitors  to  register,  approximately  one  third  (32%)  did  not  provide  delivery 
options  to  country  of  the  visitor(see  also  annex  6  for  more  details).  Finally,  the  analysis  of 
complaints collected by the Commission shows that 9% of consumers complained about non-
delivery to their member state (see also annex 7 for details).  

The 2012 Guidance stated that "The lack of alternatives for delivery can rarely be invoked by 
a service provider to refuse supply to a given Member State. For parcel deliveries up to 20 kg, 
the Postal Services Directive imposes an obligation on Member States to ensure the provision 
of  universal  postal  services,  including  cross-border.  This  obligation  means  that  at  least  one 
delivery option in a cross-border context should be available in all Member States." 

2.2.2.6.  Conclusion 

Overall, two cross-border shopping attempts out of three fail (the following table synthetises 
the  problems  identified  above).  This  is  substantiated  by  the  mystery  shopping  survey  (see 
Figure 1), by the B2B Eurobarometer survey (see Figure 2) and by the responses to the public 
consultation. 

Figure 1:  Failure rate (%) in a 2015 online cross-border mystery shopping survey   

Source: GfK Mystery Shopping Survey and JRC/IPTS calculations (forthcoming) 

In theory, one would have to identify the motivation for each geoblocking situation in order to 
quantify how much it is based on objective barriers and how much is unjustified. This is not 
possible in  practice.  It  implies  a  case-by-case  analysis  by  enforcement  authorities  under  the 
current legal framework (article 20). This could not be done with the studies carried out and 
the  complaints  received.  It  is  not  possible  to  conduct  such  additional  studies,  because, 
contrary  to  competition  sector-specific  enquiries,  the  Commission  has  no  power  to  demand 

13 

 
 
 
that companies explain in detail their pricing strategies. This could only be done in targeted 
cases  attracting  media  attention  (car  hire,45  for  instance).  The  complaints  received,  the 
responses  to  the  public  consultation  and  Eurobarometer  surveys  demonstrate  that  there  is  a 
significant degree of frustration on the side of consumers.  

However,  other  than  in  very  exceptional  circumstances,  there  are  no  costs  or  complications 
associated  with  permitting  cross-border  access  to  websites.  As  a  general  rule,  automatic 
redirecting should thus be considered unjustified. On the other hand, while a refusal to deliver 
could  be  either  justified  or  unjustified,  depending  on  the  motivation  for  such  a  refusal  (see 
section 2.2), they are likely to be justified, given the objective complications of cross-border 
delivery,  tax  laws  and,  if  the  trader  directs  its  activities  to  the  consumer's  Member  State, 
differences  in  applicable  consumer  protection.  Therefore,  it  is  possible  to  estimate  that 
unjustified geoblocking is practiced by between 2% and 27.6% of websites, keeping in mind 
that the 2% account for 7.5% of cross-border traffic.  

Even  if  to  a  smaller  extent  than  for  consumers,  problems  are  also  encountered  at  various 
stages  of  the  purchasing  process  in  B2B  transactions.  Among  companies  experiencing 
problems when purchasing goods and services cross-border issues related to VAT or payment 
where among the most cited (Figure 2).46 

Figure  2:  Step of the  purchasing process during which the  problems were experienced 
(B2B) 

25%

20%

15%

10%

5%

0%

When the
place of
delivery was
indicated

When the
location of the
companies was
indicated

When seeking
to use a
credit/debit
card issued in
another EU
country

When the
firm's VAT
number was
provided

When wanting
to pay by using
a bank account
located in
another EU
country

Source: European Commission, Flash Eurobarometer 434, 'B2B Geoblocking', 201647 

The significance of the issue is also reflected by the results of the public consultation on geo-
blocking (annex 2). A vast majority (98%) of consumer respondents consider that consumers 
should  be  able  to  purchase  and  access  services  everywhere  in  the  EU.  They  also  think  that 

45  

46  

47  

releases  of  11/08/2014 

(http://europa.eu/rapid/press-release_IP-14-917_en.htm)  and 

see  Press 
28/10/2014 (http://europa.eu/rapid/press-release_IP-14-1209_en.htm) 
The  figure  does  not  show  problems  occurring  after  the  order  has  been  placed  (delivery)  or  when  an 
experienced problem did fit into the answer options ("others"). For more information see Annex 10. 
The responses are filtered based on those companies having engaged, and experienced problems with 
cross-border purchasing process  in  the  last 12  months.  Multiple  problems  could  be  indicated  by  each 
respondent and thus the percentages are not cumulative. 

14 

 
 
 
                                                            
geo-blocking  and  other  geographically  based  restrictions  create  significant  obstacles  to  the 
single market. Companies largely share the view that geo-blocking/discrimination is an issue 
and  that  consumer  choice  and  competition  are  important.  A  large  majority  of  consumer 
respondents  (70-94%  depending  on  the  option)  supports  a  legislative  solution  to  tackle 
unjustified  geo-blocking,  while  companies  agree  in  principle  (up  to  50%  agreement 
depending on the option) but stress respect for contractual freedom. 

2.3.  The drivers of the problem (underlying causes) 

There are different reasons why traders may not sell goods or services to customers in other 
Member States. They may not sell or provide access to customers from other Member States 
because the regulatory complications or language issues outweigh the benefits from additional 
sales, for example because the company would have to register for VAT in different Member 
States. This may even be the case if the company does not invest in commercial promotion in 
a  foreign  market  but  is  approached  by  a  customer  from  abroad.  When  the  differences  in 
treatment are thus based on objective and actual additionnal complications and extra costs for 
the  seller  and  they  are  proportionate  thereto,  they  may  be  justified.  Otherwise,  they  are 
unjustified.  

Based  on  the  evidence  gathered  it  is  not  possible  to  provide  an  assesment  of  the  relative 
importance  of  each  driver,  given  that  the  prevalence  will  differ  depending  various  factors. 
Taking the exampel of VAT differences, the relative importance will depend on the type of 
product and the Member State concerned. 

2.3.1. Barriers leading to geoblocking and other types of 

discrimination 

Barriers  which  create  significant  additional  complications  and  extra  costs  for  the  seller 
include the following: 

  The  complications  of  having  to  deal  with  many  different  national  legal  and  tax 
systems  represent  a  real  obstacle  for  companies  trying  to  trade  cross-border  both  on 
and  offline.  The  complexity  of  VAT  for  making  intra-EU  B2C  supplies  is  cited  by 
business as one of the top three barriers to cross-border e-commerce.48 

  Differences in national consumer laws may be a reason for refusing cross-border sales 

in a B2C context (this would not be relevant in a B2B relationship),. 

  Technical specifications or rules on labelling and selling arrangements may also differ 
depending  on  where  in  the  EU  the  trader  has  expressly  chosen  to  supply  products. 
They  may  require  the  trader  to  adapt  their  products  and  packaging  accordingly,  in 
particular concerning linguistic versioning. 

  Beyond  these  objective  differences,  even  the  uncertainty  as  to  whether  the  trader 
should apply foreign law or  not may be a driver. Given the case-by-case assessment 
required under  the Rome I regulation49 pursuant to the case law of the Court of Justice 
of  as  regards  the  applicability  of  national  law,  a  company  may  very  well  prefer  to 
forego the additional revenue rather than to face a badly understood legal situation. 

48  

49  

Ecommerce  Europe,  Analysis  of  the  survey  “Barriers  to  Growth”,  2015,  http://www.ecommerce-
europe.eu/stream/survey-barriers-to-growth-ecommerce-europe-2015.pdf 
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the 
law applicable to contractual obligations (Rome I) 

15 

 
 
                                                            
  The  lack  of  possibilities  to  arrange  for  good  after-sales  services  can  be  a  reason  for 

traders to deny cross-border sales. 

  Lack of affordable, high-quality delivery services is consistently cited amongst the top 
reasons  mentioned  by  both  e-retailers  and  consumers50  for  not  engaging  in  cross-
border e-commerce. 

  Until  the  implementation  of  the  Payment  Servuices  Directive  251  in  2018,  some 
operators may prefer not to sell to other Member States because their fraud prevention 
system  is  based  on  access  to  informational  resources  such  as  public  registries  which 
may not be available in other countries. 

  Companies  may  refuse  to  sell  to  residents  of  other  Member  States  because  of 
legislation  forcing  them  to  do  so  (for  instance  a  measure  adopted  by  a  local  public 
authority which restricts access to coffee-shops to Netherlands residents52). 

  Companies may in specific circumstances refuse to sell to residents of other Member 
States on the basis of lawful (vertical) agreements.  For instance, paragraph 61 of the 
Vertical  Guidelines53  acknowledges  that  there  are  situations  in  which  territorial 
restrictions  may  be  objectively  necessary  for  an  agreement  of  a  particular  type  and 
therefore  fall  outside  Article  101  (1)  TFEU  altogether.  Agreements  with  territorial 
restrictions  may  also  fulfil  the  conditions  under  Article  101  (3)  and  therefore  be 
compatible with the internal market. 

  For  online  content  services,  companies  may  in  some  cases  only  hold  the  rights 
(licences)  for  the  use  of  copyright-protected  content  for  a  specific  territory,  which 
prevents them from providing such services to all Member States. 

Geoblocking  or  different  treatment  based  on  these  issues  can  be  considered  justified  (see 
annex 11). Some of these issues are addressed in the legislative proposals put forward as part 
of  the  (Digital)  Single  Market  Strategy  (see  section  1)  and  not  in  this  initiative.  As  a 
consequence, justified geoblocking can be expected to decrease in the future. 

2.3.2. Drivers for unjustified differences of treatment:  

2.3.2.1.  Market segmentation along national borders  

Companies  may  prevent  cross-border  sales  in  order  to  enforce  market  segmentation.  Such 
action  may  be  based  on  a  unilateral  decision  of  businesses,  or  on  contractual  arrangements 
preventing resale of products (in a B2B context).  

If  a  supplier  forbids  a  retailer  from  servicing  an  unsollicited  request  from  another  Member 
State  ("passive  sale"),  is  in  principle  against  EU  competition  law54.  Other  than  in  cases  of 

50  

51  

52  

53  
54  

Around  a  quarter  of  online  consumers  have  concerns  about  high  delivery  costs  (27  %),  high  return 
shipping costs (24 %), and long delivery times (23 %) when it comes to purchasing online from another 
EU  Member  State.  GfK  for  the  European  Commission,  Consumer  survey  identifying  the  main  cross-
border obstacles to the DSM and where they matter most, 2015   
Directive  (EU)  2015/2366  of  the  European  Parliament  and  of  the  Council  of  25  November  2015  on 
payment services in the internal market 
Marc  Michel  Josemans  vs.  Burgemeester  van  Maastricht,  Case  C-137/09  of  16  December  2010, 
ECLI:EU:C:2010:774 
Guidelines on Vertical Restraints, OJ C130/1 of 19.5.2010 
A ban of internet sales by retailers is considered as a passive sales restriction which has the object of 
restricting competition. It qualifies as a hardcore restriction under Article 4 (b) and (c) of the Vertical 

16 

 
 
                                                            
 
abuse  of  dominance,  EU  competition  law  does  not,  however,  address  restrictions  stemming 
from unilateral business decisions of non-dominant companies, including decisions taken and 
applied within a group of companies.  

In  order  to  systematically  analyse  restrictions  of  competition  that  create  barriers  to  cross-
border e-commerce, the Commission launched a sector inquiry into the e-commerce sector in 
all Member States. The inquiry with respect to goods showed that most restrictions of cross-
border sales are linked to unilateral decisions by traders, not by contractual arrangements with 
suppliers.55  Moreover,  as  the  enforcement  practice  of  national  competition  authorities 
demonstrates,  such  restrictions  do  not  only  take  place  for  sales  of  goods,  but  also  in  other 
services sector, such as hotel bookings or package travel.56  

Individual companies might find it profitable to segment the market. Market segmentation is 
often an issue where the trader has distinct operations in or targeting several Member States. 
This is typically the case of multinational companies, although it is also possible that SMEs 
can  apply  such  restrictions.  In  certain  cases  it  could  be  even  beneficial  for  some  customers  
i.e.  depending  on  national  demand  and  supply,  certain  goods  and  services  may  be  sold  for 
higher  price  in  some  countries  than  in  others  (see  also  section  2.3).  The  Study  on  business 
practices  applying  different  condition  of  access  based  on  the  nationality  or  the  place  of 
residence of service recipients from 200957 highlighted a number of reasons for differences of 
treatment,  which  the  Commission  considers  do  not  constitute  objective  criteria  justifying  a 
difference of treatment. Market segmentation in itself is a legitimate way to take into account 
different  markets  in  a  commercial  strategy  and  can  take  many  forms,  for  instance,  special 
rebate add appearing only on French websites, a different presentation, a special price "train 
from Belgium+hotel" available on the Belgian version of a website, or even different prices of 
the  packages/options  on  different  national  versions  of  the  website  etc.  It  is  only  a  problem 
when  the  company  refuses  requests  from  consumers  based  in  another  country  than  the  one 
targeted  in  order  to  enforce  this  market  segmentation,  when  the  foreign  consumer  is 
effectively in the same situation as the national consumer.    

Companies  also  sometimes  rely  on  alleged  legal  uncertainty  concerning  the  applicability  of 
foreign  consumer  law,  VAT,  or  labelling  requirements  etc,  to  apply  different  conditions  on 
customers, when in fact these problems do not arise in the three cases mentioned above. 

2.3.2.2.  Ineffective enforcement of the existing legal framework 

Although it has been in force since 2009 in all Member States, the effectiveness of the current 
legal  framework  (Article  20  of  the  Services  Directive)  is  hampered  by  a  lack  of  proper 
application  and  enforcement  on  national  level.  One  of  the  main  reasons  for  the  lack  of 
enforcement is the legal uncertainty regarding justifications for differences in treatment based 
on customer's nationality or place of residence or establishment. Differences in treatment do 
not  always  constitute  discrimination.  According  to  Article  20(2)  of  the  Services  Directive, 
differences in the conditions of access are legitimate if directly justified by objective criteria. 
To determine whether a difference in treatment adds up to discrimination or not, it has to be 
assessed if the reasons invoked by the trader indeed constitute objective criteria justifying the 
difference  in  treatment.  Recital  95  of  the  Services  Directive  provide  for  a  broad  list  of 

Block  Exemption  Regulation  and  runs  afoul  of  Article  101(1)  TFEU  unless  justified  by  clear 
efficiencies under Article 101(3) TFEU. 
SWD(2016) 70 final, final report scheduled for early 2017 
DG COMP report, scheduled for early 2017 
http://ec.europa.eu/internal_market/services/docs/services-dir/studies/20091210_article20_2_en.pdf 

55  
56  
57  

17 

 
 
                                                                                                                                                                                          
possible  objective  criteria  which  makes  it  difficult  to  apply  the  provision  in  practice.  At 
present,  the  assessment  must  always  be  made  on  a  case  by  case  basis,  thus  creating 
uncertainty for traders, customers and national enforcement authorities. 58  
Furthermore, some Member States even failed to identify clear enforcement authorities.59  

The situations covered by Article 20(2) may require Member States's authorities to cooperate 
with each other in order to ensure an effective enforcement.60  Regulation (EC) No 2006/2004 
on consumer protection cooperation (CPC Regulation) lays down the general conditions and 
framework  for  cooperation  between  national  enforcement  authorities  in  the  EU.  The 
cooperation  is  applicable  to  consumer  rules  in  various  areas,  such  as  unfair  commercial 
practices,  distance  selling  and  passenger  rights  which  are  listed  in  its  Annex.  However, 
Article 20(2) of the Services Directive is to date not included in the Annex. It means that there 
is currently no cooperation in terms of coordinated enforcement of Article 20 (2) by national 
authorities. The Commission has proposed to include Article 20(2) of the Services Directive 
in the Annex of the CPC Regulation. Adoption is planned for May 2016. 

Guidance on this Article 20 was issued by the Commission in 2012,61 but it did not lead to 
any clear improvement in terms of application and enforcement on this point.  

Although  it  is  often  stressed  the  need  for  a  case-by-case  analysis,  the  Guidance  provided 
examples  of  situations  (including  those  identified  above)  where  it  was  difficult  to  find  any 
justification for differences of treatment based on nationality or residence.  

-  For instance, it said that "techniques allowing service providers to identify the location 
of  the  recipient  and  thus  to  direct  the  consumer  to  the  offer  adapted  to  the  territory 
where he is resident are not per se indicators of discrimination" but that if "recipients 
in  each  of  these  countries  are  completely  barred  from  accessing  information  on  the 
conditions  of  access  offered  to  recipients  resident  in  other  Member  States",  the 
situation may be very different. 
It  also  stated    that  "the  lack  of  alternatives  for  delivery  can  rarely  be  invoked  by  a 
service  provider  to  refuse  supply  to  a  given  Member  State."  All  the  more,  if  the 
consumer is prepared to organise delivery itself, this makes a difference of treatment 
even less justifiable. 

- 

-  Similarly, for services received on the premises of the trader (or outside of the country 
of residence of the consumer), such as hotels or car hire, the Guidance recognised that 
different pricing and marketing policies could be set up towards the various Member 
States, but that the objective is for consumers to "become more active in seeking out 
such  favourable  conditions  offered  online  by  service  providers  established  in  other 
Member States." Such an objective can be jeopardized, not only when consumers are 
prevented from accessing information, but also when they applied a higher price than 
the one announced on the website visited. 

58  
59  

60  
61  

See Annex 8 
See Commission Staff Working Document with a view of establishing guidance on the application of 
Article  20(2)  of  Directive  2006/123/EC  on  services  in  the  internal  market  ("the  Services  Directive") 
(SWD(2012)  146  final)  and  its  annex  providing  an  overview  of  the  competent  authorities.  In  some 
Member States, only national courts are mentioned as such authorities. 
Impact Assessment 
Commission  Staff  Working  Document  with  a  view  of  establishing  guidance  on  the  application  of 
Article  20(2)  of  Directive  2006/123/EC  on  services  in  the  internal  market  ("the  Services  Directive")  
SWD(2012) 146 final 

18 

 
 
 
                                                            
-  As  far  as  payments  are  concerned,  the  Guidance  considered  that  refusals  of  foreign 
means  of  payment  would  become  unjustified  when  the  relevant  barriers  have  been 
addressed, which they have. 

Despite  this,  the  recurring  complaints  received  from  consumers,  and  the  fact  that  the 
Guidance clearly encouraged Member State authorities to "take into account progress made in 
the completion of the internal market and the further elimination of barriers", the Commission 
is  not  aware  of  any  trader  having  been  sanctioned  for  infringing  the  non-discrimination 
provision of article 20 (2) of the Services Directive. Equally, no Member  States took action 
and, based on the guidance, amended their national provisions transposing Article 20(2). For 
instance,  the  progressive  entry  into  force  of  the  Single  Euro  Payment  area62  and  of  the 
Payment Services Directive 2 should have led to a more stringent application of rules against 
discriminations linked to means of payment. This was not the case. In specific cases, only the 
intervention  of  the  Commission  prompted  the  trader  to  give  up  its  refusal  of  foreign  credit 
cards or direct debits from SEPA-based bank accounts. 

This  lack  of  enforcement  action  can  partially  be  explained  with  reference  to  the  low  value 
involved in consumer disputes which deters consumers from pursuing legal action, but also by 
the low degree of priority given by national authorities to enforcement of article 20.  

Article 8(3) of the Consumer Rights Directive requires traders to indicate clearly and legibly 
at  the  beginning  of  the  ordering  process  whether  any  delivery  restrictions  apply  and  which 
means  of  payment  are  accepted.  The  2015  online  mystery  shopping  survey  showed  that  in 
37% of all websites assessed, no information on delivery restrictions was clearly displayed on 
the starting page or during the ordering process. This was as high as 44% for those websites 
that  were  found  to  practice  some  kind  of  restrictions.  If  Article  8(3)  was  respected  by  all 
traders,  consumers  would  at  least  be  aware  of  delivery  restrictions  and  the  payment  means 
accepted by trader before going through the ordering process. 

2.4.  Who is affected, in what ways and to what extent? 

Customers are often prevented from taking full advantage of the opportunities of the (Digital) 
Single Market. This has two main effects. Firstly, they are prevented from accessing a greater 
variety of products. For example, evidence shows that less than 7% of all smartphone models 
are  available  in  all  Member  States;  almost  50%  are  available  in  one  Member  State  only63. 
Secondly, customers face higher prices as competition is less intense than it would otherwise 
be; for some electronic goods, such as laptops, tablets, desk top computers or smart phones, 
customers in the most expensive Member State are paying between 30% and 60 % more than 
if  they  would  be  able  to  purchase  from  the  cheapest  Member  State.64  In  the  previously 
mentioned web-scraping of car rental tariffs, customers were charged up to 53% more for the 
same car during the same period and on the same location due to the fact that they came from 
specific Member States.65  

Whether  customers  realise  that  they  are  being  discriminated  or  not  depends  on  the 
technological means used to identify their residence: if IP-tracking or another technology of 
similar effect is used, customers will from the start only see the higher prices; if they suddenly 
face  higher  prices  after  entering  address  or  credit  card,  they  will  notice.  In  30%  of  the 

62  

63  
64  
65  

Regulation  (EU)  No  260/2012  of  the  European  Parliament  and  of  the  Council  of  14  March  2012 
establishing technical and business requirements for credit transfers and direct debits in euro 
GfK Mystery Shopping Survey and JRC/IPTS calculations (forthcoming) 
Ibid. 
See section 2.1.2.3 

19 

 
 
                                                            
the  Commission,  customers  complained  about  such  price 
complaints  received  by 
discrimination  (see  annex  7  for  details).  This  results  in  customer  frustration,  as  they  are 
largely  unable  to  enforce  their  rights.  Lodging  a  complaint  or  finding  the  appropriate 
enforcement body when facing different conditions either online or over the counter is often 
too burdensome compared to the detriment endured.  

Moreover,  as  a  direct  result  of  unjustified  geoblocking,  e-commerce  and  cross-border  trade 
are lower than they would otherwise be, resulting in a loss of consumer surplus. 

For  businesses  as  end-users,  the  B2B  Eurobarometer  undertaken  in  February  2016  gives 
evidence  on  problems  experienced  when  purchasing  goods  and  services  cross-border.    The 
results  also  showed  that  smaller  companies,  and  in  particular  microenterprises,  were  most 
impacted.  For  companies  buying  goods  and  services  cross-border  as  end-users,  especially 
small  ones  who  do  not  have  a  legal  department,  finding  the  right  assistance  body  is  a 
challenge, since it varies from country to country (sometimes it is the ministry of economy, 
the  local  Chambers  of  commerce,  or  the  competition  authority).  For  companies,  the  only 
enforcement bodies available are often national courts. 

Businesses may apply unjustified geoblocking through unilateral measures. If they are using 
this practice to maintain price segmentation between different national markets, geoblocking 
increases  their  benefits.  Larger  firms  with  presence  in  more  than  one  Member  States  may 
target  different  markets  with  different  offers  and  prices  However,  as  shown  by  the  mystery 
survey,  2%  of  websites,  particularly  those  of  companies  active  in  several  Member  States, 
automatically  send  the  customer  to  a  different  website  (or  block  access)  which  in  turn 
accounts for 7.5% of cross-border traffic. 

If companies do not sell to foreigners because they are afraid of ending up having to deal with 
the complications of selling cross-border (especially in the case of microenterprises) they are 
not benefitting; on the contrary, they would benefit from being able to sell more easily to a 
larger customer base. 

2.5.  How would the problem evolve, all things being equal? 

In case of no EU action unjustified geo-blocking practices would continue to exist segmenting 
the Single Market. Consumers will be prevented from making cross-border purchases or will 
be (unfairly) charged higher prices for the same good or service and consequently would not 
benefitting  from  increased  availability  of  product  and  services  and  increased  price 
competition.  Traders  could  continue  to  deny  access  to  certain  services  cross-border  by 
applying territorial restrictions limiting the free movement of services. Companies would also 
continue to apply different conditions on the basis of residence without objective reasons. As 
described in previous sections, there are not only divergences in national legislation, such as 
consumer  protection  legislation  and  product  labelling  rules,  having  an  impact  on  traders' 
choice  of  limiting  cross-border  trade.  There  is  also  pure  market  fragmentation  based  on 
unilateral decisions taken by companies without objective reason.  
The adoption and entry into force of the proposed legislation on digital contracts66 and parcel 
delivery will contribute (although not totally) to reducing the impact of some the drivers for 
justified  restrictions,  which  could  take  away  part  of  the  justifications  often  invoked  by 
companies. So would the announced initiative on extending the VAT Mini One-Stop-Shop to 

66  

Directive  on  certain  aspects  concerning  contracts  for  the  supply  of  digital  content  (COM(2015)634 
final) and the Directive on certain aspects concerning contracts for the online and other distance sales of 
goods (COM(2015) 625 final) 

20 

 
 
                                                            
B2C  supplies  of  tangible  goods.  Finally,  following  the  entry  into  force  of  the  revised 
Payments  Services  Directive,  perceived  risk  of  fraud  should  no  longer  be  an  objectively 
justifiable argument to geo-block. However, while due to these new legislation there will be 
less justified geo-discrimination they will not reduce unjustified geo-discrimination which is 
driven by the intent of business to artificially segment markets along national borders. So, as 
such, these legislative initiatives do not have an impact on unjustified geo-discrimination. On 
the contrary, for cases where traders currently use specific drivers as mere pretexts to explain 
plain market segmentation strategies, the removal of those objective barriers may even lead to 
an increase of cases of unjustified restrictions. 

The e-commerce sector inquiry launched by the Commission in 2015 unveils more in-depth 
information  with  respect  to  agreements  between  undertakings  that  impose  territorial 
restrictions. These restrictions may be tackled by  competition law enforcement. Restrictions 
based on agreements are not part of this impact assessment. 

Moreover,  with  the  advancing  technological  sophistication  of  e-commerce  providers,  it  is 
possible that  unjustified  geo-blocking  might  actually  increase  in  the  future.  As  the  software 
used for tracking and identifying online customers gets better and cheaper, geo-blocking will 
become easier to implement.  

Furthermore, the rapid development of mobile e-commerce in conjunction with the abolition 
of  roaming  charges  in  2017  will  further exacerbate  the  problem,  as  consumers  may  well  be 
geoblocked  because  of  the  IP-number  of  their  device  whilst  they  are  in  the  country  of  the 
trader.  

Consumers  would  therefore  remain  unable  to  enforce  their  rights  despite  the  revised 
Regulation  on  consumer  protection  cooperation.  There  also  would  be  no  solution  for  B2B 
transactions. While the inclusion of Article 20 of the Services Directive within the scope of 
the CPC Regulation would be beneficial to ensure coordinated enforcement across the EU, it 
would  not  be  sufficient  on  its  own  to  resolve  the  problems  described  in  this  impact 
assessment.  In  fact,  while  the  revised  CPC  Regulation  would  provide  additional  powers  for 
authorities to cooperate and would strengthen cooperation for widespread infringements, the 
fact would remain that the principle of non-discrimination laid down in  Article 20(2) of the 
Services Directive is to be understood in light of the (numerous and not always very precise) 
possible justifications listed in its recital. 

2.6.  Evaluation of existing policy framework 

The objective of the non-discrimination principle in Article 20 of the Services Directive is to 
enhance the rights of service recipients and strengthen their confidence in the Internal Market 
by ensuring that service recipients are not subject to discriminatory practices based on their 
place of residence or establishment or nationality when shopping across the EU. However, the 
objective  of  Article  20(2)  of  the  Services  Directive  has  not  been  fully  effective  as 
demonstrated in Annex 8. 

The assessment of Article 20(2) of the Services Directive has shown that it is at present not an 
effective or efficient EU intervention to achieve the pursued objectives. On 8 June 2012, the 
Commission  published  guidelines  on  the  on  the  application  of  Article  20(2)  Service 
Directive.67 The guidelines provide clarification on the interpretation of the relevant article, in 
particular its scope, and demonstrate typical situations of discriminations. 

67  

http://ec.europa.eu/internal_market/services/docs/services-
dir/implementation/report/SWD_2012_146_en.pdf 

21 

 
 
                                                            
Awareness-raising  activities  are  regularly  conducted,  at  national  level  by  consumer 
associations  and  European  Consumer  Centres,  and  at  EU-level  by  the  Commission  (for 
instance  through  the  issuance  of  a  Practical  Guide  for  consumers  in  201468  and 
communication  activities such  as  press releases in  the car hire sector69). As a follow up, no 
Member  State  started  changing  their  national  rules  or  practices.  To  the  Commission's 
knowledge,  only  Malta  issued  its  own  Guidance  on  discrimination,  which  essentially 
reproduces word by word the 2012 Guidance. This did not have any noticeable result, since 
the Guidance can only be based on the broad and vague wording of article 20. 

An approach based on voluntary agreements had been attempted with respect to the car hire 
sector,  with  a  publicity  campaign  by  the  Commission  in  2014  leading  to  commitments  by 
some  companies.  The  most  recent  web-scraping  study  of  March  2016  demonstrated  the 
several companies nevertheless continued to apply unjustified differences based on the place 
of residence or establishment of consumers and the Commission still receives complaints. 

One of the main reasons seem to be the broad list of possible objective criteria justifications 
mentioned  in  Recital  95  of  the  Services  Directive.  However,  the  objectives  of  the  non-
discrimination  principle  remain  highly  relevant,  and  coherent  with  other  EU  policy  actions, 
such  as  the  Digital  Single  Market  Strategy  and  the  Single  Market  Strategy  for  goods  and 
services. The introduction of Article 20(2) of that Directive has not brought any substantive 
added  value  due  its  lack  of  effectiveness,  but  the  evaluation  shows  that  EU  intervention  to 
address the issues concerned is necessary to reach the objectives. 

3.  Why should the EU act  

3.1.  Does the EU have the right to act? 

Traders are free to make contracts with any customer in the EU. Nevertheless,  Article 18 of 
the  TFEU  establishes  the  general  prohibition  of  discrimination  between  persons  on  the 
grounds  of  nationality.  Articles  34  and  56  of  the  TFEU  provide  for  the  free  circulation  of 
goods  and  the  freedom  to  provide  services.  The  Court  of  Justice  further  clarified  the 
implications  of  the  non-discrimination  provision  in  Article 56.  It  said that  Article 56  TFEU 
gives rights not only to the provider of services but also to the recipient.70 It also added that 
the  abolition  of  State  barriers  to  freedom  to  provide  cross-border  services  would  be 
compromised  if  it  could  be  neutralised  by  obstacles  resulting  from  publicly  announced 
decisions  of  private  operators71  (for  instance  publically  available  terms  and  conditions)  or 
private associations. In those situations, decisions of such private entities might have effects 
equivalent to those of public authorities.  The Court judged that equality of treatment between 
nationals  and  non-nationals  prohibit  not  only  overt  discrimination  based  on  nationality  but 
also discriminations linked to the place of residence.72 It held that even a measure putting at 
an advantage only residents of a specific region or area may be considered discriminatory; it 
does not have to disadvantage only nationals of other Member States. 

68  

69  

70  
71  
72  

releases  of  11/08/2014 

Buying  services  everywhere  in  the  EU  -  A  practical  guide  for  consumers,  Publications  Office  of  the 
European Union, 2014 
see  Press 
28/10/2014 (http://europa.eu/rapid/press-release_IP-14-1209_en.htm) 
Case C-233/09, Dijkman 
Case C-281/98, Angonese, paragraph 32 
Case C-103/08, Gottwald, paragraphs 27 and 28 

(http://europa.eu/rapid/press-release_IP-14-917_en.htm)  and 

22 

 
 
 
                                                            
Article  20(2)  of  the  Services  Directive  does  not  prevent  the  Commission  from  adopting  a 
proposal  going  beyond  the  current  legislation.  A  new  legislative  initiative  addressing 
discrimination  based  on  residence  or  nationality  could  complement  Article  20(2),  which 
would  remain  applicable  insofar  as  it  is  compatible  with  any  new  instrument.  Even  though 
Member  States  have  transposed  the  entire  Services  Directive,  including  this  provision, 
national  laws  and  regulations  remain  little  specific  on  this  point  and  lack  any  clear  criteria 
which  justifications  are  acceptable  or  not.  As  a  result,  customers  do  not  only  lack  a  clear 
framework at European level but when it comes to exercising their rights under national law, 
they have no clear way forward how the principle of non-discrimination is actually applicable 
and effective in practice.     

Geo-blocking  of  customers  based  on  their  nationality  or  country  of  residence  applies  by 
definition only to transactions between nationals or residents of two different Member States. 
The initiative complies with the subsidiarity principle as due to the cross-border nature of the 
problem, it can be more effectively and efficiently tackled at EU level.    

At  a  workshop  on  18  February  2016,  participants  discussed  the  possible  value  added  of  an 
initiative  at  EU  level.  The  business  community  stressed  that  barriers  to  cross-border 
transactions  (cross-border  parcel  delivery  problems,  payment  issues,  applicable  law,  VAT) 
should  be  addressed  in  tandem  with  efforts  to  improve  the  effectiveness  of  the  non-
discrimination principle. Consumer representatives stressed that failing action opportunities to 
serve wider markets would continue to be lost and frustration amongst citizens interested in 
shopping cross-border would only increase. 

3.2.  What would be the added-value of action at EU-level? 

Differences of treatment based on residence or nationality are experienced by citizens of all 
EU member states. In 27 out of 28 member states, more than 10% of consumers report having 
been geo-blocked in the last year (see annex 5). Although some differences of treatment can 
also  apply  within  one  Member  State  (with  more  favourable  conditions  for  residents  of  a 
specific town or region), the Court of Justice underlined that a measure can be discriminatory 
as soon as it affects residents of other Member States, even if it does not affect only them.73 

The transposition of Article 20 of the Services Directive and the subsequent guidelines issued 
by  the  Commission  have  not  led  to  better  application  and  efficient  and  consistent 
enforcement. Member States authorities cannot rely on a sufficiently clear legal framework to 
ensure  such  enforcement,  as  Article  20  is  not  sufficiently  specific.  Even  if  they  were  to 
enforce  Article  20  more  strictly,  this  would  lead  to  an  uneven  application  of  this provision, 
since it would probably be interpreted in a variety of ways.  

This suggests that a better and stricter application of the non-discrimination principle, where 
that is justified and required in certain specific situations, cannot be sufficiently achieved by 
Member States acting alone. By reason of the scale and expected effects, this action can be 
better achieved at the EU level.  

EU  aAction  would  create  equal  rights  and  obligations  for  businesses  and  consumers  across 
the Single market, thus simplifying the current legal framework and creating a level playing 
field, thus allowing both customers and traders to benefit from the internal market. It would 
give enforcement authorities the means to act effectively against discriminatory practices. 

73  

Case C-388/01, Commission v. Italy, paragraph 14 

23 

 
 
                                                            
4.  Objectives 

4.1. 

 General policy objectives 

Better access to goods and services for customers in the Digital Single Market  

Prevent unjustified discrimination of customers in the Single Market. 

4.2. 

  Specific policy objectives  

The following objectives are cumulative. 

-  To improve transparency for customers by enabling access to websites/applications 

throughout the Single Market; 

-  To prevent unjustified differences of treatment in access to goods and services for 

customers throughout the Single Market; 

-  To improve public enforcement in relation to unjustified geo-blocking and other 
discriminations based on the place of residence or establishment or nationality. 

-  To increase legal certainty for business for cross-border transactions.  

5.  Policy options 

5.0 

Baseline scenario - no EU policy change 

The base-line scenario implies implementing Article 20 of the Services Directive, the current 
provisions of the Consumer Rights Directive and the 2012 Guidance document on Article 20 
of  the  Services  Directive.  It  also  assumes  the  adoption  of the  proposed  Directive  on  certain 
aspects  concerning  contracts  for  the  supply  of  digital  content74,  the  Directive  on  certain 
aspects concerning contracts for the online and other distance sales of goods75, the revision of 
the Consumer Protection Cooperation Regulation (among other changes, including Article 20 
of the Services Directive in the Annex of the CPC Regulation) and the proposed regulation to 
improve cross-border delivery of parcels. However, Article 20 of the Services Directive has 
proven  to  be  ineffective  and  difficult  to  enforce  by  national  authorities,  mainly  due  to  the 
broad  list  of  possible  justifications  for  differences  in  treatment.  The  inclusion  of  Article  20 
within  the  scope  of  the  CPC  Regulation  would  be  beneficial  to  ensure  coordinated 
enforcement across the EU in B2C-situations. However, it will not improve legal certainty or 
cover enforcement in B2B-situations.  

5.1. 

Option 1: Improving transparency and enforcement 

In order to improve transparency on the reasons for unjustified geo-blocking and other types 
of discriminations, this option would be based on the following principles: 

1) transparency in cases of justified restrictions for accessing the service, applied by a trader. 
A  trader  could  for  instance  refer  to  unsatisfactory  delivery  conditions,  need  to  register  for 
VAT  purposes  in  the  country  of the  consumer,  lack  of  knowledge  about  labelling rules  and 
consumer laws applicable in the country where the consumer resides. 

74  
75  

COM(2015) 634final 
COM(2015) 635 final 

24 

 
 
                                                            
2) no obligation for a trader to explain price differences (if access to the best possible price in 
any EU member State is no longer restricted for consumers). 

The  trader  would  be  given  the  choice  between  two  ways  of  implementing  the  transparency 
principle: 

1)  As  a  principle,  traders  would  to  provide  an  explanation  for  justified  differences  of 
treatment upon request of the customer if such differences are not otherwise covered by the 
legal instrument. In that case, companies should react within a reasonable timeframe to be set 
in a legislative proposal.   

2)  In  order  to  avoid  dealing  with  constantly  incoming  requests  from  customers,  the  trader 
could also provide justifications upfront. Pursuant to the Consumer Rights Directive, traders 
are  under  the  obligation  to  inform  consumers  about  only  possible  delivery  or  payment 
restrictions; a general disclaimer or an entry in the general sales conditions could be provided 
on the website about the justifications for access restrictions applied on customers from other 
Member States (such as cost of registering for VAT purposes in another country).  

In order to limit administrative burden, the company will be obliged to provide a reply only in 
the language(s) announced in the general terms and conditions. If a Spanish consumer intends 
to  buy  a  product  on  a  Swedish  website,  written  only  in  Swedish,  he  should  not  expect  to 
receive a reply in Spanish. 

In  order  to  ensure  enforcement,  the  legislative  act  resulting  from  the  proposal  that  is  now 
being  considered  would  be  added  in  the  annex  to  the  Regulation  on  Consumer  Protection 
Cooperation. This would not apply to B2B issues for which Member States could designate 
enforcement authorities, if they consider it appropriate.  

This option would apply to all companies including SMEs and micro-enterprises. 

For  the  transparency  obligation  there  would  be  no  difference  in  treatment  depending  on 
whether the explanation is requested by a consumer or by a business (B2B), but in line with 
above the enforcement mechanism would vary depending on the situation. In a B2C context, 
enforcement would include strengthened co-ordination between national authorities under the 
CPC Regulation. In a B2B context, only the general enforcement rules would apply. 

5.2. 

Option 2: Banning blocking of access 

This  option  would  make  the  denial  of  access  to  a  website  based  on  nationality  or  place  of 
residence or establishment illegal, with a very limited set of exceptions (only if required by 
EU law or national law in accordance with EU law, e.g. e-commerce Directive).  Rerouting 
would be subject to the customer's consent. Even after the expression of consent to rerouting, 
the original website targeted by a customer should always remain accessible and the customer 
should be informed about this at the time of giving his/her consent to rerouting. If blocking of 
access of automatic rerouting is required by EU law or national law in accordance with EU 
law, the customer should be informed about it. 

In  order  to  ensure  enforcement,  the  legislative  act  resulting  from  the  proposal  that  is  now 
being  considered  would  be  added  in  the  annex  to  the  Regulation  on  Consumer  Protection 
Cooperation. This would not apply to B2B issues for which Member States, in line with the 
principle  of  subsidiarity,  could  designate  enforcement  authorities,  if  they  consider  it 
appropriate.  

This option would apply to all companies including SMEs and micro enterprises. 

25 

 
 
The  option  would  not  entail  a  difference  in  treatment  based  on  if  the  goods/services  are 
purchases by a consumer (B2C) or by a business (B2B).76 

It  would  also  apply  to  websites  of  third  country  traders  targeting  the  European  Union  and 
aiming at providing services within the Single Market. 

5.3. 

Option 3: Option 2 + equal treatment in specific situations 

("shop like a local")  

This  option  aims  at  ensuring  non-discrimination  on  the  basis  of  nationality  or  place  of 
residence  or  establishment  in  well-defined  situations  where  no  or  only  minimal  additional 
costs  associated  to  cross-border  sales  are  created,  either  because  the  situation  is  akin  to  a 
national sale or because the trader has already taken the decision to incur the costs of selling 
abroad  independently  of  the  purchase  request,  or  at  least  been  able  to  take  account  of  the 
possibility of such costs occuring (e.g. a large company operating in several Member States). 
Traders could  recoup  incurred additional  costs in transparent  manner to  the extent  to  which 
they are objectively justified. 

The option covers online and offline sales of tangible goods without obligation on the trader 
to organise cross-border delivery as well as services such as online digital services, tourism 
services, leisure and accommodation services. 

Traders would not be obliged to contract under this option. For example, if a product is "out 
of stock" or if a certain service is unavailable at a specific point of time, traders can refuse to 
contract.  However,  traders  should  provide  equal  treatment  in  different  steps  of  the  sale 
process for foreign and for local customers. 

a) 

Sales of goods 

For sales of tangible goods, non-residents should have the possibility to contract under 
the same conditions as residents of the country where the trader is operating. Given the 
objective  constraints  to  cross-border  delivery,  the  trader  would  not  be  obliged  to 
deliver  the  ordered  tangible  good  to  the  country  of  the  customer  but  the  customer 
would be provided with the same delivery options as national customers, residing in a 
country in which the trader is operating. This includes delivery to an address provided 
by the customer within that country, as well as all other delivery options (e.g. pickup 
at  a  collection  point,  delivery  through  an  intermediary,  etc.)  available  for  the 
consumers residing in the country. Tangible goods include inter alia books (on paper). 
This option would not preclude traders from applying different prices to customers in 
certain  territories  in  so  far  as  they  are  required  to  do  so  under  the  laws  of  Member 
States in accordance with Union law (e.g. book price regulations). 

The customer could only rely on the after sales service in the country where the good 
was delivered by the trader.  

In  B2B  situations  in  particular,  this  should  exclude  transactions  involving  products 
intended for resale, in order to avoid interfering with the competition law framework. 
For businesses as end-users, VAT is due in principle in the country where the goods 
are transported to. 

It would also apply to third country traders already offering delivery or pick-up in at 
least  one  Member  State  of  the  European  Union.  If  a  Brazilian  company  offers  to 

76  

For B2B purchases, only those purchases subject to general selling terms and conditions made available 
to the public at large would be covered by this option. 

26 

 
 
                                                            
deliver a product to Portugal, a consumer residing in France should be able to pick it 
up in Portugal. 

b) 

Sales of electronically supplied services 

Customers  should  be  entitled  to  purchase  electronically  supplied  services  such  as 
cloud  services,  data  warehousing,  website  hosting,  remote  system  administration, 
installation  of  filters,  firewalls,  banner-blockers  etc.,  from  any  trader.77  In  these 
situations, physical delivery does not take place. There is therefore no objective reason 
to  advance delivery problems against  foreign  customers.  Traders  could use  the VAT 
mini one-stop shop for VAT clearance, but would still need to find out the applicable 
rates in the country of destination. Traders exempted from paying VAT under national 
special  schemes  for  small  enterprises  are  not  subject  to  the  non-discrimination 
obligation. Traders would not be obliged to contract but only justifications unrelated to 
nationality  or  place  of  residence  or  establishment  could  be  invoked  (out  of  stock, 
suspicion of fraud based on individual circumstances etc.). In order for traders to adapt 
to the new situation, this part of the option will be phased in progressively. 

