E-commerce and getting rid of geo-blocking: good for consumers, good for companies

Source: A. (Andrus) Ansip i, published on Tuesday, May 31 2016.

I was happy to see that our comprehensive package on stimulating e-commerce across the EU was so well received. All of its proposals - on parcel delivery, geo-blocking and consumer protection rules - will, together, tackle the fragmentation of the Digital Single Market and reduce the barriers to cross-border e-commerce.

For me, this package represents a major step forward in our project to build a connected Digital Single Market for Europe; an essential step that is also long overdue.

It should be seen together with the proposed alignment of online contract rules and the forthcoming proposals on VAT simplification.

I saw in particular that the proposal on unjustified geo-blocking attracted a great deal of attention. I also understand that there are some concerns and, if I may say so, some misunderstandings - especially about what online sellers can expect from it.

Let me address the major misconceptions.

Firstly, I would like to clarify that we are not suggesting or proposing any obligation on companies either to sell or to deliver across borders.

What we are asking for is simple: to end discrimination in the single market - and to stop unfair and unjustified discrimination based on somebody's nationality, residence or place of establishment.

Our proposal reflects the reality that we see every day in the offline world. People would be shocked to walk into a store - and then be refused a sale based on whichever passport they have in their pocket. But this is what happens today in the online world with many retail websites.

And it happens in more than one-third of cases.

What does this all mean in practice?

It means that sellers should not treat customers differently - or worse - than they treat their local customers.

Every buyer becomes a local, in effect - and if there is no cross-border delivery involved, there are no foreign VAT rules to deal with, for tangible goods and services that are provided locally.

In most cases, and particularly for small- and medium-sized businesses, traders' law will apply: local rules for consumers and business regulation, and also the local language used.

For example, a small company selling locally and not operating outside its home country would serve customers from other EU countries in order to comply with the non-discrimination rule - and would be able to apply its own local consumer law.

Companies would also be free to set different prices across different websites: the Commission is certainly not trying to fix or align any prices.

However, customers should be free to choose from which website they wish to buy. That remains their own personal choice.

I also read some misleading views about acceptable methods of online payment. Again, what the proposal is actually about is non-discrimination.

Traders will not be forced to accept any means of payment other than those that they accept in their everyday business.

But within the same payment card brand, they cannot refuse the means of payment merely because the payer's nationality, residence, or the payment service provider's place of establishment is in a different EU country.

Then, some people have said that it is not good enough to provide a 'pick-up' option in the country of the trader but have no obligation to deliver.

Here, I have to disagree. If I buy something online in another country, I should be able to have it shipped to - or picked up by - a friend who lives in that country.

The package also addresses these issues with its proposal on cross-border parcel delivery.

We do not want to devise business models. I believe that the geo-blocking and parcel proposals together create the right incentives for delivery markets to develop.

Finally, "click and collect" is a developing business model that meets the demands of many European consumers: 32% of online customers are ready to collect their goods, or have them delivered, in the country of the trader.

Contrary to some views I have heard expressed, I believe that the Commission's geo-blocking proposal is in the interests of companies and sellers.

It does not impose an undue burden on them; in fact, it creates opportunities for them to expand their business and take full advantage of Europe's massive single market of more than 500 million consumers across 28 countries.

Bringing better value and more choice of online goods and services to customers across and between EU countries can only help businesses because their sales stand to grow.

Why should companies remain limited to their domestic markets?

They should be able to make the best of the opportunities offered by Europe's single market in the digital age.

Unjustified geo-blocking goes against the principle of the free circulation of goods and services in the single market.

It causes a splintering of national markets, it deprives customers or choice and value - and it deprives businesses of possibilities to expand.

In the 21st century, consumers as well as businesses deserve better than that.

Another blog soon.