Regulating ‘Geo-blocking‘ in Europe – a most Un-European thing?

Author

Bojana Vitanova[1]

 

 

  1. Introduction

It is 2018 and crossing physical borders in Europe nowadays is easier than crossing them in the digital world.

As Reiner Schulze observes, ‘European solutions, which consider the conditions and potential of the Digital Internal Market (or as the European Commission refers to it – the ‘Digital Internal Market’), are needed as contracting through new technologies is of key importance’.[2]

Geo-blocking exemplifies this point well. Consumer and businesses alike (especially content providers) feel the consequences of licence policy of rights holders daily. There are two main reasons why it occurs – the principle of territoriality in copyright law, and predominant business models of right holders using the fragmentation of the digital single market for higher profits.

My argument moves in three parts. It will first elaborate further on the phenomenon of geo-blocking and its impact on the European (allegedly) single market. It will then describe how it has been tackled so far by the Commission and the European Court of Justice, and will paint the different dimensions of geo-blocking.

Finally, I will evaluate current legislative measures which are part of the Digital Single Market agenda. I will demonstrate that they are not only limited in scope, but also approach the problem from the wrong angle – they tackle the contract law sphere. The correct response instead would be a comprehensive copyright reform, for which Article 118 TFEU grants the competence.

 

  1. Geo-blocking: What is it, why does it occur, and how does it affect the (Digital) Single Market?

What is it?  Geo-blocking, a form of technological protection measure where access to Internet content is restricted based upon the user’s geographical location.

2.1 A possible taxonomy of geo-blocking measures includes the following examples:[3]

  • Re-routing to a website targeting the home country of the visitor without the possibility to overrule.
  • Refusing access to a website or an offer based on customers’ IP address, or based on their nationality or residence.
  • Terminating the transaction based on customers’ disclosure of their residence.
  • Refusing foreign credit cards or other foreign means of payment.
  • Linking access to, purchase or download of digital goods or services to postal address.
  • Application of disproportionality higher shipping costs based on the location of the customer.
  • Providing a format for address, postal codes or phone etc. which is specific to certain countries.

2.2 Why does it happen?

It occurs due to copyright laws and business strategy. Patents, trademarks, copyrights and other intellectual property (IP) rights are “territorial in nature”. No intangible subject matter is protected by one uniform right applying world-wide. Instead, technical inventions, works of literature and arts, signs, etc. are subject to a bundle of possibly more than 150 territorial rights.[4] In the European Union, courts observe 28 IP regimes.

Right holders thus have copyright in each Member State according to its IP regime, and they conclude license agreements granting content providers a right to stream or offer that content for sale (download) in a particular Member State. They also include geo-blocking clauses in their licensing agreements, requiring content providers to block users outside of the territory of the state in question.

This is a tool to prevent consumers from infringing copyright, but also a business strategy – it allows right holders to impose different prices for the same content across the continent. There are vastly different purchasing abilities across Europe. Territoriality is also used to ensure the appropriate remuneration for advertising.[5] In an integrated market increased competition would mean that prices would fall.

These exclusive mono-territorial licensing agreements are hence at odds with competition law (absolute exclusivity is prohibited by competition law per se[6]). At the same time geo-blocking hampers the functioning of the Digital Single Market (especially the freedom to provide and receive services).

 

2.3 The different Treaty dimensions of geo-blocking

It is vital to take note of the different Treaty dimensions of geo-blocking, to demarcate where the European Contract Law part of the issue begins and ends.

2.3.1. Copyright

As already mentioned above, geo-blocking is possible due to the content of copyright laws in the first place. The overarching goal of copyright law is to incentivize persons both natural and corporate to invest in the creation and distribution of copyrighted expression.[7] It seeks to accommodate clashing objectives. That is its very nature. On the one hand, it needs to provide sufficient protection to authors and right holders and on the other hand, it needs to observe the needs of the public, which are concerned with access to content.[8] Copyright law clearly pursues social values, which are sometimes at odds with a free market.

It has two features, likely to clash with other EU Treaty rules – its territoriality potentially conflicts with the free movement of goods and services, and its exclusivity possibly impairs the rules safeguarding the freedom of competition. [9]

As Agnes Lucas-Schlötter observes, both issues have been addressed in the 1970-80s by the ECJ. It first decided that copyright falls within the scope of ‘industrial and commercial property’, whose protection may justify an exception to the free flow of goods and services (Art. 36 TFEU).[10]

Some positive integration followed as well, after the introduction of the Single European Act in 1987. It provided the impetus for further evolution of copyright law within the EU.[11]

Ultimately, post 2004, can be argued that there are today more common features than differences in the copyright legislation of all Member states of the EU. However, these common principles do not yet constitute a genuine European copyright law.[12] Despite this gradual process of approximation problems persist.

Protectability (social and cultural dimension) vs Access (free trade dimension)

New business models and social changes (global marketplace) put pressure even on this ‘partially approximated’ European copyright law. There is a gap between the global reach of markets and the local reach of European copyright laws.