B2B  transactions  for  such  online  services  are  taxed  at  the  customer's  place  of 
establishment,  pursuant  to  VAT  rules.  The  trader  does  not  charge  VAT;  it  is  the 
customer who pays VAT on the services received at the applicable rate in their country 
(using the reverse charge procedure). 

It would also apply to third country traders providing services in the EU. 

c) 

Sales of electronically delivered non-audio-visual content services 

Similar  considerations  could  apply  to  digital  content  services  which  give  access  to 
non-audiovisual  content  subject  to  copyright  protection  such  as  music,  e-books, 
software and games delivered online, provided that the trader has the required rights 
for the relevant territories. However, their potential inclusion within the scope of the 
non-discrimination obligation has to be analysed further. 

d) 

Supply  of  goods  and  services  in  the  premises  of  the  trader  or  in  a  physical 
location  where  the  trader  conducts  its  business,  outside  the  customer's  home 
Member State  

Traders would not be allowed to refuse to sell or differentiate prices at the same point 
of sale/website between customers based on the place of residence or establishment or 
nationality  if  the  service  is  used  or  consumed  by  the  customer  at  the  place  of 
establishment of the trader or the location where the trader provide the services outside 
the  home  Member  State  of  the  customer  (e.g.  buying  tickets  to  a  concert,  sales  of 
products  (retail),  visiting  a  leisure  park,  rental  of  summer  accommodation,  car  hire, 
etc.).  Traders  would  still  have  the  freedom  to  set  different  prices  across  different 
websites/applications  (including  country-specific  websites)  but  customers  would  be 
free to choose from which country website they wish to buy.  

In  the  case  of  online  sales,  it  will  be  up  to  the  trader  to  ensure  compliance  so  that 
customers  can  place  orders  on  the  online  interface,  e.g.  through  amendments  to  the 
lay-out  of  the  web  site  if  necessary  or  providing  for  taking  orders  by  an  alternative 
means such as e-mail. 

77  

Services covered by the VAT Mini One-Stop-Shop (Council implementing regulation EU No282/2011) 

27 

 
 
                                                            
Traders  would  remain  free  to  deny sales  on  grounds  not  related  to  the nationality or 
residence  of  the  customers,  for  example  running  out  of  stock  or  not  selling  below  a 
certain age. 

B2B  services  in  respect  of  admission  to  cultural,  artistic,  sporting,  scientific, 
educational, entertainment and similar events, restaurant and catering services, short-
term hire of means of transport will be taxed at the place where those events actually 
take place. 

It  would  also  apply  to  third  country  traders  providing  their  services  within  the 
European  Union.  A  US  company  selling  tickets  for  a  large  music  festival  in  Europe 
would be subject to this provision. An Australian car hire company offering rental of a 
car in Australia to European consumers would not be subject to it. 

Non-discrimination in the means of payment.  

By 2018, all Member States must transpose the second Payment Services Directive.78 
As  a  consequence,  traders  will  have  no  reason  to  refuse  transactions  in  the  EEA  or 
impose additional conditions based on the country of origin of the payment provided 
that  the  retailer  adopts  strong  customer  authentication  and  the  payments  are  in  a 
currency  that  the  trader  accepts.  The  present  proposal  would  not  force  any  trader  to 
accept any specific means of payment, but it would imply that traders who can request 
strong  customer  authentication  by  the  payer  cannot  refuse  payment  because  of  the 
country of origin of the payment within the EEA. Traders would for instance not be 
allowed  to  reject  consumer  credit  or  debit  cards  issued  in  another  country  if  they 
accept the same debit or credit card issued to customers in their country. They could, 
however,  charge  any  extra  costs  occurred  for  transactions  with  cards  of  which  the 
interchange fees have not been capped79.  

Restraints on passive sales 

As  a  complementary  element,  the  option  would  also  clarify  the  situation  as  regards 
vertical  restraints.  It  would  declare  agreements  imposing  on  traders  obligations,  in 
respect of passive sales, to act in violation of the proposed Regulation  automatically 
void. This would in some case go beyond the current competition law framework and 
is  necessary  in  order  to  avoid  the  rules  of  the  proposed  Regulation  from  being 
circumvented through contractual arrangements.  

to  unsolicited  requests  from 

Under the current EU competition law framework with regard to vertical agreements 
passive  sales  restrictions  (i.e.  provisions  in  agreements  which  restrict  a  retailer  from 
responding 
individual  customers)  are  generally 
considered  restrictive  of  competition  pursuant  to  Article  101(1)  TFEU  and  cannot 
normally  be  exempted  under  Article  101(3)  TFEU.  As  a  result,  the  vast  majority  of 
passive  sales  restrictions  in  vertical  agreements  are  already  currently  unlawful  and 
therefore automatically void (Article 101(2) TFEU under EU competition law. Only in 
very  exceptional  circumstances  can  passive  sales  be  lawfully  restricted  in  an 

78  

Directive  (EU)  2015/2366  of  the  European  Parliament  and  of  the  Council  of  25  November  2015  on 
payment  services  in  the  internal  market,  amending  Directives  2002/65/EC,  2009/110/EC  and 
2013/36/EU  and  Regulation  (EU)  No  1093/2010,  and  repealing  Directive  2007/64/EC,  OJ  L  337, 
23.12.2015, 

79 in accordance with Regulation (EU) 2015/751 

28 

 
 
                                                            
agreement  under  EU  competition  law.80  The  option  would  only  bring  a  change  for 
those exceptional cases where passive sales restrictions can lawfully be implemented 
in agreements in the scope of the application of this option. Those agreements would 
now  be  declared  to  be  void.  This  change  would  however  be  justified  under  internal 
market rules to achieve the objectives of the legislation.   

The  legislative  proposal  does  not  affect  active  sales  restrictions  governed  by 
competition  law  (in  particular  by  the  Vertical  Block  Exemption  Regulation)81, 
according  to  which  the  supplier  can  designate  exclusive  territories  to  one  or  more 
retailers  under  certain  circumstances.  These  exclusive  distribution  agreements  may 
lead  to  efficiencies,  especially  where  investments  by  the  distributors  are  required  to 
protect or build up the brand image. 

This  option would apply to  all  companies  including  SMEs and  micro  enterprises other than 
companies  selling  electronically  supplied  services  which  are  exempted  from  paying  VAT 
under the national special schemes for small enterprises.. 

5.4. 

Option 4: Option 2 + list of justifications deemed not to be 

based on objective criteria  

In  some cases  differences  of treatment based on residence or  nationality can  be justified  by 
objective criteria. This option, however, would set out arguments that cannot be accepted as 
being based on objective criteria for traders to justify a difference in treatment, for example:   

  "Lack of delivery options" in the following cases: 

o  when the customer arranges for delivery or takes over the risk of delivery 
o  for parcels up to 20 kg 
o 

if  the  trader  has  a  physical  branch  or  subsidiary  selling  the  same  products  in 
the country of residence of the customer. 

  "Cost for shipment (for refusals to deliver/to sell)" if the customer is willing to pay the 

additional cost linked to delivery. 

  "Cost  of  adapting  to  mandatory  provisions  of  the  law  of  the  country  where  the 
consumer  has  its  habitual  residence"  when  the  trader  does  not  direct  its  activities  to 
this country 

  "Cost or difficulty of bank transfers" in the Single Euro Payment Area. 
  "Difficulty to recover debts from service recipients based in other countries", when the 
service  provider  can  use  the  European  Payment  Order  Procedure  and  the  European 
Small Claims Procedure.  

  "Risk of fraud for electronic means of payment" if the transaction can be authenticated 
by using strong customer authentication pursuant to the Payment Services Directive. 

The option would cover all services, on-line/off-line sales (including delivery), as well as on-
line services that has a physical dimension. 

This option would apply to all companies including SMEs but exempting micro enterprises. 

80 See Vertical Guidelines, paragraph 61.  
81 Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty 
on the Functioning of the European Union to categories of vertical agreements and concerted practices, 
OJ L 102/1, 23.4.2010. 

29 

 
 
 
                                                            
The  option  would  cover  all  purchases  by  customers  and  thus  not  entail  a  difference  in 
treatment based on if the goods/services are purchases by a consumer (B2C) or by a business 
(B2B).82 In B2B situations in particular, this should expressly exclude transactions involving 
products  intended  for  resale,  in  order  to  avoid  circumvention  of  the  competition  law 
framework. 

The justifications that could or could not be invoked would depend on whether the customer 
is  a  individual  consumer  or  a  company,  since  the  applicable  VAT  legislation  is  different  in 
both  cases,  and  depending  on  whether  the  transaction  concerns  a  provision  of  service,  a 
distance sale of goods, whether it involves delivery, etc. 

5.5. 

Option 5: Option 3 + obligation to serve customers across 

the EU 

In  a  Single  Market  with  few  remaining  barriers  for  cross-border  trade,  customers  have  an 
expectation  to  be  served  across  borders.  Under  this  option,  companies  that  already  deliver 
within  their  own  country  could  not,  as  a  general  rule,  refuse  to  deliver  to  another  Member 
State.  They  could,  however,  charge  any  extra  delivery  costs.  This  option  goes  thus  further 
than option 3, where the trader would not be obliged to deliver the ordered tangible good to 
the country of the customer but where same delivery options as national customers would be 
given, for example delivery to an address in the country of the trader. 

Responding  to  customer  concerns  about  the  availability  for  after-sale  services,  2this  option 
would also create an obligation for traders to provide similar after-sales services for a given 
product/service  in  all  EU  Member  States  in  which  the  traders  is  present  through  its  own 
branches  and/or  subsidiaries  and  through  which  the  trader  already  offers  the  same 
product/services for which after-sales services are sought, regardless of the EU Member State 
in which the customer originally purchased the product/service. The trader in the country of 
the customer would however only be obliged to provide the minimum harmonised after-sale 
services as foreseen under EU law. For instance, if a Polish citizen living in Germany buys a 
product  in  Poland  and  the  trader  has  a  branch  or  a  subsidiary  in  Germany  where  the  same 
product is offered, the Polish customer should not have to go back to Poland to benefit from 
after-sales  services. In  order  to  provide  for level-playing  field for companies  irrespective of 
their business model, the concept of "trader" should include all branches or subsidiaries of a 
given company.  

Given  the  burdens  that  this  option  may  create,  SMEs  and  micro  enterprises  should  in  any 
event be exempted from this option. 

The  option  would  cover  all  purchases  by  customers  as  end-users  and  thus  not  entail  a 
difference in treatment based on if the goods/services are purchased by a consumer (B2C) or 
by a business (B2B).83 

82  

83  

For B2B purchases, only those purchases subject to general selling terms and conditions made available 
to the public at large would be covered by this option. 
For B2B purchases, only those purchases subject to general selling terms and conditions made available 
to the public at large would be covered by this option. 

30 

 
 
                                                            
5.6. 

 Other policy options 

As  mentioned  in  section  2.6  above  ("Evaluation  of  the  existing  policy  framework"),  the 
published guidelines based on existing legislation did not succeed in ensuring consistency in 
the  application  of  the  non-discrimination  clause  of  the  Services  Directive  across  Member 
States. Based on past experience, it is possible to conclude that publishing other kind of 'soft-
law', such as additional guidelines or a non-binding recommendation would not be effective 
and not make any difference.  

As  mentioned  in  section  2.6,  promoting  voluntary  agreements  of  traders/providers  failed  to 
enforce a legally binding non-discriminatory provision, although this took place in a context 
where the Commission managed to attract substantial media coverage, with large international 
market players. Such an approach does not seem likely to be effective or appropriate if it is to 
be  extended  to  all  players.  The  Commission  would  also  be  seen  as  intervening  directly  in 
individual enforcement  cases,  which  are  the  responsibility of  national authorities. Finally,  it 
does  not  seem  appropriate  to  make  the  respect  of  the  fundamental  principle  of  non-
discrimination enshrined in the treaty dependent on “voluntary” agreements. 

Amending  the  Services  Directive  was  also  considered  inappropriate.  The  Directive  is  the 
result  of  very  complex  negotiations  resulting  in  a  delicate  political  balance,  and  both  the 
European Parliament and the vast majority of Member States already indicated that they were 
opposed to any amendment to it. 

6.  Analysis of impacts 

6.1.  Option 0 – baseline scenario- see section 2.5 

6.2.  Option 1. Improving transparency and enforcement 

Impact on the policy objectives  

Requesting companies to provide an explanation to customers why they refuse them access 
to a particular website or redirect them automatically to another one or informing customers 
that  they  will  not  sell  cross-border  could  discourage  them  from  doing  so,  because  it  may 
generate  negative  publicity  for  their  business  model.  However,  the  mechanism  is  very 
indirect,  and  by  providing  a  valid  justification,  companies  can  avoid  negative  publicity. 
Requesting companies to provide a justification upon request would be meaningful for the 
concerned  customer,  but  not  necessarily  induce  –  directly  or  indirectly  -  companies  to 
abandon geoblocking. Thus, the positive impact could be very small. Similarly, improved 
enforcement  of  an  unclear  provision  is  unlikely  to  ensure  non-discrimination,  since 
enforcement authorities would not know how to enforce the rule. 

On  the  other  hand,  the  public  consultation  showed  that  more  than  eight  out  of  ten  of 
respondents from the consumer group are in favour of companies having the obligation to 
explain  -  either  before  the  transaction  or  upon  request  -  the  reasons  for  the  difference  in 
treatment  of  customers  based  on  residence/nationality.  Between  a  third  and  half  of  the 
business  respondents  also  agree  to  more  transparency  as  a  policy  option  in  the  sense  that 
companies should explain their different treatment, either before or after the transaction. 

Economic Impacts 

31 

 
 
Operating costs and conduct of business  

The option would entail administrative costs.  

For  the  explanation  of  access  refusal  or  automatic  redirecting,  this  would  concern  only  a 
small  share  of  total  websites  (around  2%,  see  annex  6),  which  however  have  a 
disproportionately large share of cross-border traffic (around 7.5%, see annex 6) and who 
are  already  present  on  several  national  markets  through  a  multiplicity  of  websites,  and 
already have carried out significant IT investments for that purpose.  

On  the  other  hand,  the  cost  of  providing  explanations  to  customers  if  restrictions  are 
justified  would  concern  a  very  large  share  of  companies.  It  could  be  done  either  upon 
request, or provided upfront.  The cost for handling a request  can  be  estimated to  €2.0584. 
For  a  standard  company  which  does  not  target  foreign  consumers  and  does  not  aim  at 
delivering cross-border, one request a week seems a high assumption, which would result in 
a cost of up to 100 euros per year. Some providers would find it less profitable and more 
time-consuming  to  edit  a  cost  estimate  and  an  invoice  than  to  add  the  information  to  the 
legal notice of the website, if it does not involve development or coding costs. 

In case of billing, assuming that adding a few lines to a webpage (without coding) would 
involve at most 4 hours of work, the low estimate of the one-off cost for a simple operation 
would  be  around  EUR 10085.  In  relation  with  the  EU  cookie  notification  policy,  which 
involved  higher  development  costs,  a  higher  estimate  of  adapting  of  websites  was  of 
EUR 90086  -  this  would  then  include  the  provision  of  an  explanation  when  re-routing  (as 
well the ban on the block of access – as under Option 2).  

For the explanation of discrimination or refusal to sell/deliver when requested, this would 
represent a cost which is proportional to the number of websites operated. For SMEs and 
micro-enterprises having to explain why they will not sell/deliver to other Member States 
would constitute an administrative burden, the size of which will depend on the number of 
inquiries received.  

Impact on the Single Market 

Given the indirect mechanism by which this option would reduce discrimination, the impact 
of  this  option  in  addressing  the  problem  will  be  very  small.  It  will  therefore  not  increase 
market  integration  or  trade  flows  to  any  significant  extent.  However,  transparency  may 
reduce  customer  frustration  who  want  to  buy  everywhere  in  the  Single  Market  but  not 
necessarily  increase  their  satisfaction.  Transparency,  however,  matters  in  a  context  where 
trust in the Internet relies on appropriate information of customers.  

84  

85  

86  

Price (P) equals tariff * time; Tariff: The wage cost of the employee assessing the request and replying. 
The wage costs will differ between Member States, but the EU-28 is used as a proxy (€24.6/hour).  
Time: The time taken up by the reply to each request for justifications should be minimal considering 
that the  trader should  be  well  aware  the  reason used  for  applying  different  condition  (as  it  requires a 
concerted effort to do so) and as the reply can be provided in the trader's own language. Assessing the 
request and providing a reply should not take more than 5 minutes (or 1/12 hour).  Using these general 
estimations for price and quantity, the total cost for each justification would be 24.6*(1/12) = €2.05. 
On  the  basis  of  an  EU  average  of    €24.6/hour;  Eurostat,  Labour  cost  levels,  Industry,  construction, 
services (2014) 
ITIF, The Economic Costs of the European Union’s Cookie Notification Policy BY DANIEL CASTRO 
AND ALAN MCQUINN | NOVEMBER 2014,  

32 

 
 
                                                            
Competitiveness of business 

This  option  is  not  expected  to  affect  competitiveness  of  European  businesses,  because  it 
applies to European and non-European companies alike. 

Impacts on SMEs and microenterprises 

SMEs and microenterprises would face administrative costs for providing the information 
(see  above).  These  costs  would  occur  to  a  large  share  of  these  enterprises  and  would  be 
relatively  more  important  for  SMEs  and  especially  microenterprises  than  for  large 
companies,  thus  putting  them  at  a  disadvantage.  Nevertheless,  they  could  provide 
information in their language. SMEs, and especially microenterprises, operating in a purely 
national environment, with a limited number of products in catalogue, are unlikely to run 
multiple  websites.  The  possibility  given  to  companies  to  choose  between  an  upfront 
explanation  and  explanation  upon  request  would  enable  them  to  opt  for  the  less  invasive 
transparency measure, in line with their business model. In line with the Consumer Rights 
Directive, a small company selling one product on its website already has the obligation to 
inform consumers about delivery or payment restrictions. It could adapt its website to the 
new  obligation  by  explaining,  for  instance,  that  the  company  does  not  sell  in  a  given 
Member  State  because  of  the  costs  linked  to  registration  for  VAT  purposes  there.  As 
explained above the cost of such a change would depend on whether or not the website is 
managed internally.   

In addition, the trader would remain totally free, as it is today, to reply to requests in any 
language it wants. This option would not impose any translation obligation. 

During  the  stakeholder  consultation,  more  individual  business  expected  a  positive  than  a 
negative impact, but a clear majority of business associations expected a negative impact. 

In  so  far  as  customer  willingness  to  purchase  cross-border  increases  thanks  to  better 
information, SMEs which are prepared sell cross-border might profit from increased sales. 
However, this effect is likely to be very small. Specific enforcement provisions will enable 
SMEs as purchasers to seek redress in case their rights have been violated.   

Consumers and households 

Consumers  would  benefit  by  being  better  informed  about  reasons  for  discrimination, 
assuming  the  reasons  given  by  traders  are  correct.  Nevertheless,  providing  information  in 
relation  to  delivery  restrictions  and  means  of  payment  is  already  mandatory  under  the 
Consumer Rights Directive. 

Moreover, improved enforcement mechanisms will also benefit consumers. First they will 
have an incentive to claim respect for their rights towards traders, knowing that they could 
be  effectively  enforced.  Second,  they  will  be  encouraged  to  lodge  a  complaint,  knowing 
precisely  which  the  enforcement  authorities  (endowed  with  the  necessary  powers  to  act) 
are. 

A  very  clear  majority  of  consumers  and  of  consumer  associations  who  responded  to  the 
stakeholder consultation believe the impact of transparency requirements to be positive or 
very positive. One of the main conclusions of the workshop with stakeholders organised on 
18/2/2016  in  Amsterdam  has  been  that  addressing  information  shortcomings  in  isolation 
would not address the underlying problems. 

33 

 
 
Macroeconomic impact 

This option does not have any macroeconomic impact. 

Impact on Member States 

For  enforcement  purposes,  no  new  administrative  arrangements  are  required,  as  the  CPC 
network  is  already  active.  There  might  be  an  increased  workload,  but  there  is  no  data 
available  to  estimate  this  increased  workload.  However,  the  information  on  reasons  for 
blocking access and rerouting concerns a very small share of websites. The additional costs 
due to the present proposal is, therefore, likely to be small, including with respect to third-
country traders. 

Social Impacts 

This option does not have any social impact. 

Environmental Impacts 

This option does not have any environmental impact. 

6.3.  Option 2  

Banning of blocking access to websites  

Impact on the policy objectives 

Requesting companies to refrain from blocking access and automatic rerouting will enable 
customers to compare offers on different websites of the same seller. They may well resent 
it  if  they  are  forced  to  use  a  website  offering  less  advantageous  conditions.  As  a  result, 
some companies may start to allow visitors from other Member States to buy from any of 
their  websites.  Some  may  even  offer  identical  conditions  on  all  websites  if  there  is  a 
business case to do so. However, the mechanism by which discrimination in terms of access 
to goods and services is reduced is very indirect since most companies will likely continue 
discriminating when selling. 

In  the  public  consultation,  four  out  of  five  respondents  from  the  consumer  and  consumer 
organisations group agree that the forms of geoblocking such as blocking access to websites 
create  significant  obstacles  to  the  single  market,  and  a  large  majority  of  the  respondents 
from  the  consumers  and  consumers'  organisations  group  favour  a  ban  on  discriminatory 
blocking of access to websites. Around half of the business respondents agree. 

Economic Impacts 

Operating costs and conduct of business  

Companies currently blocking access and practicing automatic rerouting would have either 
to  abandon  automatic  rerouting  or  to  change  their  websites  to  request  approval  of  the 
customer  for  rerouting  (except  for  the  small  number  of  websites  for  which  geoblocking 
remains permitted because of legal obligations, such as sales restriction on Swedish tobacco 
"snus").   

Abandoning  automatic  rerouting  (basically,  disabling  the  IP  filtering)  is  inexpensive. 

34 

 
 
 
Requesting approval from Website visitors before rerouting them entails some compliance 
costs but this would concern only a small share of total websites (around 2%, see above), 
which however are typically larger websites – they have a disproportionately large share of 
cross-border  traffic  (around  7.5%)  and  they  are  only  concerned  if  they  have  at  least  two 
different websites addressing two different Member States (see annex 6) and already have 
carried out significant IT investments for that purpose. 

Informing  customes  when  they  are  rerouted  for  reasons  of    EU  law  or  national  law  in 
accordance with EU law will concern only exceptional cases. 

Impacts on the Single Market 

Blocking access to websites and automatic rerouting is practiced only by 2% of websites, so 
even  if all  of them disabled blocking and accepted cross-border  customers, the impact on 
trade would be very small. If those websites accepted cross-border customers with the same 
ratio  as  websites  overall  (49.2%),  the  impact  would  be  smaller  still  (1%  increase  in 
successful  cross-border  shopping  attempts).  Since  these  websites  are  distinguished  from 
websites in general by having actively implemented policies to segment markets already at 
the  access  level,  one  can  assume  that  the  actual  share  of  such  websites  allowing  foreign 
orders would be even smaller.  

Competitiveness of business 

This  option  will  not  affect  competitiveness  of  European  businesses,  because  it  applies  to 
European and non-European companies alike. 

Impacts on SMEs and microenterprises 

The fact  that companies practicing automatic rerouting have about 4 times  average  cross-
border  traffic  indicates  that  these  are  usually  larger  companies.  Equally,  from  the 
eCommerce  Sector Inquiry it emerged that retailers with  a large turn-over geoblock more 
often than smaller retailers, since they frequently have several websites in several Member 
States. 

Only very few of the websites practising automatic rerouting belong to SMEs, and virtually 
none to micro enterprises – automatic rerouting only makes sense if the company operates 
several websites directing sales efforts to at least two distinct national markets. Therefore 
the impact on micro enterprises is likely negligible.  

During  the  public  consultation  a  majority  of  businesses  expected  the  impact  of  banning 
discriminatory blocking to be positive, but the impact of a ban on automatic rerouting to be 
negative,  despite  the  fact  that  less  than  only  2%  of  businesses  actually  reroute 
automatically. A majority of business association expected a negative impact of both.  

Consumers and households 

Consumers will be able to access previously blocked websites, providing them with better 
information  on  goods  and  services  as  well  as  prices  offered  in  other  Member  States. 
However, they will not necessarily be able to actually purchase these goods and services at 
those prices. This option is therefore of limited value to customers. It will, however, be a 
necessary first step for further-reaching rules on the access to goods and services.  

During  the  public  consultation  an  overwhelming  majority  of  consumers  and  of  consumer 

35 

 
 
association estimated  the  impact  of  banning  discriminatory blocking  to  be  positive, and  a 
clear majority thought the same of requesting prior approval before automatic rerouting.  

Macroeconomic impact 

Given  the  small  impact  on  the  Digital  Single  Market,  this  option  does  not  have  any 
measurable macroeconomic impact. 

Impact on Member States 

None  

Social Impacts 

Given  the  small  impact  on  the  Digital  Single  Market,  this  option  does  not  have  any 
measurable social impact. 

Environmental Impacts 

Given  the  small  impact  on  the  Digital  Single  Market,  This  option  does  not  have  any 
measurable environmental impact. 

6.4.  Option 3  

Option 2 + equal treatment in specific situations 

("shop like a local") 

Impact on the policy objectives  

In  addition to the impacts of Option 2, for the situations concerned,  geo-discrimination is 
likely  to  be  reduced,  although  companies  will  only  need  to  deliver  physical  goods  within 
their  normal  delivery  area  and  will  keep  the  possibility  to  adapt  their  means  of 
communication to specific national audiences (for instance with announcing a special offer 
only  on  one  language  version  of  their  website).  The  specific  situations  are  as  follows:  a) 
sale  of  goods  when  the  customer  picks  up  the  good  himself  or  arranges  delivery  to  a 
national  address,  b)  sale  of  electronically  supplied  services  and  c)  supply  of  services  in 
another country than that in which the customer has its residence, 

In  the  public  consultation,  a  clear  majority  of  consumer  respondents  favoured  rules 
requiring  traders  to  accept  cross-border  transactions  from  users  throughout  the  EU,  either 
under  conditions  reflecting  additional  costs  or  in  cases  where  users  arrange  the  delivery 
themselves. Among companies, opinions are rather divided, although business associations 
are generally supportive of the aim to prohibit unjustified geo-blocking while at the same 
time highlighting the importance of contractual freedom.  

This  option  would  tend  to  increase  legal  certainty  by  setting  out  in  unambiguous  terms  a 
prohibition  of  different  treatment  based  on  residence  of  nationality  in  three  clearly 
identified  cases.  As  such  it  would  also  enable  national  authorities  to  enforce  the  directly 
effective provisions, in contrast with current legislation. 

Economic Impacts 

36 

 
 
 
Operating costs and conduct of business  

For those traders which would need to implement changes in order to allow foreigners to 
purchase  via  their  websites  under  certain  circumstances,  there  would  be  the  compliance 
costs of changing the website. Nevertheless, if they do not expect large cross-border sales 
volumes, companies could ensure that they accept cross-border orders temporarily by other 
means, such as e-mail. While in this case a single transaction is more labour-intensive, any 
cost  would  not  occur  without  a  direct  benefit  (a  sale).  In  the  medium-to-long  run,  as 
websites need to be regularly modernised, the acceptance of cross-border purchases can be 
introduced as an ancillary of a regular modernisation.  

It  is  only  when  the  customer  organises  the  transport  to  its  Member  State  of  residence 
independently from the supplier that goods delivered are taxed at the origin. The assessment 
of this distinction has to be made with the view of avoiding the possibility of creating any 
tax abuse arrangements. Thus this option involves the seller delivering to an address within 
its normal delivery range, without interfering in any way in the transport of the good to the 
residence of the customer, not even by providing a list of intermediaries which could do so 
on  behalf  of  the  customer.  The  cross-border  transport  is  entirely  left  for  the  customer  to 
arrange. 

Other compliance costs would only occur at a very limited level.  

a) In the case of sale of tangible goods, for activities not directed to the country of residence 
of  the  customer,  according  to  the  Rome  I  Regulation  the  trader  retains  total  freedom  of 
choice  over  the law which should apply  to  the contract  –  and de facto,  in  such  cases, the 
trader indeed usually chooses the law applicable in its country of establishment – and does 
not need to abide by any more stringent mandatory consumer contract rules that may apply 
in the consumer's Member State. In any case, mere compliance with this instrument will not 
be construed as implying that a trader directs his activities to the Member State where the 
consumer has his habitual residence or domicile. 

For activities directed to the country of the customer, the trader has already accepted that it 
has  to  comply  with  the  mandatory  consumer  contract  rules  applicable  in  the  consumer's 
Member  State.  Not  covering  companies  directing  their  activities  to  other  Member  States 
might have the side-effect of favouring larger operators providing their services across the 
Single  Market  through  a  single  establishment,  while  subjecting  operators  organised  with 
independent  subsidiaries  directing  only  their  activities  to  their  own  Member  States  of 
establishment.  The  same  rules  regarding  directing  of  activities  and  applicable  law  and 
jurisdiction apply in (b), (c) and (d) below. 
Pursuant to the VAT directive87, VAT for goods is due in the Member State into which the 
goods  are shipped; since there is no cross-border delivery (goods are only  shipped within 
the area where the traders already deliver), and only when the supplier does not intervene 
directly  or  indirectly  in  the  organisation  of  the  transport  of  goods  to  the  customer,  no 
additional VAT registration will be necessary. In terms of shipping costs, this option would 
not  require  traders  to  ship  beyond  their  normal  delivery  area,  as  they  would  do  for  local 
consumers.  Additional  labelling  costs  would  not  occur  when  the  trader  has  not  expressly 
chosen to supply products to EU consumers or other end-users.  

b)  For  the  sale  of  electronically  supplied  services  covered  by  the  VAT  Mini-One-Stop-

87  

Council Directive 2006/112/EC — the EU’s common system of value added tax (VAT) 

37 

 
 
                                                            
Shop,  VAT  is  due  in  the  country  of  the  service  recipient,  but  registration  is  done 
automatically through the one-stop-shop. It is for the supplier to decide whether he opts to 
account  for  taxes  due  in  other  Member  States  through  the  one-stop-shop  or  whether  he 
prefers to register in each member State. The trader would need to identify the VAT rate in 
the  customer's  country  in  the  case  of  digital  sales,  but  under  the  new  VAT  proposal,  this 
information will be easily available. For these services, application of the new rules would 
only start on 1 July 2018, giving companies sufficient time to familiarise themselves with 
the available information sources.  

However, the facilitation provided by the VAT Mini-One-Stop-Shop is only helpful if the 
company  is  already  registered  for  VAT.  Yet  under  current  legislation,  companies  falling 
under  certain  thresholds  set  by  Member  States  may  be  exempted  from  VAT.  For  those 
companies, compliance with this option would create burdensome obligations. They should 
therefore be exempted from the obligation of equal treatment.   

For  the  sale  of  electronically  delivered  non-audiovisual  content  services  subject  to 
copyright  protection,  such  as  music,  e-books,  software  and  games,  if  the  trader  has  the 
required rights for the relevant territories, the considerations above would apply. However, 
given  ongoing  developments  in  the  market,  e.g.  with  respect  to  multi-territorial licensing, 
for  these  services  the  potential  extension  of  the  non-discrimination  obligation  requires 
further assessment. 

c)  For  supply  of  the  service  in  another  country  than  that  in  which  the  customer  has  its 
residence (e.g. a hotel booking or a car rental), this would not entail any extra compliance 
cost  linked  to  taxation  or  applicable  legislation,  and  the  VAT  Directives  provide  that 
normally VAT is to be paid in the country where the service is supplied. 

Traders 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. 

Impact on the Single Market 

The  proposal  to  allow  customers  access  to  more  choice  and  affordable  offers  should 
motivate  consumers  to  shop  cross-border.  Price  arbitrage will  nevertheless  be constrained 
by delivery costs in the case of tangible goods.  
For  example,  an  analysis  of  distance  sale  of  electronic  goods88,  one  of  the  most  popular 
online  sales  categories,  estimates  that  net  effect  of  lifting  geoblocking  restrictions  by 
companies  on  cross-border  sales  of  these  goods  would  be  increase  of  about  1.1%  of  the 
total market size (total sales). Most of that additional trade would come at the expense of a 
reduction  in  domestic  purchases,  mostly  in  domestic  offline  purchases.  The  net  trade 
expansion effect on these goods is estimated at 0.4% only. Nevertheless, one has to keep in 
mind  that  the  baseline  will  be  affected  by  the  effectiveness  of  the  related  regulatory 

88  

Unless  stated  otherwise  the  evidence  in  the  following  sections  refers  to  specific  situation  a)  distance 
sale  of  tangible  goods  when  the  customer  arranges  for  cross-border  delivery. The  analysis  of  the 
electronics sector is based on four product categories in ten Member States accounting for more than 
half  of  EU  online  sales  of  electronic  goods.  For  the  economic  model  used  in  the  assessment  of  this 
option and its limitations, please see annex 4; Full report:. Duch-Brown, N. and B. Martens (2016) , The 
Welfare  effects  of  lifting  geoblocking  restrictions  in  the  EU  Digital  single  Market.  JRC/IPTS  Digital 
Economy Working Paper (forthcoming). 

38 

 
 
                                                            
initiatives listed in section 1. 
According to the previously cited survey, 32% of Western European89 international online 
buyers  have  used  a  forwarding  address  to  get  delivered90.  42%  of  them  did  so  when  no 
shipping to the country of the customer was available, and 9% did so while travelling in the 
country of the seller. With 35% of citizens travelling abroad every year and 40% of citizens 
living  in  border  regions,  the  ability  to  purchase  without  delivery  to  the  customer's  home 
address is likely to have a significant impact. 

This option is likely to affect mostly retail of consumer goods and encourage consumers to 
shop cross-border, whether on a tourist, family or business trip, and in cross-border regions. 
It will also encourage consumers to check offers on different websites. Anecdotal evidence 
form companies showed that some of those who changed their practices in the leisure sector 
noticed an increase of cross-border sales. 

Under this option, obligations on traders in agreements that violate the Regulation would be 
automatically  void.    The  overall  impact  of  this  rule  would  not  significantly  affect  market 
participants,  as  most  passive  sales  restrictions  are  already  at  present  prohibited  and 
automatically void under EU competition law. In the very exceptional circumstances when 
they  are  not,  it  would  be  justified  under  internal  market  rules  to  go  further  and  prohibit 
them to achieve the objectives of the proposed Regulation to ensure the proper functioning 
of the internal market and avoid circumvention.   

Active sales restrictions would however not be covered by this rule, because of the major 
impact that this would have on exclusive distribution agreements and investment incentives 
of  distributors.  Exclusive  distribution  may  lead  to  efficiencies,  especially  where 
investments by the distributors are required to protect or build up the brand image. In order 
to  persuade a  local  distributor  to  make  investments,  it  may  be  necessary  to  provide  some 
territorial  protection  to  the  distributor  in  the  form  of  active  sales  restrictions  on  other 
distributors, so that the former can recoup these investments. According to the findings of 
the  e-commerce  sector  inquiry,  roughly  half  of  the  manufacturers/suppliers  make  use  of 
exclusivity clauses at least for one product, at least in one product category. 

Competitiveness of business 

Lifting  geo-blocking  restrictions  should  boost  trade  as  on-line  sellers  will  receive  more 
sales orders from foreign customers. Offline price competition can be expected to increase. 
In  the  case  of  electronic  goods,  for  which  particularly  good  data  is  available,  both  online 
and offline prices are forecast to decline when sellers adjust to the new market conditions 
when geoblocking restrictions are lifted, leading to additional sales.  

The net effect of lifting geoblocking restrictions by companies for tangible goods on total 
sales is likely to be positive. Based on an extension of the analysis of the electronics sector, 
producer  surplus  (profits)  could  increase  by  1.0%  on  average  across  Member  States,  as 
revenue losses from those companies abandoning market segmentation to maintain higher 
prices  in  some  markets  are  more  than  compensated  by  the  additional  revenues  for 
companies which previously had not sold to customers resident in another member state.  

Firms  that  buy  goods  and  services  online  as  end-users  would  benefit  from  lifting 
geoblocking  restrictions  in  the  same  way  as  consumers,  from  lower  prices  and  a  wider 

89  
90  

Defined in the study as DE, FR, IT, ES , UK, NL, SW, IR, AT and CH 
Ipsos MORI 2015 for PayPal 

39 

 
 
                                                            
variety of products. 

The international competitiveness of companies will not be affected, since the obligations 
apply to all companies selling to EU customers, whether established in the EU or not. 

Impact on SMEs and microenterprises 

SMEs which already target the country of the customer will not incur any additional costs. 
SMEs which do not target other countries would incur only minimal additional costs. This 
would include virtually all microenterprises and most SMEs. 

For tangible goods, by delivering within their country (and only when the supplier does not 
intervene  directly  or  indirectly  in  the  organisation  of  the  transport  of  goods  to  the 
customer), they do not need to register for VAT, and no additional delivery costs occur. The 
risk of fraud will not be any higher following the implementation of the Payment Services 
Directive 2.  

For  digital  services,  the  same  would  apply,  except  that  they  would  need  to  pay  foreign 
VAT, but not register for it as the Mini One-Stop Shop applies. They would need to identify 
the applicable foreign rate, which is already easily available and will be made  even  more 
understandable  under  the  new  VAT  proposal.  From  the  evaluation  of  the  VAT  MOSS, 
businesses  seemed  overall  pleased  with  its  introduction  and  level  of  functionality  and 
estimated to contribute to reduced costs for business by 500 million in 2015. However, the 
facilitation  provided  by  the  VAT  Mini-One-Stop-Shop  is  only  helpful  if  the  company  is 
already registered for VAT. Yet under current legislation, companies falling under certain 
thresholds  set  by  Member  States  may  be  exempted  from  VAT.  For  those  companies, 
compliance with this option would create burdensome obligations. They should therefore be 
exempted from the obligation of equal treatment.   

For  digital  non-audio  visual  content  services  which  give  access  to  content  subject  to 
copyright  protection,  the  potential  extension  of  the  non-discrimination  obligation  to  them 
requires  further  assessment.  In  any  case,  companies  would  not  be  obliged  to  acquire 
additional licences, but would potentially be subject to the provisions only if they already 
have the licenses for the territories in question. 

For services provided in the premises or at the location of the trader outside the customer's 
Member  State  (such  as  hotels,  leisure  activities,  festivals,  car  hire  etc…),  SMEs  will  not 
face any burden, since the place of residence or establishment of the customer cannot create 
any  additional  cost:  the  applicable  VAT  is  the  VAT  of  the  country  where  the  service  is 
supplied,  and  this  type  of  services  do  not  involve  any  cross-border  delivery  of  products. 
Larger traders operating a number of different websites and applying source market pricing 
strategies in order to maximise their profits by charging more to consumers from countries 
where  there  is  more  demand  (or  less  competition)  may  be  more  affected  than  SMEs  or 
micro-companies  traditionally  targeting  a  single  country  or  without  the  means  to  develop 
such complex pricing strategies. 

In  all  of  the  scenarios  mentioned  above,  if  the  trader  does  not  direct  its  activities  to 
consumers in a Member State, according to the Rome I Regulation the trader can decide to 
apply the law applicable in its place of establishment and it does not need to abide by any 
more stringent consumer contract rules that may be applicable in  the consumer's Member 
State. 

This  option  only  obliges  traders  not  to  treat  foreign  customers  differently  from  national 
customer, just like they would not treat them differently if they walked into their shop. 

40 

 
 
During the public consultation, slightly more companies thought the impact to be negative 
than positive. Company associations had a more negative expectation. 

Consumers and households 

If  current  unjustified  geoblocking  practices  cease,  customers  will  have  access  to  the 
catalogues of distance sales of goods catalogues in all Member States, at the same prices as 
domestic  online  shoppers  in  these  countries  (with  the  additional  transport  and  handling 
costs to ship the goods themselves or via a third party to their country of residence, if they 
so wish). As a result, customers will be able to benefit from lower prices in other Member 
States and buy a larger variety or quality of goods available in the EU.   

As  mentioned  above,  both  online  and  offline  prices  can  be  expected  to  decrease  which 
increase  consumers'  purchasing  power  and  real  expenditures.  In  the  previously  cited 
example of the electronic goods sector, price decreases are estimated at -0.5% offline and -
0.6%  online,  on  average  across  the EU.  The  variety  effect will  further  increase  consumer 
welfare  because  they  will  find  more  appealing  products  than  those  available  in  the  home 
market.  Moreover, increased competition should spur innovation. 

Based  on  the  analysis  of  the  electronics  sector, the  total  EU28  consumer  surplus  increase 
from online  purchases of tangible goods could amount  to  0.8%  on average  for the EU28, 
with  variations  across  Member  States.  Smaller  Member  States  would be  expected  to  gain 
more (up to 15%) because the variety of goods locally available online is more limited. The 
impact  on  consumers  in  larger  EU  economies  would  be  more  limited  because  larger 
markets offer more product variety. 

Similarly,  regarding  electronically  supplied  services  and  services  at  the  location  of  the 
trader outside the customer's Member State, the abolition of geoblocking will allow foreign 
customers  access  to  services  in  all  Member  States,  at  the  same  prices  as  domestic  online 
shoppers in these countries. The major difference compared to goods is that in these cases 
there are no transport costs to limit price arbitrage. Generalised access to all offers could in 
theory  lead  to  progressive  convergence  of  prices  in  excess  of  transport  costs.  However, 
customers also face information costs resulting from language and the fact that most price 
comparison sites are national. In fact, the following empirical evidence suggests that price 
arbitrage in practice might not lead to uniformisation of prices, even where transport costs 
are minimal. 

Indeed, the existing situation in European cross-border regions points to existing large price 
differentials, which have not been affected by the fact that consumers regularly make use of 
the  freedoms  of  the  single  market.  In  2015,  a  study  analysing  price  differentials  between 
France, Belgium and Luxembourg pointed to a 13% price difference for the same consumer 
basket in large supermarkets of the same brand.91 Already in 2009, the European Consumer 

91  

of 

differential 

lesfrontaliers.lu 

2015  Study  by 
(http://www.lesfrontaliers.lu/finances/faut-il-faire-ses-courses-au-
luxembourg-en-france-ou-en-belgique).  An  older  similar  study comparing  the  prices  of  seven  product 
categories between Belgium, the Netherlands, France, Luxembourg and Germany had demonstrated a 
(http://www.test-achats.be/action/espace-presse/communiques-de-
price 
presse/2011/comparaison-de-prix-produits-electroniques-la-belgique-9-plus-chere). A 2011 study found 
large differences in the prices of 74 consumer products sold in Austria and Germany, with for example 
a  difference  of  74%  in  the  price  of  the  same  face  cream  sold  by  the  same  drugstore 
(http://www.konsument.at/markt-dienstleistung/preisvergleich-oesterreich-deutschland-
318879174916?pn=1). A study conducted in 2014 found that the price differences of drugstore products 
persisted 
sold 

Germany 

Austria 

had 

9% 

in 

in 

41 

 
 
                                                            
 
Centres  for  France  and  Germany  had  noted  very  substantial  price  differences  for  kitchen 
elements  (up  to  50%)  sold  on  both  side  of  the  border  in  shops  of  the  same  company.92 
These figures show that in situations characterised by a high level of cross-border mobility 
of customers, no real price harmonisation took place.  

Partly,  this  is  due  to  the  fact  that  retailers  cannot  in  practice  have  very  different  national 
prices on-line and offline. Therefore, national pricing strategies of companies are unlikely 
to totally change. A non-discrimination obligation would therefore not be expected to lead 
to price harmonisation and general increase in prices in low-price countries, Nevertheless, 
the Internet significantly reduces information costs, and price comparison sites will expose 
differences more prominently than before, enabling potential cross-border shoppers to take 
advantage of remaining price differentials. 

