02 June 2017

Uncertain risks and benefits of lifting Geo-blocking restrictions in the EU

Uncertainty about price discrimination and real benefits for consumers creates concerns over lifting geo-blocking restrictions.

Bruegel recently hosted an event on Geo-blocking in the Digital Single Market, which generated an interesting discussion on the topic. EYIF was present to fully comprehend the developments regarding geo-blocking practices.

Geo-blocking is a discriminatory practice that is wide-spread in EU. It prevents online customers from accessing and purchasing products or services from a website based in another member state.

Bertin Martens, working for the European Commission Joint Research Center analyzed how legal and commercial obstacles still hinder cross-border trade, although the welfare impact is still ambiguous.

The 2016 European Commission regulatory proposal for lifting geo-blocking restrictions in physical goods and non-copyrighted services sparked some debate especially for the sectors left out such as digital media which is mostly copyrighted.  The event focused around two main panels addressing both non- audiovisual media services and audio-visual services.

The average consumer might not be familiar with the term geo-blocking, however at some point most people will experience these restrictions in different forms. The discrimination may be encountered in terms of cross-border access, which refers to the consumer’s ability to buy a product in another country, cross-border availability, which per se does not have a big impact since most products are available in different countries and cross-border price discrimination which causes consumers to encounter different prices according to the country income and price elasticity (popularity of the product).

What are the impacts or at least the theoretical impacts of lifting geo-blocking restrictions?

Perspectives appeared very diverse between the MEP Roza von Thun and EC Representatives Bertin Martens and Werner Stengg and the Representatives from the business sector (Marine Elgrichi, Head of Public Policy Europe, Spotify and Fabian Paagman EIBF co-President).

Ms. Elgrichi presented Spotify’s successes in removing barriers for consumers in terms of catalogue availability, full portability and price barriers and she underlined the difficulties for the music industry of dealing with the numerous Pan-European and national labels and publishers that detain the copyrights. She believes that lifting the barriers would cause further uncertainty and disruptions in relation to licensing frameworks and cause a price increase.

Mr. Paagman firmly suggested that the e-book market is not ready for this change at this stage. The investments needed to implement the new digital single market and the technicalities related to the lifting of geo-blocking would cause new booksellers to pull back.

MEP Von Thun believed that the digital market in the EU should not be so fragmented and that competition would help boost the market development and growth, opening up more possibilities for both consumers and providers. Companies should not fear change and should adapt to the harmonization of the digital single market and embrace the barrier lifting.