They seek to incentivize creative activity, but instead limit access to knowledge and represses competition.[13]

The clash also plays out in the differences between different jurisdictions. There are the rather utilitarian common law systems (copyright laws in those countries are perceived as more business friendly) and the ‘romantic’ civilian systems, especially the French with their droit d’auteur.[14]

2.3.2 Free movement rules

Geo-blocking restrictions are also likely to violate the free movement rules, subject to the party in breach of Treaty rules being able to provide sufficient policy arguments that make geo-blocking a proportionate and reasonable response to a policy issue (e.g. these considerations can be subsumed under the justification provision of Art. 36 TFEU, copyright laws fit under ‘commercial and industrial property’). It should be borne in mind that in the case of geo-blocking no state measures are concerned.

However, free movement rules have been applied to the action of private parties in certain instances in the context of free movement of persons and services.

Firstly, this is the case where the private parties in question are, de facto, regulating the market and there is no other way for market access to occur than by compliance with the action of private parties.[15]

The above principle was then extended to unilateral practices of private parties in Angonese[16].

Stephen Weatherill sums up the law as follows: ‘Private practices that interfere with cross-border trade in goods have always been treated as the preserve of the Treaty rules on competition law, in contrast to private practices affecting people and services, which are assessed from the perspective of both competition law and free movement law’.[17] Still, it is important to note that the above mentioned rulings were all made in the context of employment relationships. There are no Court decisions in this context so far, but it is unlikely it should transplant this line of reasoning to the geo-blocking context, which can hardly be said to concern a relationship of strong dependency and instead only concerns economic interests.[18] Using this line of argument, it seems possible to explain why the Court is sometimes ready to stretch the personal scope of the four freedoms and sometimes not. Of course, the Court itself never openly explains why some private practices that interfere with cross-border trade have been assessed from the perspective of both competition and free movement law, while some concerning goods are not.

2.3.3. Competition law

The rules of EU competition law found in Articles 101 and 102 TFEU have been applied to address a variety of forms of geo-blocking on the grounds that it can damage the integration of the internal market.

Vertical agreements (Producer-Distributor Agreements):

Article 101 TFEU outlaws anti-competitive collusions between undertakings. This is considered one of the most dangerous anti-competitive practices. It has been clarified by the ECJ that the provision also covers vertical agreements as possible forms of collusion in its decision Consten and Grundig v Commission.[19] It is considered that while vertical agreements between a producer (hereinafter P) and a distributor (hereinafter D) may increase efficiency through a division of labour, they may also harm the consumer by restricting price competition. In short, such vertical agreements require examination: they cannot be considered to be automatically lawful or automatically unlawful.[20]

Precisely this aspect of P to D agreements is covered by geo-blocking. Requiring geo-blocking measures makes it harder for the distributor to export or for a would be buyer to purchase from distributors situated in another Member State.

Regulation 330/2010 on the application of Article 101 (3) of the TFEU (also known as the Block Exemption Regulation) is also designed to facilitate business planning by setting out that agreements that comply with certain parameters will not face competition law scrutiny.[21] The Block Exemption Regulation applies on condition that the market share held by the supplier does not exceed 30 % of the relevant market on which it sells the contract goods or services and the market share held by the buyer does not exceed 30 % of the relevant market on which it purchases the contract goods or services.[22] So, provided the vertical agreement which includes clauses that require geo-blocking falls below these market share thresholds, it benefits from the Block Exemption Regulation. However, this is not the full story. Certain restrictions are considered so harmful that they do not benefit from the Block Exemption even where the market share thresholds are exceeded. Of particular relevance to geo-blocking, the Regulation distinguishes between restrictions on active sales into a territory (which are generally permitted) and restrictions on passive sales (which are generally not permitted). The distinction between active and passive selling, though vital in principle, is not always clear-cut in practice. However, the Commission starts from the premise that selling goods on the internet is a passive sale, even if this means that the buyer is able to reach customers in other Member States.[23] The Vertical Guidelines also suggest that automatic re-routing of customers to another website or blocking a sale when a foreign credit card is issued are actions that would constitute prohibitions of passive sales.[24]

Therefore, geo-blocking which obstructs passive sales will often be vulnerable to challenge on the basis of competition law.

DG Competition antitrust investigations, in particular on pay TV-broadcast services – Case AT.40023 Cross-border access to pay-TV, 28 September 2016[25] clearly showed that competition law cannot provide a coherent or comprehensive answer.

While demonstrating that the Commission will take action against specific contractual clauses considered to restrict passive selling in relation to digital content, the acceptance of Paramount’s Commitments in that case needs to be viewed within the broader context that copyright remains a matter of national law and the Commission does not object to exclusive national licensing arrangements as such.[26]

The cross-border pay-TV investigation has confirmed that the Commission does not object to exclusive licensing arrangements per se. This follows from the Premier League/Murphy ruling by the ECJ back in 2011.[27]

Overall, EU Competition law favours cross-border sales both directly and indirectly.

Export bans (de-facto bans on internet sales):

Of key importance in the context of geo-blocking is Article 4 (b) of Regulation 330/2010, which provides that export bans are black-listed so that agreements which include this provision cannot benefit from the block exemption and only exceptional circumstances justify an export ban. The case law of the CJEU suggests that only exceptional circumstances will lead to a finding that an export ban does not infringe Article 101(1) TFEU or may benefit from an exemption under Article 101(3) TFEU.

The Court of Justice has held that a de facto ban on internet sales constitutes a restriction by object of Article 101(1) TFEU.