During the public consultation, a clear majority of consumers and a majority of consumer 
associations  estimated  the  impact  of  an  option  allowing  customer  to  organise  delivery 
themselves to be positive. 

Macroeconomic impact 

Increased  cross-border  trade  after  lifting  discriminatory  restrictions  will  tend  to  reduce 
prices  in  the  domestic  retail  sector.  This  would  benefit  other  sectors  of  the  economy 
because it becomes cheaper to distribute goods and services through the retail sector. The 
overall  decline  in  retail  prices  would  increase  consumers'  purchasing  power.  The  current 
levels  of  cross-border  e-commerce  already  increase  real  household  expenditure  by  about 
1%  compared  to  a  situation  without  cross-border  e-commerce93.  As  a  result,  the  overall 
impact of the current level of cross-border e-commerce on total output (GDP) is estimated 
at  around  +0.14%,  compared  to  a  situation  with  no  cross-border  e-commerce94.    The 
magnitude  of  the  overall  macro-economic  impact  varies  across  Member  States,  from 
virtually zero to +0.25% in countries that are in the vanguard of e-commerce development. 
Lifting geoblocking restrictions will amplify this positive impact, but a precise estimate of 
the macroeconomic impact of this option is not available.  

Impact on Member States 

For enforcement purposes, no new administrative arrangements are required beyond those 
mentioned  in  option  1.  There  might  be  an  increased  workload;  however,  there  is  no  data 
available to estimate this increased workload. There were roughly 1500 complaints over 8 
years  (2007-2015)  which  have  come  to  the  Commission's  attention,  but  many  issues  are  
under-reported..  The  specificity  of  the  rules  and  the  limited  scope  of  this  proposal  will 

the  same  supermarket  cost  47  € 

(https://tirol.arbeiterkammer.at/beratung/konsumentenschutz/TestsundPreisvergleiche/_Oesterreich-
Aufschlag__bei_Drogerieartikeln.html).  Similarly,  according  to  a  2015  test,  a  basket  of  10  food 
products  sold  by 
in  Estonia 
in  Finland  and  39  € 
(http://www.mtv.fi/uutiset/kotimaa/artikkeli/mtv-vertasi-ruokakorin-hinta-viron-ja-suomen-
prismoissa/4712440). 
http://www.europe-consommateurs.eu/fileadmin/user_upload/eu-
consommateurs/PDFs/publications/etudes_et_rapports/4.4.8_synthese_comparaison_des_prix_ikea-
cuisine_france-allemagne.pdf 
Cardona,  Duch-Brown,  Francois,  Martens  and  Yang  (2015)  "The  macro-economic  impact  of  cross-
border  e-commerce  in  the  EU  Digital  Single  Market",  JRC/IPTS  Digital  Economy  Working  Paper  nr 
2015-09. 
Ibid.  

92  

93  

94  

42 

 
 
                                                                                                                                                                                          
contribute to a speedy resolution of complaints. 

Whilst the possibility of a consumer arbitrage based on different VAT rates across countries 
cannot  be  completely  ruled  out,  it  is  unlikely  to  lead  to  significant  impacts.  In  so  far  as 
consumers  travel  themselves  to  collect  the  tangible  good  ordered  online  (as  tourists, 
business travellers or in border regions), the impact is decisively limited by the travel costs, 
just  as  in  offline  transactions.  If  consumers  use  an  intermediary  to  forward  the  tangible 
good  cross-border,  there  are  two  cases.  If  the  seller  is  in  any  way  involved,  VAT  of  the 
destination  country  is  due  and  no  VAT  arbitrage  is  possible.  If  the  seller  is  not  at  the 
slightest involved, VAT arbitrage could be possible. However, the incurred additional costs 
(i.e. additional shipping costs plus handling fees for the intermediary) and the complications 
(finding  an  intermediary  without  any  assistance  from  the  seller  and  engaging  in  a 
forwarding contract) are in many cases too high to be offset by the variation in VAT rates. 
Systematic non-compliance by businesses, e.g. by intervening in the delivery yet applying 
national tax rates would be fairly easy to detect and prove, since the information would be 
available through the company's website.  

In  some  border  areas  of  some  Member  States  direct  employment  in  retail  services  for 
certain goods particularly prone to cross-border ordering with pick-up in the country of the 
trader could be affected to a limited extent. Nevertheless, any savings made by the buyers 
due to lower prices would increase demand of other goods and services in the same area, at 
least partially offsetting this already limited effect. 

Social Impacts 

This option does not have any significant social impact 

Environmental Impacts 

This option does not have any significant environmental impact 

6.5.  Option 4  

Option 2 + list of justifications deemed not to be 

based on objective criteria 

Impact on the policy objectives 

In  the  short  term  this  option  could  create  more  legal  certainty  for  traders  and  prevent 
customers from being discriminated; i.e.  treated differently  because  of their  nationality or 
place of residence or establishment on arbitrary grounds. However; it is doubtful whether 
the option is futureproof enough to impact the discipline of companies and to invite them to 
be more   open to consumers shopping cross-border. Legislation is underway in many of the 
areas  concerned.  The  option  would  have  to  be  aligned  with  that  legislation.  More 
importantly  it  would  not  cover  situations  which  might  occur  in  the  future.  Companies 
frequently  consider  that  "what  is  not  explicitly  prohibited  is  allowed",  so  in  order  to  be 
comprehensive the list would need to be constantly reviewed, which politically and in terms 
of administrative burden requires some effort. Therefore the option in the long term is not 
expected to positively impact on the policy objective. Also there is a danger of dissolution 
(of the list) as a result of political negotiations, as happened with Article 20 and the relevant 
recitals in the Services Directive 

43 

 
 
 
Economic Impacts 

Operating costs and conduct of business  

It would not create an "obligation to sell": traders should still be able to refuse to sell and to 
apply  different  terms  and  conditions,  as  long  as  they  are  based  on  objective  criteria  (i.e. 
criteria not mentioned in the list). 

The option would entail compliance costs for companies which would need  to  asses with 
the support of trade associations and law firms which justifications could be invoked. For 
this option to be  effective, companies would annually  have to  assess in detail the reasons 
why they refuse to sell or apply different terms and conditions on grounds of nationality or 
place of residence or establishment, in order to rely only on justifications that are based on 
objective criteria. Criteria, in order to remain pertinent, would have to be adapted over time. 
Such  adaption  would  require  changes  to  the  basic  legal  instrument  for  instance  after  the 
other DSM initiatives, such as on parcel and VAT, have been adopted. 

Impact on the Single Market 

This  option  would  imply  careful  and  complex  crafting  in  order  to  take  into  account 
complicated and evolving situations, particularly as its effect would depend on the adoption 
of proposals which have just been made or are yet to be put forward, e.g. on cross-border 
parcel  delivery  or  VAT.  If  the  upcoming  legislation  mentioned  in  the  baseline  scenario 
enters  into  force,  this  option  would  not  substantially  affect  the  rules  in  place.  However, 
depending on how the environment changes this option might paradoxically have a negative 
impact  on  the  Single  Market,  if  it  encourages  companies  to  rely  on  grounds  to  geoblock 
which are not explicitly prohibited.  

Competitiveness of business 

The  increased  administrative  burden  would  negatively  impact  competitiveness,  but  
European and non-European companies would be concerned in the same way On the other 
hand, companies might reconsider their decisions not to sell cross-border.  

Impacts on SMEs and microenterprises 

SMEs would face administrative costs for analysing the situation (see above). The effect of 
these  costs  would  disproportionally  affect  micro  enterprises  which  might  not  have  the 
administrative and legal capacity to analyse in which situation justifications can be invoked. 
Micro enterprises should therefore be exempted from this option. 

During the public consultation, companies were split on the impact of a list of unacceptable 
justifications, while a very clear majority of company associations thought the impact to be 
negative.  

Consumers and households 

On  the  one  hand,  consumers  would  benefit  by  being  better  informed  about  reasons  for 
discrimination,  by  traders  which  cannot  be  invoked.  On  the  other  hand,  consumers  (and 
customers  at  large)  would  not  immediately  get  access  to  goods  and  services  but  can only 
sue companies in front of national courts. It risks creating frustration among consumers and 
produce only long term effects. 

44 

 
 
During  the  public  consultation,  a  clear  majority  consumers  and  consumer  associations 
expected the impact to be positive. 

Macroeconomic impact 

This option does not have any macroeconomic impact. 

Impact on Member States 

This  option  might  require  particular  efforts  from  national  enforcement  authorities  and 
national courts. 

Social Impacts 

This option does not have any significant social impact. 

Environmental Impacts 

This option does not have any significant environmental impact. 

6.6.  Option 5 
the EU 

Option 3 + obligation to serve customers across 

Impact on the policy objectives 

In addition to the impacts of Option 3, this option requires sellers to sell and deliver goods 
and  services  to  a  potential  customer  irrespective  of  the  residence  of  the  customer.  As  a 
consequence,  geoblocking  and  other  such  forms  of  discrimination  will  be  significantly 
reduced (with the exception of legally required geoblocking). Companies can still refuse to 
sell on grounds not related to the residence or nationality. Thus, the policy objective will be 
completely achieved. 

In  the  public  consultation,  a  clear  majority  of  consumer  respondents  favoured  rules 
requiring  traders  to  accept  cross-border  transactions  from  users  throughout  the  EU,  either 
under  conditions  reflecting  additional  costs  or  in  cases  where  users  arrange  the  delivery 
themselves.  

However,  requiring  companies  to  ship  to  potentially  all  28  Member  States  would  be  a 
disproportionate means to achieve the objective. 

 Economic Impacts 

Operating costs and conduct of business  

This option would imply that sellers could not refuse as a rule to sell and deliver to another 
Member State. Nevertheless, they could charge the extra price for delivery of the physical 
goods to the customer. They would thus not incur directly extra costs. However, by selling 
and delivering to another Member States they would incur significant indirect costs. 

45 

 
 
 
 
Firstly,  they  would  have  to  organise  the  cross-border  delivery.  While  the  actual  price 
charged  by  a  courier  company  could  be  billed  to  the  customer,  the  trader  would  have 
overheads in terms of finding a carrier and arranging for delivery, which are not part of the 
seller's normal business activity. 

Secondly, if they deliver to an address in another Member State, they would have to accept 
returns from this address. In case of faulty products covered by the legal guarantee, there 
would  be  the  additional  direct  costs  and  the  indirect  costs  of  organising  the  repairs  or 
replacement in particular due to higher shipment costs.  

Thirdly,  for  physical  goods  VAT  is  due  in  the  Member  State  into  which  the  goods  were 
delivered.  Therefore,  traders  would  have  to  register  for  VAT  in  each  Member  State  into 
which they deliver if they haven't done so previously. These costs have been estimated at 8 
000 € per Member State95.  Currently,  there is a simplification  measure in  place  whereby 
businesses do not have to register up to the distance sales thresholds for intra-EU Business 
to  Consumer  (B2C)  supplies  of  goods  (EUR 35  000  or  EUR 100  000  determined  by  the 
Member State of destination)96.  It should be noted that the Commission will be making a 
proposal by end 2016 to extend the cross-border VAT electronic and payment system (See 
2.2.1.2) to cross-border supplies of goods which will substantially reduce these compliance 
costs. 

Finally, when delivering goods to another member state, traders would have to respect the 
labelling  requirement  applying  in  this  member  state,  e.g.  in  terms  of  language. 
Consequently, such sales might require companies to modify the labels on their products. 

As a result of these extra costs, selling to customers in another Member States at the same 
price as to national customers may become unprofitable or loss-making, even if the seller is 
allowed to bill extra delivery costs.  

Impact on the Single Market97 

The proposal to allow customers access to more offers should motivate customers to shop 
cross-border. Price arbitrage for physical goods will be constrained by delivery costs, which 
will however be lower than in option 3, as the trader will arrange cross-border delivery.  

As a result, for the example of electronic goods only, the net effect of lifting geoblocking 
restrictions by companies could lead to an increase in cross-border sales of about 1.4% 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.  

Since  for  digital  services  consumed  at  the  establishment  of  the  trader  no  delivery  is 
involved, the impact for these two elements would be the same as under option 3. 

Competitiveness of business 

The elimination of lifting geoblocking restrictions by business would boost trade and sellers 
will  receive  sales  orders  from  foreign  customers.  However,  offline  sales  could  decline 

95  
96  

97  

CapGemini: "VAT Aspects of cross-border e-Commerce - Options for modernisation", (forthcoming)  
The  vast  majority  of  Member  States  apply  the  EUR  35  000  threshold,  notably  France  who  recently 
reduced the threshold due to concerns on distortions of competition. 
For the economic models used in the assessment of this option, please see annex 4; Full report:. Duch-
Brown,  N.  and  B.  Martens  (2016),  The  Welfare  effects  of  lifting  geoblocking  restrictions  in  the  EU 
Digital single Market. JRC/IPTS Digital Economy Working Paper (forthcoming). 

46 

 
 
                                                            
because  online  price  competition  increases.  Both  online  and  offline  prices  will  decline 
when sellers adjust to the new market conditions when geoblocking restrictions are lifted.  

Based on extension of the analysis for the popular eCommerce category electronic goods, 
the  net  effect  of  lifting  geoblocking  restrictions  on  total  sales  would  be  positive,  as 
additional sales outweigh the decrease in prices. Producer surplus (profits) would increase 
by 1.4% on average across Member States.   

Firms  that  buy  goods  and  services  online  would  benefit  from  lifting  geoblocking 
restrictions  in  the  same  way  as  consumers.  They  would  benefit  from  lower  prices  and  a 
wider variety of products.  

The  competitiveness  of    European  businesses  will  not  be  affected,  because  it  applies  to 
European and non-European companies alike 

Impacts on SMEs and microenterprises 

SMEs  and  especially  micro-enterprises  would  find  the  complications  of  selling  under 
unfamiliar  circumstances  and  under  unknown  legal  conditions  prohibitive.  They  should 
therefore be exempted from this option. 

During  the  public  consultation,  a  slight  majority  of  business  and  a  very  clear  majority  of 
business associations expected a negative impact.   

Consumers and households 

When  all  geo-blocking  and  discriminations  based  on  nationality  or  place  of  residence  or 
establishment, including delivery restrictions are fully lifted, customers will have access to 
all online product sales catalogues in all EU Member States, at the same prices as domestic 
shoppers  in  these  countries  (possibly  with  additional  transport  costs  to  ship  the  goods  to 
their  country  of  residence,  which  will  however  be  lower  than  under  option  3  since  the 
delivery is arranged by the trader). As a result, customers would be able to price-arbitrage 
between  online  shops  in  all  Member  States  and  buy  any  variety  or  quality  of  goods 
available anywhere in the EU.   

The combination of price arbitrage by customers and increased price competition between 
online  sellers  should  reduce  prices,  both  in  online  and  offline  retail  stores,  and  increase 
consumers'  purchasing  power  and  real  expenditures.  For  example,  for  electronic  goods 
prices are expected to decline across Member States by -0.2 to -2%, depending on current 
price  levels  and  market  competition.  The  variety  effect  will  further  increase  consumer 
welfare  because  they  will  find  more  appealing  products  than  those  available  in  the  home 
market.   

Based on an extension of the analysis of the electronic sector, EU28 consumer surplus from 
online  purchases  could  amount  to  1.2%  on  average  for  the  EU28,  with  variations  across 
Member  States.  Smaller  Member  States  would  be  expected  to  gain  more  (up  to  15%) 
because the variety of goods locally available online is more limited. 

During  the  public  consultation,  an  overwhelming  majority  of  consumers  and  a  clear  
majority of consumer associations expected a positive impact.   

Macroeconomic impact 

47 

 
 
Increased  cross-border  trade  after  lifting  discriminatory  restrictions  will  tend  to  reduce 
prices in the domestic retail sector, in this option more than in option 3. This should benefit 
other sectors of the economy because it becomes cheaper to distribute goods and services 
through  the  retail  sector.  The  overall  decline  in  retail  prices  would  increase  consumers' 
purchasing power.  

The current levels of cross-border e-commerce already increase real household expenditure 
by about 1%  compared  to  a situation without cross-border e-commerce98. As a result, the 
overall  impact  of  the  current  level  of  cross-border  e-commerce  on  total  output  (GDP)  is 
estimated  at  around  +0.14%,  compared  to  a  situation  with  no  cross-border  e-commerce99.  
While lifting geoblocking restrictions would amplify this positive impact, a precise estimate 
of the macroeconomic impact of this option is not available. 

Impact on Member States 

For enforcement purposes, no new administrative arrangements are required beyond those 
mentioned  in  option  1.  There  might  be  an  increased  workload  initially  similar  to  the 
estimations  for  option  3.  However,  the  extra  costs  associated  with  cross-border  delivery 
might  lead  to  low  compliance  rates  by  businesses,  which  would  in  turn  lead  to  more 
numerous enforcement requests. 

Social Impacts 

This option does not have any significant social impact 

Environmental Impacts 

This option does not have any significant environmental impact 

7.  Comparison of options 

7.1.   Comparison in terms of effectiveness, efficiency and 

coherence 

Compared to the baseline option, Option 1 "improving transparency and enforcement" would 
improve the information  to  websites and indirectly to  goods or  services. However, it would 
depend  on  the  indirect  mechanism  of  additional  consumer  pressure  as  a  result  of  better 
information leading to less unjustified geoblocking, and would thus likely to be inefficient in 
achieving  the  objectives.  On  the  other  hand  it  would  impose  limited  but  not  insignificant 
administrative  burdens  on  a  large  share  of  enterprises,  in  particular  SMEs  and  micro-
enterprises. It would be coherent with a general policy approach in favour of providing more 
information (including the already existing provisions of the Consumer Rights Directive) but 
it would not increase legal certainty for businesses. It would however increase legal certainty 

98  

99  

Cardona,  Duch-Brown,  Francois,  Martens  and  Yang  (2015)  "The  macro-economic  impact  of  cross-
border  e-commerce  in  the  EU  Digital  Single  Market",  JRC/IPTS  Digital  Economy  Working  Paper  nr 
2015-09. 
Ibid.  

48 

 
 
 
 
                                                            
for consumers and enforcement authorities, who would be better able to ascertain whether the 
difference of treatment is based on objective criteria. On its own, it would not have significant 
effects, since the underlying rules would not be clearer.  

Option  2  "Banning  the  blocking  of  access"  would  fully  achieve  the  objective  of  "ensuring 
access to websites" but would only indirectly improve non-discriminatory access to goods and 
services.  It  would  depend  on  customers  to  increase  market  pressure;  it  would  be  up  to  the 
demand side to drive the market for further changes to address discriminations. Overall, costs 
would be quite limited, as only a small share of larger traders (with different websites) would 
be affected, leading to a low cost/benefits ratio, but it would increase legal certainty only with 
respect  of  access  to  websites  is  concerned,  not  in  relation  to  access  to  the  service/product. 
Overall,  ensuring  access  to  websites  would  be  in  line  with  the  general  policy  approach  in 
favour of eliminating restrictions linked to geographical borders.  

Option  3  "Equal  treatment  in  specific  situations"  (shop  like  a  local)  would  fully  achieve 
access  to  websites  and  partially  achieve  non-discriminatory  access  to  goods  and  services, 
keeping  in  mind  that  it  only  addresses  unjustified  geoblocking,  while  other  regulatory 
initiatives will further reduce incentives for total geoblocking. Due to the limited scope of this 
option  (no  obligation  to  deliver  cross-border,  transparency  obligations  only  in  exceptional 
cases),  costs  for  businesses  would  be  small  (adaption  of  website,  if  necessary,  no  VAT 
registration abroad and no payment of foreign VAT as long as the trader does not intervene 
directly or indirectly in the cross-border delivery arrangements of the customer), and business 
would have the certainty that the specific situations do not imply additional costs. For digital 
services, VAT registration has been substantially simplified by the Mini-One-Stop Shop, and 
companies  exempted from VAT according to  national  special schemes  for small  enterprises 
are exempted from the equal treatment obligation. For services received at the location of the 
trader, there is no obligation to apply foreign law and the VAT is that of the country of the 
trader.  As  a  result,  this  option  has  a  positive  cost/benefit  ratio.  Moreover,  it  is  fully  in  line 
with the overall approach of the (Digital) Single Market strategies to allow customers to take 
better advantage of cross-border opportunities and is not in contradiction with other pieces of 
legislation  (it  is  without  prejudice  to  competition  law  or  to  the  rules  on  contractual 
obligations). It creates directly enforceable rights for consumers, thus having a positive effect 
on legal certainty. 

Option 4 "List of unacceptable justifications" is expected to have only limited effect on non-
discriminatory  access  to  goods  and  services,  as  it  would  only  eliminate  a  small  number  of 
possible justifications for companies to discriminate. Although costs would be low, so would 
benefits be, resulting in a less favourable cost/benefits ratio. This option would be in line with 
the  overall  approach  of  the  (Digital)  Single  Market  strategies  to  allow  consumers  to  take 
better advantage of cross-border opportunities. It is unlikely that the drafting of this list would 
create the required legal certainty and lead to improvements in practice. 

Option 5 " Including delivery" would fully achieve access to websites, goods and services, but 
would impose significant additional costs on businesses, as they could be required to register 
for VAT in another member state, need to explore delivery option in unfamiliar territory, etc., 
resulting in an  unfavourable cost/benefit  ratio. It would impose  disproportionate burdens on 
traders whilst creating major legal complexities. It would not be fully in line with EU policies 
since  the  removal  of  barriers  to  cross-border  parcel  delivery  is  not  completed.  Moreover,  it 
would interfere with the freedom of contract. This would significantly restrict the freedom to 
conduct business as set out in Article 16 of the Charter of Fundamental Rights, since it would 
prevent  companies  from  taking  the  strategic  decision  not  to  deliver  to  certain  countries  and 
subject them to the implications that this may have. 

49 

 
 
All  options  would  equally  achieve  the  objective  "improved  enforcement",  since  they  all 
provide  for  an  inclusion  of  the  current  proposal  in  the  annex  of  the  Consumer  Protection 
Cooperation Regulation, as well as specific enforcement provisions. 

Table 1: comparison of options   

Effectiveness100 

Options 

Access to 
websites 

Treatment 

Baseline (0) 
Transparency (1) 
No blocking (2) 
Equal 
(3+2+1) 
List of justifications 
(4+2+1) 
With delivery 
(5+3+2+1) 

o 
o 
++ 
++ 

++ 

++ 

7.2. Preferred option  

Access to 
goods and 
services 
o 
o 
o 
+ 

o 

++ 

Improve 
enforcement 

o 
+ 
+ 
+ 

+ 

+ 

Increase 
legal 
certainty 
o 
o 
o 
+ 

+ 

o 

Coherence
102 

Efficiency
101 
(costs/ 
benefits) 

o 
- 
o 
++ 

o 

-- 

o 
+ 
+ 
++ 

+ 

--- 

The  option  which  contributes  most  to  the  achievement  of  the  policy  objectives  and  has  the 
most  positive  overall  impact  is  option  3  (which  includes  option  2).  It  ensures  access  to 
websites, as well as - in specific situations - to goods and services, thus improving consumer 
welfare  to  the  extent  that  unjustified  geoblocking  was  taking  place  in  these  situations 
previously.  This  option  is  proportionate  with  the  objective  to  be  achieved:  it  takes  into 
account potential complications of cross-border selling for businesses and therefore does not 
require  cross-border  delivery  by  traders,  hence  not  creating  any  significant  burden  on 
businesses, in particular SMEs. It applies  only  in obvious cases where  traders are not  faced 
with  undue  legal  complexities.  Transparency  obligations  are  limited  to  exceptional  cases. 
Traders can choose the when to provide information to consumers (upfront or upon request), 
and  only  those  not  covered  by  the  three  situations  would  be  subject  to  it  (essentially  e-
commerce sellers delivering their products cross-border). It addresses enforcement efficiently 
by mostly utilising existing enforcement structures (the CPC network) and not over-burdening 
Member States when enforcing the rules in B2B situations. As a result, it is the most efficient 
option, while scoring equally well on coherence.  

The preferred option would address only those forms of discrimination and access restrictions 
which  are  caused  by  unilateral  decisions  of  companies  to  segment  market  along  national 
borders. For the other drivers, there are other relevant policy initiatives.  

100 The extent to which different options would achieve the objectives 
101 The relations of costs to benefits 
102 The coherence of each option with the overarching objectives of EU policies 

50 

 
 
 
 
 
                                                            
7.3. Choice of legal instrument 

To  choose  a  non-binding  instrument  does  not  seem  appropriate.  First,  as  regards  the  very 
specific  issues  at  stake  it  would  not  guarantee  adequate  and  coherent  implementation  at 
national level. Second, Member States may express the same reluctance to act as shown until 
now (Article  20 Services  Directive),  or  be prevented  from taking action by the existence  of 
contravening national provisions and a lack of domestic political will to amend and/or abolish 
them.  Third,  a  general  non-binding  instrument  would  also  leave  a  very  broad  discretion  to 
Member States whether and how to intervene, if at all. Already Article 20(2) of the Services 
Directive has proven not very effective, so a none-binding instrument could be expected to be 
even less effective.  

A  legislative  instrument,  preferably  a  Regulation,  would  appear  to  be  more  appropriate  to 
address the identified problems and could guarantee that the policy options are introduced in 
all MS and that sufficient uniformity and legal clarity are achieved for all stakeholders to rely 
on the new rules.   

The clear advantage of a binding legislative instrument is the fact that it can guarantee that the 
policy  options  are  introduced  in  all  28  Member  States  and  that  the  rules  are  enforceable, 
ensuring in particular: (i) a level playing field across Europe and (ii) improved certainty for 
consumers  and 
implementation  and 
administrative  burden.  However,  it  would  be  proportionate  to  the  objectives  attained.  Costs 
faced  by  traders  (in  particular  for  the  adaptation  of  websites)  would  be  similar  to  those 
incurred under a recommendation or self-regulation, if properly applied. 

implies  a  certain 

traders.  Binding 

legislation 

Article 114 TFEU provides for the possibility to adopt measures (regulations or directives) for 
the approximation of the provisions laid down by law, regulation or administrative action in 
Member  States  which  have  as  their  object  the  establishment  and  functioning  of  the  internal 
market.  

A  directive  would  necessarily  leave  some  room  for  Member  States  to  choose  how  to 
implement the relevant rules in their national legislation. As a result, there would be a high 
risk that those rules would be different in different Member States. It may also take longer to 
deliver the expected results in the market. Besides, a Directive would not necessarily create 
directly enforceable rights and obligations which customers and traders could avail to before 
national  courts.  Therefore,  a  directive  would  not  be  most  suited  to  achieve  the  pursued 
objectives. The Services Directive does not address the issues at stake to an adequate degree. 
From a  more political perspective there seems to be at this stage no stakeholder or political 
support to amend the Services Directive. Changes to the Directive would require a longer and 
comprehensive  debate  with  all  stakeholders  on  a  wider  range  of  topics,  which  would  put  at 
risk the objectives of this initiative.  

A Regulation allows for quick implementation and is a particularly suitable instrument when 
the objective is the full harmonisation of a certain area. This type of instrument could be best 
used  to  achieve  the  objective  of  ensuring  the  application  of  non-discrimination  rules  across 
the  EU.  It  would  allow  a  uniform  application  of  equal  treatment  provisions  across  Member 
States  and would guarantee  that  companies  from different Member States are subject  to  the 
exact same rules. Such a Regulation would take precedence over Article 20(2) of the Services 
Directive  and  the  rules  of  national  law  transposing  it.  It  would  not  require  reopening  the 
Services Directive. 

A targeted Regulation is thus the preferred instrument. 

51 

 
 
7.4.  Subsidiarity and proportionality of the preferred option 

The  subsidiarity  principle  (Article 5(3)  TEU)  requires  the assessment of  the  necessity and 
the  added  value  of  the  EU  action:  with  respect  to  all  issues  addressed  in  this  IA,  EU 
intervention  would  be  the  only  way  to  establish  across  Europe,  common  requirements 
necessary for the smooth functioning of the Single Market.  

Geo-blocking and discrimination based on nationality or place of residence or establishment 
arise in the cross-border context, typically when customers intend to access a service provided 
by a company established in a different Member State. Due to the cross-border nature of such 
restrictions, it can only be tackled effectively on EU level. A ban on geo-blocking and other 
discriminations could only be ensured effectively if the conditions for customers’ access did 
not vary according to the Member States they are located in at a specific moment, or where 
they  have  their  place  of  residence  or  establishment.  Moreover,  EU  action  providing  for 
uniform rules would produce clear benefits to traders, compared to any national solutions, by 
creating a legally certain framework across Europe.  

The preferred option does not go beyond what is necessary to solve the identified problems. 
Moreover, the initiative is limited to solving a problem of a cross-border nature that cannot be 
achieved by the Member States alone. The obligations foreseen under the preferred option are 
necessary  to  make  sure  that  there  is  no  unjustified  discrimination  of  European  consumers. 
They  do  not  force  traders  to  contract  and  deliver  cross-border  and  therefore  have  a  limited 
effect  on  the  current  trading  practices  and  business  models.  Under  the  principle  of 
proportionality (Article 5(4) TEU), the content and the form of EU action shall not exceed 
what is necessary to achieve the objectives of the Treaty. The proportionality of the different 
policy options considered has been assessed and described in the relevant parts of this IA.  

The  preferred  option  would  cover  micro  enterprises  both  in  their  role  as  traders  and  end-
users.  The option would increase legal certainty for traders by clarifying existing obligations 
and  specifying  under  which  conditions  customers  should  be  treated  equally  in  cross-border 
purchases.   For  micro  enterprises  with  operations  in  a  single  Member  state,  the  additional 
transparency  requirements  (on  request  having  to  inform  consumers  about  the  reasons  for 
automatic rerouting) would de facto not apply, since automatic rerouting to another website 
requires  operations  in  more  than  one  country.  For  micro-enterprises  operating  in  more  than 
one Member State, transparency requirements would still be exceptional (only in the cases of 
legally  justified  automatic  rerouting),  Moreover,  the  transparency  obligation  has  also  been 
designed with the view of limiting the administrative burden by allowing traders to provide ex 
ante or ex post explanations, in the trader's own language and by mail, whichever is the less 
burdensome for the company.  

For  micro  companies  providing  goods  and  service  via  a  single  website  there  will  be  no 
additional burden from the obligation not using re-routing  or provide transparency on offers, 
unless  IP-blocking  techniques  have  already  been  implemented  (unlikely  in  case  of  micro 
enterprises)  which  would  then  incur  a  one-off  adoption  costs.   Despite  these  costs,  the 
exclusion  of  micro  and  small  businesses  would  not  be  the  viable  option.  It  would  result  in 
consumer detriment as customers would not be able to easily determine the rights they enjoy, 
as these would depend on the size of the company they are purchasing from which is difficult 
to  determine  by  them.  Furthermore,  allowing  weaker  consumer  protection  depending  if  the 
trader employ 9 or 10 people would also create artificial threshold effects with the risk of de-
incentivising micro companies for growing. 

52 

 
 
Micro  enterprises  acting  as  end  users  would  clearly  benefit  from  having  non-discriminatory 
access  to  offers.  Expanding  cross-border  for  them  can  then  be  a  way  of  finding  more 
competitive offers from suppliers and new potential customers.  

7.5.  Consistency with other EU policies and with the Charter for 

fundamental rights 

The preferred option is consistent with other initiatives of the Commission, in particular the 
legislative proposals on contracts for the supply of digital content, on contracts for the online 
sales of goods and on portability of online content services. As explained in section 2.5 ("how 
would  the  situation  evolve  all  things  being  equal?"),  the  entry  into  force  of  these  proposals 
will  not  address  the  issue  of  "unjustified"  geo-blocking,  so  they  will  not  have  any  direct 
impact  on  existing  undue  discrimination.  They  might  remove  some  of  the  current  objective 
criteria, which could turn existing justified differences of treatment into geo-discriminations. 
It is furthermore complementary to the forthcoming legislative initiatives on the amendment 
of the Regulation on Consumer Protection Cooperation, on parcel delivery, on copyright, on 
rail passenger rights and to modernise the VAT for cross-border e-commerce. Likewise, it is 
in line with the relevant results of the competition sector inquiry into e-commerce as well as 
the forthcoming Guidance on unfair business-to-consumer commercial practices. 

The  preferred  option  would  have  a  limited  impact  on  Article  16  (Freedom  to  conduct  a 
business) and 17 (Right to Property) of the EU Charter of Fundamental rights. The freedom to 
conduct business is enshrined in Article 16 of the EU Charter of Fundamental Rights and any 
proposals  limiting  this  freedom  have  to  be  carefully  analysed,  against  the  expected  benefits 
for customers and the general interest (in light of the non-discrimination principle, which is a 
cornerstone  of  the  EU).  A  careful  balancing  has  to  be  made  with  the  interest  of  protecting 
customers from any discrimination based on nationality or residence, taking account also of 
Article 38 of the Charter, and the interests associated with the EU's single market imperative 
as such and the fundamental freedoms of the Treaty. 

An introduction of obligations on companies (in particular small companies) which may not 
be in-line with their business models or commercial choices may stifle innovation and have a 
backlash  impact  on  consumers  through  higher  prices.  However,  given  that  there  is  no 
obligation  to  contract,  but  simply  an  obligation  to  treat  European  customers  in  the  same 
manner  when  they  are  in  the  same  situation,  irrespective  of  their  nationality  or  place  of 
residence or establishment, i.e. to protect them from unjustified discriminations, the concerns 
as  regards  these  rights  would  be  well  addressed.  Companies  will  not  be  obliged  to  change 
their business models. 

According to the Court of Justice, neither the freedom to conduct a business (Article 16), nor 
the right to property (Article 17) are absolute rights. They must be considered in relation to 
their  social  function  and  to  other  fundamental  rights  and  principles.  Article  52(1)  of  the 
Charter  allows  for  the  restriction  of  these  rights  in  certain  cases.  Therefore,  given  the 
importance and necessity of the proposed measures in order to achieve the policy objective of 
realising the EU's internal market and ensuring that European customers who are in the same 
situation are treated alike and the limited impact on the freedom to conduct a business and the 
right to property, the resulting balancing of rights leads have demonstrated that the restrictions 
are justified and the impact of the proposed options are proportionate.  

53 

 
 
8.  Monitoring and evaluation 
The Commission will ensure that the action selected in the course of this IA contribute to the 
achievement  of  the  policy  objectives  defined  in  Section  4.  The  monitoring  process  could 
consist of two phases: 

1)  The  first  would  concentrate  on  the  short-term,  starting  right  after  the  adoption  of  the 
legislative  proposal.  It  would  focus  on  how  the  Regulation  is  applied  in  the  Member 
States  by  the  market  participants  in  order  to  ensure  a  consistent  approach.  The 
Commission would organise meetings with Member States representatives (e.g. group of 
experts) and the relevant stakeholders in particular to see how to facilitate to transition to 
the new rules. 

2)  The  second  would  be  mid-  to  long-term  and  would  focus  on  direct  effects  of  the  rules 
contained  in  the  Regulation.  The  table  below  presents  the  main  indicators  that  could  be 
used to monitor progress towards meeting the objectives pursued by this initiative, as well 
as the possible sources of information. Depending on the data needs, information could be 
gathered from Member States, customers or information society service providers. Where 
needed,  the  Commission  could  send questionnaires  to  Member  States  or  stakeholders  or 
organise specific surveys. The information-gathering should start 2-3 years after the start 
of application of the regulation.  

The operational objectives for the preferred option are as follows:  

1) to decrease the share of websites engaging in unjustified blocking of access to users 
from other EU Member States 

to 

2) 
decrease 
geoblocking/geodiscrimination  

the 

share 

of 

consumers 

experiencing 

unjustified 

A  comprehensive  evaluation  could  take  place  two  years  after  the  start  of  application  of  the 
rules  in  particular  with  a  view  to  assessing  whether  the  prohibition  of  non-discrimination 
should  also  apply  to  electronically  supplied  services,  the  main  feature  of  which  is  the 
provision of access to and use of copyright protected works or other protected subject matter, 
provided that the trader has the requisite rights for the relevant territories, and every five years 
thereafter. 

54 

 
 
 
 
Table 2: Overview of monitoring arrangements   

Operational 
objective 

Indicator/Definiti
on 

Fewer 
websites 
practicing 
unjustified 
refusal of 
access and  
sales cross-
border  

Fewer 
consumers 
experiencing 
unjustified 
refusal of 
access and  
sales cross-
border  

to 

Variation 
of 
websites  refusing 
access  or  sales  to 
customers  based 
on  geographical 
residence, 
analysed 
identify 
unjustified 
refusals 
Variation 
customers 
experiencing geo- 
discrimination, 
analysed 
identify 
unjustified  
refusals 

of 

to 

Unit 
of 
measureme
nt 
Percentage 
points 

Source 
data  

of 

Frequency  of 
measurement 

Baseline 

Target 

Triannual 

Mystery 
shopping 
survey 

Multiple 
levels 
annex 5) 

n/a 

(see 

Percentage 
points 

Consumer 
survey 

Triannual 

Multiple 
levels 
annex 5) 

n/a 

(see 

55 

 
 
 
 
 
 
 
 
 
 
 
 
Annex 1: Procedural information 

1. 
1. Agenda planning and Work Programme References 

The Agenda Planning Reference is 2016/CNECT+/002. 

The  initiative  to  ban  unjustified  geo-blocking  forms  part  of  the  Digital  Single  Market 
Strategy,  adopted  in  May  2015,  as  well  as  part  of  the  Single  Market  Strategy,  adopted  in 
October 2015.  

2. Inter-Service Steering Group 

An Inter-Service Steering Group was set up in 2015. In total, six meetings were organised: on 
17 July 2015, on 14 December 2015, on 11 February 2016, on 1 March 2016, on 1 April and 
on 14 April 2016. The following directorates and services were consulted:  CNECT, COMP, 
GROW, JUST, TAXUD, MOVE, SJ, SG, JRC, ENV, REGIO, AGRI, EMPL, EAC, FISMA, 
NEAR,  TRADE,  HOME  and  DIGIT.  The  feedback  received  from  these  directorates  and 
services has been taken into account in the report.  

The  ISSG  approved  the  Inception  Impact  Assessment  that  was  published  on  18  December 
2015. 

The  minutes  of  the  meeting  of  1  March  2016  were  submitted  to  the  Regulatory  Scrutiny 
Board. 

3. Consultation of the Regulatory Scrutiny Board 

The Impact Assessment Report was examined by the Regulatory  Scrutiny Board on 6 April 
2016. The RSB issued its opinion on 8 April, requesting a set of revisions. The revised impact 
assessment  was  submitted  on  15  April  2016.  On  21  April  2016,  the  Board  gave  an  overall 
positive opinion and provided further suggestions for improvement, which were implemented. 
The present impact assessment includes these further improvements (see appendix). 

4. Studies to support the Impact Assessment 

Two studies were launched specifically for this impact assessment. 

Firstly,  a  Mystery  Shopping  Survey  on  approximatively  10  500  websites  assessed  cross 
border within the EU was carried out between October and December 2015. For details, see 
annex 6. 

56 

 
 
 
 
 
 
 
 
full 

The 
marketing/news/160318_en.htm 

study  can  be 

found  at:  http://ec.europa.eu/justice/newsroom/consumer-

Secondly, in February 2016 a Flash Eurobarometer was carried out to determine the extent of 
geo-blocking which business as end-users face.  For details, see annex 10. 

The full study can be found at forthcoming 

In addition to these two specific studies, there exist a number of other recent studies relevant 
for the extent of geo-blocking and discrimination based on residence or nationality within the 
European Union. An overview of the evidence can be found in annex 5. 

Finally, for the economic model described in annex 4, the European  Commission acquired a 
data set with nearly 2 million observations of monthly online and offline sales volumes and 
prices for more than 100 000 models of 4 types of electronic goods in 10 EU Member States 
2012-2015 from a data provider. 

57 

 
 
 
 
Appendix - RSB requests for improvements and revisions introduced by services 

Subject area 

(1) Further clarify the scope of the 
initiative. 

RSB comments 
The rationale for the extension of the scope to the 
transport sector should be further elaborated in the 
report, clarifying what is the underlying problem and 
explaining why this cannot be addressed by the sectoral 
transport legislation currently in place that already 
prohibits discrimination (except for railways). 

Revisions introduced 
Sections 1, 2.6, 3.1, 5.0, 5.3, 6.4, 7.2 
The extension to the transport sector has been abandoned 

(2) Enhance the definition of the 
problem 

(3) Better define the options and 
analyse their impacts 

The problems related to the ineffectiveness of Article 
20(2) of the Services Directive should be further explained 
in the main report, rather than only in Annex 8. 

The studies used for illustrating the existence of the 
problem should be quoted with caution and the results 
should be qualified. For instance, the apparent high 
demand for arranging cross-border part of the delivery of 
products by the online buyers (with 32% of consumers 
ready to do so) is misleading as only 12% of the surveyed 
online buyers in these countries used freight forwarding 
due to the reason that the seller did not ship to their 
country (which may have been true for non-EU countries 
as well). 

The report should clarify whether or not microenterprises 
are excluded from the initiative 

The executive summary and conclusions from the impact 
analysis should be more nuanced and qualified in order to 
reflect the uncertainties surrounding: the estimations of 
the magnitude of unjustified geo-blocking; the fact that 
the baseline will be affected by the effectiveness of 

58 

Section 2.3.2.2 
The text explaining the ineffectiveness of Article 20 of the Services Directive 
has been further developed under "Ineffective enforcement of the existing 
legal framework". 
Sections 2.2.1 and 6.4 
The references to the studies have been adjusted to better express 
inherent uncertainties. For the example, multiple motivations have been 
acknowledged. 

Sections 5.3, 6.4 and 7.1 
The square brackets have been removed. Micro-companies are included in 
the initiative, but transparency requirements have been significantly 
reduced.  
Sections 6.4, 7.1, 7.2 and executive summary 
The relation between unjustified geoblocking and total geoblocking has 
been reinforced, and the importance of other policy initiatives has been 
strengthened.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
related regulatory initiatives that would reduce the main 
incentives for geo-blocking; and the possibility for the 
identified negative impacts to be larger than expected. 
For example, VAT arbitrage is explicitly referred to, but 
not seen as opening the door to VAT circumvention 
practices (p. 44). 
The possible negative impacts in some Member States 
(such as employment effects related to the reduction in 
off-line shopping in the option of "shopping like a local") 
should be mentioned 
Interactions with other EU regulatory instruments and 
initiatives will need to be specified. For instance, passive 
sales restrictions in vertical agreements are mentioned as 
possible cases of unjustified geo-blocking, but are not 
clearly part of the scope of the impact assessment (p. 23). 
It should be clarified whether the envisaged Regulation 
will include or not such restrictions in its scope. 
Option 3 on "shopping like a local" but might raise 
compliance issues and the applicability of Rome I is made 
clear for services but not for tangible goods (p. 39).  

Section 6.4 
The possibility of increased VAT arbitrage has been expressed more clearly. 

Section 6.4 
The possible negative impact has been acknowledged. 

Sections 1 and 5.3 
The interaction with EU competition law, especially regarding to vertical 
restraints, has been clarified. 

Sections 5.3 and 6.4 
The causation  between a trader directing its activities to a Member State 
and the applicable law has been clarified. 

The indicators chosen refer to geo-blocking in general 
without trying to better measure the scope and the 
trends in “unjustified” geo-blocking. 

