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European Commission - Fact Sheet

Antitrust: Commission publishes initial findings on geo-blocking from e-commerce sector inquiry - Factsheet

Brussels, 18 March 2016

The European Commission has today published initial findings on geo-blocking of its ongoing antitrust sector inquiry into e-commerce, launched in May 2015.

The e-commerce sector inquiry serves the purpose of gathering market information to allow the Commission to better understand if and to what extent any barriers erected by companies affect European e-commerce markets. Geo-blocking is one of the issues covered by the sector inquiry.

Please also see the press release. For more background about the antitrust e-commerce sector inquiry and competition sector inquiries in general, please see Factsheet from the launch of the inquiry and DG Competition's sector inquiry webpage.

 

1)      What is the scope of and the fact-finding methodology for the initial results published today?

The Commission gathered information on geo-blocking as part of its ongoing antitrust sector inquiry into the e-commerce sector. In particular, the replies from more than 1400 retailers and digital content providers from all 28 EU Member States show that geo-blocking is common in the EU for both consumer goods and digital content.

Questionnaires were mainly sent to retailers selling consumer goods in the following product categories:

  • clothing, shoes and accessories, consumer electronics (including computer hardware), electrical household appliances, computer games and software, toys and childcare articles, books (including e-books), CDs, DVDs and Blu-ray discs, cosmetic and healthcare products, sports and outdoor equipment (excluding clothing and shoes), and house and garden,

and to service providers offering the following types of digital content:

  • films, sports, fiction TV (e.g. drama), children programmes, TV non-fiction (e.g. documentaries), music and news.

The sample of respondents was designed to ensure a broad representation of the entire spectrum of companies and business models active in e-commerce, both for consumer goods and for digital content.

The number of respondents by Member State varies mainly because of the different size of e-commerce markets across the Member States, and the number of spontaneous requests to participate in the inquiry that the Commission received.

The results present valuable insight into the prevalence of geo-blocking practices in the EU but are not statistically representative of EU e-commerce markets overall.

 

2)       What are the main initial findings on geo-blocking?

The initial findings suggest that geo-blocking is widespread throughout the EU. In relation to consumer goods, geo-blocking is mostly based on unilateral business decisions of retailers. Geo-blocking in digital content, on the contrary, is mostly contractually required by suppliers.

Consumer goods

Retailers were asked whether they gather any location related information from users (e.g. internet protocol (IP) address, credit/debit card details) in order to geo-block users. 38% of participating retailers reported they collect such data and use it for geo-blocking purposes.

The methods they use to implement geo-blocking of consumer goods are outlined in the figure below.

 

Figure 1 – Respondents that gather location information for each geo-blocking purpose – EU 28[1]

graph1

 

Geo-blocking by retailers may result from unilateral business decisions by retailers or be based on contractual restrictions agreed between the retailer and its suppliers (see further below Question 3).

On the basis of the information gathered, contractual restrictions to sell cross-border can be found in all investigated product categories. The figure below summarises the proportion of retailers that reported having such contractual restrictions broken down by product category. Overall, 12% of retailers across the EU reported facing contractual restrictions to sell cross-border.

 

Figure 2 – Respondents that have a contractual restriction to sell cross-border for each product category – EU 28

graph2

 

Digital content

The majority ofproviders participating in the inquiry (68%) replied that they geo-block users located in other EU Member States. 59% reported to be contractually required by suppliers to geo-block. They do so mostly by verifying the IP address of users, which identifies and gives the geographic location of a computer or smartphone.

All types of content covered by the sector inquiry are affected to some extent by geo-blocking practices.

 

Figure 3 – Proportion of agreements requiring providers to geo-block by category – Average for all respondents – EU 28

figure3

 

The results also show that there are significant differences as regards the prevalence of geo-blocking between different digital content categories and EU Member States.

 

3)       What do these initial findings mean?

The facts and data on geo-blocking published today do not prejudge the finding of any anticompetitive concerns or the opening of any antitrust cases. The findings will feed the Commission's ongoing analysis in the sector inquiry to identify possible competition problems and also complement actions launched within the framework of the Commission's Digital Single Market Strategy, to address barriers that hinder cross-border e-commerce.

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 antitrust rule. This however needs to be assessed on a case-by-case basis.

In contrast, if geo-blocking is based on unilateral business decisions by a company not to sell abroad, such behaviour by a non-dominant company falls outside the scope of EU competition law.

If the Commission identified specific competition concerns, it could open case investigations to ensure compliance with EU rules on restrictive business practices and abuse of dominant market positions (Articles 101 and 102 of the Treaty on the Functioning of the European Union - TFEU). Any competition enforcement measure would have to be based on a case-by-case assessment, which would also include an analysis of potential justifications for restrictions that have been identified.

There are a number of reasons for retailers and service providers not to sell cross-border and the freedom to choose one's trading partner remains the basic principle. Against that background, it is a key priority of the Commission to address unjustified barriers to cross-border e-commerce with legislative actions as part of its Digital Single Market Strategyand it will come forward with further legislative proposals in May. The common objective of competition enforcement and the Commission's legislative initiatives is to create an area where European citizens and businesses can seamlessly access and exercise online activities, irrespective of their place of residence.

 

[1]        Note that a single respondent was able to select multiple types of purposes for which it gathers location information.

MEMO/16/882

Press contacts:

General public inquiries: Europe Direct by phone 00 800 67 89 10 11 or by email


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