An issue that was recently settled in Coty Germany[28] is that a producer can block a retailer from making use of online marketplaces for distributing their goods. A contractual clause prohibiting use of third-party platforms to maintain the luxury image of those goods was not deemed to violate Treaty rules. This shows that the context is always relevant in a competition law analysis. Here, selective distribution was allowed in the context of luxury goods.

Portability of copyrighted works:

As regards agreements which concern licensed copyrighted works, the case law indicates that there may be instances where territorial segmentation in certain industries may be justifiable (Coditel v Ciné Vog Films[29]).

The leading case here is the Murphy case[30]. Here, the Football Association Premier League (FAPL) complained about publicans buying decoders in Greece and using these to show premier league football matches in British pubs, thereby avoiding Sky’s high fees for the same service sold to UK customers. In a nutshell the FAPL argued that allowing for the resale of the card decoders marketed in Greece would undermine the geographical exclusivity of its licenses and consequently the value of its rights. This would result in a race to the bottom whereby the broadcaster with the cheapest decoders could become the pan-European broadcaster, de facto, creating EU-wide license. The Court, however, found infringements of Articles 56 and 101 TFEU, confirming that agreements forbidding passive sales are restrictive of competition. At the same time this was pyrrhic victory for publicans since the Court concluded that the retransmission of the broadcast in the UK has a profit-making nature and amounted to a transmission to a new public, i.e. to a group of potential viewers that had not been taken in consideration when the right holders authorized the communication in Greece.      

So copyright law, not competition law, defeated the publican. This is also the exact constellation the Portability Regulation[31] is dealing with.

2.3.4. Other secondary legislation

It is important to view the Portability Regulation and the Regulation to end unjustified geo-blocking as part of a package of reforms and their success depends on these complementary proposals also being implemented. For instance the Proposal for a Regulation on cross-border parcel delivery[32] also helps cross-border purchases.

 

2.4.                How does it affect the Single Market?

The data:

  • There are 600 online services for music.
  • 3000 services in 2014 regarding TV catch up.[33]

Geo-blocking measures raise two kinds of obstacles to the formation of pan-European markets.

Limited cross-border portability – Consumers that lawfully subscribe in a certain Member State are unable to access it when moving (even temporarily) in another. This affects 5 million Europeans per day, short – term migrants and travellers (Plum Consulting, 2012).[34] As will be shown the Regulation on Portability tackles this situation.

Limited cross-border trade – On the other hand, geo-blocking can create trade barriers by restricting some EU consumers from accessing works that, instead, are available to other EU consumers or obliging them to access (and purchase) works just in their country of residence or location (at local prices and conditions). [35] Thus, online shopping is also at stake here. The Regulation to prevent unjustified geo-blocking addresses this aspect, although to a limited extent – it excludes audio-visual services from its scope.

A well-known example of such barriers is given by the impossibility for consumers in certain EU countries of subscribing to Netflix, an online movie service that has been available for years to consumers located in the UK and Ireland.

Affected are: Long term migrants – about 13 million Europeans; Potential demand for subscriptions based cross-border audio-visual services is in the area of 750 million to 1600 Million Euros per year; People with foreign language skills or interests – about 110 million Europeans;[36] Service providers (some might say, the right holders themselves) – they suffer foregone business opportunities.

 

  1. Regulating geo-blocking – dangers and benefits (pros and cons)

Against this background – is action on the part of the European Union really desirable and which aspects should be regulated.

3.1. Geo-blocking frustrates consumer expectations

The Internet carries with it a promise of borderless access. A phase which aptly describes the times we lives in is “All things, for all men, at all times”.

3.2. No genuine Digital Single Market argument

The market for digital content, by its very nature, should have no borders in Europe! As Giuseppe Mazziotti observes, territorial partition in Europe into national digital markets would not have been a major problem, if digital markets for copyright content had developed efficiently. Then every internet user would have had the possibility of accessing content and the related services under consumer-friendly conditions that would reflect local factors, from both economic and cultural perspectives. But as things now stand there is often no access to content.[37] Apple’s iTunes Music Store is one of the best examples to measure the cross-availability, sales and (different) prices of digital content. Evidence on the accessibility of content within Apple’s platform shows that, because of the geographical restrictions, less than a half of the all songs and music albums are available in all music stores. A study found that music availability is somewhere between 73 and 82 per cent of what could be in an “open” Digital Single Market. [38]

So, not only consumer protection issues (constitutionally entrenched in Art. 169 TFEU and Article 38 CFREU) but also the rights of long term migrants, making use of freedom for persons and of establishment (Articles 45 and 49 TFEU) are at stake.

3.3. Geo-blocking perpetuates digital piracy

Consumer willingness to engage in digital piracy results from a difference in the social stigma against theft of physical property versus the social stigma against theft of digital one. Intellectual property infringement is not considered so morally reprehensible. Tools such as VPN, which allow users to circumvent IP address location, have long existed.

3.4 Geo-blocking may also result in lost profits to right holders and licensees due to content inaccessibility in other jurisdictions

The piracy incentive argument made above also means that an open market might actually prevent losses for right holders. Licensees are more aware of this argument, as they are the ones forced to limit access, and are thus limiting their business opportunities.