The report should consistently describe the inclusion of 
Article 20(2) of the Services Directive in the revised Annex 
of the Consumer Protection Cooperation Regulation as 
part of the package of the DSM proposals and, thus, part 
of the baseline scenario. 
Annex 1 should briefly explain how the Board's 
recommendations have led to changes compared to the 
earlier draft 

59 

Section 8 
The indicators have been refined to better capture unjustified geoblocking. 

Section 2.3.2.2. 
A description of the inclusion of Article 20 in the Annex of the CPC 
Regulation has been added. It is already explained in the baseline scenario 
under section 5.0. 

Annex 1 - section 3 
The information has been added 

(4) Legal certainty and coherence 
with EU policy instruments 

(5) Monitoring and evaluation. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6) Procedure and presentation 

Annex 3 should be updated in line with the changes in the 
main report, in particular regarding the practical 
implications of the preferred option on businesses 
The report (including the executive summary) should be 
proofread for the use of correct terminology, spelling 
mistakes, redundant words and inconsistencies. 
The operational objective should rather measure the 
decrease and not the increase of "the share of websites 
blocking access to users from other EU Member States" 
options that are not the preferred option are not being 
"discarded", but are simply less effective or efficient 

Annex 3 – all sections 
The implications of selling locally to a resident in another Member states 
have been clarified. 
on-going 

Section 8 
The mistake has been corrected. 

Section 5.6 
The wording has been changed. 

60 

 
 
 
 
 
 
 
 
 
Annex 2: Stakeholder consultation 

This annex presents the main findings of the (1) public consultation on geo-blocking and other geographically-
based restrictions when shopping and accessing information in the EU and (2) other stakeholder activities. 

1. SYNOPSIS REPORT  

Summary of Responses to the European Commission's 2015 Public Consultation on  

'GEO-BLOCKING  AND  OTHER  GEOGRAPHICALLY-BASED  RESTRICTIONS  WHEN  SHOPPING 
AND ACCESSING INFORMATION IN THE EU' 

EXECUTIVE SUMMARY 

A wide majority of the respondents support the problem definition of geo-blocking and other forms of 
geographically-based discrimination as presented in the questionnaire. At the same time, a number of 
respondents,  especially  from  business  associations,  take  issue  with  the  wide  definition  of  geo-
blocking. 

Overall,  a  majority  of  respondents  from  both  the  consumer  and  company  perspective  agree  that 
consumers should be able to purchase and access services from everywhere in the EU. 

According  to  the  respondents  the  goods  and  services  most  affected  by  geo-blocking  are  clothing, 
footwear  and  accessories,  media  (books),  computer  hardware  and  electronics,  airplane  tickets,  car 
rental, digital content such as streaming services, computer games and software, e-books, MP3s. 

A majority of respondents from both the consumer and company perspective agree that traders should 
inform  customers  about  sales  restrictions.  The  majority  of  respondents  also  agree  that  there  are  no 
reasons for website blocking, apart from compliance with explicit legal requirements. 

Consumers  strongly  agree  or  agree  to  the  suggested  policy  options,  including  to  require  traders  to 
accept  cross  border  transactions  without  an  obligation  to  deliver  and  in  particular  to  allow  the 
download of digital content, when certain conditions are met. 

Businesses and public authorities urge the Commission to define what is justified or unjustified geo-
blocking.  The  majority  of  businesses  oppose  an  obligation  to  sell  and  deliver  throughout  the  EU, 
highlighting the need to respect their contractual freedom. 

A  large  majority  of  all  respondent  groups  agree  that  enforcement  of  rules  should  be  improved, 
improving information requirements and ensuring non-discrimination. 

The majority of consumer respondents expect a positive impact of most of the suggested measures to 
tackle  unjustified  geo-blocking  and  related  discrimination,  while  companies  are  divided  as  regards 
expected impacts. 

61 

 
 
 
 
 
 
 
II. INTRODUCTION 

The  Commission  launched  a  public  consultation  in  the  context  of  its  initiatives  to  tackle  unjustified 
geo-blocking under the Digital Single Market Strategy and to fight discrimination on the grounds of 
residence or nationality under the Single Market Strategy.  

The consultation ran from 24 September to 28 December 2015.  

The  questionnaire  was  published  in  24  languages.  The  consultation  was  publicised  on  the 
Commission's  websites,  social  media  channels  as  well  as  in  stakeholder  meetings.  Responses  have 
been published except where respondents asked for confidentiality.  

The questionnaire was subdivided into the following three parts (1) "consumers", (2) "trader"' and (3) 
"consumer and company perspective", depending on the perspective selected by the respondent. 

While  most  questions  were  common  to  all  three  parts  of  the  questionnaire,  each  part  also  contained 
questions  specifically  targeted  to  the  above  respondent  groups.  For  a  more  detailed  analysis  of 
respondent  perspectives,  the  respondent  groups  are  broken  down  into  further  categories  (as  can  be 
seen in the following section III of the synopsis report). 433 responses were received. 

The College of Europe, Bruges, has provided some assistance to Commission services in the analysis 
of  parts  of  the  replies  from  a  selection  of  respondents  groups.  A  report  prepared  by  the  College  of 
Europe will be published separately from this report in the EU bookshop. 

The  numbers  and  percentages  used  to  describe  the  distribution  of  the  responses  to  the  public 
consultation  derive  from  the  answers  provided  under  the  EU-Survey  tool.  Other  submissions  of 
stakeholders to the public consultation, such as position papers and contributions by email, have been 
taken  into  account  when  describing  and  analysing  the  views  of  stakeholders,  but  without  being 
considered for the statistical representation. 

Replies  to  all  questions  in  the  EU-survey  were  optional.  Respondents  often  chose  not  to  answer  all 
questions.  Therefore,  where  percentages  are  reported  below,  these  derive  from  respondents  who 
replied to that question. Those who did not reply to a particular question are not accounted for in the 
percentages displayed. This is to ensure clarity with regards to the interpretation of the data. 

62 

 
 
 
 
 
 
III. OVERVIEW OF RESPONDENTS 

The following overview of respondents details the Commission's classification of all 433 responses to 
the consultation. 

Consumers 
Consumer Organisations 
Member States authorities 
Consumer authorities 
Companies 
Business Associations 
Total 

Replies 
251 
27 
13 
6 
58 
78 
433 

63 

 
 
 
 
 
 
 
 
 
 
Note:  Place  of  Residence  as  declared  by  respondents.  Total  respondents  in  graph  as  displayed  in  the 
graph  above  exceed  total  number  of  replies  (433).  This  is  to  account  for  respondents  who  stated 
multiple places of residence. 

The consultation sought the views of interested parties, as such the responses cannot be considered to 
be statistically representative.  

Views  were  sought  from  consumers,  consumer  associations,  businesses  and  business  associations  as 
well as Member States, their institutions and national authorities. 

Based  on  the  responses  to  the  public  consultation  it  is  evident  that  respondents  made  very  different 
interpretations on which stakeholders that should reply from a “consumer and company” perspective. 
Instead  of  the  intended  target  groups  of  firms  with  a  retail  activity,  the  respondents  included  many 
different stakeholders, e.g. a small European gaming company, a multinational electronics corporation, 
a European association in the tourism sector, and a Member State’s Ministry. Given the low number of 
respondents  in  this  category  (25  total  submissions)  and  the  perceived  ambiguity  of  the  definition  of 
this stakeholder category, certain caution must be observed when drawing any conclusion from these 
responses.  

When  analysing  the  submission  to  the  consultation  the  replies  have  been  sorted  into  three  wide 
categories:  consumers  and  consumer  organisations;  companies  and  business  associations;  Member 
States and national authorities. 

Consumers and consumer organisations 

Individual  consumers  from  numerous  Member  States  responded.  The  largest  number  of  responses 
from individual consumers was received from Germany, the United Kingdom, Austria and Italy. Two 
submissions from outside the EU have been received. 

Consumer organisations responded, representing both national and European level.  

Companies and business associations 

64 

 
 
 
Companies from numerous Member States responded. The largest number of responses received are 
from  Germany,  Austria,  France  and  the  United  Kingdom.  Five  submissions  were  received  from 
companies headquartered outside of the EU.  

The majority of the companies who submitted their views indicate that they either predominantly sell 
on-line  or  both  on-line  and  offline.  Only  one  responding  company  exclusively  sells  in  brick-and-
mortar shops. 

While some responses were received from large companies, many companies described themselves as 
small  or  micro  enterprises.  Companies  indicated  they  are  active  in  many  different  sectors  including 
retail, software, IT, telecoms and transport. 

Numerous  business  associations  responded  to  the  consultation,  mostly  from  national  and  European 
level. We also received responses from associations of businesses not headquartered in the EU. 

Some  associations  represent  businesses  from  all  sectors.  Most  associations  responding  represent 
companies  from  specific  sectors  such  as  retail/e-commerce,  media,  industry,  fashion,  tourism, 
gambling or legal services. 

Some respondents criticise the questionnaire for being biased.  

The  questionnaire  stated  that  copyright  related  aspects  are  left  aside.  However,  several  respondents 
refer to practices based on copyright, e.g. relating to digital content. The relationship of this initiative 
and other initiatives under the Digital Single Market Strategy such as portability seem not to be known 
to all respondents. 

In  terms  of  views  of  stakeholders  from  specific  sectors  several  lottery  operators  underline  that  the 
regulatory  framework  on  gambling  including  any  geographically-based  restrictions  is  up  to Member 
States  due  to  the  specific  nature  of  gambling  and  is  in  the  public  interest.  From  the  music  sector, 
associations  are  concerned  about  unintended  ripple  effect  on  the  delivery  of  digital  goods  that 
incorporate copyright content if the scope of the geo-blocking initiative is not clearly defined. Many 
associations from the audio-visual and media industry highlight that copyright and licensing practices 
are not part of the scope of this initiative and stress the importance of territorial licensing, the freedom 
to conduct a business and the right to property of the EU Charter of Fundamental Rights.  

Several associations of the publishing sector point out problems associated with collecting VAT in the 
country  of  consumption  and  that  many  digital  products  include  copyright-protected  content  (for 
example political news). The presence on a given market outside national borders generates costs and 
obligations that a retailer needs to evaluate before agreeing to sell to customers abroad (VAT, fiscal 
reporting, service as well as contractual obligations), which is particularly challenging for Small and 
medium-sized enterprises (SMEs). 

Member States and national authorities 

Several  Member  States  as  well  as  authorities  from  Member  States  responded.  National  authorities 
mainly include those in charge of consumer affairs or competition issues. In total, public entities from 
16  Member  States  answered  to  the  public  questionnaire  or  provided  their  views  in  separate  written 
submissions. 

IV. FORMS OF GEO-BLOCKING 

Across the different stakeholder groups responding to the consultation there is strong support for the 
general principle  that all consumers and business should be allowed to purchase and access services 
from anywhere in the EU.   

65 

 
 
 
A  number  of  stakeholders,  especially  from  concerned  business  associations,  have  critically 
commented  on  the  wide definition  of  geo-blocking  in  the public consultation.  The  majority  of  these 
respondents see geo-blocking as blocking on-line access to an offer based on the customers' location, 
which is separate for purchasing and delivery restrictions. 

a. Significance of geo-blocking or other geographically-based restrictions 

On  the  question  on  what  forms  of  geo-blocking  and  other  geographically-based  restrictions  that  are 
considered  to  create  significant  obstacles  in  the  single  market,  respondents  generally  agree  that 
practices that either prevent access to offers or access to the actual good/service make up significant 
barriers. The views expressed regarding the extent to which geo-blocking practices constitute barriers 
in  the  single  market  are  also  reflected  by  the  importance  attributed  to  the  different  geo-blocking 
practices (Fig. 1).  

Figure 1. Significance of different forms of geo-blocking103 

Consumers and consumer organisations 

Four out of five respondents identified as consumers or consumer organisations agree that the forms of 
geoblocking  listed  above  create  significant  obstacles  to  the  single  market.  Barriers  stemming  from 
restricted access to websites are seen as the most  significant  while many individual consumers have 
highlighted  that  geo-blocking  related  to  digital  content  is  a  specific  concern  (e.g.  access  to  TV 
broadcasts or platforms for apps or audio-visual content).. 

On  qualifying  the  relevance  of  these  barriers,  consumers  considered  all  of  the  listed  types  of  geo-
blocking  practices  to  be  highly  significant  (with  85-90%  of  the  respondent  classifying  them  as 
"important"/"very  important").  Most  significant  are  barriers  blocking  access  to  offers  (>90%),  while 

103 For presentation purposes the answer options "strongly agree"/"agree" and "strongly disagree"/"disagree" are 

presented  

66 

 
 
 
 
                                                            
restrictions for digital goods/services (87%) are considered slightly more significant than non-digital 
goods/services (82%).  

As for the reasons given by traders for refusing to sell or charging a higher price because of residence, 
about half of respondents (46%) did not receive any explanation. Only about one in ten respondents 
(11%) stated that they had asked for an explanation and in most cases received one from the trader for 
the discrimination based on residence. In about a quarter of the cases (27%), the consumer asked but 
did not receive any explanation from the seller as to why they refused to sell or charged them a higher 
price. In 16% of the reported cases an explanation was provided upfront by the trader. 

Companies and business associations 

Respondents from companies and business  associations take a different view from consumers. Even 
though a clear majority (75%) of respondents believe that blocking access to a website creates barriers, 
more than half of the respondents believe that restrictions on the basis of delivery or payment issues 
create significant obstacles to trade. 

A number of stakeholders from business associations and individual companies highlight the need to 
clarify what the implication would be for copyright/licensing issues in future initiatives.  

When  ranking  the  importance  of  the  listed  forms  of  geo-blocking,  companies  and  business 
associations  tend  to  see  them  as  less  important  compared  to  consumers.  However,  two  out  of  three 
respondents from companies consider that rerouting or refusal of access to a website to be "important" 
or "very important" barriers.  Even if several company respondents argue that geo-blocking is positive 
for consumers as it forwards them to websites adapted to the customers' home market. About half of 
the company responses stated that disproportionate shipping costs or using a country specific format 
(e.g. addresses, postal codes, phone, etc.) are important barriers. 

Businesses selling and buying goods and services received an upfront explanation from the seller in 
about one of every eight cases (14%), the same frequency by which an explanation was received as to 
why a sale was denied or a higher price was charged based on the place of residence/establishment. In 
a  little  more  than  one  third  of  all  cases  (36%)  the  seller  did  not  provide  customers  with  any 
explanation, while just over a third of respondents indicated that they have never asked the seller for 
an explanation. 

According to the seller's point of view, less than one in three customers (29%) are provided with an 
explanation for the use of geo-blocking or other geographically-based restrictions. Around a third of 
businesses  (34%)  clarify  that  they  provide  a  full  explanation  upfront  on  their  website,  in  publicly 
available material or in the shop. Less than a third (31%) of the respondents state that they have not 
been asked to provide any explanation, while traders providing an explanation upon the request of a 
consumer association seldom occurred (in just 6% of cases). It has to be noted, however, that only a 
very small number of replies to this questions were received. 

b. Experience of geo-blocking or other geographically-based restrictions  

i) Being the subject of geo-blocking or other geographically-based restrictions 

Consumers and consumer organisations 

When  asked  about  their  experience  of  geo-blocking  or  other  geographically-based  restrictions  when 
shopping  cross-border,  the  vast  majority of  consumers  and  consumer  organisations  (89.4%)  confirm 
that they had been subject of geo-blocking.  

The  most  common  restrictions  which  consumers  face,  regardless  of  the  economic  sector  or  type  of 
purchased  goods  and  services  are  refusal  to  sell  (including  automatic  rerouting),  refusal  to  deliver, 
price difference when shopping cross-border and the refusal of a discount.  

67 

 
 
Consumers report that they are geo-blocked in the retail sector when attempting to purchase clothing, 
footwear  and  accessories,  media  (books),  computer  hardware  and  electronics.  In  the  digital  sector, 
another  sector  in  which  consumers  face  difficulties,  the  issues  are  mainly  related  to  the  inability  to 
purchase or access streaming services, computer games and software, e-books and MP3s. Further, the 
field  of  accommodation  and  leisure  services  also  poses  challenges.  Consumers  also  experience  geo-
blocking  when  attempting  to  purchase  airplane  tickets,  rent  a  car  or  when  they  wanted  to  access 
cultural and entertainment services. Some of the respondents specify that they have been geo-blocked 
when  renting  a  car  in  another  country.  Moreover,  customers  also  expressed  dissatisfaction  at  being 
unable to access on-line gambling websites in other Member States.  

Companies and business associations  

Companies  and  businesses  associations  selling  and  buying  goods  and  services  experience  geo-
blocking to a lesser extent than consumers, with six out of ten businesses (63%) replying that they are 
subject to geo-blocking. In contrast, more than a third of the respondents (37%) submit that they have 
not experienced business-to-business geo-blocking or geographically- based restrictions in the course 
of their business.  

Member States and national authorities 

Most  national  public  authorities  agree  with  the  forms  of  geo-blocking  identified  in  the  public 
consultation.   Two authorities stress the need to define the scope of the initiative more precisely and 
make  a  clear  case  for  the  most  problematic  practices.  One  Member  State  gives  similar  examples  of 
geo-blocking as those identified by the Commission. 

Another  Member  State  agrees  with  the  categories  identified  by  the  Commission  but  emphasised  the 
legitimate “supply side” reasons that prevent companies from delivering cross border (see under "V. 
Justifications  for  geo-blocking").  It  points  to  the  lack  of  clarity  as  to  whether  the  initiative  would 
address  copyright  related  geo-blocking.  Another  Member  State  presents  a  strong  opinion  that 
copyright aspects should stay outside the scope of the initiative on geo-blocking. In addition, another 
Member  State  reports  on  cases  of  refused  delivery  cross-border  concerning  technical  products,  toys 
and homewares. A region of a Member States highlights the importance of portability of digital goods. 

ii) Applying geo-blocking or other geographically-based restrictions 

Companies and business associations  

When  asked  about  their  experience  of  applying  geo-blocking  or  other  geographically-based 
restrictions slightly less than half of businesses (45%) submit that they have applied geo-blocking or 
other geographically based restrictions in the course of their business (in either a business-to-business 
or business-to-consumer context). However, only a limited number of responses from companies were 
received to this question. As the main reasons for the application of geo-blocking practices, most of 
the traders point out VAT rules, divergent national regulations, consumer protection laws and delivery 
costs. Others did so in order to comply with copyright and licensing restrictions, the requirements for 
fiscal  reporting  and  auditing,  due  to  their  contractual  obligations  or  business  models.  Others  point 
towards  differences  in  technical  requirements  within  different  Member  States,  avoidance  of 
bureaucracy and legal disputes, and the aim to provide a better and tailored service to consumers. A 
few of them also include as a reason the compliance with laws on pricing and misleading advertising, 
recycling fees to sales transactions and fraud prevention. In all of their responses traders consider the 
mentioned reasons as justification for the application of geo-blocking.  

From the position papers received, it is evident that companies consider some forms of geo-blocking 
to  be  good  for  consumers  (e.g.  rerouting  to  websites  where  goods  are  adapted  to  consumers  home 
market).  Most  of  the  relevant  responses  consider  geo-differentiation  required  under  local  legal 
compliance  requirements  (e.g.  in  terms  of  different  technical,  regulatory,  legal  and  fiscal  rules  in 
different Member States).  

68 

 
 
V. JUSTIFICATIONS FOR GEO-BLOCKING 

a) Situations when geo-blocking is not justified 

The responses from stakeholders show that the majority of respondents believe that the listed practices 
cannot  be  a  justification  for  geo-blocking  or  differential  treatment  based  on  residence,  even  if  the 
views  of  consumers  and  those  of  companies  show  a  larger  discrepancy  than  under  most  other 
questions.  

Consumers and consumer organisations 

Both individual consumers and consumer organisations are opposed to the listed situations being used 
as  possible  justifications,  especially  in  situations  where  delivery  is  easily  accessible  where  the 
consumer  is  willing  to  pay  additional  costs  (above  80%),  when  there  is  no  additional  cost  or 
administrative  burden  (above  90%),  or  when  paying  with  means  of  payment  that  are  internationally 
valid and accepted (87%).  

Companies and business associations 

Among  company  respondents  the  replies  are  more  evenly  distributed  between  "justified"  and  "not 
justified".  With  regards  to  justifications  relating  to  delivery,  about  half  of  the  respondents  consider 
differential treatment justified, while about a fifth of respondent take the opposite view. Especially in 
situations when a trader advertises the  services/product in that country, or targets the  country of the 
customer with a website, respondents from companies tend to be more accepting of not allowing any 
justifications.  As  a  general  point,  many  companies  underline  that  each  provider  of  goods/services 
should be free to decide the geographical scope of their operations and nothing should force them to 
extend  their  offer  to  markets  where  they  have  previously  not  been  active.  In  addition  to  the  public 
consultation, a number of companies and company associations provide examples on situations where 
they think that geo-blocking is justified. Differences on warranties, VAT, consumer rights, language 
requirements  are  repeatedly  listed  by  companies  and  business  associations  as  legitimate  objective 
reasons for differential treatment. 

Member States and national authorities 

Public authorities tend to take the position that the listed practices should not be justified. Among the 
views  presented  in  position  papers  it  is  argued  that  in  some  cases  geographical  price  discrimination 
can give rise to overall economic/consumer advantages. But even when either supply-side or demand-
based  factors  might  justify  price  discrimination,  respondents  argue  that  it  should  not  be  justified  to 
make  consumers  pay  higher  prices  based  on  their  willingness  to  pay,  but  only  on  the  grounds  of 
nationality or residence. 

b) Objective factors justifying geo-blocking (beyond legal constraints) 

The responses to the question, "what objective factors – beyond legal constraints – that could justify 
geo-blocking", reveal a disparity between stakeholders' perspectives. Consumers tend to take the line 
that no other objective reasons exist, while companies and business associations list numerous grounds 
for different treatment. 

 Consumers and consumer organisations 

The overwhelming majority of responses from consumers take a general position against all forms of 
geo-blocking. However, a few individual replies identify some situations where differential treatment 
could be justified, such as unavailability for after-sale services or very high shipping costs in hard-to-
reach areas. 

 Companies and business associations 

69 

 
 
 
Respondents  from  companies  and  business  associations  provide  a  number  of  reasons  for  differential 
treatment due to e.g. national difference in VAT, health and product safety rules, shipping cost, etc.  
The views expressed indicate that all current reasons normally invoked (see below) for geo-blocking 
are considered  as legitimate. A number  of respondents also take a  more general line that companies 
should be free to set prices within different markets (sometimes referred to as "geo-tailoring"). Others 
mention the risk of hacking or cybersecurity concerns as a ground to deny access to certain countries. 
Some  companies  also  refer  to  the  gambling  sector,  where  legal  requirements  require  restrictions  in 
terms of territoriality (e.g. denial of access to licensed gambling websites from consumers from other 
Member  States;  IP  blocking  of  access  to  unlicensed  gambling  websites  or  websites  based  in  other 
Member States). 

Member States and national authorities 

When  asked  about  possible  justifications  for  geo-blocking,  most  public  authorities  agree  that 
nationality  or  residence  alone  cannot  be  considered  as  legitimate  reasons  for  refusing  to  sell  cross-
border. However, several responses also suggest legitimate grounds for such a refusal that may occur 
in  cross-border  transactions,  including:  dispute  resolution  and  after  sales  services;  cost  of  delivery, 
security and fraud related reasons; differences in tax rates; different level of purchasing power in the 
Member State of the consumer and trader, and; different safety standards for products or services. 

VI. POLICY RESPONSES 

a) Elements of a policy response 

Consumers and consumer organisations 

When  asked  about  elements  of  a  policy  response,  the  vast  majority  of  individual  consumers  and 
consumer  organisations  strongly  agree  or  agree  to  more  transparency  and  rules  banning  certain 
business  practices.  Virtually  all  suggested  elements  of  a  policy  response  are  supported  by  a  large 
majority of respondents.  

A large majority (94%) of the relevant respondents favour a ban on discriminatory blocking of access 
to  websites.  Nine  out  of  ten  (93%)  respondents  favour  a  prohibition  of  refusal  to  download  digital 
products  (such  as  software  or  video  games).  More  than  eight  out  of  ten  (between  84  and  87%)  of 
respondents from this group are in favour of companies having the obligation to explain - either before 
the  transaction  or  upon  request  -  the  reasons  for  the  difference  in  treatment  of  customers  based  on 
residence/nationality.  A  similar  ratio  (between  71  and  87%)  of  respondents  support  a list  of  reasons 
that may never justify different treatment of domestic and foreign users or a list of reasons that may 
well  justify  different  treatment.  Almost  nine  in  ten  (87%)  of  the  relevant  respondents  agree  to  rules 
banning  ways  and  means  of  discriminatory  geo-blocking  and  other  restrictions.  Furthermore,  a  vast 
majority favours policies requiring traders to obtain consent prior to automatic rerouting. Likewise, a 
clear  majority  (70  to  80%)  of  respondents  favour  rules  requiring  traders  to  accept  cross-border 
transactions  from  users  throughout  the  EU,  either  under  conditions  reflecting  additional  costs  or  in 
cases where users arrange the delivery themselves. 

Consumer associations support the suggested EU policy responses, particularly a list of reasons which 
traders can or cannot use as ground for different treatment. 

Companies and business associations 

Across companies, opinions are rather divided. More than a half of the relevant respondents strongly 
disagree  or  disagree  to  rules  requiring  traders  to  accept  cross-border  transactions  from  users 
throughout  the  EU  under  the  same  conditions  as  those  applied  to  users  of  the  home  country  of  the 
provider.  Likewise,  the  majority  opposes  rules  requiring  traders  to  accept  those  transactions  under 
conditions  reflecting  additional  administrative  costs.  Rules  requiring  traders  to  accept  those 

70 

 
 
 
transactions  if  the  users  are  willing  to  organise  the  delivery  themselves  are  also  opposed  by  the 
majority.  

A relative majority of respondents agree on most policy proposals concerning increased transparency. 
Just above one in three respondents (35%) believe that "companies should have the obligation to make 
clear  before  the  transaction  the  detailed,  objective  and  verifiable  reasons  why  they  treat  customers 
differently based on their residence or nationality", five in ten replies (49%) submit that "companies 
should have the obligation to explain upon request the detailed, objective and verifiable reasons why 
they treat customers differently based on their residence or nationality". Around a third of the replies 
(30%) agree to "rules including a list of reasons that may never justify treating domestic and foreign 
users differently", while around a quarter of the replies (25%) wants policy proposals covering "rules 
prohibiting traders to refuse the cross-border download of digital products (such as software or video 
games)".  

Around half of the respondents (50%) agree to a policy banning the discriminatory blocking of access 
to websites. There is no clear majority for or against the other options.  

Business associations are generally supportive of the aim to prohibit unjustified geo-blocking while at 
the  same  time  highlighting  the  importance  of  contractual  freedom.  Many  of  them  call  for  a  clear 
definition of geo-blocking and what is regarded as unjustified. Some associations do not see a need for 
new  legislation  and  point  to  the  importance  of  enforcement  of  existing  rules  (Services  Directive, 
Consumer Rights Directive, competition law).  

Companies and associations from the gambling sector highlight the legitimate need to block access to 
websites of illegal operators (consumer protection and public policy reasons). 

Some business associations support policy options where a consumer is prepared to organise delivery 
of a physical product himself, to oblige the trader to non-discriminatory treatment of customers from 
abroad. That would be under the assumption that this would be within the usual delivery area of the 
trader and on the same basis as domestic customers or those in the usual delivery area. Similarly, some 
companies acknowledge that the situation of unsolicited requests and if the trader's law applies is very 
different situation for a trader compared to active sales.  

There is no clear majority across all groups of respondents as to whether respondents favour specific 
rules for online transactions or for physical purchases and orders. 

Member States and national authorities 

While  most  public  authorities  point  to  the  need  of  effective  enforcement  of  existing  legislation 
(Services Directive, consumer acquis) several also support targeted instrument to address unjustified 
geo-blocking. 

Most public authorities agree with the need to ensure greater transparency, in particular by allowing 
consumers  to  see  differences  in  prices  (e.g.  by  banning  automatic  rerouting).  One  Member  States 
expresses  strong  views  against  obliging  companies  to  disclose  the  reasons  for  geo-blocking  upfront 
and considers that such a measure would place a disproportionate burden on businesses.  

Public authorities vary as to the preferred method for addressing geo-blocking practices. Some support 
the  concept  of  lists  of  justified  or  non-justified  practices.  Others  prefer  an  open  approach  by  which 
only examples of problematic practices would be provided in the legislation. One Member State points 
out  to  the  risk  that  exhaustive  lists  quickly  become  outdated.  Technologically  neutral  and  principle 
based  legislation  is  preferred.  One  public  authority  supports  the  option  to  delegate  potential 
(additional) costs to the consumer whereby the trader has to justify the additional costs.  

Some  replies  support  more  effective  enforcement  of  the  new  rules  by  a  combination  of  enhanced 
powers  of  the  Commission  and  more  effective  cooperation  between  national  competent  authorities. 
Some replies invoke the need to strengthen the Consumer Protection Cooperation (CPC) network. 

71 

 
 
b) Exclusion of SMEs 

When  asked  whether  SMEs,  in  and  particular  micro  companies,  should  be  exempted,  a  third  of  all 
respondents favour an exemption, while two thirds would not exempt SMEs. Both the consumer and 
company respondents mirror these exact fractions (one third vs. two thirds). When asked under which 
circumstances  SMEs  should  be  exempted,  respondents  made  several  suggestions.  Some  respondents 
would accept an exemption only if their small nature practically impedes the offer of goods or services 
Union-wide,  others  suggested  the  use  of  a  threshold/volume  criterion  based  on  e.g.  the  number  of 
employees, company turnover, total revenue or the production volume. Others argue that an exemption 
would  be  needed  only  if  the  administrative  impact  would  be  too  large.  One  business  association 
expressly welcomes exemptions for small firms, however, not by means of a blanket exemption but on 
a case-by-case basis. 

c) Best policy instrument 

Consumers and consumer associations 

When asked about the best policy instrument, consumers suggest very different approaches. Examples 
are the introduction of a genuinely free movement of digital and non-digital products within the EU, a 
removal  of  all  restrictions  to  the  free  circulation  of  goods  and  an  EU  legal  framework  plus  national 
implementation.  Better  enforcement  and  the  possibility  of  fines  are  also  mentioned.  Overall,  many 
respondents  favour  harmonised  European  rules  on  this  topic.  Others,  however,  would  not  favour  a 
legislative response, suggesting that European Treaties would not allow an intervention to force sellers 
to be active in specific territories. 

Companies and business associations 

Companies showed equally divergent views as consumers. Some said there should not be any policy 
response.  Others  pointed  out  the  importance  of  competition.  Common  rules  facilitating  cross-border 
trade are favoured by other respondents. Finally, non-legislative action or guidelines are mentioned as 
preferred options by several respondents.  

Some business associations oppose the enactment of a list of justifications as it would not reflect the 
complexity of business models would never be comprehensive and soon be outdated. 

Member States and national authorities 

Only a limited number of replies to this open question were received, but several replies from Member 
States consider monitoring and enforcement by national authorities in combination with cooperation of 
national  authorities  as  important.  Divergent  views  are  expressed  as  to  whether  the  existing  regime 
based on Art. 20 of the Services Directive is sufficient. 

d) Effective implementation 

Overall, the respondents favour almost all suggested ways to improve effective implementation. More 
than  seven  out  of  ten  (72%)  of  the  respondents  support  a  monitoring  and  enforcement  role  for  the 
European  Commission  as  well  as  for  national  authorities.  Similar  numbers  of  respondents  (70%) 
support a more effective cross-border cooperation mechanism between national authorities. More than 
a  half  of  the  respondents  want  alternative  dispute  resolution  bodies  to  ensure  implementation.  The 
support is larger among consumers, with more than seven in ten (respectively 78%, 74% and 77%) to 
the  first  three  enforcement  options.  Companies  are  less  supportive  of  the  suggested  implementation 
mechanisms. However, half of the relevant company respondents support monitoring and enforcement 
by national authorities. As regards the other enforcement options, no majority can be identified among 
company respondents. When asked to specify, some suggest that the European Commission was best 
placed  to  take  care  of  the  enforcement  due  to  the  pan-European  dimension  of  the  problem.  Others 
highlight reservations vis-à-vis the effectiveness of their national enforcement authorities. Additional 
respondents mention the role of courts. When asked about best practices, including self-regulation of 

72 

 
 
companies,  respondents  argue  either  in  favour  of  self-regulation  or  against  it,  pointing  out  that  it 
would not achieve a real solution for consumers. 

Member States and national authorities 

Most responses from Member States and their authorities support improved enforcement by national 
authorities.  More  effective  cooperation  between  national  authorities  is  also  welcomed  by  several 
Member States. 

VII. MARKET IMPACT 

a) Overall impact 

Consumers and consumer organisations 

A large  majority (94%) of consumers believe the impact would be very positive or positive. Only a 
small fraction (4%) believes that the impact would be negative or somewhat negative. Consumers also 
highlight  the  opportunities  and  improved  market  access.  Some  argue  that,  due  to  increased  offers, 
greater  choice  and  competitive  prices,  they  would  buy  more.  Finally,  respondents  mention  the 
beneficial impact on migrants and minorities as regards better cross-border access.  

The opinions of consumer associations are more divided. All but one of the consumer associations see 
positively  on  measures  to  increase  transparency,  while  a  relative  majority  of  respondents  (44%) 
answer that “rules including a list of reasons that may never justify treating domestic and foreign users 
differently” and “rules banning ways and means of discriminatory geo-blocking and other restrictions” 
would have a very negative effect on market opportunities. 

Companies and business associations 

Among  companies  six  out  of  ten  respondents  (64%)  expect  a  positive  impact  on  cross  border  e-
Commerce,  while  similar  numbers  (59%,  58%  and  55%)  expect  such  impact  on  cross  border  trade 
generally,  the  economy  and  their  business  sector  respectively.  A  negative  impact  on  the  economy, 
cross-border  e-Commerce,  etc.  is  expected  by  less  than  a  quarter  of  the  respondents  representing 
individual  companies  (13%  to  25%).  Some  associations  submit  that  a  prohibition  of  geo-blocking 
would reduce competition. Because of the de facto obligation to sell, only large traders would be able 
to  comply  with  such  an  obligation  and  economically  survive.  Smaller  traders  would  not  be  able  to 
respond to these sales requests and if not competitive enough, this would lead to a concentration in the 
market. Only big traders would then survive, which would lead to less choice and offers to consumers.  

Member States and national authorities 

Most responses from Member States and their authorities invoke the principle of freedom to contract 
which should not be undermined by the new instrument on geo-blocking. They also point out that the 
legitimate  considerations  to  address  unjustified  geo-blocking  have  to  be  weighed  against  the  risk  of 
putting additional burdens on businesses. 

b) Impact of individual measures 

Overall, a clear majority of all respondents see a very positive or somewhat positive impact on their 
activities. An overwhelming majority of respondents (79%) expect a positive impact in case rules are 
introduced banning ways and means of discriminatory geo-blocking and other restrictions. A similar 
number of (78%) of respondents expect a positive impact if rules are enacted that prohibit traders to 
refuse cross border download of digital products. More than seven in ten (73%) respondents expect a 
positive  impact  in  case  of  enactment  of  rules  banning  the  discriminatory  blocking  of  access  to 
websites.  There  is  a  clear  majority  of  respondents  that  see  a  positive  impact  also  as  regards  other 
possible measures such as more transparency i.e. information to the customer, rules requiring traders 

73 

 
 
 
to  accept  cross  border  transactions  under  certain  circumstances  and  rules  including  a  list  of  reasons 
that may or may never justify different treatment.  

No  clear  majority,  however,  was  found  as  regards  the  expected  impact  of  rules  either  specifically 
addressed at online or offline transactions respectively. 

Consumers and consumer organisations 

The degree of expected positive impact is even higher if one only looks at the consumer responses. An 
overwhelming  majority of consumers (95%) said that they positive  impact in  case  rules are in force 
banning discriminatory geoblocking and other restrictions. 88% of consumers see a positive impact if 
rules are enacted regarding cross border download of digital products. 92% expect a positive impact of 
banning the blocking of access to websites. Likewise, a clear majority of consumers expects a positive 
impact  of  measures  on  transparency,  of  requiring  traders  to  accept  certain  cross  border  transactions 
and of a list of reasons clarifying different treatment respectively (81%, 64% and 80%). 

Companies and business associations  

Based on replies by companies, a majority (56%) expect a negative impact of rules requiring traders to 
accept  cross  border  transactions  under  the  same  conditions  as  those  applied  to  users  of  the  home 
country of the trader. Likewise, more than a half (55%) state such negative impacts would have to be 
expected once rules were enacted that impose on traders to obtain consent of users prior to automatic 
rerouting. Half of the respondents forecast a negative impact if rules are created including a closed list 
of reasons that may justify different treatment. However, up to a quarter of companies provide – across 
possible measures – they are neutral as regards expected impact. 

When companies were asked whether such impact would be mostly on the economy, cross border e-
commerce, cross border trade generally or their business sector, a clear majority (62%) of companies 
did  not  to  answer  the  question.  The  replies  of  those  who  answered  are  split  among  the  four  choices 
(31%  economy,  29%  cross  border  e-commerce,  23%  my  business  sector,  17%  cross  border  trade 
generally). 

When respondents from the group of companies were asked about where an additional burden would 
be  expected  to  be  on,  the  replies  are  divided  among  the  four  options:  respondents  chose  additional 
administrative compliance costs (30%), additional costs in the area of marketing or web design (22%), 
additional personnel costs (24%) and additional delivery costs (25%).  

Member States and consumer authorities 

Among  individual  measures  listed  in  the  public  consultation  all  respondents  from  public  authorities 
support  rules  including  a  list  of  reasons  that  may  never  justify  different  treatment  of  domestic  and 
foreign customers (50% of replies indicate somewhat positive result, 50% very positive). 

Three quarters of respondents are supportive of rules including a closed list of reasons that may justify 
different treatment of domestic and foreign customers, while one forth is neutral. 

Respondents are in general supportive of other individual measures listed, with the exception to rules 
requiring traders to accept cross-border transactions from customers from throughout the EU under the 
same  conditions  as  those  applied  to  customers  of  the  "home"  country  of  the  provider,  where  a  half 
indicate somewhat negative result. This is mirrored in the replies concerning the rules requiring traders 
to  accept  cross  border  transitions  from  customers  from  throughout  the  EU  and  to  provide  delivery 
cross-border  if  the  customer  is  willing  to  organise  themselves  the  delivery  and  cover  the  additional 
shipping costs. Half of the respondents would be against such rules. 

VIII. CONCLUSION 

74 

 
 
 
The  responses  to  the  consultation  show  that  there  is  overwhelming  support  for  the  general  principle 
that consumers and business should be able to purchase goods anywhere in the EU. Across the board, 
regardless  of  their  geographical  location,  the  responses  from  consumers  and  consumer  organisations 
expressed a general dissatisfaction with the current state of affairs. Companies, across various sectors, 
agree with the description of existing barriers in the single market while urging caution in introducing 
sweeping new measures seeking to address the situation. Member States also consider geo-blocking to 
be of high importance.  

Regarding  the  different  forms  of  geo-blocking  and  other  geographically-based  restrictions  currently 
being  practised  a  clear  majority  of  respondents  agreed  to  their  general  significance.  Very  few 
additional restrictions were brought up in the responses. Both from the perspective of consumers and 
companies the replies show a general discontent with the current state of fragmentation of the single 
market. However, on more specific issues the views of consumer and consumer organisations, on the 
one  hand,  and  companies  and  business  associations  on  the  other,  are  somewhat  divergent. Although 
concerned  about  existing  barriers,  companies  and  business  associations  were  more  accepting  of  the 
current  state  of  affairs,  attributing  it  to  divergent  legal  regimes  within  different  Member  States. 
Consumers and consumer organisations expressed a view of principle that the prevalence of existing 
practices is an important obstacle to the single market. 

The  difference  in  the views  expressed  by  consumer  and  companies  becomes  even  more  pronounced 
when  considering  the  possible  justification  for  allowing  geo-blocking  and  geographically-based 
restrictions.  Consumer  and  consumer  organisation  tend  to  qualify  more  of  the  listed  practises  as 
"unjustified", while companies, although more divided in their positions, tend to be more accepting of 
the  number  of  objective  factors  that  would  justify  geo-blocking.  The  replies  also  give  voice  to  a 
concern,  mainly  stemming  from  companies  but  also  public  authorities,  that  the  consultation's 
separation of "justified" and "unjustified" practices is vague and difficult to apply in practice. If future 
policy  measures  address  these  practises,  many  of  the  respondents  from  companies  and  business 
associations underline the need to clearly define - in a legally certain way - what is considered to be a 
"justified" or "unjustified practice". Similar concerns have been voiced by respondents from Member 
States which argue for a cautious approach, being wary that attempts to define justifications might  in 
practice lead to unintended consequences or unacceptable infringements of the freedom to contract. 

In  terms  of  favoured  policy  responses  to  address  the  current  situation,  a  vast  majority  of  consumers 
and  consumer  organisations  show  support  for  increased  transparency  by  preventing  the  blocking  of 
access  to  websites.  An  equally  large  proportion  also  favours  a  prohibition  to  refuse  downloading  of 
digital products. Consumers also support a list of reasons which can never justify different treatment, 
which is also the policy response consumer associations deem as appropriate. From the perspective of 
companies, a common thread is the emphasis on respect for contractual freedom. Even if the majority 
of companies support measures increasing transparency, many replies highlight the risk of introducing 
overly  burdensome  information  obligations.  At  the  same  time  a  majority  of  company  respondents 
oppose measures that would force them to accept cross-border transactions from users throughout the 
EU under the same conditions as those applied to users from the provider's home country. A majority 
of  respondents  from  companies  and  business  associations  also  reject  potential  policy  responses  that 
would require traders to accept transactions which come with additional administrative costs. They are 
divided, however, as regards transactions where the customers organise the delivery themselves.  

With  regard  to  ensuring  effective  implementation,  there  is  strong  support  from  consumers  for  all 
envisaged mechanisms, be it increasing the role of the Commission, national authorities or providing a 
better  cross-border  cooperation  mechanism.  Companies  take  a  different  view  with  none  of  the 
suggested mechanism getting support from a majority of the respondents. 

Concerning the expected impact of measures to address geo-blocking, companies take a more reserved 
view,  with  a  majority  expressing  concerns  about  the  effect  of  having  to  accept  cross-border 
transactions  or  requiring  consumer  consent  before  rerouting.  Some  business  associations  also  warn 
that proposed measures would amount to a de facto obligation to sell, which could reduce competition, 
as small actors would not be able to respond to sales requests. Consumer organisations are supportive 

75 

 
 
of measures on transparency and clarification of non-discrimination. They expect a positive impact of 
most  of  the  suggested  measures.  Likewise,  the  vast  majority  of  consumers  expect  a  positive  market 
impact,  with  some  respondents  expecting  increased  offers,  greater  choice  and  competitive  prices 
leading to increased overall consumption.  

Further consultation activities 

The Commission exchanged views with stakeholders in numerous meetings, in particular:  

  Meetings with Member States in January 2016. 

  Meetings with business and consumer organisations in 2015/2016. 

STAKEHOLDER CONSULTATION WORKSHOP 

On  18  February  2016,  the  Commission  held  a  workshop  on  geo-blocking  and  geo-discrimination  in 
Amsterdam,  with  a  good  balance  of  representation  of  stakeholders.  49%  of  participants  represented 
business interests, 30% consumer interests (including European Consumer Centres) and the remaining 
was composed of various organisations, including enforcement authorities. 

Participants  discussed  and  commented  on  possible  policy  options  as  set  out  in  the  Inception  Impact 
Assessment. Some options were welcomed, others were criticised by stakeholders. 

