Sales practices: geo-blocking and territorial segmentation of the market becoming more difficult in Luxembourg
30/01/2019

Since 3 December 2018, EU Regulation 2018/302 on addressing unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market has been directly effective in the European Union. It expressly forbids traders (distributors and retailers) from imposing a series of geographical restrictions on customers (business and consumers) within the EU and is significant in going beyond the existing competition law and consumer protection framework.

In order to make the provisions of the Geo-blocking Regulation fully applicable in Luxembourg, the Luxembourg Parliament is currently studying a draft bill which among others gives businesses and consumers the possibility of asking the court to order injunctions against companies in Luxembourg which engage in geographic restrictions. This legislation should be adopted over the coming months.

What the EU Regulation forbids

The Geo-blocking Regulation concerns both business-to-business and business-to-consumer transactions (excluding individually negotiated agreements) and online and offline sales. It stipulates in essence that there should be no unjustified discrimination based on a customer’s nationality or country of residence in the sale of goods and services to customers for end use (i.e. not for resale).

In particular:

– There must be no blocking of access or automatic re-routing to a trader’s website in another EU Member State (unless there are strict legal grounds for doing so);

– All customers in the EU must be given the same right to prices or promotions as customers in the trader’s Member State;

– Any differentiation in price or sales conditions based on residence, nationality or place of establishment should be objectively justified (for instance, for reasons of legal compliance);

– There should be no discrimination based on the “nationality” of credit card or payment mean used.

However:

– There is no obligation on traders to deliver goods or services to customers in Member States where they do not ordinarily do so. Therefore, although a customer in the EU must be allowed to buy a particular product on non-discriminatory terms, the customer may have to take care of delivery itself;

– Traders are allowed to offer different prices or sales conditions in different Member States (the provisions of the Geo-blocking Regulation are focused on giving customers the possibility to benefit from better prices or conditions in other EU Member States if they so choose and does not seek to enforce the harmonisation of prices in the EU);

– Some of the regulation’s provisions do not apply to copyright protected works (such as music, computer games and software) and a series of services, including audiovisual, financial, healthcare (and pharmaceutical products), social and transport services, are totally excluded from the regulation’s scope (these exemptions will be reviewed in 2020).

Enforcement in Luxembourg

The Luxembourg Parliament is currently considering a draft piece of legislation on the enforcement of the provisions of the Geo-blocking Regulation in Luxembourg. Indeed, the Geo-blocking Regulation requires Member States to adopt effective measures in their national law which apply whenever the provisions are infringed.

The draft bill proposes an enforcement framework which mirrors the one applicable for certain unfair trading practices and consumer law. Parties may bring an action for injunction against traders established in Luxembourg before a district court which is empowered to order the cessation of any unlawful act(s) using an accelerated procedure. If the injunction is not respected, the court may impose a fine of up to EUR 120 000. Parties able to bring such actions include not only natural and legal persons but also interested professional groups (groupements professionnels) and consumer associations as well as the Minister for the Protection of Consumers.

In addition, the draft bill suggests that the Centre européen des consommateurs GIE Luxembourg be conferred the responsibility for providing advice and information to consumers in Luxembourg in disputes with companies.

The draft bill has already been commented upon by the Luxembourg Chamber of Commerce (Chambre de commerce), the Luxembourg Consumer Association (ULC) and the Competition Council (Conseil de la concurrence) and therefore is expected to be adopted in the next few months (Parliament File N° 7366: « Projet de loi relatif à certaines modalités d'application et à la sanction du règlement (UE) 2018/302 du Parlement européen et du Conseil du 28 février 2018 visant à contrer le blocage géographique injustifié et d'autres formes de discrimination fondée sur la nationalité, le lieu de résidence ou le lieu d'établissement des clients dans le marché intérieur, et modifiant les règlements (CE) no 2006/2004 et (UE) 2017/2394 et la directive 2009/22/CE »).

As a result of the Geo-blocking Regulation and the future national law, traders of most goods and services must already ensure that the availability, pricing and sales conditions of what they offer do not discriminate without objective justification due to the country of residence or establishment of customers or their means of payment. The precise risks or opportunities presented by the Geo-blocking Regulation in Luxembourg will soon be determined by national legislation.

Zie ook : Arendt ( Mr. Philippe-Emmanuel Partsch ,  Mr. Thomas Evans )

[+ http://www.arendt.com]