3.5. Geo-blocking discriminates against immigrants and linguistic minorities

There are other concerns apart from the impact on the internal market and giving a full picture is far more complex. There are cultural minorities with rights to access online content in their native language (see i.a. Art. 11 (1) CFREU, freedom to receive and impart information regardless of frontiers, Art. 14 (1) CFREU, right to education).

Language minorities amount to 55 million people or roughly 10 per cent of the EU population. 14 per cent are national minorities. E.g. 20 per cent of people in Wales speak Welsh. The Åland Islands or Åland is an autonomous and the only monolingually Swedish-speaking region in Finland. About 30 000 people reside there.[39] They have little knowledge of Finnish. Large Hungarian minorities reside in Romania, Slovakia and Croatia. Language borders are not identical to national borders.

Opportunities for multicultural diversity, and the protection of those minorities thus seem to all speak against geo-blocking.

What is more, foreign media present a different point of view on events and developments in societies. This boosts critical thinking and enriches us with many perspectives, and is also related to the right to information under Art. 11 (1) CFREU. Online content being available in multiple EU countries and in multiple languages boosts opportunities to learn foreign languages. So, there is a particular need to lift geo-blocking on content with a public service flavour and limited commercial value such as news. This might create wider democratic, social and cultural value within the EU. Art. 2 TEU, after all, reads:

‘The European Union is founded on the values of … including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism … prevail.’[40]

 

According to some, territorial restrictions do raise barriers for trade, but might nevertheless be justified on objective grounds.

Militating objectives are contract freedom[41], the freedom to conduct a business, and the right to property (Articles 16, 17 CFREU). As things stand, forcing copyright holders to omit geo-blocking clauses in their licencing agreements would erode freedom of contract, which is a constitutional principle enshrined in the Charter of Fundamental Rights of the EU.

Another strong argument related to contract freedom is protecting advertising and distribution opportunities in a continent where purchasing abilities are enormously varied. Giuseppe Maziotti wonders: “If access to films and TV series were provided on a pan-European basis, with a subsequent removal of all forms of geo-blocking in Europe, would Romanian or Bulgarian viewers be given an incentive to subscribe to lawful online content services?[42] Would they be willing to pay higher fees, which might be closer to the price that German or Scandinavian consumers currently pay…?”

Some also point towards the goal of protecting the fragile European creative industry. In the film sector territoriality is a key factor for commercial exploitation. It might be necessary to protect sustainability of content production and the various forms of adaptation and versioning of creative content to local and culturally diverse audience. [43]

For example, Scandinavian European studios point out that their usual producing practice is receiving funds from producers in major countries like Germany in exchange for granting them exclusive rights to distribute the content in German.[44] This is a carefully thought out business model. They feel that this model actually safeguards linguistic diversity in film Europe and makes it possible that films in Norwegian or Swedish are made in the first place. So local films do cross borders, but under certain conditions. Market integration should occur without depriving the whole creative industry of the support that their creative endeavour and professional content creations deserve (cf. Article 167 TFEU). This means that, for the sake of cultural diversity, an integration of markets for creative content should never become a reality in Europe.

The contested issue, then is: How do we weigh contract freedom and freedom to conduct a business against the consumer protection and multi-cultural diversity, as well as the four freedoms? The traditional narrative in EU law has always been one giving precedence to the latter.

What is more, the “protecting cultural and linguistic diversity” argument seems to pull in two opposite directions and is perhaps counter-intuitive when used to protect the business practices of large film studios. After all, it is Hollywood studios which dominate the industry and profit most from geo-blocking.

This leads us to the DSM Agenda 6th May 2015.

More appropriately, the territoriality of copyright law is the subject of this proposed reform. Its aim is to create an EU-wide set of copyright principles as part of the Commission’s Digital Single Market (DSM) policy objective.

The reviewed EU copyright rules consist of a Directive on copyright in the Digital Single Market. It also contains a Directive and a Regulation to implement the Marrakesh treaty in EU law.[45] However, the Commission faced intense opposition and was forced to hold back with copyright reforms.

With this in mind, I will go on to evaluate Portability Regulation[46] and the Regulation to end unjustified geo-blocking.[47] The new rules entered into force on 22 March 2018 and will apply from 3rd December 2018.[48]

 

  1. The Portability Regulation and the General Geo-Blocking Regulation – a small, first step towards a Digital Single Market

 

4.1 Portability Regulation

The Portability Regulation, which is based on Article 114 TFEU, contains eight articles. What it does is to tackle content portability for short-term migrants and travelers, not access to digital content for long-term migrants and linguistic minorities. It achieves this via contract law and a legal fiction. The provision of an online content service to a subscriber who is temporarily present in a Member State is deemed to occur solely in the subscriber’s Member State of residence (Article 4).

The Regulation does not address free-to-view services, which are not subject to residency verification.

It is a very small step towards genuine content portability and free access to digital content across borders.