Convergence  of  views  occurred  on  the  following  aspects:  Stakeholders  would  favour  enhanced 
transparency for consumers, if that would not become overly burdensome for businesses. Stakeholders 
asked the  Commission to  address the drivers of geo-blocking  and  discrimination  first rather treating 
the symptom. The policy option of a "black list" was seen risking to be too prescriptive, burdensome 
and  not  future-proof.  The  policy  option  "shop  like  a  local"  raised  concerns  by  some  stakeholders, 
particularly traders who pointed to the risk of being made forced to apply foreign law. 

The  relevant  remaining  barriers  to  cross-border  trade  were  discussed  (e.g.  applicable  law,  taxes, 
labelling, right of return, warranties).  

SME  Representatives  considered  there  is  no  need  for  new  legislation  on  transparency,  which  would 
involve  high  compliance  costs  (translation  of  websites).  The  view  was  that  more  coordination  was 
needed.  Consumers  considered  however  that  transparency  would  increase  market  opportunities  for 
companies  and  could  increase  their  market  share,  although  it  could  be  more  complicated  for  SMEs. 
Some enforcement authorities questioned the need for transparency if there was no eventual access to 
the product or the service.   

The possibility to pick-up goods at the location of the trader with no obligation to deliver cross-border 
was discussed. Businesses questioned whether it would require a pure online player to set up physical 
pick-up  points.  Most  considered  that  this  should  be  based  on  a  voluntary  approach  rather  than  an 
obligation.  Questions  were  raised  as  to  the  compatibility  with  the logistical  chain  of  several  traders. 
Possible  effect  on  prices  was  discussed.  Consumer  representatives  stressed  the  complexity  of  the 
proposal. In their view, it can help in neighbouring countries or for very expensive goods (buying a car 
cross-border). 

On  purely  digital  services,  businesses  focused  on  how  to  address  the  various  drivers  spurring 
companies to restrict cross-border transaction, especially the issue of payments systems not supporting 
cross-border sales. Questions were also raised on the scope of this option  

76 

 
 
 
 
 
For the policy option "same location, same deal", the scope was discussed and clarified  

Finally, with respect to the reasons that should or should not be accepted as being based on objective 
criteria, discussions pointed at the complexity of this issue an. Generally, traders would favour a stable 
and clear list of non-acceptable justifications, which should however remain sufficiently broad so as to 
take  into  account  technological  and  economic  developments.  They  stressed  that  the  issue  of  the 
applicable consumer legislation generates a uncertainty for traders. They also stressed, with regard to 
refusals of means of payment, that such refusals are often due to the payment service provider and not 
the trader himself. Consumers generally were on a similar line, favouring more "black list" approach 
but stressing that devising it would practically be very complex. 

77 

 
 
 
 
 
ANNEX 3: WHO IS AFFECTED BY THE INITIATIVE AND HOW 

Stakeholders  who  would  be  affected  by  the  initiative  as  contained  in  the  preferred  policy 
option 3 (equal treatment in specific situations "shop like a local"): 

  Consumers searching and shopping across borders for tangible goods and those buying 
digital services or services provided at the premises of the trader would benefit from the 
initiative: 
o  Tangible goods  

Consumers  could  compare  offers  and  prices  cross-border  without 
facing 
discriminatory  practices  including  geo-blocking.  They  would  have  access  to  goods 
and  services  like  domestic  consumers  in  the  country  of  the  trader,  i.e.  at  the  same 
conditions. However, as in order to take advantage of this possibility, they would need 
to organise the transport of the good across the border themselves. They could either 
pick  up  the  good  themselves,  which  would  often  be  the  case  in  border  regions.  It 
would  also  help  consumers  who  want  to  send  gifts  to  a  person  in  another  Member 
State or consumers who travel, study or work abroad. Alternatively, consumers could 
contact  a  parcel  delivery  intermediary,  which  consumers  in  some  Member  States 
already do. It should be noted that in order to find the intermediary, they will typically 
not be able to rely on the seller, as such an intervention by the seller in the delivery 
would trigger VAT registration requirements which many sellers will want to avoid. 

As  a  result,  consumers  will  be  able  to  benefit  from  lower  prices  in  other  Member 
States  and  buy  a  larger  variety  or  quality  of  goods  available  in  the  EU.  Both  online 
and  offline  prices  can  be  expected  to  decrease  slightly,  which  increases  consumers' 
purchasing power and real expenditures. In the example of the electronic goods sector, 
price decreases are estimated at -0.5% offline and -0.6% online, on average across the 
EU. Based  on the analysis of the electronic sector,  the total EU28 consumer surplus 
increase from online purchases of tangible goods could amount to 0.8% on average for 
the EU28, with variations across Member States.. 

Consumers would be treated as domestic customers and, hence, would have to accept 
the language of the trader and certain legal rules of that country.  

o  Digital Services  

The  abolition  of  geoblocking  will  allow  foreign  consumers  access  to  services  in  all 
Member States, at the same prices as domestic online shoppers in these countries. The 
major  difference  compared  to  tangible  goods  is  that  in  this  situation  there  are  no 
transport  costs  increasing  potential  price  arbitrage.  Unrestricted  access  to  all  offers 
could in theory lead to progressive convergence of prices in excess of transport costs. 
However, consumers also face information costs resulting from language differences 
and the fact that most price comparison sites are national.  

78 

 
 
 
 
 
 
As  regards  non-audiovisual  online  content  services,  although  at  this  stage  non-
discrimination  principle  is  not  applicable  to  them,  from  the  outset  consumers  would 
not be blocked or rerouted without their consent when accessing the online interfaces 
from  other  Member  States  and  should  not  be  discriminated  as  regards  payment 
means..  

o  Services  consumed  at  the  location  of  the  traders  (such  as  hotel  rooms  or  rental 

cars) 

Consumers  could  not  be  denied  access  to  a  services  or  made  to  pay  different  prices 
based on their place of resident or their nationality, in situation where the services is 
used by the consumer at the place of establishment of the trader or the location where 
the  trader  provide  the  services.  The  situation  will  mainly  affect  situations  where  the 
consumer  is  temporarily  visiting  another  Member  States  be  it  on a  tourist,  family  or 
business trip, where consumers reside in a Member States where they do not hold the 
nationality  or  those  residing  in  cross-border  regions.  The  transport  costs  inherent  in 
this  situation  are  likely  to  keep  price  arbitrage  to  a  minimum.  In  fact,  empirical 
evidence suggests that price arbitrage in practice might not lead to price convergence, 
even where transport costs are minimal. 

  Businesses  

o  Companies  that  currently  automatically  reroute  website  visitors  would  have 
either to abandon this rerouting practice or install an approval procedure for website 
visitors to agree. This concerns a small number of mostly larger companies – 2% of 
website operator practice automatic rerouting, and in order for this to be possible, the 
company must operate at least two distinct websites. 

o  Companies selling tangible goods, digital services or services consumed physically 
(hotel  rooms,  rental  cars  etc.)  that  currently  treat  customers  differently  on  the 
basis  of  nationality  or  place  of  residence  would  have  to  accept  foreign  buyers  at 
the  same  conditions  as  national  customers.  For  traders  operating  online,  this  may 
either require modifications to the interface in order to ensure that details of foreign 
buyers  can  be  entered,  or  the  installation  of  an  alternative  possibility  (e.g.  e-mail 
ordering). It is important to note that under this option traders would not be obliged 
to  deliver  tangible  goods  across  borders.  In  order  to  avoid  VAT  registration 
requirements in other Member States, they would also have to abstain from putting 
customer in contact with parcel delivery intermediaries.  

In so far as companies still treat customers differently, they would have to set up a 
mechanism to respond to requests for justification (e.g. via e-mail) or to provide an 
explanation on their website. 

If the company had previously several distinct websites/points of sale with different 
conditions, it is possible that there will be a limited shift of sales channels, with some 
customers moving to the more favourable sales channel. 

o  Companies  that source cross-border goods or services for which they  are  end-
users (i.e. supplies which are neither sold nor transformed) could take advantage of 
the same increase in variety and better prices as consumers.   

79 

 
 
 
 
  Member States 
Member  States'  authorities  responsible  for  consumer  protection  will  need  to  familiarise 
themselves with the new rules.  

80 

 
 
 
 
Annex 4:  The economic impact of lifting geo-blocking restrictions 

1 

Introduction 

This  annex  summarises  the  method  used  to  assess  the  economic  impact  of  removing  geo-blocking 
(GB) practices in the EU and the results obtained. A more detailed explanation of both issues can be 
found in Duch-Brown and Martens (2016). 

The  2015  Mystery  Shopping  Survey  (GfK,  2016)  provided  evidence  and  measurements  on  the 
prevalence  of  GB  at  different  stages  in  the  cross-border  shopping  process  by  product  category.  The 
objective  of  this  annex  is  to  quantify  the  economic  impact  of  the  (partial)  elimination  of  GB 
restrictions. This is done in several steps. First, we estimate the impact of lifting all GB restrictions on 
cross-border  e-commerce  for  a  limited  set  of  online  electronics  goods  in  10  Member  States  that 
represent  about  85%  of  the  EU  electronics  market.  The  Mystery  Shopping  Survey  showed  that 
electronics goods are subject to widespread GB restrictions; lifting the restrictions could have a strong 
impact in that sector.  Moreover, we have detailed data for electronics goods sales that enable us  to 
estimate the impact of lifting trade restrictions on buyers (consumers) and sellers (producers), both in 
the  online  and  offline  distribution  channels.  Without  GB  restrictions,  buyers  can  price-arbitrage 
between  country  markets  and  find  new  product  varieties  that  are  not  available  in  their  domestic 
markets. Sellers would adjust prices in response to these new market conditions. Second, starting from 
these  overall  results  for  a  scenario  whereby  all  GB  restrictions  are  lifted,  we  estimate  the  economic 
impact of intermediate policy scenarios that provide for a partial lifting of GB restrictions only. Some 
cross-border  online  trade  restrictions  remain  in  place  and  result  in  relatively  higher  trade  costs  and 
barriers, compared to the full lifting of all GB restrictions. We simulate the impact of these relatively 
higher  trade  costs  and  the  corresponding  decline  in  economic  benefits,  compared  to  the  full  GB 
scenario.  Third,  we  expand  the  estimates  obtained  from  this  limited  electronics  sales  dataset  to  all 
other  online  goods  sales  and  to  all  EU28.  We  apply  the  Mystery  Shopping  Survey  results  on  the 
prevalence of GB restrictions and cross-border price difference in other online products. 

We find that lifting GB restrictions has a positive impact on consumer and producer surplus in all EU 
MS. Overall, consumer surplus increases by 1.2% in the EU28 and producer surplus (profits) by 1.4%. 
The  relative  impact  is  especially  strong  in  some  smaller  MS  where  consumer  choice  is  currently 
relatively limited and price competition is lower because of limited market size. Consumer gains are 
stronger  than  producer  gains  in  these  countries.  However,  for  the  overall  EU28,  producers/sellers 
benefit  slightly  more  –  in  relative  terms  –  than  consumers  because  of  economies  of  scale  and  cost 
reductions  when  online  sales  increase.  Absolute  figures,  however,  are  higher  for  consumer  surplus 
than for firms' profits. The overall result is largely driven by the largest EU economies. Partial lifting 
of GB restrictions reduces the magnitude of the benefits but still generates a positive economic impact. 

The remainder of this annex is structured as follows. Section 2 explains the methodology employed. 
Section  3  discusses  the  data  sources.  Section  4  presents  the  results,  for  each  stage  in  the  simulation 
process. 

2 

Modelling methodology 

81 

 
 
 
 
 
 
 
 
 
 
 
 
The  ideal  methodology  would  have  implied  the  estimation  of  a  general  equilibrium  trade  model 
linking the observed extent of GB for different products groups to bilateral cross-border trade volumes 
by product category. However, there are no detailed online cross-border trade data by country pair and 
product category for the EU. In the absence of such data the estimation of the trade response to lifting 
GB related trade restrictions is not possible.  In addition, there is no computable general  equilibrium 
model  at  the  EU  level  that  explicitly  incorporates  e-commerce.  Solving  these  severe  modelling 
restrictions required alternative solutions in order to estimate the economic impact of removing GB. 

The  quantitative  methodology  adopted  can  be  conceptualised  as  a  partial-equilibrium  structural 
bottom-up  approach.  The  model  is  grounded  in  a  partial-equilibrium  framework  since  it  uses  very 
detailed  online  and  offline  price  and  quantity  data  to  identify  with  high  precision  consumers' 
substitution patterns in only four product categories and ten EU Member States. It is structural in the 
sense that economic theory is used to develop statements about how a set of observable endogenous 
variables are related to another set of observable explanatory variables, and sometimes also to a set of 
unobservable variables. However, economic theory alone cannot provide enough information for the 
estimation  of  the  model.  For  this  reason,  there  is  a  need  to  add  statistical  assumptions  about  its 
observed and unobserved variables. A key reason to use economic theory, beyond the specification of 
the relationship between the variables,  is to clarify how institutional and economic  conditions affect 
these  relationships.  This  specificity  is  essential  to  make  causal  statements  about  the  estimated 
relationships, or use them to perform counterfactuals, i.e., scenarios that have not been implemented 
but  that  can  represent  the  likely  outcomes  of  policy  interventions.  Finally,  it  is  bottom-up  because 
from  the  detailed  results  obtained  for  the  four  product  categories,  we  extrapolate  to  the  rest  of  the 
online economy and the other MS –using proportions – to produce a figure for the whole EU-28. 

2.1 

The core model 

The methodological approach is framed in the tradition of structural estimation in empirical industrial 
organisation in the economics profession. This approach uses discrete choice models for the estimation 
of  demand  and  adds  a  simulated  supply  side  to  compute  the  industry  equilibrium  given  by  the 
observed data. Adding a simulated supply side to account for firms' pricing behaviour, the observed 
market equilibrium can be found. Moreover, by changing supply or demand conditions, the framework 
allows for the design of counterfactuals that simulate policy changes. 

The  model  used  here  is  a  modified  version  of  Duch-Brown  et  al.  (2015),  and  was  developed  by 
researchers  from  the  JRC/IPTS.  The  model  is  a  partial  equilibrium  approach  using  detailed  pricing 
data  for  both  online  and  offline  sales  of  specific  products,  allowing  estimating  with  a  high  level  of 
accuracy demand substitutability and market equilibrium. 

From  a  market  analysis  perspective,  there  are  three  potential  competitive  constraints:  demand 
substitution,  supply  substitutability,  and  potential  competition.  Demand  substitution  constitutes  the 
most  immediate  and  effective  disciplinary  force  on  suppliers,  and  in  particular  to  their  pricing 
decisions. Supply substitutability and potential competition are relevant in the medium to long terms, 
since they imply the need of adjustments through tangible or intangible assets, additional investments 
or  strategic  decisions,  all  of  which  would  imply  significant  changes  in  the  markets  under 

82 

 
 
 
 
 
 
 
 
consideration104. Hence, a precise estimation of demand substitutability is essential to the analysis of 
the effects of changes in the institutional setting of a given sector, and this is the basis for the approach 
taken here. 

We  consider  the  demand  for  four  consumer  electronic  products:  smartphones,  tablets,  desktops  and 
laptops.  Consumers  can  choose  among  a  large  variety  of  products  that  are  differentiated  in  quality. 
Furthermore, consumers can either purchase these electronic products in a traditional brick-and-mortar 
shop  (offline)  or  they  can  purchase  the  products  through  an  online  distribution  channel.  Finally, 
consumers can also decide not to buy an electronic product at all, in which case they can spend their 
money  on  other  goods.  To  model  the  substitution  patterns,  a  two-level  nested  logit  model  is  used 
which allows for market segmentation according to two discrete dimensions: i) quality, which can be 
either high or low; and ii) the distribution channel, which is either offline or online (as in Duch-Brown 
et al., 2015). This model is useful since the nesting parameters enable one to assess to which extent 
consumers view products in the same distribution channel and/or quality category as closer substitutes. 

Assuming  that  consumers  choose  the  product  with  the  highest  utility,  one  can  obtain  the  choice 
probabilities  for  every  product  in  every  country,  including  the  probability  of  purchasing  the  outside 
good  (McFadden,  1978).  At  the  aggregate  level,  these  choice  probabilities  can  be  equated  to  the 
market shares, relative to a hypothesised potential market, defined here as representing 40% of country 
population.105  The  demand  model  can  be  used  to  compute  consumer  surplus  (McFadden,  1978  or 
Anderson  et  al.  1992),  and  to  compute  the  own-  and  cross-price  elasticities  of  demand  (see  Duch-
Brown  and  Martens,  2016  for  details).  If  the  model  conforms  to  the  basic  principles  of  consumer 
theory,  the  model  translates  preference  correlations  into  aggregate  substitution  patterns.  Products  in 
the same subgroup will have higher cross-price elasticity than products in a different subgroup. Hence, 
one can therefore assess to which extent the online distribution channel substitutes for the traditional 
brick-and-mortar channel, or to what extent it provides a new source of differentiation that raises total 
sales for consumer electronics rather than displaces existing sales. 

An  oligopolistic  supply  side  is  added  to  the  model  to  infer  marginal  costs  and  current  economic 
profits; as well as to define the observed market equilibrium. The model assumes that firms maximize 
profits, and that they compete in prices in a differentiated products setting (Bertrand competition). As 
shown by Berry (1994) and Berry, Levinsohn and Pakes (1995), the profit maximising conditions can 
be used to compute the current marginal costs. Furthermore, this system can be used to perform policy 
counterfactuals,  and  in  particular  the  effects  of  removing  the  GB  restrictions  to  cross-border  e-
commerce.  The  model  also  calculates  consumer  welfare  (consumer  surplus)  and  producer  welfare 
(profits)  changes,  by  computing  the  welfare  measures  in  the  different  counterfactuals  and  in  the 
observed market equilibrium. 

2.2 

Policy options 

The  policy  counterfactuals  implemented  assume  that,  from  an  observed  equilibrium,  lifting  GB 
restrictions will allow consumers to buy online from the cheapest provider, thus partially arbitraging 

104 Alternatively, one can see this as the difference between (comparative) static and dynamic approaches. 
105  Alternative  definitions  of  the  market  size  give  similar  results.  See  Duch-Brown  and  Martens  (2016)  for 

further details. 

83 

 
 
 
 
 
 
 
 
 
                                                            
away price differentials. With the help of the model, the system of profit maximising conditions can be 
used  to  compute  the  counterfactual  equilibrium  prices  if  online  products  have  become  accessible 
across  the  border.  It  is  possible,  in  turn,  to  compute  the  counterfactual  sales,  profits,  and  consumer 
surplus. The model includes both transport costs for every country pairs as well as VAT rates, which 
would also have an effect on price differences.  

A  further  step  in  the  model  is  to  incorporate  potential  reactions  from  retailers  from  lifting  GB 
restrictions. One way to do it is to assume a two-stage game in which the first stage is described by the 
consumers'  reaction  to  an  integrated  EU  online  market.  In  this  stage,  we  assume  that  consumers  are 
able  to  buy  online  from  the  cheapest  provider,  independently  of  their  respective  locations.  This 
triggers online cross-border purchases. Both offline and online retailers in those markets more affected 
by sales diversion will react, undercutting  prices to adapt to the new competitive scenario,  basically 
effective competition from cheaper prices available online abroad. At this stage, firms recognise that 
consumers  can  now  buy  from  anywhere  and  adjust  their  prices  accordingly.  This  will  bring  prices 
further down, both offline and online. The new equilibrium will also change consumer and producer 
surplus. Consumers will face even lower prices. However, it is a-priori uncertain how consumers will 
react  when  both  offline  and  online  domestic  retailers  cut  prices.  It  may  or  may  not  be  cheaper  to 
purchase across the border. Due to the existence of transaction costs, a simple price reduction could 
make  the  domestically  available  products  cheaper  for  domestic  consumers.  Domestic  firms  will  sell 
more, but with a lower mark-up, so the net change in profits is an empirical question that cannot be 
settled a-priori. 

This scenario describes a situation where there is "full lifting of all GB restrictions". We translate that 
scenario  in  costless  price  arbitrage  and  search  for  new  varieties  in  online  cross-border  shopping, 
subject to parcel delivery costs plus a trade cost margin of 25% on top of the parcel delivery costs. A 
less ambitious policy scenario is also simulated that only partially lifts GB restrictions. The "shop-like-
a-local" option implies delivery of the order in the country of the trader from where it can be picked up 
by the buyer or by a transport intermediary who delivers the good to the buyer in another country. We 
assume  that  these  intermediary  services  add  a  fixed  trade  of  20€  per  purchase,  irrespective  of  the 
country of residence of the buyer and seller. There are already a number of online firms that provide 
this type of intermediary shipment services to help consumers get around GB restrictions.  They have 
different fee structures, either flat rates (around 5-10€ per parcel) or a surcharge on shipping rates, or a 
combination  of  both.  We  combine  all  these  options  in  a  fixed  rate  of  20€  on  top  of  parcel  delivery 
costs.  In  summary,  the  less  ambitious  policy  scenario  results  in  model  simulation  with  relatively 
higher trade costs than the "full" scenario that lifts all GB restrictions.  

We do not simulate results for the "improving transparency" and "banning blocking of access" policy 
options because their quantitative impact on cross-border online trade is likely to be marginal.  Under 
the  transparency  option,  web  shops  should  indicate  clearly  at  the  beginning  of  the  ordering  process 
whether any delivery restrictions apply and inform consumers upon request about the justifications for 
different treatment. We assume that this makes no difference in the number of cross-border purchases. 
The  "Banning  blocking  of  access"  option  would  prohibit  denial  of  access  to  a  website.  Currently, 
about 98% of all websites can be accessed and 49% deliver the product order (See Annex with results 
from the Mystery Shopping Survey). An increase to 100% access implies a 2% increase in the 49% 
that are already successful at the moment, or 50% successful orders in total. The difference compared 
to the current situation is only marginal and falls within the error margins of the estimation results. 

84 

 
 
 
 
 
 
 
2.3 

Extension to all online sales 

In order to extend the results from electronics products to all online goods sales, we use a simple linear 
extrapolation method that proceeds as follows: 

First, we extend the results from the 4 electronics products to all electronics sales. To do that, we use 
the  share  of  these  products  in  the  aggregated  consumer  electronics  industry.  On  average,  these  four 
products  represent  about  60%  of  total  consumer  electronics  retail  sales,  with  differences  across 
countries. We linearly extrapolate our estimated measures of welfare and sales by country to cover the 
entire electronics sector using the corresponding shares for each of the 10 countries for which we have 
detailed  data,  assuming  that  these  4  products  are  representative  for  the  entire  electronics  products 
sector,  and  that  the  share  would  remain  constant  in  the  absence  of  GB.  Second,  we  extend 
geographically  from  EU10  to  EU28.  The  10  countries  in  the  sample  represent  85%  of  the  EU-28 
consumer electronics industry. We have information of the share of each of the countries not included 
in the detailed database, so we can impute a value that corresponds to the observed share in 2014. For 
this  purpose,  using  the  share  of  electronics  in  total  retail  sales  by  country,  and  assuming 
proportionality,  we  linearly  extrapolate  to  get  the  corresponding  values  for  each  one  of  the  missing 
countries. We can then compute also the EU28 aggregate for consumer electronics. Third, we extend 
from  electronics  to  all  online  goods  sales.  In  a  similar  procedure,  we  use  the  share  of  electronics  in 
total  e-commerce  by  country,  considering  that  this  proportion  does  not  change  across  countries  and 
linearly extrapolate the results. It is again possible to compute the EU-28 aggregated figure. 

Finally, we introduce corrections for two indicators that change with respect to our benchmark sector 
(consumer electronics): price differences between country markets and the extent of GB. First, we take 
the  ratio  of  average  cross-border  price  differences  between  the  benchmark  product  (electronics,  as 
observed  in  the  detailed  GfK  dataset)  and  other  product  categories  (as  observed  in  the  more 
aggregated  Mystery  Shopping  Survey).  We  weight  the  figures  obtained  before  by  this  measure  in 
order to take into consideration that more price arbitrage will occur in sectors with higher online price 
differences  between  countries.  Second,  we  take  the  ratio  of  the  probability  that  GB  occurs  in  our 
benchmark  product  (electronics)  and  in  the  target  product  (as  measured  by  the  Mystery  Shopping 
Survey)  to  correct  for  the  potential  trade  expansion  in  each  product  category  after  lifting  GB 
restrictions.  In  so  doing,  the  procedure  considers  also  the  maximum  potential  trade  creation 
opportunities  derived  from  online  price  differences  and  GB  intensities.  Detailed  results  in  Duch-
Brown and Martens (2016) based on the Mystery Shopping Survey indicate that  cross-country price 
differences  in  clothing  are  4%  higher  than  in  consumer  electronics.  Hence,  there  is  more  price 
variation  in  clothing  than  in  consumer  electronics.  Moreover,  attempts  to  buy clothing  online  cross-
border are only 82% as likely to get geo-blocked as attempts in consumer electronics. In other words, 
clothing has more cross-border price variation but less GB, compared to consumer electronics. 

2.4  Model assumptions, limitations and simplifications 

There  are  two  dimensions  were  assumptions  and  limitations  apply:  i)  the  core  model;  and  ii)  the 
extrapolation method. Explanations in terms of assumptions, limitations and simplifications are given 
first for the core model, and then for the extrapolation exercise. 

The  core  model  is  based  on  discrete  choice  models  of  product  differentiation.  These  models  have 
gained considerable importance in empirical work in economics in the past two decades. Because they 

85 

 
 
 
 
 
 
 
 
 
treat  products  as  bundles  of  characteristics,  they  offer  the  possibility  to  uncover  rich  substitution 
patterns with a limited number of parameters. Berry (1994) developed a framework to estimate a class 
of discrete choice models with unobserved consumer heterogeneity based on aggregate sales data. His 
framework  includes  the  random  coefficient  logit  model  of  Berry,  Levinsohn  and  Pakes  (1995),  the 
nested logit model (with special random coefficients on discrete product characteristics) and the logit 
model (without consumer heterogeneity). This is the state of the art in the literature. Alternatives based 
on considering homogeneous products106, representative consumers, preferences over goods instead of 
characteristics, are inferior in both theoretical and empirical terms. 

The logit and nested logit models have been popular because of their computational simplicity. At the 
same  time,  they  have  long  been  criticized  because  they  yield  too  restrictive  substitution  patterns.  In 
particular,  the  nested  logit  model  allows  products  of  the  same  group  to  be  closer  substitutes  than 
products  of  different  groups,  but  the  aggregate  substitution  patterns  remain  restrictive:  cross-price 
elasticities within the same group are symmetric, and substitution outside a group is symmetric to all 
other  groups.  In  contrast,  the  random  coefficients  logit  model  incorporates  random  coefficients  for 
continuously  measured  product  characteristics.  This  creates  potentially  more  flexible  substitution 
patterns,  where  products  tend  to  be  closer  substitutes  as  they  have  more  similar  continuous 
characteristics.  However,  the  random  coefficients  model  is  computationally  more  demanding,  and 
several recent papers have studied a variety of problems relating to its numerical performance (Knittel 
and Metaxoglou, 2008; Dubé, Fox and Su, 2012; and Judd and Skrainka, 2011). 

In  this  respect,  Grigolon  and  Verboven  (2014)  suggest  that  the  choice  between  the  more  tractable 
nested logit model and the computationally more complex random coefficients model depend on the 
application. In the present analysis of removing GB restrictions, consumer heterogeneity regarding the 
offline/online origin is particularly relevant, and the nested logit model should capture this reasonably 
well.  Needless  to  say,  the  model  used  would  gain  from  a  more  flexible  specification  of  substitution 
patterns, or at least from a combination of the two. 

On the supply side, the most relevant assumption is that of price competition. However, this is also a 
standard assumption in the literature, reflecting the fact that prices tend to be considered more relevant 
from a differentiated product perspective than competition in quantities or different strategic variables. 
Additional assumptions are necessarily imposed by the lack of appropriate data. For instance, the data 
does  not  include  separate  information  about  manufacturers  and  retailers.  Hence,  we  assume  vertical 
integrated  firms.  The  database,  however,  includes  information  about  brands.  Although  there  is  no 
complete correspondence between brands and manufacturers, the best option is to define each brand as 
a multi-product firm. This assumption introduces some degree of competition in each country, since 
the number of brands sold by country is different, but normally large. 

The main counterfactual completely removes all GB restrictions and allows consumers to buy online 
from the cheapest provider, thus partially arbitraging away price differentials, subject to trade costs. In 
addition,  consumers  are  able  to  access  a  wider  choice  set  of  new  products  that  were  not  accessible 
because  of  GB.  This  implicitly  assumes  that  consumers  can  incur  in  costless  search  and  purchasing 
activities.  In  order  to  take  this  into  consideration,  trade  costs  are  inflated  to  accommodate  other 

106  Product  differentiation  is  an  important  source  of  market  power  in  many  industries.  One  of  the  main 
motivations  to  estimate  demand/supply  of  differentiated  products  is  to  understand  the  role  of  product 
differentiation in consumer choice, changes in market structure and the intensity of competition. 

86 

 
 
 
 
 
 
                                                            
"costs".  The  alternative  “shop  like  a  local”  scenario  allows  online  sellers  to  avoid  additional  cross-
border trade costs by delivering the goods to a domestic address in the country of establishment of the 
shop. Hence, the buyer has to arrange for pick-up, either in person or through an intermediary. Such 
commercial  intermediaries  already  exist  as  a  way  to  overcome  GB  restrictions  and  they  charge  an 
additional cost for this task. In the counterfactual simulation, we add a fixed fee of 20€ per purchase, 
over and above physical transport costs, to capture the cost of these intermediary delivery services.  

An important caveat is that the model does not take into account that sellers may start making losses 
on some products because of increased price competition and exit the market nor the fact that, in order 
to export, firms may incur in additional costs. Some smaller sellers may also merge to gain more from 
economies  of  scale  and  become  more  competitive.  Additionally,  the  simulations  assume  that  the 
change in total welfare is the sum of total consumer surplus and producer surplus. Although we use 
VAT  rates,  we  do  not  compute  tax  revenues.  Moreover,  the  exogenous  variables  in  the  model  are 
assumed not to change after removing GB. In particular, the exogenous part of utility 9consumer side) 
and marginal costs (supply side) remain unchanged. This means that the focus is thus entirely on the 
quantification  of  the  allocative  effects  of  removing  GB.  A  more  complete  analysis  would  also 
incorporate the efficiency effects, which may enter through changes in utility, marginal costs or fixed 
costs. 

The extrapolation is a simple exercise that tries to give an overall picture of the effects obtained by the 
core model. In this case, the limitations come mostly from the lack of appropriate data to translate the 
estimations  of  the  four  product  categories  and  ten  countries  to  the  rest  of  the  online  EU  economy. 
Please refer to Duch-Brown and Martens (2016) for a more detailed discussion.  

2.5 

Appropriateness, validation and robustness 

These types of models are common in the industrial organisation literature and in competition policy 
analysis in particular. As a matter of fact, these models are used regularly by competition authorities 
around the world to simulate the effects of mergers, and other issues related to market structure, trade, 
vertical  restraints  and  competition.  The  model  used  here  has  been  developed  by  the  JRC/IPTS 
exclusively for the impact assessment study presented.  A similar  model  was produced by JRC/IPTS 
researchers in collaboration with researchers from the University of Leuven and Telecom ParisTech. 
The original purpose of that model was to study the economic impact that the appearance of the online 
distribution  channel  has  had  on  the  European  Economy  (Duch-Brown  et  al.  2015).  A  similar  model 
was developed by the JRC/IPTS to analyse the welfare effects of trade in digital music (Aguiar and 
Waldfogel, 2014). 

This  class  of  econometric  models  is  a  useful  tool  to  evaluate  the  effects  of  public  policies  in 
oligopolistic industries, to understand business strategies, or to identify collusive or anti-competitive 
behaviour. The original model has been presented in several workshops and conferences and discussed 
broadly  with  scientists,  academics  and  e-commerce  stake-holders.  It  relies  on  similar  but  older  data 
than the one used in this report. The data comes from a well know marketing company that indicates 
that  their  coverage  of  sales  of  the  products  and  countries  they  supplied  is  well  above  90%.  Hence, 
product  market  coverage  is  extensive  supporting  the  validity  of  the  results.  Scientific  experts  in  the 
fields of modelling and data management have been consulted and both the modelling approach and 
the richness of the data have been confirmed. 

87 

 
 
 
 
 
 
 
 
 
Several  counterfactual  scenarios  have  been  estimated  to  corroborate  the  results  of  the  model.  In 
addition,  several  parametric  modifications  have  also  been  introduced  in  order  to  test  the  model 
consistency. All these tests are reported in the main text and they all suggest that the model results are 
consistent. Efforts have been put in place to assure that the maximum market coverage is achieved and 
that the modelling tool is effective and up-to-date, in order to address both the potential uncertainty in 
the model results and also the robustness of the model results to changes in its structure. 

3 

Data 

We use data from three different sources:  detailed online and offline sales data for electronics goods 
for 10 EU MS from the marketing data company GfK; data on price differences and the probability of 
GB  for  other  product  categories  from  the  2015  Mystery  Shopping  Survey;  and  general  e-commerce 
market data for the EU from Euromonitor. 

We use data on online and offline sales of electronic goods for the simulation of the impact of lifting 
GB restrictions. We selected this dataset because it was the only  dataset available in the EU  market 
with sufficiently detailed information on monthly online and offline sales volumes in several Member 
States,  prices  and  detailed  characteristics  of  the  goods  over  a  sufficiently  long  period  of  time. 
Moreover, electronics products are an important online product, representing 13% of all online sales. 
We selected four electronics products (smartphones, laptops, tablets and desktops) that represent about 
60% of all online electronics sales. The 10 countries for which we have data represent about 85% of 
the total online market in the EU. Last but not least the Mystery Shopping Survey demonstrated that 
electronic goods are most likely to be subject to GB (GfK, 2016). An earlier 2009 Mystery Shopping 
survey had already come to similar conclusions (Cardona and Martens, 2014). This enables us to use 
electronic goods as a benchmark for the GB impact simulations.  Geo-blocking will be less severe in 
other product categories.   

We acquired data on online and offline sales of 4 types of electronic goods in 10 EU MS for the period 
Jan 2012 – Jun 2015107.  For each country, the data include the brand name and model label of each 
product, the technical characteristics of the products, the volume of sales and the average price in each 
distribution  channel  and  country.  We  also  relied  on  Euromonitor  International's  Passport  Database 
which  includes  detailed  information  on  retail  sales  and  particularly  online  retail  by  sector,  at  the 
country level. These data are required to produce an estimation of the impact for all online sales and 
for all EU-28. 

Table 1 gives an impression of the extent of geographical market segmentation in the EU for these 4 
electronic products. Few models are sold in all countries but the models that are widely sold account 
for a large share of total sales, especially for tablets and smartphones. While average price differences 
between  online  and  offline  prices  are  rather  low,  the  average  difference  between  the  highest  and 
lowest  priced  product  across  countries  and  models  can  be  very  substantial.    These  data  give  an 
indication of the large potential for price arbitrage and searching for product varieties (models) when 
GB restrictions would be lifted. 

107 The data were purchased by DG JRC from GfK, a German market intelligence company. 

88 

 
 
 
 
 
 
 
 
 
 
                                                            
Table 1:  Indicators of market segmentation in the EU 

Product  
category 

Models 

Desktops 

33253 

Tablets 

6398 

Smartphones 

6136 

Laptops 

66473 

Models sold in 

All countries 
% 
% 
sales  
models 

Only 1 country 
% 
sales 

% 
models 

0.6 

3.0 

6.8 

0.4 

18.9 

75.2 

20.8 

64.3 

60.6 

11.7 

77.4 

47.9 

2.8 

16.4 

75.2 

34.3 

Price differences (%) 

Offline 
vs. Online 

Offline 

Online 

2 

3 

2 

9 

42 

31 

47 

31 

30 

38 

57 

26 

Notes:  Average price difference between the highest and the lowest price for the same product. 
Source: JRC/IPTS calculations with data from GfK. 

Online sales overall have grown over the period 2012-2015, from 13.9% to 17.5% of total retail sales 
(Fig. 1) in these four product categories. Figure 2 shows how the proportion of online and offline sales 
varies significantly across the 10 EU MS covered by the dataset, from only 4.1% online sales in Italy 
to  31.4%  in  Slovakia.  On  average,  there  are  also  significant  price  differences  between  countries 
(Figure 3). Price differences are much wider at individual product level. Table 2 shows the share of e-
commerce in total retail by country. It also shows the distribution of e-commerce in 2014 by MS. In 
the  first  case,  Denmark  and  the  UK  have  the  highest  proportions  of  e-commerce  over  retail.  In  the 
second  case,  the  UK,  Germany  and  France  represent  almost  70%  of  total  e-commerce  in  the  EU  in 
2014.  

Figure 1:  Evolution of e-commerce as a share of total retail 

20,0
18,0
16,0
14,0
12,0
10,0
8,0
6,0
4,0
2,0
0,0

13,9 

2
1
-
.
v
n
a

j

2
1
-
.
r
v
a

2
1
-
.
l
i

u

j

2
1
-
.
t
c
o

3
1
-
.
v
n
a

j

3
1
-
.
r
v
a

3
1
-
.
l
i

u

j

3
1
-
.
t
c
o

4
1
-
.
v
n
a

j

4
1
-
.
r
v
a

17,5 

4
1
-
.
t
c
o

5
1
-
.
v
n
a

j

4
1
-
.
l
i

u

j

Note:  Product-level  data  covering  4  product  categories  and  ten  countries  Jan  2012  to  Mar 
2015. The aggregate figure for the EU in 2014 was 7% (Duch-Brown and Martens, 2015). 
Source: JRC/IPTS calculations with data from GfK 

89 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 2:  Online sales as a proportion of total sales 

31,4 

25,1  24,0  23,6 

18,2  17,8 

16,0 

7,0  6,5  6,3 

4,1 

35,0
30,0
25,0
20,0
15,0
10,0
5,0
0,0

Note: Product-level data covering 4 product categories and 10 countries Jan 2012 to Mar 
2015.  
Source: JRC/IPTS calculations with data from GfK. 

Figure 3:  Potential for price arbitrage across the EU  

140,0
120,0
100,0
80,0
60,0
40,0
20,0
0,0

Online

Offline

Note: EU-10=100 in each channel. 
Source: JRC/IPTS calculations, data from GfK. 

Table 2:  Market shares of e-commerce 
Share of e-commerce in 
Domestic retail  EU e-commerce 

Country 
Austria 
Belgium 
Bulgaria 
Croatia 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 

1.8 
2.4 
0.1 
0.1 
0.1 
1.1 
2.5 
0.1 
1.9 
15.1 
18.9 
0.7 
0.5 
1.4 
3.8 

5.2 
5.7 
1.3 
1.5 
3.5 
6.9 
11.0 
5.5 
9.0 
6.2 
7.2 
3.3 
3.2 
8.1 
2.3 

90 

 
 
 
 
 
 
 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
United Kingdom 
EU-28 

Source: Euromonitor. 

2.7 
4.0 
4.3 
5.9 
8.1 
5.8 
2.6 
2.4 
4.6 
2.6 
3.1 
7.1 
12.2 
6.8 

0.1 
0.2 
0.2 
0.0 
4.5 
2.8 
0.6 
0.4 
0.4 
0.1 
3.4 
2.7 
34.3 
100.0 

4 

Results 

4.1 

Policy Scenario 1: full lifting of all GB restrictions 

The results from all these calculations are brought together in a few tables. Table 3 reports additional 
cross-border trade in electronics products after the lifting of all GB restrictions108. Trade increases by 
nearly 630  Mln €. This can be decomposed in a  trade diversion  and a trade expansion  effect.  Trade 
diversion  occurs  because  consumers  shift  from  buying  offline  and  online  in  their  home  market  to 
importing  online  because  foreign  markets  are  cheaper  and  offer  new  varieties  of  goods.  Trade 
expansion occurs because electronics products become cheaper on average and consumers buy more 
as a result. Table 4 shows these substitution and net increase effects. The UK and Poland gain most in 
terms of trade. Both are very competitive markets. The decline in domestic sales hides two opposing 
forces:  domestic  consumers  who  shift  to  cross-border  purchases  and  foreign  consumers  who  start 
buying in your country market. 
Table 3: Additional online cross-border trade in the lifting of all GB restrictions scenario (Mln 
€) 

BE 

0.0 
0.1 
0.9 
0.2 
18.8 
0.0 
0.0 
0.0 
0.0 

DK 

0.1 

-0.2 
10.1 
0.0 
0.4 
0.4 
0.8 
0.0 
0.0 

FR 

0.4 
2.2 

7.9 
0.7 
4.7 
1.0 
0.6 
0.2 
0.2 

DE 

1.6 
5.5 
1.0 

1.5 
2.2 
1.0 
0.2 
0.3 
0.0 

BE 
DK 
FR 
DE 
GB 
IT 
NL 
PL 
SK 
ES 

Exports 
Source: Duch-Brown and Martens (2016). 

19.9 

11.7 

17.8 

13.3 

GB 

18.8 
21.2 
45.3 
49.4 

25.4 
23.9 
2.0 
0.6 
-3.8 

182.9 

IT 

0.0 
0.1 
0.2 
2.5 
0.0 

0.1 
0.0 
0.0 
0.0 

3.0 

NL 

0.2 
1.8 
1.3 
6.6 
2.2 
0.7 

1.2 
0.1 
0.1 

PL 

23.1 
100.6 
43.7 
75.5 
7.6 
46.4 
45.1 

4.2 
7.1 

14.1 

353.4 

SK 

0.1 
1.7 
0.3 
1.5 
0.1 
0.3 
0.2 
0.1 

0.0 

4.4 

ES 

0.1 
1.9 
0.6 
1.2 
0.1 
3.3 
0.4 
0.2 
0.4 

8.2 

Imports 

44.4 
134.8 
92.2 
155.6 
12.5 
102.3 
72.1 
5.1 
5.8 
3.8 

628.6 

108 Note that we have no data on trade flows prior to lifting GB restrictions.  The trade flows reported here are 

estimated increases in trade, whatever the level of trade before lifting restrictions. 

91 

 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
                                                            
Table 4: Changes in sales volumes between online and offline channels, net trade effect (in Mln € 
and %) 

Market 
size 
1,569 

1,759 

6,448 

14,033 

6,816 

5,663 

3,007 

1,679 

232 

3,649 

Offline 

-23.4 

-89.6 

-101.1 

-213.8 

-15.9 

-78.9 

-74.2 

-1.4 

-3.4 

-5.6 

BE 

DK 

FR 

DE 

GB 

IT 

NL 

PL 

SK 

ES 

-0.3 

-0.7 

-7.6 

67.2 

-4.0 

4.1 

7.1 

-0.8 

-0.1 

8.4 

73.4 
Total 
Source: Duch-Brown and Martens (2016). 

44,854 

-607.5 

Change in volume 

Online 

Domestic  Cross-border 

Percentage change 

Total 

Offline 

Imports  Exports 

-0.2 

-4.5 

-1.4 

-0.9 

2.4 

-1.3 

-1.8 

20.9 

0.4 

0.3 

0.2 

-1.5 

-5.1 

-1.6 

-1.5 

-0.2 

-1.4 

-2.5 

-0.1 

-1.5 

-0.2 

-1.4 

2.8 

7.7 

1.4 

1.1 

0.2 

1.8 

2.4 

0.3 

2.5 

0.1 

1.4 

1.3 

0.7 

0.3 

0.1 

2.7 

0.1 

0.5 

21.1 

1.9 

0.2 

1.4 

Net 
effect 

-3.8 

-78.6 

-90.8 

-133.3 

163.0 

-71.8 

-53.0 

351.1 

0.8 

10.9 

94.5 

19.9 

11.7 

17.8 

13.3 

182.9 

3.0 

14.1 

353.4 

4.4 

8.2 

628.6 

Table 5 shows the dynamic impact of lifting all GB restrictions on electronics products prices in each 
country (by policy scenario, see below). Prices decrease across the board in all countries, both online 
(-1%  on  average)  and  offline  (-0.5%  on  average).  The  decrease  is  stronger  is  more  highly  priced 
country  markets  as  competition  increases.  Offline  prices  also  decrease  because  there  is  more 
competition from online sellers. 

