Geoblocking and Price Discrimination

Within a single currency is deemed unethical to charge different prices for a single product if this difference is the result of a person’s race or nationality. Trading online means that you can offer prices in different currencies. If you are trading in Europe, European law dictates that you cannot discriminate on terms of nationality. The question is how does this apply to ecommerce and in particular geoblocking? Geoblocking is where you use a persons IP to restrict access to certain content.

How Does It Work?

Basically if you go into a shop anywhere in Europe you cannot be asked to produce ID to indicate your country of origin. Furthermore this ID cannot be used to allow a retailer to charge you more if you are from a certain country. This basically means that in theory ecommerce stores cannot charge an individual in a certain country one price and an individual in another a different price. All individuals have the right to access all prices without restriction. Recent examples of this type of price discrimination are Disneyland Paris and car rental companies charging higher prices based on solely a consumer’s location. In both instances the European Commission deemed this activity unlawful under there services directive.

UK Position on Geoblocking

The UK government has recently released a paper detailing its stance on Geoblocking. It has decided that it wants to take action on unjustified geoblocking and price discrimination based on a consumer’s geographic location. According to the Office of Fair Trading personalised pricing within a competitive market might have long term impacts on consumer trust.

Government Proposals

The UK wants to see a ban on types of geoblocking that can be defined by the EU Commission as ‘being blocked upfront from accessing a specific web page or content on a web page’. The Government also believes that a person’s location alone should not be used as grounds for charging a different price or preventing an online purchase.

What Does This Mean?

What this means is that soon a person’s IP (Internet Protocol) cannot be used to restrict their access to certain website pages and that if there are multiple prices in multiple currencies the consumer has the right to view all these prices. Effectively if the new proposal becomes legislation you can have a ‘.co.uk’ in English and a ‘fr’ site in French. With different packages and pricings on each. However under the legislation you will not be able block and restrict access to each of these sites based on an individuals location. The government proposal is about promoting choice and empowering consumers. There is more in this document UK Government Response to EU Public Consultation on Tackling Unjustified Geo-blocking. If this draft proposal eventually becomes legislation it could have wide ranging impacts on ecommerce. Particularly on those stores that set their prices by country whilst enforcing a restrictive geoblocking policy.