Generally speaking, the proposed Regulation obliges a provider of an online content service to enable a subscriber who is temporarily present in a Member State to access and use the online content service in the same way as made possible in the home Member State.[49] Providers have to offer subscribers access to the same content on the same range and number of devices, for the same number of users and with the same range of functionalities as those offered in their Member State of residence.[50] The only exception relates to the quality of the service offered.[51]

The Regulation establishes that the provision, the access to and the use of such online content service should be deemed to occur in the Member State of the subscriber’s residence.[52]

According the Commission, the proposal envisages above all “video-on-demand platforms (Netflix, HBO Go, Amazon Prime, Mubi, Chili TV), online TV services (Viasat’s Viaplay, Sky’s Now TV, Voyo), music streaming services (Spotify, Deezer, Google Music).”[53]

The Regulation also covers any other service the main feature of which is the provision of access to and use of works, other protected subject matter or transmissions of broadcasting organisations, whether in a linear or an on-demand manner, which is provided on agreed terms either against payment or money or without payment or money yet after verification of the subscriber’s residence.[54] An example could be a free YouTube-user profile upon completion of a registration form requiring the user to provide details about his location.

Free-to-view services not subject to residency verification would not be covered; By way of example, the BBC iPlayer produces the “Outside UK” error message when a user tries to access the service from outside the UK. As the BBC states “because of the way BBC iPlayer is funded, only users with registered UK IP addresses can access our programmes”.

Some dimensions of this Regulation are yet unclear:

  • What does temporarily present mean? 1 week or 1 month or 6 weeks? A broad interpretation seems appropriate – after all Erasmus students, whose study visits take between 6 and 8 months, are also present in a host state on a temporary basis.
  • How is it going to be enforced? The Regulation would not impose specific enforcement obligations on Member States’ authorities in this regard. But will Sky as a content provider ask for a certificate of residence, when you pay them using a credit card or using a PayPal account, registered in a particular country. But this does not mean you are resident there. Content providers really have no incentive to conduct further checks which could only lead to them losing revenue.
  • How is habitual residence going to be verified?

The Commission Proposal in Recital 17 indicated that this verification of residency may be by means of “IP address or other means of authentication”.[55] The counter-argument to this may be that this IP check does not verify the individual’s residence, only their presence, and therefore does not constitute a residence check. This would then mean that Recital 17 of the proposed Regulation should be changed.[56]

These criticisms are, however, technical in nature. On the one hand, the instrument is a Regulation, which has immediate effects, is legally binding and directly applicable (Art. 288 II TFEU). On the other hand, the real issue is that it constitutes a narrow, piecemeal approach. It does not tackle question of language minorities, or long-term migrants. And while the fact that free-to-view services not subject to residency verification are not covered, is probably due to proportionality concerns, it does not address the need for information sources to be available internationally. Thus, educational and informational needs are not adequately met.

The Regulation addresses the contractual relationship between the consumer and the content provider, using a legal fiction (Art. 4). At the same time, it must be admitted that these issues cannot be tackled appropriately within the contract law acquis at all. A reform of the copyright framework within the EU would be the appropriate approach.

4.2. The General Geo-blocking Regulation or ‘Regulation to end unjustified geo-blocking’ – addressing online shopping[57]

Commission survey shows that in 2015, less than 40% of websites allowed cross-border customers to complete a purchase.[58]

The 2018 Regulation to end unjustified geo-blocking is meant to provide more opportunities for customers not being able to buy products and services from traders located in a different Member State or those being discriminated in accessing the best prices or sales conditions compared to nationals or residents of that Member State.[59] It thus addresses the aspect of limited cross-border trade and limited market access mentioned above.

4.2.1. Scope

The Regulation prevents discrimination for consumers and companies on access to prices, sales or payment conditions when buying products and services in another EU country.

However, it excludes access to audio-visual content available in another Member State from its scope.[60] Copyrighted content is also excluded from the scope of the Regulation. This seems like too much of a hot issue to handle. Also, liberal side of the political spectrum (an alliance between S&D and EPP) has prevailed during negotiations. Notably, it was felt that a separate copyright reform is simultaneously ongoing.[61]

4.2.2 Evaluating the Regulation

When using an online interface, traders shall not, through the use of technological measures or otherwise, block or limit customers’ access to that interface for reasons related to the nationality, place of residence or place of establishment of the customer. Nor should they redirect customers to a version of their interface that is different, by virtue of its layout, use of language other characteristics that make it specific to customers with a particular nationality, place of residence or establishment, from the one which the customer originally wanted to access.[62] Such redirection can only take place with the customer’s explicit consent; in that case, the original version of the interface has to remain easily accessible for that customer as well.[63]

Similarly, the trader cannot apply different conditions of payment where payments are made by means of electronic transfer within the same payment brand.[64]

In addition, the Regulation also prohibits traders to apply different general conditions of access to their goods or services, for reasons related to the nationality or place of residence or establishment of the customer.[65] Article 4 (1) identifies three scenarios where geo-blocking takes the form of discrimination: (a) where the trader sells goods to a buyer based in another Member State and no cross-border delivery is envisaged; (b) where the trader sells electronically supplied services; (c) where the trader provides services that are supplied to the customer at a place where the trader operates. In those circumstances, traders cannot justify a refusal to trade with a customer on the same terms and conditions as the ones applicable to those having the nationality of or residing in the same Member State.

Article 5 forbids traders from discrimination based on the method of payment. As noted above, any agreement between a manufacturer and a distributor that imposes such a restriction would also be prohibited by Article 101 TFEU.