The main question is not so much the increase in cross-border trade but how it affects the welfare of 
consumers and producers (or sellers).  Trade is not an economic policy objective in its own right; it is 
a  means  to  increase  the  well-being  of  citizens.  For  the  4  electronics  products  we  estimate  that 
consumers gain about 500 Mln €  or 0.7% in consumer surplus thanks to lower prices and increased 
variety  of  products  available.  Producers  gain  283  Mln  €  or  1.3%  in  profits  from  these  new  trade 
opportunities – all this compared to a total market size of about 45 Bln €.   
Table 5: Impact on prices (% change) 

Full removal 

Shop like a local 

Offline 

Online 

Offline 

Online 

-1.2 
-0.7 
BE 
-2.2 
-0.5 
DK 
-0.6 
-0.6 
FR 
-0.8 
-0.5 
DE 
-0.2 
-0.2 
UK 
-1.1 
-0.7 
IT 
-0.8 
-0.5 
NL 
-0.6 
-0.5 
PL 
-2.9 
-0.5 
SK 
-0.5 
-0.8 
ES 
Source: Duch-Brown and Martens (2016). 

-0.7 
-1.4 
-0.3 
-0.3 
-0.1 
-0.6 
-0.4 
-0.3 
-1.9 
-0.2 

-0.7 
-0.5 
-0.6 
-0.5 
-0.2 
-0.7 
-0.5 
-0.6 
-0.5 
-0.8 

92 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We  the  above  estimates  we  can  now  estimate  the  EU-wide  impact  of  a  hypothetical  policy  scenario 
that would remove all GB restrictions for all goods in all MS. In Figure 4 we extend the results from 
the above analysis to all online sales in all EU28. We find that lifting GB restrictions has a positive 
impact on consumer and producer surplus in all EU MS. Overall, consumer surplus increases by 1.2% 
in the EU28 and producer surplus (profits) by 1.4%. The impact is especially strong in some smaller 
MS where consumer choice is currently relatively limited and price competition is lower because of 
limited market size. Consumer gains are stronger than producer gains in these countries. However, for 
the  overall  EU28,  producers/sellers  benefit  slightly  more  than  consumers  because  of  economies  of 
scale and cost reductions when online sales increase. The overall result is largely driven by the largest 
EU  economies.  Partial  lifting  of  GB  restrictions  reduces  the  magnitude  of  the  benefits  but  still 
generates a positive economic impact. 

Figure 4a:  Impact of the full GB removal scenario (EU28, all online products) 

CS = consumer surplus; PS = producer surplus. 
Source: JRC/IPTS calculations. 

Figure 4b: Impact of the full GB removal scenario (EU28, all online products), Bln€ 

93 

 
 
 
 
 
 
 
 
CS = consumer surplus; PS = producer surplus. 
Source: JRC/IPTS calculations. 

4.2 

Policy scenario 2: "shop like a local" 

In  the  "shop  like  a  local"  scenario  the  shop  deliver  to  a  domestic  address  in  its  country  of 
establishment only; the buyer has to arrange for pick-up, either in person or through an intermediary.  
This  has  been  modelled  in  the  simulations  by  means  of  an  increase  in  cross-border  trade  costs 
compared  to  the  baseline  scenario.    In the  "shop  like  a  local"  scenario  we  add  20€  per  purchase  for 
intermediary  delivery  services.  Such  intermediary  delivery  service  providers  already  exist  and  this 
scenario  could  be  a  reality  without  a  policy  initiative.  We  assume  however  that  the  policy  initiative 
would give more visibility to this option and would bring more service providers to this market. 

Because  of  these  higher  trade  costs,  the  trade  effect  of  the  alternative  option  is  lower  than  in  the 
baseline scenario. The dynamic price effect is also somewhat lower, -0.5% offline and -0.6% online on 
average  across  EU28  (table  5).  The  growth  in  consumer  and  producer  surplus  diminishes  a  bit 
compared  to  the  baseline.  EU28  consumer  surplus  increases  by  0.8%,  producer  surplus  by  1.0%. 
Figure 6 (panels a and b, respectively) below show the results per MS. The ranking of impact across 
MS does not change substantially. 

Figure 5a: Impact of the "shop like a local" scenario (EU28, all online products) 

94 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CS = consumer surplus; PS = producer surplus. 
Source: JRC/IPTS calculations. 

Figure 5b: Impact of the "shop like a local" scenario (EU28, all online products), Bln€ 

CS = consumer surplus; PS = producer surplus. 
Source: JRC/IPTS calculations. 

95 

 
 
 
 
 
 
 
 
 
 
References 

Aguiar, L. and J. Waldfogel (2014). Digitization, Copyright, and the Welfare Effects of Music Trade. 

JRC/IPTS Digital Economy Working paper 2014-05. 

Anderson,  S.  P.,  A.  de  Palma,  and  J.  F.  Thisse  (1992).    Discrete  Choice  Theory  of  Product 

Differentiation. Cambridge: MIT Press. 

Berry,  S.,  J.  Levinsohn,  and  A.  Pakes  (1995).  Automobile  Prices  in  Market  Equilibrium, 

Econometrica, 63, pp.841-890. 

Berry, S.T. (1994). Estimating Discrete-Choice Models of Product Differentiation, RAND Journal of 

Economics, 25(2), pp.242-262. 

Dubé,  J-P.,  J.  T.  Fox,  and  C.-L.  Su  (2012).  Improving  the  Numerical  Performance  of  Static  and 
Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation. Econometrica, 
80(5), 2231 .2267. 

Duch-Brown, N. and Martens, B. (2015). The European Digital Single Market. Its Role in Economic 

Activity in the EU. JRC/IPTS Digital Economy Working Paper 2015-17. 

Duch-Brown, N. and B. Martens (2016). The economic impact of removing GB restrictions in the EU 

Digital Single Market. JRC/IPTS Digital Economy Working Paper 2016-02. 

Duch-Brown, N., L. Grzybowski and F. Verboven (2015). The Impact of Online Sales on Consumers 
and Firms: Evidence from Household Appliances. JRC/IPTS Digital Economy Working Paper 
2015-15. 

GfK  (2016),  Provision  of  a  Mystery  Shopping  survey  on  Territorial  Restrictions  and  GB  in  the 

European Digital Single market. 

Grigolon,  L.  and  F.  Verboven  (2014)  Nested  logit  or  random  coefficients  logit?  A  comparison  of 
alternative  discrete  choice  models  of  product  differentiation.  The  Review  of  Economics  and 
Statistics 96(5), 916-935. 

Judd,  K.  L.  and  B.  Skrainka  (2011).  High  performance  quadrature  rules:  how  numerical  integration 
affects a popular model of product differentiation. CeMMAP working papers CWP03/11. 
Knittel,  C.  and  K.  Metaxoglou,  (2008).  Estimation  of  Random  Coefficient  Demand  Models: 
Challenges,  Difficulties  and  Warnings,  Working  Paper  14080,  National  Bureau  of  Economic 
Research. 

McFadden,  D.  (1978).  Modelling  the  Choice  of  Residential  Location,  in  Spatial  Interaction  Theory 
and  Planning  Models.  Karlquist,  A.,  L.  Lundquist,  F.  Snickers,  and  J.  Weibull  (eds.). 
Amsterdam: North Holland. 

96 

 
 
 
 
 
 
 
 
Annex 5: Evidence overview 

The evidence showing the extent of restrictions based on nationality or place of 
residence including geo-blocking 

Discrimination based on nationality or place of residence including geo-blocking is not a rare 
occurrence:  there  is  ample  evidence  of  this  phenomenon.  Indeed,  there  are  seven  recent 
quantitative  sources  independent  of  each  other  all  of  which  point  to  the  existence  of 
widespread restrictions based on nationality or place of residence: 

1.  Mystery Shopping Survey 2015 
2.  eCommerce competition sector inquiry 2015 
3.  Inquiries into car rental and amusement park industries in 2014 and 2015 
4.  DSM Consumer survey 2015 (reported in the Consumer Conditions 

Scoreboard 2015) 

5.  Consumer Flash Eurobarometer 397 (2015) 
6.  Business Flash Eurobarometer 434 (2016) 
7.  Community survey on ICT usage 2015 
8.  Complaints database 
9.  Studies specific to non-audiovisual digital content 

The mystery shopping survey and the eCommerce competition inquiry as well as the sectoral 
inquiries look at the supply side, the two consumer surveys and the Community Survey look 
at  the  demand  side.  In  addition,  the  complaints  database  provides  evidence  on  consumers 
motivated enough to take action.  

1. Mystery Shopping Survey 2015 

At the end of 2015, a large mystery shopping survey for goods and services (but not digital 
content) was carried out looking at approximately 10 500 websites that were visited first by 
mystery  shoppers  as  domestic  users  and  then  as  cross  border  users  from  another  Member 
State.  It  covered  goods/services  from  the  eight  sectors  most  commonly  purchased  online  in 
the European Union according to the DSM Consumer Survey published in 2015109.  

The survey found that while only 2% of all websites completely block access to their website 
to visitors from another EU country (either by denial of access or automatic re-routing), 26% 
do not allow such visitors to register (in order to initiate a purchase). Of the remaining 72% of 
websites which did not block access and allowed visitors to register, approximately one third 
did  not  provide  delivery  options  to  the  country  of  the  visitor.  Finally,  a  quarter  of  those 

109 
ttp://ec.europa.eu/consumers/consumer_evidence/market_studies/obstacles_dsm/docs/21.09_dsm_final_report.p
df    The  only  sector  in  the  top  8  that  was  excluded  was  that  for  Non-electrical  household  products  &  interior 
design.  This  sector  was  replaced  by  Computer  games  and  software  in  order  to  investigate  a  more  diversified 
sample of markets.  

97 

 
 
 
 
 
 
                                                            
 
websites which did allow registration and delivery did not accept payment from the users. So, 
in  the  end,  geo-blocking  practices  were  identified  in  approximately  63%  of  all  assessed 
websites.  The  chart  below  displays  the  success  rate  in  terms  of  not  encountering  various 
forms of geo-blocking, as a proportion of all websites assessed. It can be seen that only 37% 
of websites actually allowed foreign visitors to reach the stage of successfully  entering their 
payment card details, i.e. the final step before pushing the "order/buy" button, 

Chart 1: Mystery shopping success rates (% of all shopping attempts) 

100,0%

98,0% 

97,2% 

72.4% 

49,2% 

41,9% 

36,6% 

80,0%

60,0%

40,0%

20,0%

0,0%

sent to same
website

find same
product

can register
successfully

can have
product
delivered

possible to
pay

can enter
payment
detail
successfully

Source: JRC-IPTS based on Mystery Shopping Survey 2015 (GfK Mystery Shopping) 

Significant  differences  of  the  prevalence  of  geo-blocking  restrictions  were  found  depending 
on  the  sector.  Among  the  selected  sectors,  electronic  household  appliance  had  the  highest 
share, with only 14% of cross-border shopping attempts succeeding. However, even the sector 
least  prone  to  geo-blocking  i.e.  travel  services,  still  produced  a  failure  in  one  third  of  the 
cases.  Most  of  the  remaining  tangible  goods  sectors  have  fairly  similar  total  success  rates 
(between 21% and 40%). 

In  short,  the  survey  found  that  geo-blocking  restrictions  are  a  significant  and  widespread 
problem when attempting to buy cross-border online. 

Table 1:  Mystery shoppers success rates by product category 

sent to 
same 
website 

find same 
product 

can register 
successfully 

can have 
product 
delivered  

possible to 
pay 

can enter 
payment 
details 
successfully 

Clothing, shoes and accessories 

Electronics & computer hardware 

Travel services (hotels, transport) 

Cosmetics and healthcare products 

Books 

Computer games and software 

Electrical household appliances 

97% 

98% 

99% 

96% 

99% 

98% 

98% 

75% 

64% 

86% 

74% 

75% 

62% 

59% 

45% 

32% 

80% 

44% 

66% 

42% 

25% 

37% 

25% 

74% 

40% 

52% 

32% 

19% 

35% 

21% 

67% 

37% 

40% 

27% 

14% 

98% 

97% 

94% 

98% 

98% 

98% 

99% 

98 

 
 
 
  
Online reservations of offline leisure  

98% 

96% 

83% 

71% 

66% 

60% 

These  results  confirm  a  2009  Mystery  Shopping  Survey  concerning  online  shopping  of 
tangible  goods  which  found  that  only  40%  of  websites  allowed  the  completion  of  a  cross-
border purchase, with 19% of websites not allowing registration, 52% not offering shipment 
and 47% not accepting foreign credit cards.110 

See annex 6 for more detail; see full report at: 
 http://ec.europa.eu/consumers/consumer_evidence/market_studies/geo-
blocking/index_en.htm   

2. e-Commerce Competition sector inquiry 2015 

In  2015  the  European  Commission  initiated  an  inquiry  into  the  eCommerce  sector  for 
physical  goods  and  digital  content  within  the  framework  of  EU  competition  law.  For 
consumer goods, it found that 36% of online retailers (out of more than 1000 online retailers 
who  participated  in  the  inquiry)  do  not  sell  cross  border  in  at  least  one  product  category  in 
which they are active. The practice is widespread across all the sectors covered by the inquiry 
and can take place at different stages of the purchasing process. 

Chart 2: Respondents who gather location information for each geo-blocking purpose – EU 28 

Interestingly, it appears that there is a positive relationship between the total turnover and the 
proportion  of  respondents  that  gather  location  information  for  geo-blocking  purposes.  With 
the exception of the lowest turnover bracket, the higher the turnover, the higher the proportion 
of retailers that gathers information for geo-blocking purposes. 

110 "Supply-side Barriers to Cross-border eCommerce in the EU Digital Single Market", Melisande Cardona and 
Bertin  Martens,  JRC-IPTS  Digital  Economy  Working  Paper  2014-13;  JRC92294.  See  also:    YouGov 
Psychonomics (2009), Mystery Shopping Evaluation of Cross-Border E-Commerce in the EU 

99 

 
 
  
  
  
  
  
  
  
 
 
 
 
                                                            
Chart 3: Respondents who gather location information for geo-blocking purposes for each 2014 
turnover category 

Finally, the proportion of respondents who reported that they face a contractual limitation to 
sell cross-border in at least one product category at EU level is 12%. Therefore, most of the 
geo-blocking practices seem to be based on unilateral decisions by the traders. .  

As regards digital content, the vast majority of the 262 retail providers of digital content that 
were contacted sell audio-visual content, including music videos. A total of 58 digital content 
providers  were  active  in  selling  music  content.  Music  products  overall  are  among  the  least 
geo-blocked  product  categories;  however  44%  of  contracts  licensing  music  require  digital 
content  providers  to  geo-block.  The  reasons  behind  these  restrictions  will  be  analysed 
subsequently.  

Proportion of agreements requiring providers to geo-block by category – Average for all respondents 

– EU 28 

100 

74%66%63%55%50%44%23%0%10%20%30%40%50%60%70%80%Fiction TVFilmsSportsChildren TVNon-fiction TVMusicNews 
 
 
 
 
 
 
 
This  percentage  is  higher  in  large  groups  (companies  active  in  4  or  more  MS).  70%  of 
contracts between rights holders and these providers require them to geo-block. 

Proportion of agreements requiring providers to geo-block by category – Large groups 

See full report at: http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html  

3. Inquiries into car rental and amusement park industries in 2014 and 2015 

Inquiries into the car rental and amusement park industries in 2014 and 2015, as well as the 
analysis of complaints have shown that companies applied different conditions on the basis of 
residence even when the service they provide takes place at an identical location and on the 
same  time  for  all  customers  concerned;  i.e.  in  situations  where  the  trader  did  not  have  to 
deliver  the product  or  to  apply  different  consumer  law  or  taxation  rules.  In  one  particularly 
egregious case, a customer booking a rental car from Germany was found to be charged twice 
as  much  as  a  comparable  customer  based  in  the  UK111,  while  the  amusement  park  charged 
visitors up to 80% more if they came from a different member state112. Although some of the 
specific  practices  identified  have  been  brought  to  an  end  following  the  Commission's 
involvement113,  these  examples  indicate  that  price  discrimination  can  reach  very  large 
dimensions.  

4. DSM Consumer survey 2015 (reported in Consumer Conditions Scoreboard) 

On the side of the online consumers, a 2015 survey found that among consumers whose most 
recent  problem  concerned  (an  attempted)  purchase  of  tangible  goods/offline  services 
purchased online from another EU Member State, 7% reported that they could not access the 
foreign  seller’s  website  (or  only  limited  content  was  displayed  to  them),  6%  indicated  that 
foreign  sellers  refused  to  sell  to  them  because  of  their  country  of  residence,  5%  were 
automatically  redirected  to  a  website  of  their  country,  6%  reported  that  the  foreign  seller 
charged them a higher price than was available in the seller’s country and 4% that their means 
of payment was refused by the foreign seller. 

111  
112 

113  

http://europa.eu/rapid/press-release_IP-14-917_en.htm 
http://www.euractiv.com/sections/competition/eu-probes-disneyland-paris-alleged-price-discrimination-
316675 
http://europa.eu/rapid/press-release_IP-14-1209_en.htm 

101 

78%77%70%69%58%44%20%0%10%20%30%40%50%60%70%80%90%Fiction TVFilmsMusicSportsChildren TVNon-fiction TVNews 
 
 
 
 
 
 
                                                            
See full report at: 
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/11_edition/docs/cc
s2015scoreboard_en.pdf 

5. Consumer Flash Eurobarometer 397 (2015) 

In spring 2014 a Flash Eurobarometer survey was carried out on "Consumer attitudes towards 
cross-border trade and  consumer protection", interviewing approximately 26 600 consumers 
from all Member States. It found that among consumers shopping goods and services online 
cross-border, 19% experienced geo-blocking restrictions in total, with 10% not being offered 
any delivery, 8% being automatically redirected and 5% having their credit card refused114.  

Chart 4: Problems encountered when shopping cross-border online for goods or services  

The retailer or services provider
refused to deliver to your country

You were redirected to a website in
another country where prices were
different

The retailer did not accept foreign
payments

http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/
FLASH/surveyKy/2031 

0%

2%

4%

6%

8%

10% 12%

114 Figures do not add up due to overlaps 

102 

 
 
 
 
 
 
 
 
                                                            
6. Geoblocking Flash Eurobarometer 434 (2016) 

In  February  2016,  a  Flash  Eurobarometer  survey  was  carried  out  context  in  order to  collect 
evidence  on  the  prevalence  of  geo-blocking  and  other  discriminations  faced  by  businesses 
based on their place of residence or establishment. It covered purchases of goods and services, 
whether online, offline or by distance sales (phone/fax), subject to publicly available general 
sales conditions, excluding purchases of goods/services for resale. The study surveyed 4.200 
companies  from  15  Member  States,  finding  that  around  10%  of  those  having  engaged  in 
cross-border sourcing in the last  12 months were  not  able to conclude the purchase without 
encountering any problems. 

Chart 5: Problems encountered by companies when buying goods and services from 
another EU country115 

Very high shipping prices

Could not get an invoice due to
different VAT regulations

Different prices (excluding shipping
costs) due to establishment in another…
Impossible to get after sales services
back home

Refusal to grant a special discount due
to establishment in another EU country
Refusal to sell outside the suppliers
country
Difficulty to access the offers online
(access to website blocked)

0%

5%

10%

15%

20%

The respondents' feedback shows that problems were  encountered across various goods and 
services sectors.  

115 The responses are filtered based on those companies having engaged in cross-border purchases in the last 12 
months.  Multiple  problems  could  be  indicated  by  each  respondent  and  thus  the  percentages  are  not 
cumulative.  

103 

 
 
 
 
 
                                                            
Chart 6: Types of goods and services for which companies faced problems when 
purchasing within the EU116 

Electronic or ICT goods

Raw materials and construction material

Maintenance and repair services

Digital goods

Sales and customer support services

Postal and communication services

Travel transport

Financial services

Office supplies and equipment

IT services

Accommodation and hospitality

Professional services

Uniforms, safety equipment

Utility services

See full report at: forthcoming 

0%

5%

10%

15%

20%

7. Eurostat survey on ICT usage 

As part of the 2015 Community survey on ICT usage in households and by individuals, which 
surveys more than 200 000 individuals in all EU Member States, an option "Foreign retailer 
did not sell to my country" was included in the questionnaire. This option was chosen by 3% 
of all online shoppers. Given that 30% of online shoppers purchase cross-border, this means 
that 10% of cross-border online shoppers experienced restrictions as a result of their place of 
residence in the last twelve months. 

http://ec.europa.eu/eurostat/documents/2995521/7103356/4-11122015-AP-EN.pdf/276b6a7c-
69a6-45ce-b6bf-488e975a8f5d 

8. Complaints database 
Between 2008 and 2015, the European Commission has received through various channels117 
more  than  1500  complaints  by  citizens  who  felt  they  were  discriminated.  These  complaints 
concern restrictions based on nationality or place of residence taking place online and over the 

116 The responses are filtered based on those companies having engaged, and experienced problems with cross-
border  purchases  in  the  last  12  months.  Multiple  goods  and  services  could  be  indicated  by  each 
respondent and thus the percentages are not cumulative. 
Your Europe Advice, European Consumer Centres, complaints addressed directly to the Commission, 

117  

questions posed by MEPs and Parliamentary petitions 

104 

 
 
 
 
 
 
                                                            
counter. More than a third of the consumer complaints concern traders who automatically re-
route  their  cross-border  customers.  In  about  a  third  of  the  handled  cases  the  consumers 
suffered from a price difference as a direct effect of being faced different terms and conditions 
based  on  their  nationality  or  where  they  live.  A  significant  amount  of  consumers  also  felt 
discriminated against because traders refused to deliver to their member state. 

Chart 5: Complaints received by the European Commission 

Total number of complaints (year by year) 

350

300

250

200

150

100

50

0

2008

2009

2010

2011

2012

2013

2014

2015

See annex 7 for details 

9. Studies specific to digital content 

A  recent  study118  looking  at  the  cross-border  availability  of  music  for  download  on  iTunes 
found that whilst cross-border purchases were not possible, availability stood at 78% for the 
top 300 songs, although with price differences across countries.119  
Another recent study120 looked at the cross-border availability of e-books121 based on Amazon 
sites.  This  study  (based  only  on  the  100  top  books)  showed  that  availability  is  high  due  to 
universal  access  to  the  generic  amazon.com  site,  but  there  are  severe  restrictions  on  cross-
border  access  to  the  existing  country  extension  in  the  EU122.  Similarly,  the  Commission 
undertook recently a scrapping of Amazon sites. Preliminary results based on crawling 1148 

118http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=6084   
119 iTunes accounted for 63% of worldwide digital media downloads in 2013. 
120 

https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/geographic-

fragmentation-eu-market-e-books-case-amazon 

121 In the sector inquiry e-books are included in a category of consumer goods together with tangible books, CDs 

and DVDs and BluRay. 

122 Most Kindle readers may be bought from any European Amazon website, except for amazon.nl, which serves 
only Dutch consumers. From the US, only consumers without a dedicated EU website can buy a Kindle 
reader (except for NL). Certain Kindle readers (Fire tablets with 4G connectivity and "Special Offers 
devices") are available only for customers whose country of residence is FR, IT, ES, UK, DE. 

105 

 
 
 
 
 
 
                                                            
top  selling  e-books  on  all  6  Amazon  domains  in  Europe  show  that  for  a  given  Amazon 
domain, Amazon does not price discriminate with respect to where a consumer lives (to the 
limited extent cross-border access is possible). For instance on amazon.de prices seem always 
the same, regardless of whether a customer resides in DE or AT or LU. However, there are 
price differences across Amazon domains.. 

Finally, 
the  public  consultation  on  geo-blocking  and  other  geographically–based 
restrictions123  contained  a  disclaimer124  upfront  excluding  geo-blocking  or  other  restrictions 
related to copyright and licensing practices. Nonetheless, the consultation contained a number 
of questions on barriers to downloading digital content (see also annex 2 for details) which is 
very  often  protected  by  copyright  and  neighbouring  rights.125  Therefore  there  is  some 
uncertainty whether respondents took into account the above disclaimer in their replies. The 
end result is that  

  86% of consumer respondents regarded restricting the access to/download of a digital product by 
traders  as  an  important  barrier;  90%  of  consumers  felt  that  geo-blocking  was  particularly 
unjustified if there is no additional cost of delivery/administrative burden (e.g. download of digital 
content)  and  93%  of  consumer  favoured  a  prohibition  of  refusal  to  download  digital  products 
(such as software or video games); 

  25% of the businesses who responded wanted policy proposals covering rules prohibiting traders 

to refuse the cross-border download of digital products (such as software or video games). 

123 It is to note that the results of the public consultation cannot be considered representative as it was the choice 
of  respondents  to  take  part  in  the  consultation  and  not  pre-selected  sample  of  respondents.  In  total  251 
consumers, 58 businesses and 78 business associations responded to the questionnaire.   
124 "This questionnaire refers only to geo-blocking or other restrictions in so far as they do NOT those related to 
copyright and licensing practices (such as sport events), which will be addressed by the Commission in 
separate  initiatives.  They  do  cover,  however,  geo-blocking  of  non-copyrighted  content,  including 
political news reporting." 

125 Questions 2, 3 7, 8 and 13. 

106 

 
 
 
 
 
                                                            
Annex 6: Summary of Mystery Shopping Survey 2015 

a) Methodology 

At the end of 2015, a large mystery shopping survey was carried out by GfK  Belgium PS looking at 
approximately  10  500  websites  that  were  visited  first  by  mystery  shoppers  as  domestic  users  and 
then as cross border users from another Member State.  

A  total  of  8  sectors  (6  tangible  goods  sectors  and  2  services  sectors)  were  assessed  in  order  to 
provide sufficient breadth in terms of sectors covered whilst keeping a balance in delivering sufficient 
mystery shopping surveys per sector to enable post-fieldwork analysis. The two services sectors, in 
particular, were relatively challenging in terms of being able to compare and sample similar services 
in multiple countries, but their inclusion was key in order to ensure that the mystery shopping survey 
focuses on services as well as on tangible products.  

The  sector  selection  was  based  on  those  goods  and  services  sectors  that  are  most  commonly 
purchased online126 in the EU  according to the 2015 DSM Consumer Survey127.  

Sector 

share of users purchasing online 

Clothing, shoes and accessories  
Travel services (hotel and transport) 
Electronics and computer hardware 
Books 
Online reservation of offline leisure 
        (e.g. event tickets, restaurants) 
Electrical household appliances   
Cosmetics and healthcare products 
Computer games and software   

76% 
68% 
66% 
64% 

63% 
61% 
60% 
50% 

The survey targeted 143 country pairs where cross-border eCommerce is more intense. For each of 
the country pairs and each of the 8 sectors, 9 websites were visited, resulting in a target of 10296  
websites  (eventually,  a  total  of  10537  websites  were  assessed).  Each  website  was  accessed  twice, 
once  from the country of  the website  (online retailer) and  a  second  time  from the   country  of  the 
mystery shopper (cross border).  

126  The  only  sector  in  the  top  8  that  was  excluded  was  that  for  Non-electrical  household  products  &  interior 
design.  This  sector  was  replaced  by  Computer  games  and  software  in  order  to  investigate  a  more 
diversified sample of markets. 

127   
http://ec.europa.eu/consumers/consumer_evidence/market_studies/obstacles_dsm/docs/21.09_dsm_final_report.

pdf  

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
b) Results 

Overall, the survey found that:  

  2%  of  all  websites,  accounting  for  7.5%  of  cross-border  traffic,  engaged  in  automatic  re-

routing or directly blocked mystery shoppers 

  During  website registration,  27%  of  online retailers  blocked  cross-border  mystery  shoppers 

by preventing them from successfully registering on their website 

  Even after allowing mystery shoppers to successfully register on their website, 32% of online 

retailers refused to deliver a product/provide a service to the shoppers’ country  

  At  the  payment  stage,  in  26%  of  websites  shoppers  couldn’t  pay  because  their  means  of 
payment was not accepted/offered or because they were unable to enter their  card details 
In 37%  of  all  websites,  no  information  on delivery  restrictions  was  clearly  displayed on the 
starting  page  or  during  the  ordering  process  (at  44%  among  those  websites  where  geo-
blocking practices were identified) 

 

  Only  in  37%  of  all  websites  were  shoppers  successful  in  reaching  the  final  stage  of 

successfully entering their payment card details in order to verify the purchase 

The Figure below shows the success rate in terms of not encountering various forms of geo-blocking 
as a proportion of all websites assessed (not within each stage of the shopping process).  

For example, out of all 10537 websites assessed, on 49.2% i.e. 5184 websites no delivery restrictions 
were imposed (i.e. mystery shoppers reported that it was possible to have the product delivered to 
the  country  of  the  shopper).  Or,  to  take  another  example,  it  was  possible  for  mystery  shoppers  to 
register successfully on 72.4% of the 10537 websites assessed, i.e. on 7629 websites.    

Figure 1: Mystery shopping success rates (% of all websites N=10537) 

100,0%

98,0% 

97,2% 

72.4% 

49,2% 

41,9% 

36,6% 

80,0%

60,0%

40,0%

20,0%

0,0%

sent to same
website

find same
product

can register
successfully

can have
product
delivered

possible to
pay

can enter
payment
detail
successfully

In terms of the eight sectors covered, large differences in geo-blocking restrictions were observed. In 
the  Electrical  household  appliances  sector,  86%  of  the  mystery  shopping  assessments  ended 
prematurely  because  of  geo-blocking  restrictions  compared  to  only  60%  within  the  Books  sector. 
With  services,  geo-blocking practices were not  as  common,  resulting in  geo-blocking restrictions  in 
33% and 40% of cases for Travel services and Online reservations of offline leisure. Service providers 
were more likely to place restrictions at the access stage of the shopping process (between 7% - 9%) 

108 

 
 
 
 
 
 
compared to tangible goods (3%-6%). At the access stage128, the highest proportion of geo-blocking 
practices  took  place  when  shopping  cross-border  for  Flight  Bookings  (17%),  Car  rentals  (13%), 
followed by amusement/theme or adventure park tickets (11%).  

Figure 2: Geo-blocking practices prevalence at different stages of the online shopping process 
by sector (expressed as a proportion within each stage of the shopping process) 

Source: Q11, Q13, Q15 - Access, N = 10537; Q19 - Registration, N = 10382; Q20 – Delivery, N = 7628; Q24, Q25 – 
Payment, N = 5180; weighted data 

It should be noted that notable differences can be observed with products within the same sector, 
not  only  between  different  sectors.  In  the  Travel  services  sector,  for  example,  overall  geo-blocking 
practices stand at 56% for Car rentals but only at 25% for Accommodation bookings.  
Regarding  the  size  of  the  seller,  medium-sized  retailers  were  the  least  likely  to  engage  in  geo-
blocking practices (55%) compared to small (66%) and large retailers, (69%)  while marketplaces were 
the most likely to engage in overall geo-blocking practices with as many as 70% of mystery shopping 
assessments facing geo-blocking restrictions.  

128  Geoblocking during ‘access’ is either due to rerouting, blocking access to a website or not offering the exact 

same product that was found when the website was assessed by a domestic shopper   

109 

3%4%5%5%6%4%7%9%40%35%37%24%25%25%16%10%58%51%33%40%40%12%14%7%44%33%37%22%18%39%16%17%Electrical household appliancesElectronics & computer hardwareComputer games and softwareClothing, shoes and accessoriesCosmetics and healthcare productsBooksOnline reservations of offline leisureTravel services (hotels, transport)Geo-blocking prevalence by sectorAccessRegistrationDeliveryPayment86%Overall33%40%60%63%65%73%79% 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 3: Geo-blocking practices prevalence at different stages of the online shopping process by 
retailer size   

Source: Q11, Q13, Q15 - Access, N = 10537; Q19 - Registration, N = 10382; Q20 – Delivery, N = 7628; Q24, Q25 – Payment, N 
= 5180; weighted data 

For most websites assessed,  registration was required in order to be able to complete a purchase. 
Only  for  8%  of  the  websites  purchase  was  possible  without  having  to  register  on  the  cross  border 
website.  For  one  in  five  of  the  websites  assessed  during  the  registration  stage,  problems  with 
registration  were  reported  but  it  was  still  possible  to  complete  the  registration,  whilst  registration 
could  not  be  completed  for  27%  of  those  websites  where  shoppers  tried  to  register.  Registration 
failed  most  often  for  websites  selling  electrical  household  appliances  (40%),  computer  games  and 
software (37%) or electronics and computer hardware (35%). 

Figure 4:  Prevalence of encountered problems during registration by market 

Source: Q19 - Did you encounter problems during registration? N = 10366, weighted data 

110 

4%5%4%6%25%26%24%29%55%27%24%45%9%35%21%18%MarketplacesSmall retailersMedium retailersLarge retailersGeo-blocking by retailer size (based on website traffic)AccessRegistrationDeliveryPayment70%Overall69%55%66%40%35%37%24%25%25%16%10%34%27%22%28%21%10%11%2%26%38%41%48%54%65%73%88%Electrical householdappliancesElectronics & computerhardwareComputer games andsoftwareClothing, shoes andaccessoriesCosmetics and healthcareproductsBooksOnline reservations of offlineleisureTravel servicesEncountered problems during registration by marketEncountered problems and could not registerEncountered problems, but was able to registerDid not encounter problems 
 
 
 
 
 
During the delivery stage where shoppers need to provide their delivery/shipping address related to 
a specific online purchase, for almost a third of online retailers, mystery shoppers found that delivery 
is  possible    to  all  EU28  countries.  This  suggests  that  two-thirds  of  online  retailers  apply  in  some 
degree  geo-blocking  practices  when  it  comes  to  delivery  within  the  EU.  According  to  mystery 
shoppers’ assessments and the way information was provided on websites, most commonly, retailers 
either only deliver to the country where they are based (26.4%) or where the consumer is based (in 
addition to the country of the retailer, but not to other countries) (31.5%). 

Figure 5: Overall delivery restrictions – countries where retailers deliver to

Q20: To which EU countries would it be possible to deliver the product, in addition to country of the retailer? N = 
7628, weighted data 

During  the  payment  stage,  it  was  found  that  issues  with  blocking  payment  are  more  prevalent  by 
small retailers, while there is only little difference between medium and large sellers. Market places 
are the least restrictive regarding means of payment.  

111 

26,4%31,5%4,7%5,7%31,7%Delivery restrictions -overallOnly the country where the seller is based;The country where the consumer is based (in addition to the seller country);Several EU28 countries and the country where the consumer is based;Several EU28 countries, but not the country where the consumer is based;All EU28 countries. 
 
 
 
Figure 6: Prevalence of payment errors by size of retailer 

Source: Q24 - Does it appear possible for you to pay for this product on the website? N = 5135, weighted data; 

Q25 - Now, please try to enter the payment card details provided without confirming the order. Are you able to 

do it and if so? N = 4381, weighted data 

112 

1%20%13%10%8%19%9%9%MarketplacesSmall retailersMedium retailersLarge retailersPayment errors by retailer sizeMeans of payment not accepted/offeredNot able to enter payment card details 
 
 
 
 
 
 
Annex 7: Factual analysis of discrimination-related complaints collected by the 
Commission 

1. 

INTRODUCTION AND METHODOLOGY 

The  purpose  of  this  Annex  is  to  present  the  complaints-based  databank,  which  is  a  factual 
analysis of complaints, rather than an evaluative one. It is to serve as a broader overview of 
the  challenges  which  consumers  and  businesses  face  within  the  Single  Market,  when 
providing  or  purchasing  cross-border  services.  In  the  beginning  of  this  exercise  over  4000 
complaints were made available to the Commission from various sources. Out of those, only 
one  thousand  five-hundred  and  fifty  complaints  from  2008  until  2015  were  assessed  to  be 
relevant to the databank. They provide an ample number of real life examples of restrictions 
based on nationality or place of residence. 

In  comparison  to  the  public  consultation  on  the  topic,  the  database  was  created  through 
additional  efforts  by  the  Commission  to  utilise  available  internal  channels  containing 
information  pertinent  to  our  current  efforts.  It  is  compiled  through  analysing  complaints 
received  via  ECCRS129,  Your  Europe  Advice  (YEA),  European  Consumer  Centres  (ECC), 
complaints  addressed  directly  to 
the  Commission,  questions  posed  by  MEPs  and 
Parliamentary petitions.  The possible explanations of  the divergent  nature of the complaint 
extraction and the post-analysis numbers have been discussed. The Commission has learned 
that in some databases where the consumers themselves have to enter the sectors concerned or 
the relevant law which they allege is infringed, mistakes occur.  

The database is not an exhaustive catalogue of consumer complaints and due to the lack of a 
centralized system is only a representation of the success of the Commission's internal efforts. 
The factual individual assessment of the complaints, unlike in the above mentioned databases, 
has  enabled  the  creation  of  a  more  detailed  point  of  reference  with  regards  to  difference  in 
treatment based on nationality or residence under Article 20 of the Services Directive.  

Instead of having a pre-set questionnaire, each complaint has been individually assessed and 
recorded.  The  database  is  complimentary  to  the  public  consultation.    It  also  goes  a  step 
beyond  the  information  gathered  through  EU-barometer  surveys,  since  the  type  of 
encountered problems is more comprehensively recorded.  

129 European Consumer Complaints Registration System 

113 

 
 
 
 
 
 
 
                                                            
2.  MAIN RESULTS 

Fig.1 

Sources and complaints 

250

200

150

100

50

0

ECC 

ECC 

ECC 

ECC 

ECC 

YEA 

COM/ARES/CHAPS

ECC

MEP

PETI

YEA

ECC 

YEA  YEA 

YEA 

YEA 

YEA 

ECC 

YEA 

YEA 

Linear (ECC)

Linear (YEA)

2008

2009

2010

2011

2012

2013

2014

2015

The graph above is a visual representation of the breakdown of sources of complaints year-
by-year. At a first glance the red trend line shows that complaints received through ECCs are 
on a much stronger rise that complaints received through various other channels. There is a 
slight distortion in the YEA trend line which is due to the fact that the process of accessing 
some  over  8000  entries  with  complaints  from  2013-15  which  might130  be  relevant  to  our 
database  is  still  pending.  Once  the  process  is  complete  the  YEA  complaints  count  are 
expected to surpass the data provided by the ECCs. In March 2016, the Commission is also 
expecting to receive additional data of complaints handled by various Member States, some of 
their enforcement authorities, small and local consumer associations, which will also feed into 
the databank of the Commission. 

Fig.2 

130 See additional explanations about the sources of complaints in point 2.6 and 3. 

114 

 
 
 
 
                                                            
Total number of complaints (year by year) 

350

300

250

200

150

100

50

0

2008

2009

2010

2011

2012

2013

2014

2015

The graph above (Fig.2) is a representation of the total number of consumer complaints (year 
by year) which have been logged in the database. It shows the composite count, regardless of 
the channel from which they were obtained. The Commission is expecting the bars of 2013-
15 to grow with a similar measure as in the years 2009-2012, once it has fully finalised the 
analysis.  It is, however, evident that complaints concerning possible discrimination based on 
nationality or residence are on the rise. 

Transparency and access to information 

It is evident from the data that there is not enough transparency within the Single Market. A 
significant amount of the handled complaints indicate that consumers are often not provided 
with a specific justification as to why the service was refused.  

Fig.3 

115 

 
 
 
 
Justifications of traders for difference in 
treatment 

No OC 
7% 

Undetermined 
85% 

Contractual 
obligations 
3% 

Lack of required 
intellectual property 
rights 
2% 

Taxation (VAT) 
1% 

Additional costs 
incurred- 
transport and 
delivery 
1% 

Fraud avoidance 
1% 

The 'Undetermined' figure of 85% shows that in those cases, based on purely factual analysis, 
it  was  difficult  to  distinguish  whether  or  what  objective  justification  was  invoked  by  the 
trader. In most sources, this data is not mandatorily recorded and although in the majority of 
those cases it was signalled that the consumers have asked for an explanation by the trader, 
there was only follow-up data in about 15% of them.  

Most  of  the  times  when  the  service  is  refused  the  consumers  are  left  with  a  general 
justification  (if  any  is  indeed  provided)  which  is  not  specific  to  their  situation.  In  the 
predominant lot of cases consumers are not informed about the possibility of accessing offers 
on country-specific websites or there is no prior information on delivery restrictions. 

Fig.4 

116 

 
 
 
 
Justifications of traders for difference in 
treatment (15%) 

Lack of required 
intellectual property 
rights 
11% 

Additional costs 
incurred- 
transport and 
delivery 
7% 
Fraud avoidance 
4% 

Commercial practice 
3% 

Contractual 
obligations 
21% 

Taxation 
(VAT) 
10% 

No OC 
44% 

Out of the 15% of the cases where it is known what, if any, was the justification given by the 
trader, 44% of the consumers who actually enquired as to why they were refused the service 
or good did not receive an explanation. Regardless of the stage at which the explanation was 
given, whether it is a full explanation upfront on the website or after the consumer specifically 
requested  it,  in  the  remaining  56%  of  cases  consumers  felt  that  they  were  given  a  generic 
explanation.  In  21%  of  the  complaints  where  we  know  the  justification  of  the  traders,  the 
objective criteria stated was contractual obligations. 11% of justifications relate to the lack of 
required  intellectual  property  rights.  Similarly,  around  10%  are  connected  to  different  tax 
regimes in Member States. Only 7% of justifications relate to additional costs which will be 
incurred due to the transport and delivery related price fluctuations, if delivered cross-border. 
About  4%  of  the  cases  state  that  discrimination  was  applied  in  order  to  avoid  fraudulent 
practices.  And  in  3%  of  the  cases  the  difference  in  treatment  resulted  from  the  commercial 
practices of the trader.    

From the factual analysis of each individual complaint in the database, one can conclude that 
in  the  majority  of  the  complaints  with  known  justifications,  the  complainants  are  of  the 
opinion  that  traders  should  inform  customers  about  sales  restrictions  (e.g.  outright  on  the 
website) or at least provide them with the case-specific justification of why their transaction 
with the trader was rejected, rather than giving them a generic reason. 

Type of restrictions 

Difference in treatment is frustrating consumers attempting to utilize the Single Market.  

117 

 
 
 
 
According  to  the  analysed  data,  about  a  half  of  the  consumers  have  managed  to  transact, 
while the rest were denied the transaction at all (total refusal to sell or deliver). 

Fig.5 

Outcome of restrictive practices 

Price difference 
33% 

Refusal to sell (incl. 
Automatic re-
routing) 
43% 

Refusal to deliver 
9% 

Refusal of discount 
6% 

Refusal of additional 
services (vouchers, 
after-sales) 
5% 

Undetermined 
3% 

Higher deposit 
1% 

In all of the cases in the databank, whether the transaction was concluded or not, there was a 
sale but with an accompanying difference in treatment based on residence or nationality. Fig. 
5  is  showing  the  outcome  of  restrictive  practices,  not  taking  an  account  of  whether  the 
different treatment was justified or not.  

