Technology | Proposed amendments to the Services Act aim to tackle geo-blocking

Geo-blocking refers to the act of blocking or limiting access to Internet content based on the Internet user’s geographical location. For instance, geo-blocking may result in a customer located in Norway being blocked from accessing or making a purchase from a website of a trader in another country, or being automatically re-routed to a country specific website (possibly offering different prices). The Ministry of Trade, Industry and Fisheries has recently issued a proposition for implementation of Regulation (EU) 2018/302 (the Geo-blocking Regulation) into Norwegian law. The Regulation aims to prevent unjustified geo-blocking and is an important element of the EU’s Digital Single Market strategy.

Geo-blocking

There are different reasons why companies may choose to apply different conditions for access to Internet content based on the user’s geographical location. The Regulation mentions differing legal environments across jurisdictions, the associated risks as regards the applicable consumer protection laws, environmental or labelling laws, as well as taxation and fiscal issues, delivery costs or language requirements. Online traders may block or limit access to their website on the basis of information indicating the geographical location of its customers, such as the IP address used when accessing an online interface, the address submitted for the delivery of goods, the choice of language made or the country where the customer’s payment instrument has been issued. In the proposal for implementation of the Regulation, it is emphasised that such geo-blocking and other forms of discrimination based on geographical location may contribute to market sharing and reduced competition, as well as reduce the consumers’ options and influence in the market.

Current legislation

According to Article 20 of the current Directive 2006/123/EC (the Services Directive), EU/EEA member states shall ensure that recipients of services are not made subject to discriminatory requirements based on their nationality or place of residence. This prohibition against discrimination is implemented in Section 19 of the Norwegian Services Act. However, pursuant to this provision, differences in the conditions of access for the recipient may be provided, where those differences are directly justified by “objective criteria”. This provision has, however, not been fully effective in combatting discrimination due to legal uncertainty related to the term “objective criteria”, as well as due to poor enforcement mechanisms. The Geo-blocking Regulation contributes to clarifications on the matter, inter alia by defining situations in which there can be no justification for different treatment under Article 20.

The scope of the Regulation

The Ministry has proposed that the Geo-blocking Regulation is implemented into Norwegian law by incorporation, with a statutory basis in a new third paragraph in Section 19 of the Norwegian Services Act. The Regulation will detail the more general prohibition on discrimination already included in Section 19. The key provisions of the Regulation concern access to online interfaces, access to goods and services, and non-discrimination in means of payment. Certain goods and services are excluded from the scope of the Regulation, including financial, audio-visual, transport, healthcare and social services. Importantly, the Regulation does not cover the provision of services linked to copyright-protected content or works in an intangible form, such as music streaming services and e-books. The scope of the Regulation shall, however, be evaluated regularly.

Key provisions of the Regulation

Firstly, traders are prohibited from blocking or limiting customers’ access to their online interfaces, such as websites or applications, based on a customer’s nationality, place of residence or place of establishment, and must obtain the customer’s explicit consent in order to redirect a customer to an alternative version of an online interface. However, such geo-blocking is permitted where it is necessary to comply with EU or national law in line with EU law. Where this is the case, a clear and specific explanation must be provided. For instance, traders may lawfully block access to websites due to various sales restrictions on tobacco and alcohol products.

Secondly, the Regulation lists three specific situations in which there can be no justified reason for applying different general conditions of access to goods or services based on a customer’s nationality, place of residence or place of establishment, namely (i) for goods that are delivered in a member state to which the trader offers delivery or those goods are collected at a location agreed with the customer, (ii) for electronically supplied services such as cloud, data warehousing and website hosting, and (iii) for services such as hotel accommodation and car rental which are received by the customer in the country where the trader operates.

Finally, while traders remain free to choose their accepted means of payment, the Regulation includes a specific provision on non-discrimination within the range of means of payment they accept. Differential treatment is prohibited if (i) payments are made through electronic transactions by credit transfer, direct debit or card-based payment instrument within the same brand and category, (ii) authentication requirements are met, and (iii) the payments are in a currency that the trader accepts.