In sum, the prohibitions in Articles 3, 4 and 5 prohibit the kind of unilateral conduct which is already forbidden when this kind of conduct is part of an agreement between two undertakings, or when the conduct is carried out unilaterally by a dominant undertaking. Insofar as this fills a regulatory gap, then these provisions are to be welcomed. They reflect, but also supplement, the existing treatment of restrictions on active and passive sales under competition law.[66]

Just like the Portability regulation, this one imposes a clear set of prohibitions on content providers (traders) in relation to consumers (subscribers) and limits contractual freedom.

The general Geo-Blocking regulation is exposed to the same set of criticisms levelled above – it is too narrow and enforceability issues remain open. Above all, it does not tackle one of the most important aspects – access to audio-visual content.

Perhaps promising is the willingness to review after two years, then every five years, which Art. 9 (1) stipulates.

Overall, the approach in both regulations is cautious. We are a long way from an integrated Digital Single Market, even only as far as contractual aspects are concerned. At the same time, the Commission approach is decisive – using regulations instead of directives.

  1. Conclusions – using the wrong ailment to merely suppress the illness

What the EU is currently doing is merely to alleviate the problem, it does not go to the core of it. It uses the wrong medicine merely to suppress the problem. The answer is not competition law either, but rather a comprehensive and coherent copyright reform.

Two questions have been tackled:

First: Is geo-blocking really such a bad thing? Weigh the negatives against the benefits? It has been demonstrated that there cannot be one black or white response – the treatment of geo-blocking is a value weighing exercise! What is required is a comprehensive, evidence based assessment of the costs and benefits involved.

The Internet is defined by the phrase: All things, all men, at all times. The very idea that we should stop access or copying, be it on the basis of legal restrictions, has become questionable.

At the same time in this field culture is just as important as the market. And the true value of art is seldom what someone is willing to pay for it. Geo-blocking for copyright reasons is supposed to promote science and the arts. However, let us not forget, that prohibiting geo-blocking does not mean automatic free access to everything and for all. It far more often means accessibility at a reasonable price.

Thus: Despite legitimate concerns for the current financing and distribution models of the fragile European creative industry, the EC decision to tackle geo-blocking is justified. The very nature and purpose of the new digital environment is to deliver digital-content across borders.

Second: If yes, what sort of action is necessary? Further integration, whatever form it takes requires legislators first to take a clear stand on the direction to be followed.[67] Different paths might be legitimate, e.g. regulatory vs market-oriented approaches. But the EU claims to aim for an integrated Digital Single Market, but really takes a conservative approach. This is quite hypocritical.

The mechanism of a legal fiction in the contract law acquis is the wrong response – it is a piecemeal approach, and the wrong sort of medicine which merely suppresses the illness, without going to its root.

A comprehensive reform of copyright, through a regulation based on Artitcle 118 TFEU, would be the most appropriate approach, even though it is one which disrupts the carefully crafted business models of the fragile European creative industry. The arguments against geo-blocking made on their behalf are truly legitimate.

A key issue for policy-makers to address is how to mitigate the hindrance to the internal market caused by territorial protection of copyright. This can only be done by tackling copyright as such, not to pretend that a solution for the problem can be found in the contract law acquis.

It is embarrassing how modest the current measures are. They do not correspond to what the Digital Single Market, or as a matter of fact, what true cultural integration requires. Those familiar with the Services Directive[68] might notice that there is not much more in the Portability Regulation than there already was in the Directive.

Not surprisingly, it also has a similar background story. The European Commission envisaged a liberalized market in services free of protectionist national practices but the concerns of the European Parliament led to a watered down version of the directive.[69] The Commission’s proposal was criticized due to the intended degree of liberalization. This criticism derived from ‘social dumping’ concerns. After the reaction of the European Parliament to the Commission’s proposal, a much more diluted version of the original proposal was finally adopted.

Similarly, the Geo-blocking proposals from 2015 and 2016 respectively faced hurdles both in Parliament and in the Commission itself. Firstly, the Commission internal process of initiating legislation itself has inherent constraints. Different DGs address separate areas of the law and draft proposals. What is more, it seems that the current Commissioner on the Digital Single Market is young and inexperienced and seems to carry less weight than the previous one – Günther Öttinger. She was also appointed mid-term.[70]

Majorities within Parliament’s large parties are also difficult to achieve, i.a. due to French EPP members’ insistence on keeping the status quo. Traditionally, French law favours creators – it is no accident it is called ‘droit d’auteur’.

Overall, both institutional make-up and lack of political unity lead to a stalemate. This also demonstrates that the debate about the correct approach to regulating new technology ultimately hinges on policy issues and remains a question of social construction.

[1] Bojana Vitanova, Diplomjuristin, MJur (Oxon), DPhil Student in Law, Brasenose College, Oxford University. Opinions and views expressed are those of the author. I thank my supervisor, Professor Stephen Weatherill, for his support and comments.

[2] Reiner Schulze, Dirk Staudenmayer, “Digital Revolution – Challenges for Contract Law”, in Schulze/Staudenmeyr (eds) Digital Revolution: Challenges for Contract Law in practice, (Nomos, Hart, 2016) 21, 22.

