An end to geoblocking? Europe presents border-busting strategy for online world

European Commission launches new investigation into barriers to online trade and plan to update everything from copyright to cloud privacy rules.
Written by Liam Tung, Contributing Writer

In pursuit of Europe's single digital economy, the European Commission today confirmed it will launch an investigation that aims to root out artificial barriers blocking online retail between countries.

The EC's antitrust regulator said it will proceed with an investigation into restrictions, such as geoblocking, that prevent consumers in the European Union from buying goods in other EU countries.

EC competition boss Margrethe Vestager announced in March she would get to the bottom of whether companies were using distribution contracts to restrict cross-border sales within the EU and limit competition.

"European citizens face too many barriers to accessing goods and services online across borders. Some of these barriers are put in place by companies themselves," said Vestager.

She said her aim was to "determine how widespread these barriers are and what effects they have on competition and consumers".

"If they are anti-competitive, we will not hesitate to take enforcement action under EU antitrust rules," she added.

The formal launch of the investigation means a range of businesses will begin to receive questions from the EC and may be compelled to answer them under EU antitrust rules, under penalty of a fine for supplying false information.

Targets could include manufacturers, wholesalers, and online retailers. The investigation will initially focus on all EU member states with a focus on popular goods and services sold on e-commerce sites, such as electronics, clothing, shoes, and digital content. The EC hopes its questions will put it in a better position to enforce EU competition laws against restrictive business practices and abuse of dominant market positions.

The chief statistic motivating the inquiry is that while 50 percent of Europeans have shopped online, only 15 percent of goods or services have made online purchases from a provider in another country.

The commission will publish a preliminary report in mid-2016 with a view to publishing a final report, following a public consultation, in the first quarter of 2017.

The investigation will go hand in hand with Europe's new agreement to adopt the digital single market strategy, also announced today.

The investigation, in conjunction with the new strategy, may draw in everyone from smaller online firms to Silicon Valley bigwigs, including Amazon, eBay, Google, Netflix, and Uber, the Financial Times said last week after reviewing a draft proposal.

The EC has laid out 16 key initiatives due for delivery by the end of 2016 to get the ball rolling on Europe's elusive digital single market.

Among them, the EC wants to end "unjustified geoblocking" and harmonise contracts and consumer protection rules. It will also attempt to tackle complaints about high parcel-delivery costs in Europe.

In addition, it plans on updating European copyright laws to support a single digital market and wants to support licensing that would allow a film available on-demand in one EU country to be available in another. The update follows rising tensions between European publishers and Google News, which last week saw the search company launch funding and an initiative to support publishers developing new products.

Other key areas for the EC probe include reducing the VAT burden for cross-border trade and adjusting a range of other past-VAT rules that don't line up with the new agenda.

Regulators will look into telecoms rules regarding spectrum, investment, and regulatory governance, however roaming charges and net neutrality - currently being fought over between the Council of the European Union and the European Parliament - will not.

Privacy and security will be covered with a planned review of Europe's e-Privacy Directive, and a private-public partnership to address Europe's "fragmented" cybersecurity sector.

Cloud vendors will also be impacted by the new EC agenda, with Europe looking to establish new certification that assures Europeans secure cloud services.

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