A  denial  of  access  to  a  website  (blocking  the  access  or  automatically  re-routing  the 
consumers)  and  refusal  to  sell  are  among  the  most  common  outcomes  for  consumers  when 
they  feel  that  they  have  been  discriminated  against.  More  than  a  third  of  the  consumer 
complaints  handled  indicate  that  traders  often  automatically  re-route  their  customers  when 
they  try  to  access  the  website  of  the  trader  in  another  Member  State,  rather  than  the  one 
provided  within  the  country  of  origin  of  the  consumer's  IP  address.  In  about  a  third  of  the 
handled cases the consumers suffered from a price difference as a direct effect of being geo-
blocked.  Fig.  5  above  is  not  differentiating  between  cases  with  or  without  objective 
justification but it is rather showing the outcome of all the complaints logged in the database.   

A significant amount of consumers also felt discriminated against because traders refused to 
deliver to their Member State. In some cases it is not just the product or the service having to 
cross borders but also customers. EU consumers legitimately expect the same treatment when 
receiving  services  or  products  in  the  same  location  regardless  of  where  and  how  the 
transaction took place (e.g. car rental pick-up in a certain location on a particular dare for a 
particular  duration  with  the  same  car  and  options,  amusement  park  entrance  on  a  particular 
date  and  for  a  particular  duration).  The  complaints  by  consumers  show  a  trend  that  some 

118 

 
 
  
companies  within the Single Market  refuse to  sell  or  differentiate prices between customers 
based on the place of residence or nationality, regardless of the fact that they are receiving the 
service or product at the same location.  

Type of difference of treatment 

There are still cases where consumers are treated differently based on their nationality within 
the Single Market.  

Based on the obtained records of different complaints, almost one-fifth of the analysed cases 
relate to difference in treatment of consumers based on their nationality. Fig. 6 is showing the 
basis  for  different  treatment,  not  taking  an  account  of  whether  the  different  treatment  was 
justified or not. 

Fig.6 

Basis for different treatment 

Both 
1% 

Nationality 
18% 

Residence 
81% 

Although  different  treatment  of  consumers  based  on  residence  is  far  more  common,  a 
significant portion of consumers are still feeling discriminated against based on the Member 
State  from  which  they  come.  The  most  often  encountered  methods  of  differentiation  which 
have  been  registered  are 
the  automatic  geo-location  of  consumers'  IP  addresses; 
differentiations  based  on  billing-  and  delivery  addresses;  credit-  and  debit  card  or  bank 
account identification; identification through national identification documents (including, but 
not limited to, passport, ID card, driver's license, disability- and student cards, license plates, 
phone numbers); proof of residence; language and country of establishment. 

119 

 
 
 
 
 
Are  differences  of  treatment  based  on  residence  or  nationality  purely  an  on-line 

issue? 

It is not only in the digital context that consumers feel discriminated against. The complaints 
handled show that 'off-line' differentiation of consumers is also quite significant.  

In  about  a  third  of  all  handled  cases  it  is  evident  that the method  of  sale is  an  off-line  one. 
From  the  data  gathered,  it  is  apparent  that  differences  of  treatment  based  on  residence  or 
nationality  are  not  just  purely  an  on-line  issue,  although  being  mainly  such.  Consumers  are 
frustrated  a significant  amount  by  difficulties and  discrimination in  the  off-line  world  when 
purchasing services or goods. In about 10 % of the cases the method of sale was not entirely 
clear. Sometimes, it was not recorded, other times it could not be certain as to whether it was 
an on-line or an off-line transaction. In another 8% of the cases, consumers were affected by 
this difference in treatment when trying to access the same service in both the on-line and off-
line markets.  

Fig.7 

Method of sale 

On-line 
59% 

Off-line 
24% 

On- and 
Off-line 
8% 

Undetermined 
9% 

Fig.7  is  representative  of  the  percentage  of  complaints  across  all  sectors  and  for  all  of  the 
years  for  which  the  Commission  has  managed  to  gather  information  (see  Fig.  1and  2).  It  is 
showing the method of sale described in the complaints, not taking an account of whether the 
different treatment in the individual complaint was justified or not. 

120 

 
 
 
 
 
 
 
 
Sectors mainly affected by geo-blocking practices 

Restrictive practices are affecting consumers in a wide array of sectors. Some of them fall 
within the scope of the Services Directive, but there are also other significant ones, which 
remain outside of its reach.  

Fig.8 shows the main sectors in which different treatment was applied, not taking an account 
of  whether  the  different  treatment  was  justified  or  not.  It  merely  purports  to  visualize  the 
distribution,  in  percent,  of  complaints  within  different  sectors  of  the  Single  Market.  As 
mentioned earlier,  the database is  limited to  the success of our  internal efforts to  obtain  the 
maximum number of entries from various Commission sources.  

Although the Commission specifically searched for cases which are only within the scope of 
the  Services  Directive,  the  different  data  sources  yielded  varying  results,  including  sectors 
which are not covered by the Services Directive but were logged in the different systems as 
pertinent cases.   

About two-fifths of the analysed complaints relate to the retail sector (which includes tangible 
consumer  goods).    In  comparison,  the  latest  data  has  about  10%  of  cases  relating  to  purely 
digital issues (excluding tangible goods).  

In the retail sector, the complaints which have been collected are mainly concerned with the 
cross-border  (attempted)  purchase  of  clothing,  footwear  and  accessories  (including  tailor-
made goods) and electronics and computer hardware. Each of the two sub-sectors represents 
one-fifth of all complaints related to retail. 

In  the  digital  sector,  a  predominant  number  of  complaints,  with  71%,  relate  to  e-books, 
streaming services and MP3 downloads. In most of those cases, consumers have complained 
that  they  do  not  have  access  to  such  paid  services  from  another  member  state.  Still,  in  a 
considerable  one-fifth  of  all  the  complaints  which  we  have  concerning  the  digital  sector, 
consumers  claim  to  have  been  treated  differently  when  attempting  to  purchase  computer 
games and software.   

Fig.8 

121 

 
 
 
Main Sectors 

Digital 
(excluding 
tangible) 
10% 

Network 
Industries 
8% 

Transport services 
Car rental (incl. 
lease and sharing) 
4% 

Accommodation and 
Leisure services 
16% 

Transport services 
Excluding car rental 
12% 

General Consumer 
Services 
1% 

Education 
1% 

Undetermined 
5% 

Other 
5% 

Gambling 
1% 

Financial Services 
3% 

Retail (tangible 
consumer goods) 
39% 

In the transport services sector, we were mainly interested in finding cases where there were 
issues  with  the  car  rental  sub-sector.  Out  of  the  16%  of  the  complaints  related  to  transport 
services,  4%  relate  to  cases  where  consumers  had  issues  when  renting,  leasing  or  sharing  a 
car.   

The remaining 12 % of cases refer to other transport services. About a third of those relate to 
local public transport. Maritime-, air-, and rail transport related issues amount for about 15% 
each. Road transport and transport infrastructure services related cases amount to 10% each. 

The  accommodation  and  leisure  services  cases  are  16  %  of  all  the  cases  in  our  databank. 
Some of them explicitly relate to accommodation  and food service related issues  within the 
Single  Market,  but  the  majority  of  cases  communicate  issues  which  consumers  had  when 
attempting either to purchase or to use various package-travel options from different member 
states.  Complaints  including  cultural  and  entertainment  services  also  represent  a  significant 
amount.  The  minority of cases  which the Commission  assessed concerns services related to 
sports and hobbies, especially in the cross-border context.  

Out of the 8% network industries cases, the most problematic area, based on the assessment 
of complaints, are the telecom services. More than two-thirds of all issues are related to the 
latter sub-sector with a fifth attributed to gas, water and electricity related services and about 
one-tenth representing issues in the Radio and TV sub-sector.  

As  stated  earlier,  the  presence  of  the  sectors  in  others,  namely  education,  financial  services 
and  gambling  is  not  representative  of  the  actual  number  of  complaints  addressed  at  those 

122 

 
 
 
sectors.  The  Commission  has  not  specifically  searched  for  cases  which  relate  to  financial 
services or gambling.  

The  extraction  made  from  the  IT  Tools  available  from  the  Commission's  sources  (YEA, 
ECCRS) yielded results, which included the complaints in those sectors. They were registered 
as complaints under the Services Directive, pertaining to difference in treatment expressed as 
discrimination based on nationality or residence as per Art.20. 

3.  CONCLUDING REMARKS 

When internally comparing the conclusions from the data, whether it is method of sale year-
by-year,  basis  for  different  treatment  year-by-year  or  main  Member  States  involved,  certain 
consistency  stemming  from  the  results  has  been  established.  The  number  of  complaints 
received  through  the  various  channels  is  growing.  The  bigger  the  economy  the  more 
complaints related to that particular Member State there are. The proportion of issues related 
to a particular sub-sector from within the main sectors remains in the large part similar. 

As already mentioned, further assessment work is still undergoing in an attempt to compile an 
even more comprehensive database. However, the Commission is not expecting results which 
are too divergent from the ones presented in this document. It believes that the current pool of 
examples  is  sufficiently  telling  for  general  trends  to  be  recognized  and  observed  within  the 
Single Market. 

123 

 
 
 
 
 
 
Annex 8: Assessment of the functioning of Article 20(2) of the Services Directive 

1. Introduction 

The purpose of this Annex is to assess the effectiveness, efficiency, coherence, relevance and 
EU added value of the current provision addressing discrimination by service providers based 
on  nationality  or  place  of  residence,  namely,  Article  20(2)  of  Directive  2006/123/EC  on 
services  in  the  internal  market  ("Services  Directive")131.  Due  to  the  limited  scope  of  the 
exercise (only one article of the Directive), this is not a fully-fledged evaluation in the spirit 
of the Better Regulation Guidelines. The findings will, however, provide further evidence as 
to the problems described in the Impact Assessment. 

The public consultation on geo-blocking and geographically-based discrimination was carried 
out  in  the  framework  of  the  preparation  of  this  Impact  Assessment  (see  annex  2  for  more 
details). In February 2015, the Commission organised a public consultation in the form of a 
conference dedicated to Article 20 of the Services Directive; "Buying Services everywhere in 
the  Single  Market".132  In  addition,  other  sources  of  data  i.e.  the  complaints  database,  the 
results of the surveys were also used to inform the findings of this assessment (see  annex 7 
and annex 5 for more details). 

As  described  in  the  problem  definition  of  the  Impact  Assessment,  discrimination  based  on 
place  of  residence  or  nationality  is  an  obstacle  to  a  fully  functioning  Single  Market. 
Customers wishing to access better deals across the borders are faced with outright refusals to 
sell  or  charged  higher prices based  on  where  they  live;  undermining  customers’  trust  in  the 
Single  Market.  Differences  in  treatment  based  on  nationality  or  place  of  residence  when 
shopping abroad is mainly applied by private service providers, not Member States (i.e. public 
service  providers).  The  complaints  received  by  the  Commission  show  that  4%  of  them 
concern  alleged  discrimination  by  Member  States  (e.g.  price  discrimination  in  public 
museums).133  The  assessment  of  the  functioning  of  Article  20  of  the  Services  Directive  is 
therefore limited to Article 20(2) covering discrimination by private service providers.  

Article 21 of the Services Directive obliges Member States to designate assistance bodies to 
ensure that service recipients can obtain information and assistance in case of dispute between 
a  provider  and  a  recipient.  Article  21  is  partly  covered  by  the  assessment  since  it  has  an 
impact  on the functioning of the non-discrimination principle in Article 20(2). 

2. Background 

The Single Market has delivered advantages to European businesses. The implementation of 
the Services Directive has contributed to the removal of barriers for companies across the EU. 
A  2015  Commission  analysis  of  the  effects  of  the  Services  Directive  showed  that  an  even 
more  ambitious  implementation  of  the  Directive  could  generate  up  to  1.7%  of  EU  GDP  in 

131 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006L0123&from=EN  
132 http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=8076  
133 See Annex 7 

124 

 
 
                                                            
addition  to  the  0.9%  that  will  be  realised  by  reforms  undertaken  since  the  adoption  of  the 
Services Directive.134 However, facilitating the provision of services across national borders 
is  not  enough  for  the  establishment  of  a  genuine  Single  Market.  It  is  equally  important  to 
ensure  that  service  recipients,  and  in  particular,  consumers  can  make  full  use  of  the 
opportunities of the Single Market. 

2.1 Services Directive 

The objective of the Services Directive is to release the full potential of services markets in 
Europe by removing legal and administrative barriers to trade.  The Directive was adopted in 
2006 and transposed by all EU countries in 2009.  

To  enhance  the  rights  of  service  recipients  and  strengthen  their  confidence  in  the  Single 
Market,  the  Services  Directive  obliges  Member  States  to  remove  obstacles  for  service 
recipients  wanting  to  purchase  goods  or  services  across  the  borders,  such  as  obligations  to 
obtain  a  specific  authorisation  to  receive  services  from  another  Member  State.  It  also 
introduced an obligation on Member States to ensure that discriminatory requirements based 
on service recipients' nationality or place of residence were not applied against them.  

Article  20  of  the  Services  Directive  prohibits  discrimination  against  service  recipients,  by 
both  public  and  private  service  providers,  on  the  basis  of  their  nationality  or  place  of 
residence.  The  purpose  of  the  Article  is  to  help  service  recipients,  especially  consumers, 
access offers available in other Member States and make the most of the Single Market.  

Article  20(1)  is  targeting  public  service  providers  such  as  public  authorities.  It  obliges 
Member  States  to  ensure  that  the  recipients  are  not  made  subject  to  discriminatory 
requirements  based  on  nationality  or  place  of  residence  under  national,  regional  or  local 
regulations. It includes situations where public authorities treat service recipients differently.  

Article 20(2) cover situations where private service providers, i.e. private companies, treat 
service recipients  differently  based on  their  nationality  or  place  of  residence  when  trying to 
access  offers  across  the  borders.  It  obliges  Member  States  to  ensure  that  the  general 
conditions  of  access  to  a  service,  which  are  made  available  to  the  public  at  large  by  the 
provider,  do  not  contain  discriminatory  provisions  relating  to  the  nationality  or  place  of 
residence of the recipient, but without precluding the possibility of providing for differences 
in the conditions of access where those differences are directly justified by objective criteria. 
According to Recital 95 of the Directive, objective criteria could be additional costs incurred 
because  of  the  distance  involved  or  the  technical  characteristics  of  the  provision  of  the 
service,  or  different  market  conditions,  such  as  higher  or  lower  demand  influenced  by 
seasonality, different vacation periods in Member States and pricing by different competitors, 
or extra risks linked to rules differing from those of the Member State of establishment. The 

134 European Commission analysis available under  http://ec.europa.eu/growth/single-market/services/economic-

analysis/index_en.htm  

125 

 
 
 
                                                            
lack of the required intellectual  property  rights in  a particular territory  could also constitute 
objective criteria according to the Recital. 

2.2. National implementation of the non-discrimination principle 

Member  States  were  obliged  to  implement  Article  20  into  their  national  legislation.  Article 
20(2) is implemented through national provisions that make the prohibition of discrimination 
on  grounds  of  nationality  or  residence  binding  on  service  providers.  Most  Member  States 
have  introduced  in  the  horizontal  laws  transposing  the  Services  Directive  the  provision  on 
non-discrimination.  Many  simply  reproduced  literally  the  wording  of  Article  20(2).  Others 
have relied on already existing legislation that achieves the same purpose. It is for the relevant 
national  competent  authorities  to  ensure  compliance  with  the  relevant  national  provisions 
implementing Article 20(2) into their national law.135  

Apart from enforcement authorities, Member States were also obliged to designate assistance 
bodies  according  to  Article  21  of  the  Services  Directive.  The  objective  was  to  enhance 
confidence of recipients of services by giving them the means to make informed choices and 
comparisons when engaging in cross-border transactions. It introduces the right to recipients 
to obtain, in their home state, general information and assistance on the legal requirements, in 
particular  on  consumer  protection  rules,  and  on  redress  procedures  applicable  in  other 
Member States. The "Article 21 bodies" may assists service recipients who have experienced 
discrimination based on residence or nationality in violation of Article 20(2). 

2.3.  Commission  guidance  on  the  application  of  Article  20(2)  of  the  Services  Directive  and 
the brochure "Buying services everywhere in the EU – A practical guide to consumers" 

In 2012, the Commission issued guidance on the application of Article 20(2) of the Services 
Directive.  The  purpose  was  to  improve  the  application  and  enforcement  by  national 
authorities and courts. In light of the situation where national authorities received numerous 
complaints  but  there  were  hardly  any  enforcement  actions,  the  guidance  was  an  attempt  to 
give  full  effect  to  Article  20(2)  by  further  clarifying  the  interpretation  of  the  non-
discrimination obligation.136 

In 2014, the Commission published a brochure "Buying services everywhere in the EU  – A 
practical guide for consumers" explaining the non-discrimination principle by giving real life 
examples  of  differences  in  treatment  and  advice  on  how  to  act  if  experiencing  alleged 
discrimination including a list with contact details to the "Article 21 bodies". 

3. Effectiveness 

135 With a view to establishing guidance on the application of Article 20(2) of Directive 2006/123/EC on services 

in the internal market, SWD(2012) 146 final, see Annex I 

136 With a view to establishing guidance on the application of Article 20(2) of Directive 2006/123/EC on services 

in the internal market, SWD(2012) 146 final 

126 

 
 
 
 
 
 
 
 
 
                                                            
- To what extent have the objectives been achieved? 
- What have been the (quantitative and qualitative) effects of the intervention? 
- What factors influenced the (lack) of achievements? 

The objective of the non-discrimination principle in Article 20 of the Services Directive is to 
enhance the rights of service recipients and strengthen their confidence in the Internal Market 
by ensuring that service recipients are not subject to discriminatory practices based on their 
place of residence or nationality when shopping across the EU. The Commission has collected 
and factually analysed over 1500 complaints between 2009 and 2015 from service recipients 
across  Europe  on  alleged  discrimination.137  The  complaints  show  that  customer  experience 
restrictions/differences in treatment based on their nationality or place of residence which in 
turn might constitute discrimination. However, in  order  to  establish discrimination causality 
link,  a  case-by-case  assessment  has  to  be  conducted,  which  falls  under  responsibility  of  the 
national enforcement authorities . 85% of the complaints received by the Commission did not 
contain clear information on service providers' justification for treating a customer differently, 
or enough information about the situation to fully assess whether the difference in treatment 
was justified or  unjustified.  Therefore, it is  not possible to draw any conclusions as regards 
the  percentage  of  discrimination  cases  among  the  complaints.  However,  the  number  of 
complaints  show  that  restrictions  based  on  nationality  or  place  of  residence  are  a  major 
concern for consumers. Despite the number of complaints the Commission is not aware of a 
single  company  that  has  been  subject  to  sanctioned  enforcement  actions  by  national 
enforcement authorities since 2009.  

In  2012,  the  Commission  published  guidance  on  the  application  of  Article  20  (2)  of  the 
Services Directive where it was stated that the application of Article 20(2) has to be made on 
a case-by-case basis. The Commission also identified a number of situations of differences in 
treatment; such as online transactions (geo-blocking) where customers are treated differently 
based on various proxies (e.g. IP address, the country where their credit card has been issued, 
delivery address, etc.), and the situation where the consumer travels to receive the service at 
the  premises  of  the  trader  (e.g.  hotels,  amusement  parks,  museums,  tourist  attractions,  etc.). 
The  guidance  addresses  the  same  situations  covered  by  option  3  of  the  present  Impact 
Assessment.  The  publication  of  the  guidance,  including  the  advice  given  on  thee  specific 
situations,    did  neither  result  in  an  increased  number  of  sanctions,  nor  did  Member  States 
amend their national  regulations in order  to  ensure a  more effective transposition of  Article 
20(2) of the Services Directive. 

In  2014/2015,  the  lack  of  enforcement  actions  was  discussed  by  the  “Article  21  Network” 
which  is  a  sub-group  to  the  Expert  Group  on  the  implementation  of  the  Services  Directive. 
The “Article 21 Network” consists of the designated assistance bodies referred to in Article 

137  Between 2009 and 2015, the European Commission has collected 1500 complaints on alleged discrimination 
direct  or  indirect  by  utilising  various  internal  channels,  namely  ECCRS,    the  European  Consumer 
Centre Network and Your Europe Advice, see Annex 7 

127 

 
 
 
 
 
 
                                                            
21 of the Services Directive.  In  general, the assistance  bodies  do not  have  any enforcement 
powers. Their role is to help consumers solving Article 20 disputes with service providers. If 
the  bodies  do  not  manage  to  solve  the  dispute  they  may  transfer  the  case  to  the  relevant 
enforcement authority. As part of the discussions, the Article 21 Network reported problems 
with the interpretation of Article 20(2) and the list of possible justifications in Recital 95, the 
identification  of  the  relevant  enforcement  authority  and  continuous  difficulties  to  get  local 
enforcement authorities to act. 

In  addition,  the  conference  on  Article  20  organised  by  the  Commission  in  February  2015, 
brought  together  all  relevant  stakeholders  (in  total  122  participants  representing  consumers, 
businesses and competent authorities) to discuss the non-discrimination principle from a legal 
and  economic  point  of  view.  The  objective  was  to  discuss  (1)  How  the  non-discrimination 
principle  is  working  in  practice  for  consumers,  (2)  Challenges  for  companies  as  regards 
Article 20(2) and (3) The way forward – what should be the next steps.  Moreover, particular 
attention was brought to the question on how to improve cooperation between various players 
active in the enforcement of Article 20. The conclusions of the conference by all stakeholders  
were  that  the  framework  set  in,  as  well  as  the  implementation  of,  Article  20(2)  is  nowhere 
working  in  practice.  Competent  authorities  highlighted  that  the  enforcement  has  to  be 
intensified,  and  that  unsettled  legal  questions  regarding  the  application  of  Article  20(2)  and 
what  constitutes  objective  criteria  justifying  differences  in  treatment  has  to  be  clarified. 
Consumers supported that they are not in a position to claim concrete rights under Article 20 
(2) of the Services Directive. Business representatives stressed the need to respect that there 
are  objective  criteria  which  may  justify  differences  in  treatment;  however,  there  is  a  legal 
uncertainty as regards what is justified and what is not.138  

The following issues have been identified as the main reasons to the lack of effectiveness. 

3.1. Legal uncertainty regarding objective criteria justifying a difference in treatment 

Not every difference in treatment based on service recipients' place of residence or nationality 
constitute discrimination. According to Article 20 (2) of the Services Directive, differences in 
the conditions of access are legitimate if directly justified by objective criteria. To determine 
whether a difference in treatment adds up to discrimination or not, it has to be assessed if the 
reasons invoked by the trader indeed constitute objective criteria justifying the difference in 
treatment.  At  present,  this  must  always  be  assessed  on  a  case  by  case  basis,  thus  creating 
uncertainty for traders, consumers and national enforcement authorities.  

The provision itself does not provide any further guidance on what constitutes such objective 
criteria. Recital 95 of the Directive gives numerous examples of objective criteria that may be 
invoked by service providers to treat customers differently; additional costs incurred because 
of  the  distance  involved  or  the  technical  characteristics  of  the  provision  of  the  service,  or 

138 http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=8076  

128 

 
 
 
 
 
 
 
                                                            
different  market  conditions,  such  as  higher  or  lower  demand  influenced  by  seasonality, 
different vacation periods in the Member States and pricing by different competitors, or extra 
risks linked to rules differing from those of the Member State of establishment. The lack of 
the  required  intellectual  property  rights  in  a  particular  territory  would  not  constitute  an 
unlawful different treatment. The 2012 Guidance of the Commission on how to apply this part 
of  the  Services  is  not  delivering  the  expected outcomes,  as  confirmed  at  the  February  2015 
conference  on  Article  20(2)  of  the  Services  Directive  "Buying  Services  everywhere  in  the 
Single Market" and by the respondants to the public consultation who perceived there to be no 
improvement after the publication of the guidance.  

At present, companies use a wide range of justifications for treating customers differently, as 
observed  in  a  2009  Commission  study  on  business  practices.139  For  example,  the  following 
reasons  have  been  given  by  companies  to  justify  price  differences  based  on  the  consumers 
place of residence: regulatory environment (e.g. compliance costs, fragmentation of consumer 
or  environmental  legislation,  regulatory  uncertainty,  etc.),  different  marketing  costs  in 
different  Member  States  (e.g.  online  ads  and  costs  for  translating  brochures);  corporate 
structure (e.g. franchisees having their own pricing policy); exchange-rate fluctuations; need 
for a bank account in the country where the company is established, taxation and credit card 
processing fees; operational drivers (e.g. costs such as re-registration of cars or verification of 
foreign driving licenses in the car rental sector); competition; market growth, risks related to 
stricter consumer protection laws; seasonality (e.g. different holiday periods) and simply the 
fact that the cost for different services varies between the Member States. These justifications 
have been given by companies operating in different fields including car rental, leisure parks 
and  rental  of  summer  accommodations  and  were  confirmed  in  recent  interviews  with  the 
European Consumer Centres and Your Europe Advice.140 

In a study titled "Discrimination of Consumers in the Digital Single Market" from 2013, it has 
been  concluded  that  Article  20  of  the  Services  Directive  has  had  hardly  any  effect  on  the 
Single  Market.  It  particularly  addresses  the  issue  of  justifications,  and  the  question  what 
constitutes objective criteria. According to the study, the list of justifications in Recital 95 is 
so long that in the vast majority of cases it would be easy for businesses to find (or feign) a 
reason  for  any  refusal  to  sell  or  for  offering  different  conditions.  Furthermore,  even  for 
services which are purely digital (e.g. cloud computing services) different prices can easily be 
justified  by  "different  market  conditions"  or  the  "pricing  by  different  competitors".  The 
European Parliament draws the conclusion that the lack of clarity regarding objective criteria 
is the reason why there is currently no discernible enforcement activity throughout Europe.141 

139  European  Commission,  'Study  on  business  practices  applying  different  condition  of  access  based  on  the 
nationality or the place of residence of service recipients  – Implementation of Directive 2006/123/EC 
on Services in the Internal Market', 2009. The study covered car rental, digital downloads, online sales 
of electronic goods and tourism. 

140 A Single Market Strategy for Europe – Analysis and Evidence (SWD(2015) 202 final) p. 52-53 
141 Study "Discrimination of Consumers in the Digital Single Market" (2013), European Parliament Directorate-
scientific  policy 

internal  policies,  Policy  department  A:  Economic  and 

General 
for 
(IP/A/IMCO/ST/2013-03) 

129 

 
 
 
 
                                                            
justifications 

from  stakeholders  concerning 

This  is  also  confirmed  by  the  results  of  the  public  consultation  (see  annex  2)  which  seek 
views 
for  allowing  geo-blocking  and 
geographically-based  restrictions.    Consumers  and  consumer  organisation  tend  to  qualify 
more of the listed practises as "unjustified", while companies, although more divided in their 
positions, tend to be more accepting of the number of objective factors that would justify geo-
blocking.  These  replies  also  give  voice  to  a  concern,  mainly  stemming  from  companies  but 
also  public  authorities,  that  the  separation  of  "justified"  and  "unjustified"  practices  is  vague 
and difficult to apply in practice. In the same manner, the conclusions of the conference on 
Article 20 of the Services Directive also indicated difficulties with the application of Article 
20(2) due to the legal uncertainty regarding acceptable and non-acceptable justifications.142 

The legal uncertainty created by the broad list of possible justifications for differences in 
treatment  seem  to  be  the  main  problem  as  regards  effectiveness.  The  publication  of 
guidance has not been perceived as improving the situation. 

3.2. Lack of enforcement actions by national authorities 

To  this  date,  the  Commission  is  not  aware  of  any  company  that  has  been  sanctioned  for 
violating  Article  20  (2)  of  the  Services  Directive.  In  the  2012  Commission  guidance  on 
Article  20,  a  list  of  the  competent  enforcement  authorities  in  all  Member  States  was 
introduced  as  an  Annex.  The  purpose  was  to  clarify  which  authority  that  is  responsible  to 
enforce Article 20 (2) in each Member State. However, in several countries consumers would 
have to go to court in order to proceed with a case of non-compliance with Article 20 of the 
Services  Directive  and  in  others  it  is  very  difficult  to  identify  the  competent  enforcement 
body.143  

The  European  Parliament  made  a  call,  already  in  2010,  for  an  effective  implementation  of 
Article  20(2),  as  well  as  the  proper  enforcement  by  national  authorities  and  courts  of  the 
national  provisions  implementing  the  non-discrimination  principle  in  the  legal  systems  of 
Member States.144 

The European Consumer Centre Network ("ECC Network") has analysed complaints received 
by  the  network  related  to  Article  20  of  the  Services  Directive.  Between  2010  and  2012  it 
received  222  Article  20-related  complaints,  but  believes  that  many  complaints  pertaining  to 
situations  whereby  consumers  could  not  fully  benefit  from  the  Single  Market  went 

142 http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=8076  
143  For  example; Finland,  Latvia,  Luxembourg  and  Poland refer  to national courts  and  Germany  refer  to  7000 
trade  and  business  authorities,  chambers  of  auditors,  lawyers  and  tax  consultants  (Annex  II  of 
SWD(2012) 146 final) 

144 European Parliament resolution of 21 September 2010 on Completing the Internal Market for E-Commerce 
(2010/2012(INI)); points 31 and 32; Conclusions of Competitiveness Council on Digital Single Market and 
Governance of the Single Market of 30-31 May 2012 

130 

 
 
 
 
 
 
 
 
 
                                                            
unreported. This may be attributed to the lack of awareness of the protection consumers enjoy 
under  the  Services  Directive  and  their  inability  to  recognise  which  business  practices  may 
constitute  a  breach  of  the  non-discrimination  principle.  In  more  than  32%  of  the  222 
complaints, active intervention from the ECC on behalf of the consumer was necessary with a 
successful outcome reached in nearly 50% of those cases.  8 service providers changed their 
business practice following the intervention by the ECC network. Furthermore, it reported 12 
cases to the relevant enforcement authorities, but only one of all these referrals resulted in a 
decision made by an enforcement authority. The fact that very few cases result in enforcement 
actions  at  national  level,  may  be  due  to  the  authorities'  inability  to  handle  individual 
complaints  or  their  failure  to  interpret  the  existing  rules  correctly.  The  ECC  Network  has 
called for the urgent need to make the Services Directive work in practice. 145 

Regulation  (EC)  No  2006/2004  on  consumer  protection  cooperation  (CPC  Regulation)  lays 
down  the  general  conditions  and  framework  for  cooperation  between  national  enforcement 
authorities  in  the  EU.  It  covers  situations  when  the  collective  interest  of  consumers  are  at 
stake  and  allows  authorities  to  stop  breaches  of  consumer  rules  when  the  trader  and  the 
consumer are established/residing in different Member States. The cooperation is applicable 
to consumer rules in various areas, such as unfair commercial practices, distance selling and 
passenger  rights  which  are  listed  in  its  Annex.  However,  Article  20  (2)  of  the  Services 
Directive is not included in the Annex. It means that there is currently no cooperation in terms 
of coordinated enforcement  of Article 20 (2) by national  authorities.  The situations covered 
by  Article  20  (2)  are  cross-border  situations  which  require  Member  States  to  cooperate  in 
order  to  ensure  an  effective  enforcement.  As  evidenced  by  the  evaluation  underpinning  the 
CPC  regulation  review,  the  lack  of  such  cooperation  constitutes  an  obstacle  to  an  effective 
enforcement of Article 20(2). As part of the review of the CPC Regulation, the Commission 
has proposed to include Article 20 in the Annex of the CPC Regulation.  

The assistance bodies referred to in Article 21 of the Services Directive play an important role 
in the enforcement of Article 20(2) even though they, in general, do not have any enforcement 
powers.  Consumers  may  turn  to  the  assistance  bodies  first,  which  in  turn  may  submit  the 
complaints  to  the  competent  enforcement  authorities.  The  ECC  network  has  taken  the 
initiative  to  organise  themselves  regarding  the  application  of  Article  20(2)  (see  report  from 
2012 in  footnote 15), and the Commission  meets them twice a year as observers. However, 
only half of the Member States have appointed the national ECC as their Article 21 assistance 
body,  and  the  Commission  is  therefore  organising  separate  meetings  with  the  Article  21 
assistance bodies in addition to the meetings of the ECC network. Overall, the resources are 
scarce among the assistance bodies, in particular, in some of the eastern European countries. 
Furthermore, consumers usually turn to the assistance body in his/hers home Member States 
whereas  the  trader  normally  is  established  in  another  Member  State.  It  means  that  the 
assistance  body  has  to  contact  the  enforcement  authority  of  the  country  where  the  trader  is 

145 Enhanced Consumer Protection – the Services Directive 2006/123/EC, Analysis of Article 20.2 and Article 

21 related consumer complaints reported to ECC-Net between 2010 and 2012. 

131 

 
 
 
 
                                                            
established,  the  complaint  may  never  reach  the  competent  enforcement  authority  if  the 
assistance body does not transfer the complaint due to e.g. the lack of resources. 

The  need  for  more  effective  enforcement  was  also  clearly  voiced  in  the  public  consultation 
(see annex 2). More than seven out of ten (72%) of the respondents support a monitoring and 
enforcement  role  for  the  European  Commission  as  well  as  for  national  authorities.  Similar 
numbers of respondents (70%) support a more effective cross-border cooperation mechanism 
between national authorities.  

The lack of enforcement by national enforcement authorities has been identified as one 
of the reasons for the lack of effectiveness of the non-discrimination principles in Article 
20(2)  of  the  Services  Directive.  However,  only  ensuring  that  all  Member  States  have 
designated  enforcement  authorities  that  cooperate  with  each  other,  and  that  these 
authorities have the resources to properly enforce Article 20(2) would not be sufficient, 
as  confirmed  in  the  Impact  Assessment  on  the  review  of  the  Consumer  Protection 
Cooperation  Regulation.  Improved  enforcement  in  terms  of  coordinated  enforcement 
across  the  EU  would  not  be  sufficient  on  its  own  to  resolve  discrimination  based  on 
nationality or place of residence. However, coordinated enforcement across the EU is a 
necessary element to address discrimination covered by Article 20(2). To summarise the 
conclusions of section 3.1 and 3.2, the objective of Article 20(2) of the Services Directive 
has  not  been  fully  achieved.  The  legal  uncertainty  regarding  acceptable  and  non-
acceptable  justifications  for  differences  in  treatment  makes  it  difficult  for  Member 
States to effectively enforce the non-discrimination provision. 

4. Efficiency  

- To what extent are the costs involved justified, given the changes/effects which have been 
achieved? 
-To what extent has the intervention been cost effective? 
- If there are significant differences in costs (or benefits) between Member States, what is 
causing them? 

The  transposition  of  Article  20-21  of  the  Services  Directive  required  Member  States  to 
designate an assistance body, and to ensure proper enforcement of Article 20 (2). The role of 
the assistance body is to provide general information and assistance on e.g. redress procedures 
applicable  in  other  Member  States.  It  includes  assisting  consumers  facing  discrimination 
when buying services in the EU. The costs and the administrative burden for Member States 
to  fulfil  the  obligation  of  an  assistance  body  may  vary  across  Member  States  due  to  the 
organisational structure in the Member States at the time of the transposition of the Directive, 
and  the  quality  of  the  services  provided  by  the  assistance  bodies.  However,  there  is  no 
available data on the costs in each Member State. No feedback from stakeholders concerning 
the functioning of the assistance bodies was provided during the public consultation on geo-
blocking  and  other  forms  of  geographically-based  discrimination.  During  the  public 
conference  held  in  February  2015,  stakeholders,  including  the  assistance  bodies  confirmed 

132 

 
 
 
 
that  the  current  system  is  not  working.  In  addition,  the  ECC  network  cannot  be  fully  used 
because  Member  States  did  not  always  appoint  their  national  ECC  as  interlocutors  under 
Article 21 of the Services Directive.   

However,  the  existence  of  assistance  bodies  is  justified  to  fully  achieve  the  objectives 
pursued,  namely,  enhance  the rights  of  service  recipients and  strengthen  their  confidence  in 
the  Internal  Market.  Merely  enforcing  the  provision  by  sanctioned  decisions  against 
businesses violating the provision is not sufficient, since it does not provide a solution to the 
dispute  between  the  trader  and  the  customer.  The  assistance  body,  which  in  many  Member 
States is the ECC, helps the consumer by contacting the trader to try to solve the dispute. The 
number  of  contacts  and  complaints  dealt  with  by  European  Consumer  Centres  has  been 
steadily  increasing,  thus  demonstrating  a  growing  awareness  of  their  role  and  usefulness.146 
As  regards  designated  enforcement  authorities,  a  majority  of  the  Member  States  have 
designated  the  national  consumer  and/or  competition  authority,  i.e.  make  use  of  already 
existing enforcement authorities.  

The costs and the administrative burden for Member States to fulfil the obligation of an 
assistance body varies across Member States due to the organisational structure in the 
Member  States  at  the  time  of  the  transposition  of  the  Directive,  and  the  quality  of  the 
services  provided  by  the  assistance  bodies.  However,  there  is  no  available  data  on  the 
costs  in  each  Member  State  to  assess  cost  effectiveness.  Furthermore,it  has  been 
established  in  section  3  that  Article  20(2)  is  not  effective;  the  objectives  have  not  been 
fully reached and despite the publication of guidance there is no progress in terms of an 
increased  number  of  sanctioned  decisions.  Therefore,  no  matter  how  Member  States 
have chosen to organise their enforcement and assistance bodies, and the level of quality 
of the services provided, Article 20(2) cannot be considered as an efficient provision. 

5. Relevance 

-To what extent is the intervention foreseen under Article 20(2) intervention still relevant? 
-How well do the original objectives still correspond to the needs within the EU? 
-How relevant is the intervention for EU-citizens? 

The  non-discrimination  principle  was  introduced  in  the  Services  Directive  to  enhance  the 
rights  of  service  recipients  and  strengthen  their  confidence  in  the  Single  Market,  and  to 
contribute  to  the  overall  objective  of  the  Services  Directive  –  a  fully  functioning  Single 
Market.  Since  the  adoption  of  the  Services  Directive  cross-border  trade  has  increased.  The 
Digital Agenda Scoreboard showed an increase of online cross-border purchases of goods and 
services between 2008 and 2014; from 6% as an EU average in 2008 to 15% in 2014. Today, 
customers travel on a frequent basis across the borders to purchase goods and services (35% 
of  EEA  citizens  travel  at  least  once  a  year  abroad  for  different  reasons147),  and  the  Internet 

146  

2015  ECC  Anniversary  report,  p.8;  http://ec.europa.eu/consumers/solving_consumer_disputes/non-
judicial_redress/ecc-net/docs/ecc_net_-_anniversary_report_2015_en.pdf 

147 Those travelling spend on average 11.6 days per year abroad. BEREC International Roaming Analysis of the 
2014, 

December 

(RLAH), 

impacts 

Home” 

“Roam 

Like 

17 

of 

at 

133 

 
 
                                                            
 
revolution  has  made  it  a  lot  easier  to  search  for  the  best  possible  offers  in  the  EU.  For 
example, in the travel and tourism sector – one of the activities most affected by the Internet 
revolution – online sales represent 40% of total retail sales. In 2014, online sales in this sector 
reached a volume close to EUR 70 billion.148 As a consequence of customers travelling more 
frequently and the digital development facilitating e-Commerce, consumers expect to be able 
to fully enjoy the benefits of the Single Market.  

However,  the  number  of  complaints  received  by  the  Commission  on  alleged  discrimination 
since  the  implementation  of  the  Services  Directive  in  2009  shows  that  consumers  are 
frequently faced with restrictions based on their nationality or place of residence when trying 
to make use of the Single Market.  In 2014, the Commission initiated a dialogue with the car 
rental  industry  based  on  numerous  complaints  from  consumers  on  discriminatory  practices. 
Consumers were charged different prices based on their place of residence, and when trying to 
complete  a  booking  from  another  country-specific  website  (e.g.  a  German  consumer  tries 
book  from  the  country-specific  website  targeting  French  consumers)  they  were  sometimes 
automatically re-routed to the website targeting their own country. The Commission and the 
car  rental  companies  reached  an  agreement  which  has  improved  the  situation.149  In  2015,  a 
web scraping study showed that a major leisure park in Europe charged different entry prices 
for  the  access  to  the  park  depending  on  the  consumer’s  place  of  residence,  and  prevented 
them  from  accessing  better  deals  available  at  other  country-specific  webpages  of  the  same 
company.  Consumers  in  France  and  Belgium  had  access  to  specials  deals  on  their  country-
specific  webpages  which  were  not  accessible  for  consumers  residing  in  other  Member 
States.150 The car rental initiative and the amusement park exercise attracted media attention 
in  nearly  all  Member  States,  showing  that  EU  consumers  care  about  these  issues  and  the 
importance of addressing discriminatory practices across Europe.151 

In  2011,  a  Commission  survey  showed  that  the  main  reason  why  consumers  did  not  buy 
products from an online seller based in another country was related to conscious choices by 
consumers (i.e. the choice of products was enough in their home countries).152 However, the 
survey did not offer online discrimination based on residence or nationality (geo-blocking) as 
an option apart from non-acceptance of foreign credit cards. The recent 2015 Digital Single 
Market  (DSM)  survey  of  online  consumers  projects  geo-blocking  as  one  of  the  main 
challenges that online customers face. Furthermore, the results of the public consultation on 
geo-blocking  and  other  forms  of  geographically-based  discrimination  showed  that  80%  of 
consumer respondents indicated that they have experienced geo-blocking (i.e. discrimination 

http://berec.europa.eu/eng/document_register/subject_matter/berec/opinions/4826-international-
roaming-analysis-of-the-impacts-of-8220roam-like-at-home8221-rlah  

148 Duch-Brown, N. and Martens, B., 'The European Digital Single Market', JRC/IPTS Digital Economy Working 

Paper [DSM Strategy SWD] 

149 http://europa.eu/rapid/press-release_IP-14-1209_en.htm  
150 Commission web scraping study performed by College of Computer and Information Science, North-eastern 

University, Boston 2015. 

151 Articles on the initiative on the amusement park were published in UK, FR, DE, BE, NL, ES, PL, DK, LV, 

FI, IT, SE, IE, CZ, AU, RO, SI, CY, HU, LT and HR, and in the US and Brazil. 

152 Consumer market study on the functioning of e-commerce and Internet marketing and selling techniques in 

the retail of goods, Civic Consulting (2011), final Report for DG SANCO. 

134 

 
 
                                                                                                                                                                                          
based on residence or nationality in an online context), and a majority strongly agreed to the 
statement  that  geo-blocking  and  other  forms  of  geographically-based  discrimination  create 
significant obstacles to the Single Market.153 Most recently, a large mystery shopping survey 
looking at 10 500 websites first as a domestic user and then as a  cross-border user found that 
only  37%  of  these  websites  actually  allowed  shoppers  from  another  EU  Member  State  to 
complete an online purchase.154 

It's  clear  that  refusals  to  sell  and  the  application  of  higher  prices  purely  based  on  the 
customer's  nationality  or  place  of  residence  is  a  major  cause  of  frustration  for  those  who 
wants to make full use of the Single Market.  

The  need  to  enhance  the  rights  of  EU-citizens  by  addressing  discrimination  based  on 
nationality  or  place  of  residence  remains  highly  relevant,  and  might  be  even  more 
important today than in 2009. Effectively addressing discrimination based on nationality 
or residence could increase consumers’ trust in the Single Market, and contribute to the 
overall objective of a fully functioning Single Market. 

-How well adapted is the intervention to subsequent technological or scientific advances? 

Article  20  (2)  of  the  Services  Directive  only  introduced  a  general  non-discrimination 
principle,  and  the  guidance  document  on  the  application  of  the  provision  gives  no  further 
guidance  on  how  to  address  the  use  of  technological  measures  to  apply  discriminatory 
practices.  

Digital technology has advanced since the implementation of the Services Directive in 2009. 
The  development  of  new  technologies  has  made  it  easier  for  traders  in  an  online  context to 
identify  the  location  of  the  customer.  It  is  well-known  today  that  traders  use  different 
technological  measures  (e.g.  tracking  of  IP  addresses  or  the  use  of  credit  card  details)  to 
identify  the  location  of  the  customer  to  refuse  to  sell,  apply  different  conditions  or,  in  an 
online context, even prevent access to the actual website or application.  