[3] See Analysis of part of the public consultation on geo-blocking, A study prepared for the European Commission, DG Communications Networks by College of Europe, at p. 4, available under <https://ec.europa.eu/digital-single-market/en/news/analysis-part-public-consultation-geo-blocking>, last accessed on 15 December 2017.

[4] Alexander Peukert, ‘Territoriality and Extraterritoriality in IP Law’ in: Günther Handl, Joachim Zekoll & Peer Zumbansen (eds), ‘Beyond Territoriality: Transnational Legal Authority in an Age of Globalization’, Queen Mary Studies in International Law, (Brill Academic Publishing, 2012), 189-228.

[5] Giuseppe Maziotti, ’Is geo-blocking a real cause for concern in Europe?’, European Intellectual Property Review (EIPR, Sweet & Maxwell 2016).

[6] The ECJ has found in judgment of 4 October 2011, Football Association Premier League and Others (C‑403/08 and C‑429/08, EU:C:2011:631), that national restrictions on the provision of services are not justified by the protection of intellectual property and infringe Art. 101 TFEU.

[7] Copyright, Creativity and Human Rights, <https://www.law.ox.ac.uk/events/copyright-creativity-and-human-rights> last accessed on 6 February 2018.

[8] Irini Stamatoudi, Paul Terromans, ‘Introduction’ in Irini Stamatoudi/Paul Torremans (eds), EU Copyright Law, A commentary (Edward Elgar, 2014), 1.

[9] Agnes Lucas-Schloetter, ‘Is there a concept of European Copyright Law? History, evolution, policies and politics and the acquis communautaire’ in Irini Stamatoudi/Paul Torremans (eds), EU Copyright Law, A commentary (Edward Elgar, 2014), 7,8.

[10] Judgment of 8 June 1971, Deutsche Grammophon Gesellschaft (78/70, EU:C:1971:59), the Court only expressed the ‘the assumption’ that related rights may fall under Article 36 TFEU.

[11] Ibid, ft.11, at p. 10 and 11: The first Directive in the field of copyright, Directive 91/250/EEC on computer programs, (1991) OJ/L 122, p 42 – 46, was adopted in May 1991. It has now been repealed by 2009/24/EC of the European Parliament and of the Council of 23 April 2009, (2009) OJ/L 111/6. Further harmonizing measures included Directive 92/92/100/EC of 19 November 1992 on lending and rental rights, replaced by Directive 2006/115/EC of December 2006, (2006) OJ / L 376, p. 28–35, Directive 93/83/EEC of 27 September 1993 on cable and satellite, (1993) OJ/ L 248, p. 15–21, Directive 93/98/EEC of 29 October 1993 on the term of protection, (1993) OJ/L 290 , p 9 – 13 , replaced by Directive 2011/77 if 27 September 2011, Directive 2001/84/EC of 27 September 2001 on the resale right, (2011) OJ/ L 265, p. 1–5 . Most of the measures were reactions to ECJ decisions, which found restrictions on the free movement of goods and services to be justified by copyright laws. They were intended to support the creation of an integrated internal market. Their aim was never to achieve a fully harmonized EU copyright law.

[12] Ibid, ft.11, at p. 15.

[13] Prof. Graeme Dinwoodie, Bucerius IP Conference 2012, <https://www.youtube.com/watch?v=pzinX6MQbyQ> last accessed on 3 February 2018.

[14] Compare the stance of Constance Le Grip, MEP from France on the French position , EPP, EU copyright rules: Is it time for a revolution?, available under: <https://www.youtube.com/watch?v=ws9irVN2ya8&t=491s> last accessed on 06 February 2016.

[15] This is the case especially in the context of football associations, which de facto control access to the market. C-415/93, Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman [1995] ECR I-04921. In that case the ECJ ruled on the direct applicability of what is now Article 45 TFEU.

[16] C-281/98, Roman Angonese v Cassa di Risparmio di Bolzano S.p.A. (2000), ECR I-04139, paras 32 – 34; More recently, in C-414/16, Vera Eggenberger (2018)
ECLI:EU:C:2018:257, the Court provided a constitutional interpretation of Directive 2000/78 and insisted that EU non-discrimination law codifies a horizontally directly effective constitutional general principle of non-discrimination law. See: Ronan McCrea, Salvation outside the Church?, available under: < http://eulawanalysis.blogspot.co.uk/2018/04/salvation-outside-church-ecj-rules-on.html > last accessed on 26.04.2018.

[17] Stephen Weatherill, Contractual Autonomy and National Contract Law in the Internal Market in: Contract Law of the Internal Market (Intersentia 2016), p.17.

[18] Compare the reasoning of AG Kokott, Opinion in CHEZ Razpredelenie Bulgaria, C‑83/14, EU:C:2015:170, at points 144 to 146.

[19] C-56 and 58/64, Consten and Grundig v Commission, [1964] ΕCR 2009.

[20] Geradin, Damien /Layne-Farrar, Anne / Petit, Nicolas (eds), Article 101 TFEU, Limited Distribution, European Competition Law and Economics, Article 101 (OUP 2012), 436, 470.

[21] Ft.22.

[22] See Articles 3,7 Block Exemption Regulation, para. 87 of the Vertical Guidelines.

[23] Vertical Guidelines, para 52.

[24] Vertical Guidelines, para 53.