The non-discrimination principle in Article 20(2) is technological neutral. However, new 
technological developments have given traders more possibilities to identify the location 
of  the  customer  and  apply  discriminatory  practices  (e.g.  unjustified  charge  a  higher 
price).  

6. Coherence 

- To what extent in the intervention coherent with other interventions with similar objectives 
(non-discrimination)? 

153 Annex 2 of the Impact assessment on the proposal for a Regulation of the European Parliament and of the 
Council on addressing geo-blocking and other discriminations based on residence or nationality. 
154 Annex 7 of the Impact assessment on the proposal for a Regulation of the European Parliament and of the 
Council on addressing geo-blocking and other discriminations based on residence or nationality. 

135 

 
 
                                                            
 
Treaty on the Functioning of the European Union (TFEU): In primary law Article 18 of the 
TFEU establishes the general prohibition of discrimination between persons on the grounds of 
nationality. Articles 34 and 56 of the TFEU provide for the free circulation of goods and the 
freedom to provide services. The Court of justice further clarified the implications of Article 
56. It said that Article 56 TFEU gives rights not only on the provider of services but also on 
the recipient.155 It also added that the abolition of State barriers to freedom to provide cross-
border services would be compromised if it could be neutralised by obstacles resulting from 
publicly  announced  decisions  of  private  operators156  (for  instance  publically  available terms 
and conditions) or private associations. In those situations, decisions of such private entities 
might have effects equivalent to those of public authorities to which Article 56 of the TFEU is 
primarily addressed.  The Court judged that equality of treatment between nationals and non-
nationals prohibit not only overt discrimination based on nationality but also discriminations 
linked to the place of residence.157 It went as far as saying that even a measure putting at an 
advantage  only  residents  of  a  specific  region  or  area  may  be  considered  discriminatory;  it 
does not have disadvantage only nationals of other Member States. 

Transport:  The  non-discrimination  principle  in  the  transport  sector  prohibits  traders  to 
discriminate passengers in terms of price based  on their place of residence or nationality.158 
Traders could only deviate from this principle if it concern social tariffs, e.g. preferential rates 
for  citizens  living  in  remote  areas.  It  means  that  passengers  of  different  modes  of  transport 
(air,  maritime,  bus  and  coach)  can,  in  general,  purchase  tickets  without  any  discrimination 
based on the customer's nationality or place of residence or on the place of establishment of 
carriers or ticket vendors. 

Consumer  protection  cooperation:  The  review  of  the  CPC  Regulation  concluded  that  an 
update  of  the  Annex  of  the  CPC  Regulation  would  be  necessary  to  ensure  consistency 
between  the  sectorial  and  horizontal  legislation  which  is  already  listed  in  the  Annex.  The 
Commission  proposes  to  introduce  Article  20  as  one  of  the  new  provisions,  Directives  and 
Regulations that could be added to the Annex. In addition, Regulation (EC) No 1008/2008 on 
common  rules  for  the  operation  of  air  services  which  also  contain  a  provision  on 
discrimination will be added. 

Article  20  (2)  is  based  on  Article  18  and  56  of  the  TFEU.  The  non-discrimination 
provisions  in  the  transport  sector  are  similar  to  Article  20(2),  but  much  stricter  since 
traders, in general, may not invoke objective criteria justifying price differences based 
on  residence  or  nationality.  The  consequence  of  the  transport  legislation  and  Article 
20(2)  is  that  customers  have  the  right  to  equal  treatment  when  buying  tickets  for 

155 Case C-233/09, Dijkman 
156 Case C-281/98, Angonese, paragraph 32 
157 Case C-103/08, Gottwald, paragraphs 27 and 28 
158 Article 1(a) and Article 4(2) of both Regulation (EU) No 181/2011 concerning the rights of passengers in bus 
and coach transport and Regulation (EU) No 1127/2010 concerning the rights of passengers when by 
sea  and  inland  waterway  regulate  the  principle  of  non-discrimination.  Article  23(2)  and  16(1  of 
Regulation  (EC)  No  1008/2008  on  common  rules  for  the  operation  of  air  services  refer  to  non-
discrimination in air transport. 

136 

 
 
                                                            
transportation, but might face price discrimination when they arrive at the destination 
(e.g. in shops, museums, etc.).  

-To what extent is the intervention coherent internally? 

As stated above, the objective of the Services Directive is to realise the full potential of the 
Single  Market  for  services  by  removing  legal  and  administrative  barriers  to  trade,  which 
include  removing  barriers  for  service  recipients.  However,  the  Directive  mainly  focuses  on 
addressing national requirements affecting the service itself and the service provider, not the 
service  recipient.  Furthermore,  Article  20(2)  is  one  of  very  few  Articles  in  the  Services 
Directive  which  indirectly  creates  an  obligation  for  companies.  The  other  Articles  only  put 
obligations on the Member States. 

Article  20(2)  contributes  to  the  overall  objective  of  the  Services  Directive,  and  even 
though  it  may  be  considered  as  different  compared  to  the  other  Articles,  it  constitutes 
the backbone of service recipients' rights under the Directive and is therefore considered 
to be coherent internally 

-  To what extent is the intervention coherent with wider EU policy? 

Discrimination based on nationality or place of residence including geo-blocking (i.e. online 
discrimination)  is  addressed  in  both  The  Digital  Single  Market  Strategy  (DSM)159  and  the 
Single Market Strategy for goods and services (SMS)160. 

The  DSM  was  presented  by  the  Commission  in  May  2015.  It  is  built  on  three  pillars:  (1) 
Better access  for consumers and businesses to online goods and services  across Europe; (2) 
Creating  right  conditions  for  digital  networks  and  services  to  flourish;  and  (3)  Maximising 
growth potential of our European Digital Economy. One of the initiatives under the first pillar 
is to prevent unjustified geo-blocking (i.e. online discrimination based on nationality or place 
of  residence).  It  constitutes  one  of  five  initiatives  (the  other  initiatives  concern  improved 
cross-border parcel delivery, harmonised EU contractual rights for online purchases, reducing 
VAT related burdens for traders, etc.) which together aims to fulfil the objective of the first 
pillar, namely, give better access for consumers and businesses to online goods and services 
across Europe. 

In October 2015, the Commission presented the SMS. It aims to improve the functioning of 
the  Single Market  for products  and  services  and  to  guarantee  appropriate  protection  for  EU 
citizen  by  targeted  actions  in  three  key  areas:  (1)  Creating  opportunities  for  consumers, 
professionals and businesses; (2) Encouraging and enabling the modernisation and innovation 
that Europe needs; and (3) Ensuring practical delivery that benefits consumers and businesses 
in  their  daily  lives.  The  first  key  area  is  covering  an  action  where  the  Commission  has 
committed  to  prevent  discrimination  of  consumers  and  entrepreneurs.  The  objective  is  to 

159 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0192&from=EN  
160 http://ec.europa.eu/DocsRoom/documents/14007/attachments/1/translations/en/renditions/native  

137 

 
 
                                                            
comprehensively fight discrimination based on nationality or place of residence, regardless if 
the transaction takes place online or offline. 

The  DSM  and  SMS  have  identified  discrimination  based  on  nationality  or  place  of 
residence  as  an  obstacle  to  a  fully  functioning  (Digital)  Single  Market.  Both  strategies 
have  announced  action  to  address  these  issues.  The  objective  of  Article  20(2)  of  the 
Services Directive is coherent with the objectives of the recently launched initiatives. 

7. EU added value 

- What is the additional value resulting from the EU intervention, compared to what could be 
achieved by Member States at national level?  
-To what extent do the issues addressed by the intervention require action at EU level? 

As concluded in the assessment of the provision's effectiveness, Article 20(2) of the Services 
Directive has not brought substantive added value to service recipients or businesses trying to 
make  full  use  of  the  Single  Market.  The  lack  of  enforcement  actions  allow  companies  not 
complying  with  Article  20(2)  to  continue  to  do  so  without  any  repercussions  from  national 
enforcement authorities. The ECCs, which a majority of the Member States have designated 
as  their  "Article  21  bodies",  has  intervened  against  companies  on  behalf  of  consumers 
regarding violations of Article 20(2). However, the number of successful interventions where 
traders have changed their business practices remains very low. 

Situations covered by Article 20(2) have a strong cross-border nature which is challenging for 
national enforcement authorities. It requires coordination at  EU level in order  to achieve an 
effective enforcement and functioning of the Article. The coordination between the different 
"Article 21 bodies" assisting consumers when facing discriminatory practices in violation of 
Article 20(2) could not have been achieved without the introduction of the Services Directive. 
Member  States  would  have  been  confined  to  their  national  boarders  without  proper 
cooperation and coordination tools, and the Single Market would be undermined.  

The need for the EU action has been also confirmed in the public consultation (see annex 2). 
Even though the views of stakeholders differ as to the elements of the policy response, there 
is  a  wide  consensus  that  the  problem  of  discrimination  by  service  providers  based  on 
nationality or place of residence can be only tackled by the EU action. 

No  substantive  EU  added  value  has  been  achieved  due  to  the  lack  of  effectiveness  of 
Article 20(2). However, in principle, it would not be possible to achieve the objectives of 
the provision without an EU intervention.  

8. CONCLUSIONS 

The assessment has shown that Article 20(2) of the Services Directive is not an effective 
EU  intervention  to  achieve  the  pursued  objectives.  Several  factors  contribute  to  this: 
legal uncertainty regarding acceptable and non-acceptble justifications which companies 

138 

 
 
can use to treat customers differently, and consequently, lack of enforcement by national 
authorities. Due to the lack of data, the efficiency of the provision could not be assessed. 
However, the objectives of the non-discrimination principle remain highly relevant, and 
coherent  with  other  EU  policy  actions,  such as  the  Digital  Single  Market  Strategy  and 
the Single Market Strategy for goods and services. The introduction of Article 20(2) has 
not brought any substantive added value due to its lack of effectiveness, but the analysis 
shows  that  EU  intervention  to  address  the  issues  concerned  is  necessary  to  reach  the 
objectives. 

139 

 
 
 
Annex 9: Glossary 

For  the  purposes  of  the  Impact  Assessment  on  geo-blocking  and  other  discriminations  based  on 
nationality or place of residence the following definitions shall apply: 

 

 

 

 

 

 

 

 

'Service' means any self-employed economic activity, normally provided for remuneration, as 
referred  to  in  Article  57  of  the  Treaty.  (It  covers  for  example  retail  of  goods  and  services, 
leisure services, services provided by architects  and engineers, construction services such  as 
installations and maintenance of equipment, food services such as hotels and restaurants, and 
leasing services.) 
'Customer' means a consumer who or an undertaking which intends to purchase or purchase 
goods or services which are not for resale to another customer;  

'Trader'  means  any  natural  person  or  legal  person,  irrespective  of  whether  privately  or 
publicly owned, who is acting, including through any other person acting in her name or on 
her behalf, for purposes related to her trade, business, craft or profession. 

'Contract' means any agreement under which the trader transfers or undertakes to transfer the 
ownership  of  goods  to  the  recipient,  supplies  or  undertakes  to  supply  a  service,    and  the 
consumer pays or undertakes to pay the price thereof.   

‘Distance contract’ means any contract concluded between the trader and consumer under an 
organised  distance  sales  or  service-provision  scheme  without  the  simultaneous  physical 
presence  of  the  trader  and  the  consumer,  with  the  exclusive  use  of  one  or  more  means  of 
distance communication up to and including the time at which the contract is concluded; 

'General  conditions  of  access'  means  all  terms,  conditions  and  other  information, 
including sale prices, regulating the access of customers to goods or services offered 
for sale by a trader, which are set, applied and made available to the public at large by 
or on behalf of the trader and which apply in the absence of an individually negotiated 
agreement between the trader and the customer.  

'Discrimination based on nationality or place of residence' means unjustified differences in 
the general conditions of access to goods or services made available to the public at large, i.e. 
outright  refusals  to  sell  or  the  application  of  different  conditions,  based  on  customers' 
nationality  or    place  of  residence  when  intending  to  purchase  or  purchase  goods  or  services 
which  are  not  for  resale  to  another  customer.  Differences  in  treatment  do  not  amount  to 
discrimination if the differences can be justified by objective criteria. 

'Nationality  or  place  of  residence'  cover  also  proxy  factors  which  may  end  up  being 
tantamount to nationality or residence, such as the country of the driving licence, the country 
of credit card issuance, the place of delivery, the country of origin of specifically dedicated IP 
addresses, the lack of credit history in a particular Member State, the lack of registration in the 
population registry, etc. 

 

'Unjustified  geo-blocking'  means  online  discrimination  based  on  nationality  or  place  of 
residence. 

140 

 
 
 
 
 
 
 
 
 

 

 

 

 

 

 

'Re-routing'  means  any  practice  by  information  society  service  providers  the  purpose  of 
which  is  to  redirect  the  customer  to  an  alternative  version  of  the  online  interface  to  an 
information society service, on the basis of the customer's nationality or place of residence; 

'Online interface' means any software the purpose of which is to allow customers to conclude 
a commercial transaction by means of information society services, such as a website; 

'IP  address'  stands  for  Internet  Protocol  address  and  is  a  numerical  label  assigned  to  each 
device participating in a computer network that uses the Internet Protocol for communication. 
An  IP  address  serves  two  principal  functions:  host  or  network  interface  identification  and 
location  addressing.  IP  addresses  are  often  used  for  deducing  location  of  an  Internet  user 
through geolocation services 

'Geolocation services' means a software service used to deduce the geographical location (i.e. 
geolocation)  of  a  device  connected  to  the  Internet.  The  most  common  way  of  obtaining  a 
geolocation is through user's IP address. IP-based geolocation services use databases mapping 
IP addresses to Internet providers, cities and countries that allow them to locate a device based 
on its IP address with a high accuracy. Using this method, determining the country in which 
the  device  is  located  is  95%-99%  percent  accurate,  while  accuracy  rates  on  naming  the  city 
from  an  IP  address  vary  between  50%-80%.  Geolocation  information  can  be  obtained  in  a 
number  of  other  ways,  including  MAC  address,  RFID,  Wi-Fi  connection  location,  or  GPS 
coordinates. 

'Micro  enterprise'  means161  micro  those  businesses  having  less  than  10  employees  and  a 
turnover of €2m or less. 

'Small enterprise' means those businesses having less than 50 employees and a turnover of 
€10m or less. 

'SME Small and medium enterprises' are those businesses having less than 250 employees 
and a turnover of €50m or less. 

161 http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm. 

141 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Annex 10: Flash Eurobarometer 434 on geoblocking in B-to-B 

a) Methodology 

162

In February 2016 a Flash Eurobarometer
 survey was conducted by TNS Political & Social with the 
view  of  collecting  additional  evidence  on  the  extent  of  geoblocking  in  cross-border  business-to-
business  (b2b)  purchases.  These  purchases  cover  goods  and  services  such  as  travel  and 
accommodation (car rental, train tickets, hotels), office equipment (computers, stationery, software, 
coffee machine), uniforms and safety equipment, etc. Furthermore, these purchases must be subject 
to  publicly  available  general  sales  conditions,  i.e.  not  subject  to  specific  conditions  agreed  through 
negotiations between the contracting parties. Excluded are also purchases of goods and services for 
resale. 

The survey targeted businesses of any size that had acquired experience purchasing cross-border in 
15  Member  States  (Austria,  Belgium,  Denmark,  Estonia,  France,  Germany,  Greece,  Hungary,  Italy, 
Ireland,  Netherlands,  Poland,  Slovakia,  Spain  and  United  Kingdom).  The  survey  was  carried  out  by 
phone during the second half of February 2016, addressing a total of 4200 companies active in the 
following  sectors:  Manufacturing;  electricity,  gas,  steam  and  air  conditioning  supply;  water  supply, 
sewerage,  waste  management  and  remediation  activities;  construction;  wholesale  and  retail  trade, 
repair  of  motor  vehicles  and  motorcycles;  transporting  and  storage;  accommodation  and  food 
service activities and finally information/communication services.163  

b) Results 

Overall, the survey found that: 

Out  of  the  companies  surveyed  two  thirds  had  not  tried  to  purchase  a  good  or  service  in  another 
Member States in the last 12 months. The main reasons for these firms not sourcing cross-border are  

  Out of the companies with experience of cross-border purchases, 10% faced problems.  
  The  likelihood  of  experiencing  problems  is  partly  linked  to  the  size  of  the  company,  e.g. 
larger companies with a turnover above €2 million are more likely not to have experienced 
any problem (65%) compared to smaller companies with a turnover below €100,000 (56%). 
  The  companies  reporting  problems  mainly  experienced  problems  with  “very  high  shipping 

prices” (17%), an inability to "get an invoice due to different VAT regulations” (10%). 
  Companies report more problems when trying to purchase goods compared to services. 
  For goods, the most problematic product categories include “electronic or ICT goods” (16%), 

“raw materials and construction material” (15%) and “digital goods” (11%).  

  For services, most expressed problems concerned after-sale services, such as “maintenance 

and repair services” (11%) and “sales and customer support services” (11%) 

162  For  additional  information  on  the  methodology  and  results  of  this  Eurobarometer  please  consult: 

http://ec.europa.eu/public_opinion/index_en.htm  

163  The  sample  size  in  each Member  States  is a  follows: N=400  in France,  Germany,  Italy,  Poland, Spain  and 
United  Kingdom.  N=200  in  Austria,  Belgium,  Denmark,  Estonia,  Greece,  Hungary,  Ireland, 
Netherlands and Slovakia. 

142 

 
 
 
 
 
 
                                                            
I. Purchasing goods and services cross-border  

The introductory  question  on  the respondents'  experience  of  cross-border  purchases  of  goods  and 
services served as a filter question, as it was not possible to address the questions to a population 
only made up by businesses with experience in cross-border activity. Based on the responses to this 
question, more than half  of the consulted businesses (68%) had not tried to  purchase any good or 
service cross-border in the last 12 months prior to the survey.  

Smaller  businesses  are  less  likely  than  larger  ones  to  have  engaged  in  cross-border  purchases.  For 
business  with  a  yearly  turnover  less  than  €100,000,  only  21%  of  the  surveyed  companies  tried  to 
purchase  cross-border  while  the  corresponding  number  for  businesses  with  a  turnover  above  €2 
million  amounts  to  52%.  The  Member  States  with  the  highest  proportion  of  companies  that  have 
tried to purchase outside of their own country in the last 12 months are Greece (61%), Austria (60%) 
and  Ireland  (60%).  The  Member  States  with  the  lowest  proportion  of  companies  having  tried  to 
purchase goods and services cross-border are Italy (19%), Poland (19%) and Spain (30%).  

Graph 1: Companies having tried to purchase goods or services cross-border in the past 12 months 
(per Member States) 

Base: All companies (N=4,200) 

II.  Reasons for not purchasing goods and services from other Member States 

Companies that indicated that they had not tried to purchase any good or services cross-border were 
subsequently asked about their reasons for not doing so. A majority (77%) indicated that they had 
not tried because “they do not need anything abroad”. The second most mentioned reason, although 
significantly smaller by comparison, is the “worry about after-sales service not working from abroad” 
(13%). Slightly more than one in ten companies mentioned “standards or certifications for goods and 
services  are  different  abroad”  (12%).  A  similar  proportion  of  companies  that  have  not  tried  to 
purchase in other EU countries, explained that “shipping or delivery costs are too high” (11%). 

Micro companies tend to be less likely to have purchased abroad compared to small companies (14% 
micro versus 10% small enterprises). They have more concerns about after sale-services than small 
companies.  Microenterprises  are  also  more  likely  to  raise  different  standards  or  certifications  for 

143 

 
 
 
 
goods  and  services  as  a  reason  for  not  buying  a  product  or  service  from  abroad  than  small  size 
companies (12% micro versus 8% small companies).  

Table 1: Reasons for not trying to purchase goods and services cross-border  

Base: Companies that have not tried to purchase any goods or services from another EU country (N=2,845) 

III.  Experience with purchasing from other Member States  

A  clear  majority  of  companies  that  tried  to  buy  cross-border  did  so  without  experiencing  any 
problems (91%).  A small minority of companies mentioned the product or service was not delivered 
successfully  (4%)  while  only  2%  of  companies  could  not  carry  out  the  purchase  because  the  seller 
gave a generic refusal to sell given their location abroad. 

144 

 
 
 
 
 
 
Table 2: The result when trying to buy goods or services cross-border 

Base: Companies that have tried purchasing any goods or services from another EU country (N=1,355) 

IV.  Problems encountered when purchasing from other Member States  

When asked about the problems encountered when purchasing from other Member States, almost 
two thirds (63%) of companies having purchased cross-border replied that they had not experienced 
any of the listed problems.164 The most commonly cited problem (17% of companies) was "very high 
shipping  prices”,  while  one  in  ten  companies  mentioned  difficulties  of  getting  an  invoice  due  to 
different VAT regulations. Less common issues were different prices (excl. shipping costs) mentioned 
by  9%  and  the  unavailability  of  after-sale  services  8%.  A  small  proportion  of  firms  reported  the 
unavailability  of  special  discounts  (4%),  refusal  to  sell  outside  the  country  (3%)  and  difficulties 
accessing offer due to website being blocked (2%). 

164  Available  reply  options:  Difficulty  to  access  the  offers  online  (access  to  website  blocked);  Refusal  to  sell 
outside the suppliers country; Refusal to grant a special discount due to the fact that your establishment 
is located in another EU country; Could not get an invoice due to different VAT regulations; Very high 
shipping process; Different prices (excluding shipping costs) because your establishment is located in 
another EU country; Impossible to get after sales services back home; None of the above; Other; Don’t 
Know 

145 

 
 
 
 
 
                                                            
Table 3: Problems encountered when trying to purchase goods and services cross-border 

Base: Companies that have tried purchasing any goods or services from another EU country (N=1,355) 

V. Problems experiences during the purchasing process 

Examining when firms encounter problems, most reported issues concern the delivery phase either 
due to goods not being delivered in time or not in the condition they expected (28%). More than one 
in  ten  companies  indicated  problems  when  “indicating  the  place  of  delivery”  (14%)  or  “when 
informing  that  your  company  was  located  in  another  EU  country”  (12%).  The  least  amount  of 
reported problems concerned "downloading the purchased good or service” (7%). 

Sample size limitation prevent a deeper analysis broken down by company characteristics level, but 
broadly it can be noted that companies selling goods are less likely to have experienced any of the 
listed products compares to companies selling goods (25% vs. 15%). 

146 

 
 
 
Table 4: The stage of the purchasing process when problems were faced 

Base: Companies that have experienced a problem when buying from another country in the last 12 months (N=312) 

VI. Type of products and services for which companies experiences problems  

Little less  than half  of  the respondents  (47%) had  not experienced  any  problems purchasing goods 
from  another  Member  State,  while  about  six  of  every  ten  companies  (63%)  had  not  experienced 
problems with purchasing services. 

The type of goods which posed the most problems to purchase cross-border were electronic or ICT 
goods (16%), raw materials and construction material (15%) and digital goods (11%). Fewer than one 
in  ten  companies  experienced  problems  with  travel  transport  (8%),  accommodation  or  hospitality 
(7%),  and  office  supplies  and  equipment  (8%).  Just  less  than  one  in  ten  respondents  reported 
problems in "other" products, and only a minor number had issues purchasing with uniforms, safety 
equipment (2%). 

Most  problems  were  encountered  when  seeking  to  purchase  after-sale  services  such  as 
“maintenance and repair services” (11%) and “sales and customer support services” (11%). Problems 
with other listed services were less common with fewer than one in ten companies have experienced 
issues with postal and communication services (8%), financial services (8%), IT services (7%) and less 
than one in twenty businesses experienced issues with professional services (3%) or utility services 
(2%).  

147 

 
 
 
 
 
Annex 11: barriers leading to geoblocking 

9.  Onerous VAT rules 
The  complications  of  having  to  deal  with  many  different  national  systems  represent  a  real 
obstacle  for  companies  trying  to  trade  cross-border  both  on  and  offline.  The  complexity  of 
VAT for making intra-EU B2C supplies is cited by business as one of the top three barriers to 
cross-border e-commerce.165 
Since 1st January 2015, with the entry into force of new "place of supply" rules, VAT on all 
electronic  services  such  as  online  gaming  or  cloud  computing  services  is  levied  where  the 
customer  is  based,  rather  than  where  the  supplier  is  located.  In  parallel,  an  electronic 
registration and payment system (the Mini One Stop Shop - MOSS), has been implemented to 
reduce the costs and administrative burdens for businesses concerned. A first analysis of the 
implementation  of  the  MOSS  indicates  that  in  2015  EUR  3  billion  VAT  was  collected 
through  the  system  which  is  utilised  by  approximately  12  000  EU  business  and  which  has 
resulted in administrative burden savings of EUR 500 million as opposed to the alternative of 
having  to  register  and  account  for  the  tax  due  in  the  Member  State  where  the  customer  is 
located (the scope of the new VAT rules is however wider than the present initiative).  This 
represents a substantial simplification and in such circumstances business should no longer be 
able to legitimately justify differences in treatment. 

However, this possibility does not currently exist for businessess supplying tangible goods to 
consumers  (retail).  This  means  that  if  a  business  wishes  to  make  supplies  of  goods  to 
customers in other Member States they are still required to register and account for VAT in 
each  of  those  Member  States.  The  compliance  costs  have  been  estimated  at  EUR  8  000 
annually per Member State166. This clearly represents a significant obstacle. While there is an 
existing simplification measure in place whereby businesses do not have to register up to the 
distance  sales  thresholds  for  intra-EU  Business  to  Consumer  (B2C)  supplies  of  goods 
(EUR 35 000 or EUR 100 000 to be determined by the Member State of destination)167, these 
thresholds  have  caused  uncertainty  and  complexity  for  business  when  the  threshold  is 
exceeded.  

Under  the  DSM  Strategy,  the  Commission  has  made  a  commitment  to  bring  forward  a 
proposal  before  the  end  of  2016  to  extend  the  Single  Electronic  Mechanism  for  VAT 
registration, declaration and payment to all ecommerce supplies, both within and outside the 
EU.  

The situation of B2B cross-border transactions is  simpler,  because in  many cases, the seller 
has  no  obligation  to  charge  VAT  and  it  is  the  customer  who  accounts  for  VAT  in  his  own 
country. It is particularly so when goods are moved from one Member State to another and for 
most  services  when  the  customer  is  a  businesswith  a  VAT  registration  number  and  the 
supplier is not established in the Member State of the customer. 

165  

166  

167  

Ecommerce  Europe,  Analysis  of  the  survey  “Barriers  to  Growth”,  2015,  http://www.ecommerce-
europe.eu/stream/survey-barriers-to-growth-ecommerce-europe-2015.pdf 
Ongoing study by Deloitte “Options for the modernisation of VAT for cross-order e-commerce”. These 
calculations are based on the standard cost model. 
The  vast  majority  of  Member  States  apply  the  EUR  35  000  threshold,  notably  France  who  recently 
reduced the threshold due to concerns on losses. 

148 

 
 
 
                                                            
10.  Costs of adapting to the consumer law of other Member States 
Differences  in  national  consumer  laws  may  be  a  reason  for  refusing  cross-border  sales  in  a 
B2C context (this would not be relevant in a B2B relationship). 

The  Consumer  Rights  Directive  has  fully  harmonised  certain  aspects  of  consumer  and 
contract law applicable to distance sales  to consumers (including  online sales), such as  pre-
contractual  information  the  consumer  should  receive  and  the  right  of  withdrawal  from  the 
contract. However, in other areas (e.g. guarantee regarding the conformity of goods) there are 
only  minimum  EU  rules,  which  Member  States  may  supplement  with  stricter  national 
requirements for the benefit of consumers. Following the 2008 Rome 1 Regulation,168 traders 
may  in  principle  choose  the  contract  law  of  their  own  Member  State  in  B2C  transactions. 
However,  in  the  event  of  a  company  directing  its  activities  to  another  Member  State,  the 
possibly higher mandatory protections afforded to that consumer by the law of their country 
of residence apply.  

The  legal  situation  for  distance  sales  means  that  traders  of  goods  and  services  who  wish  to 
serve a pan-European market may potentially need to  know about, and comply  with  certain 
specific mandatory consumer protection rules from 28 Member States. Finding out what such 
rules are case may be difficult and costly especially for SMEs169. Adding up only costs related 
to  consumer  contract  law  differences,  the  costs  suffered  by  businesses  when  they  sell  to 
consumers  in  other  EU  Member  States  have  been  estimated  at  between  EUR  4  and  8 
billion170. These  set-up costs are of course  more difficult to  amortize  for smaller  businesses 
interested in online cross-border sales.  

This  complex  legal  situation  is  being  addressed  in  the  context  of  the  Digital  Single  Market 
Strategy by the Commission's proposal for a Directive on certain aspects concerning contracts 
for  the  online  and  other  distance  sales  of  goods  and  the  proposal  for  a  Directive  on  certain 
aspects  concerning  contracts  for  the  supply  of  digital  content.  A  key  objective  of  these 
proposals is to ensure full harmonisation of key consumer rights in relation to distance sales 
of goods as well as digital content. 

Differences between consumer laws, however, cannot be a reason for discrimination when the 
trader  does  not  direct  its  activities  to  the  country  where  the  consumer  has  his  habitual 
residence.  In such  a case  a trader can choose the law of his country  which will be the only 
applicable law. .  

In case of conflict, the consumer may go to the courts of the country of their residence when 
the trader targeted activities to his/her Member State. Although cross-border court litigation is 
rare in B2C case, it may oblige suppliers to invest in legal advice in a foreign jurisdiction.   

168  
169  

170  

Regulation (EC) No 593/2008 (OJ L 17716). The Regulation does not apply to Denmark 
The impact assesment accompanying the proposed Directive on certain aspects concerning contracts for 
the  supply  of  digital  content  (COM  (2015)634)  and  the  Directive  on  certain  aspects  concerning 
contracts  for  the  online  and  other  distance  sales  of  goods  (COM(2015)  635)  estimated  the  costs 
stemming from differences in contract law suffered by businesses when they sell to consumers in other 
EU  Member  States  amount  to  between  EUR  4  and  8  billion.  These  set-up  costs  are  of  course  more 
difficult to amortize for smaller businesses interested in online cross-border sales 
See  Impact  assessment  to  the  Common  European  Sales  Law,  SEC  (2011)  1165  final,  and  the  Impact 
assessment on Digital contracts rights, SWD(2015) 274 final/2  

149 

 
 
                                                            
11.  Different product-related rules  
Technical  specifications  or  rules  on  labelling  and  selling  arrangements  may  also  differ 
depending on where in the EU the customer is located. They may require the trader to adapt 
their products and packaging accordingly, in particular concerning linguistic versioning. The 
recent  public  consultation  on  product-related  national  legislations171  (in  particular  labelling) 
showed  that  business  operators  find  that  these  national  requirements  (including  national 
application of rules harmonised at EU level) can hinder intra-EU trade. As shown notably in 
the  replies  to  this  public  consultation,  businesses  perceive  that  the  information  and 
compliance costs can be prohibitive. 

In addition, the B2B Eurobarometer shows that around 12% of the companies that have not 
purchased any goods or services from suppliers in other Member States refrained from doing 
so  on  account  of  standards  and  certifications  for  goods  (and  services)  being  different  from 
their home Member State. 

The  Single  Market  Strategy  announced  an  EU-Wide  Action  Plan  to  improve  a  better 
understanding of the principle of mutual recognition in the single market for goods. 

12.  Organisation of after-sales services in cross-border situations 
Traders  generally  strive  to  provide  good  after-sales  services,  not  only  to  enhance  long-term 
relationships and customer loyalty, but also to meet the expectations from the customer and 
encourage  them  to  come  back  and  buy  more.  Every  customer  who  is  unhappy  with  the 
availability or quality of after-sales services will negatively affect the reputation of the trader. 
Customers do not expect products to be perfect, but they expect manufacturers to fix things 
quickly.172 The lack of possibilities to arrange for good after-sales services could therefore be 
a reason for traders to deny cross-border sales.  

Furthermore, it is also known that extra costs from after-sales services is one of retailers' main 
concerns  about  selling  online  to  other  EU  countries;  32%  of  the  respondents  of  a  survey 
considered it to be an important factor for not selling abroad.173 However, the survey did not 
distinguish  between  companies  present  in  one  country,  and  companies  present,  through 
subsidiaries or branches, in several countries.  

Among the companies surveyed as part of the B2B Eurobarometer, those having experienced 
problems also indicated that in 8% of cases it was not possible to obtain after-sales services 
for goods purchased cross-border. Furthermore, 13% of those firms not sourcing cross-border 
stated  that  their  concern  about  after-sales  service  not  being  available  in  their  Member  State 
was the reason for not buying cross-border. 

13.  Limited cross-border delivery options  
EU  law  requires  Member  States  to  provide  for  cross-border  postal  parcels  delivery  up  to 
20 kilograms.174 However, a lack of affordable, high-quality delivery services is consistently 

171  

172  

173  
174  

http://wcmcom-ec-europa-eu 
wip.wcm3vue.cec.eu.int:8080/justice/newsroom/contract/opinion/150609_en.htm 
"Winning  in  the  Aftermarket",  by  Morris A.  Cohen,  Narendra  Agrawal,  and  Vipul Agrawal,  Harvard 
Business Review, May 2006 
Consumer Conditions Scoreboard, 2015 edition 
In line with article 3 (5) the amended Directive 97/67/EC of the European Parliament and of the Council 
of  15  December  1997  on  common  rules  for  the  development  of  the  Internal  market  of  Community 

150 

 
 
                                                            
 
cited  amongst  the  top  reasons  mentioned  by  both  e-retailers  and  consumers175  for  not 
engaging  in  cross-border  e-commerce.  Stakeholders  complain  about  a  lack  of  transparency, 
the  high  prices  of  delivery  for  small  shipments,  the  lack  of  interoperability  between  the 
different operators typically involved in a delivery of a cross-border shipment and the lack of 
convenience  for  the  final  consumer.  Over  60%  of  manufacturing  and  retail  (including 
wholesale) companies  selling  online  across  borders  declared  the  high  prices  of  cross-border 
delivery to be a problem for them176. In fact, several research studies estimate that list tariffs 
for  cross-border  parcel  delivery  (for  non-account  customers)  charged  by  national  postal 
operators are often two to five times higher than comparable domestic prices177.  

As  observed  in  the  responses  to  the  public  consultation,  as  the  quality  of  delivery  varies 
across  Europe  and  postal  operators,  traders  who  want  to  ensure  a  high  quality  service  often 
invoke  the  lack  of  quality  of  existing  delivery  options  to  refuse  to  deliver  to  a  specific 
country.  Furthermore  the  responses  to  the  B2B  Eurobarometer  shows  that  high  prices  is  a 
frequent  problem  for  companies  buying  goods  cross-border,  with  17%  of  the  those  having 
experienced problems attributing it to very high shipping costs. The high cost of delivery was 
also  mentioned  by  11%  of  respondent  as  the  reason  for  why  they  have  not  purchased  any 
goods or services cross-border. 

Some  of  the  challenges  of  parcel  delivery  will  be  addressed,  as  announced  in  the  Digital 
Single Market Strategy, by the proposed Regulation on cross-border parcel delivery.178 It will 
aim  at  improving  transparency  of  costs  for  cross-border  parcel  delivery  and  the  regulatory 
oversight of the cross-border parcel market. 

14.  Difficulties in cross-border payments 
As consistently mentioned in studies179 and public consultations, some operators prefer not to 
sell  to  other  Member  States  because  their  fraud  prevention  system  is  based  on  access  to 
informational  resources  such  as  public  registries  which  may  not  be  available  in  other 

postal  services  and  the  improvement  of  quality  of  service,  Member  States  shall  ensure  that  postal 
parcels received from other Member States and weighing up to 20 kilograms are delivered within their 
territory. Where Member States have increased the weight limit of the universal service in accordance 
with Article 3(5) of Directive 97/67/EC, there is no lack of standard delivery of parcels up to 10 kg, or 
up to 20 kg. If, however, the parcel is heavier than 10 or 20 kg, such a lack of delivery option can be 
invoked.  The  trader  may  also  in  any  case  legitimately  invoke  the  lack  of  quality  of  existing  delivery 
options to refuse to deliver to a specific country. 
Around  a  quarter  of  online  consumers  have  concerns  about  high  delivery  costs  (27  %),  high  return 
shipping costs (24 %), and long delivery times (23 %) when it comes to purchasing online from another 
EU  Member  State.  GfK  for  the  European  Commission,  Consumer  survey  identifying  the  main  cross-
border obstacles to the DSM and where they matter most, 2015   
European Commission, Flash Eurobarometer 413, 2015   
Meschi,  M.  et  al.,  Intra-Community  cross-border  parcel  delivery,  FTI  Consulting  for  the  European 
Commission, 2011; Okholm, H. B. et al., e-Commerce and delivery - A study of the state of play of EU 
parcel  markets  with  particular  emphasis  on  e-commerce,  Copenhagen  Economics  for  the  European 
Commission,  2013;  Civic  Consulting  for  the  European  Commission,  Consumer  market  study  on  the 
functioning of e-commerce and Internet marketing and selling techniques in the retail of goods, 2011; 
YouGov Psychonomics for the European Commission,  Mystery Shopping Evaluation of Cross-Border 
e-commerce in the EU, 2009   
COM(2016)XXX final upcoming 
See for instance “Study on business practices applying different condition of access based on the 
nationality or the place of residence of service recipients - Implementation of Directive 2006/123/EC on 
Services in the Internal Market , November 2009, 
http://ec.europa.eu/internal_market/services/docs/services-dir/studies/20091210_article20_2_en.pdf” 

175  

176  
177  

178  

151 

 
 
                                                                                                                                                                                          
countries. As a consequence, they may find that they are suffering higher fraud rates on cross-
border  sales  than  on  national  sales,  which  may  result  in  the  unprofitability  of  cross-border 
operations.  However,71%  of  card  fraud  is  linked  to  domestic  transactions  and  transactions 
outside  the Single  Euro  Payment  Area  (SEPA),  while  cross-border  fraud  within  SEPA  only 
accounts for 29% of frauds. Although only 2% of all transactions were acquired from outside 
SEPA,  they  accounted  for  22%  of  all  fraud.180  According  to  the  database  of  complaints 
collected  by  the  European  Commission,  only  1%  of  the  justifications  used  by  traders  for 
difference in treatment referred to fraud avoidance. 

Besides, several EU law provisions have taken away the relevance of this justification, such 
as the European order for payment procedure181 and the European Small Claims Procedure182. 
As  a  consequence,  difficulties  to  recover  debts  below  EUR 2,000  (respectively  in  future 
EUR 5000) in cross-border cases have been substantially lowered. However, the small claims 
procedure only helps when the merchant is able to identify the target for the claim. 

With modernisation of payments technology and after the introduction of EU legislation there 
are  fewer  reasons  for  internet  retailers  to  refuse  transactions  for  payment-related  concerns. 
With the SEPA Regulation183, as of October 2016, all Member States will be using the same 
schemes  for  credit  transfers  and  direct  debits  in  euro  and  it  will  no  more  be  possible  to 
discriminate on the basis of the country where the payment service provider is located where 
payments in euro are concerned.  
The  Regulation  on  cross  border  payments184  in  euros  also  provides  that  charges  levied  by 
banks  on  retailers  in  respect  of  cross-border  payments  shall  be  the  same  as  the  charges  for 
corresponding  national  payments185
.  This  means  that  retailers  have  no  justification  for 
refusing  to  receive  transactions  by  credit  transfer  or  direct  debit  for  payments  in  euro  from 
any Member State.  

Regarding card payments, the Regulation on interchange fees for card-based transactions was 
adopted in 2015 to address the problem of widely varying collectively-agreed inter-bank fees 
regarding  card  and  card  based  transactions186.  This  Regulation  introduces  EU  wide  ceilings 
for  inter-bank  fees  regarding  transactions  with  consumer  debit  and  credit  cards.  It  also 
addresses  rules  limiting  retailers'  possibilities  to  steer  consumers  to  using  cards  with  lower 
fees. The Regulation limits the application of Honour all Cards Rules when this would oblige 
retailers  who  accept  cards  with  regulated  fees  also  to  accept  cards  with  unregulated  fees 
('Honour  all  Products').  However,  card  schemes  can  impose    Honour  all  Cards  Rules  when 
they oblige retailers to accept the same sort of card regardless of the country in which the card 
was  issued  or  the  bank  which  has  issued  the  card  ('Honour  all  Issuers').  This  means  that 
retailers  cannot  refuse  cards  issued  in  other  Member  States  with  fees  capped  by  the 
Regulation. Nevertheless, retailers often decide not to accept foreign cards.  

180 

181  
182  

183  
184  
185  
186  

on 

4th 

Bank, 

Report 

Central 

European 
Card 
https://www.ecb.europa.eu/pub/pdf/other/4th_card_fraud_report.en.pdf 
Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006  
Regulation  (EC)  No  861/2007  of  the  European  Parliament  and  of  the  Council  of  11 July  2007 
establishing a European Small Claims Procedure 
Regulation 260/2012 on SEPA credit transfers and direct debits in euro ,OJ L 94/22, 30.3.2012,. 
Regulation 924/2009 on cross border payments, OJ L 266/11, 9.10.2009 
For payments up to EUR 50 000, of the same value and in the same currency. 
Regulation 2015/751 on interchange fees for card-based transactions, OJ L 123/1, 19.5.2015. 

Fraud, 

2015, 

July 

152 

 
 
                                                            
Finally,  to  adress  concerns  of  security  and  liability,  the  revised  Payment  Services  Directive 
(PSD2)  adopted  in  November  2015187  will  introduce  common  security  requirements  to 
authenticate the user of a payment service; secure customer authentication188 will be required 
for all remote electronic payment transactions189 unless a specific exemption has been agreed 
at EU level (eg for low value payments). Where the retailer or his bank fails to adopt strong 
customer  authentication,  they  shall  be  liable  for  any  fraud.  Once  PSD2  will  be  of  full 
application  in  2018,  those  retailers  whose  bank  has  adopted  strong  customer  authentication 
for  payments  will  not  run  any  greater  risk  of  fraud  if  a  payment  is  issued  from  another 
Member State. 

15.  Legal barriers  
Companies  may  refuse  to  sell  to  residents  of  other  Member  States  because  of  legislation 
forcing them to do so. This could for example concern services which may be legal in some 
Member  States  but  not  in  others,  such  as  the  sale  of  "snus"  in  Sweden  which  traders  are 
prohibited  to  sell  in  all  other  Member  States.190  Similarly,  firearms  or  certain  alcoholic 
products  may be legally available in one Member State but not in another. Insofar as these 
restrictions  derive  from  national  law  which  is  compatible  with  European  law,  geoblocking 
would be justified. 

187  

188  

189  
190  

DIRECTIVE  2015/2366  of  25  November  2015  on  payment  services  in  the  internal  market,  OJ  L 
337/35, 23.12.2015. 
'Strong  customer  authentication’  means  an  authentication  based  on  the  use  of  two  or  more  elements 
categorised  as  knowledge  (something  only  the  user  knows),  possession  (something  only  the  user 
possesses) and inherence (something the user is) that are independent, in that the breach of one does not 
compromise the reliability of the others, and is designed in such a way as to protect the confidentiality 
of the authentication data. 
See Article 97. 
Tobacco products for oral use, except those intended to be inhaled or chewed, are prohibited in the EU 
according to Directive 2014/40/EU. Swedish snus is tobacco which is neither smoked nor chewed and 
is therefore prohibited to sell within the EU. Sweden has been granted a permanent exemption from the 
sales ban on snus. 

153