[25] Commission Decision of 26 July 2016 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement (Case AT.40023 — Cross-border access to pay-TV) (notified under document C (2016) 4740 final).

[26] Stephen Mavroghenis Gabriella Griggs, ‘Case AT.40023 Cross-Border Access to Pay-TV: Paramount’s Commitments—The Bigger Picture’, (Journal of European Competition Law & Practice, Volume 8 (8) 1 November 2017), 499–501, <https://ezproxy-prd.bodleian.ox.ac.uk:4563/10.1093/jeclap/lpx025>, published on 28 April 2017, available under: <https://ezproxy-prd.bodleian.ox.ac.uk:5876/jeclap/article/8/8/499/3771405> last accessed on 18 December 2017.

[27] See also Andreas Wiebe, Geoblocking im Lichte von europäischem Recht und europäischer Rechtsprechung, ZUM, Zeitschrift für Urheber- und Medienrecht (2015), 932 – 941.

[28] Case C-230/16, Coty Germany (2017), ECLI:EU:C:2017:941.

[29] Case 62/79, Coditel v Ciné Vog Films (1980), ECLI:EU:C:1980:84, ECR I – 00881.

[30] Case 403/08, 329/08, FAPL v Karen Murphy (2011), ECLI:EU:C:2011:631, ECR I – 09083.

[31] Regulation (EU) 2017/1128 of the European Parliament and of the Council of 14 June 2017 on cross-border portability of online content services in the internal market, (2017) OJ/L 168/1.

[32] Regulation (EU) 2018/644 of the European Parliament and of the Council of 18 April 2018 on cross-border parcel delivery services, (2018) OJ/112/19.

[33] DG Connect on Content Portability, available under: <https://www.youtube.com/watch?v=CSgTeWqVZH0> last accessed on 20 October 2017.

[34] See Plum Consulting, The economic potential of cross-border pay-to-view and listen audiovisual media services, Executive Summary for the European Commission (2012), available under <http://ec.europa.eu/internal_market/media /docs/elecpay/plum_tns_summary_en.pdf > last accessed 6 November 2015.

[35] See Plum Consulting, The economic potential of cross-border pay-to-view, op. cit. supra note 24.

[36] Plum Consulting, 2012, ibid.

[37] Giuseppe Mazzioti, ‘Another breach in the wall: copyright territoriality in Europe and its progressive erosion on the grounds of competition law’, (Journal of Policy, Regulation and Strategy for Telecommunications, Information and Media 2016) Vol. 18 (6) 2016, 55-66, 63.

[38] Gomez/Martens, ‘Language, Copyright and Geographic Segmentation in the EU Digital Single Market for Music and Film’, European Commission, Joint Research Centre, JRC Technical Reports (2015), available under <https://ec.europa.eu/jrc/sites/jrcsh/files/JRC92236_Language_Copyright.pdf> last accessed on 21 December2017.

[39] Statistical information on the Aland Islands, <https://en.wikipedia.org/wiki/%C3%85land_Islands> last accessed on 28 October 2017.

[40] Emphasis added.

[41] See on this Jürgen Basedow, Der Verordnungsentwurf zum Geoblocking – ein Trojanisches Pferd gegen die Vertragsfreiheit, EuZW, Europäische Zeitschrift für Wirtschaftsrecht, (2016), 641 – 642, 642. Prof. Basedow claims that Article 4 of the General Geo-Blocking Regulation is an unjustified restriction of Article 16 CFREU.

[42] Supra. ft. 34.

[43] Giuseppe Maziotti, ibid. ft.7, 10, 11.

[44] Malene Ehlers, Nordisk Film Production on Content Portability, <https://www.youtube.com/watch?v=JJ5jYQtWWJM> last accessed on 29 October 2017. Nordisk points out that using this distribution model it has produced a best foreign language picture Oscar nominee in 2016 – “A War”.

[45] See: Modernisation of EU copyright rules, <https://ec.europa.eu/digital-single-market/en/modernisation-eu-copyright-rules> last accessed on 21 December 2017.

[46] Ibid. ft. 31.

[47]Regulation (EU) 2018/302 of the Parliament and the Council of 28 February 2018 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, (2018) OJ/L 66, p. 1–1.

[48] Available under: <https://ec.europa.eu/digital-single-market/en/news/rules-against-unjustified-geoblocking-enter-force> last accessed on 27.04.2018.

[49] Pieter van Cleynenbruegel, ‘The European Commission’s geo-blocking proposals and the future of EU e-commerce’, (Masaryk University Journal of Law and Technology, Volume 11(1)), 39.

[50] Art. 3 (1).

[51] Art. 3 (2).

[52] Art. 4.

Art. 5.

[53] European Commission (2017) Digital Single Market: EU negotiators agree on new rules allowing Europeans to enjoy online content services across borders, 7 February 2018, available under: <http://europa.eu/rapid/press-release_IP-17-225_en.htm> last accessed 06.02.2018.

[54] Article 2 (e).

[55] European Commission (2015) Proposal for a Regulation of the European Parliament and of the Council on ensuring the cross-border portability of online content services in the internal market, COM/2015/627 final.

[56] Benjamin Farrand, ‘The EU Portability Regulation: one small step for cross-border access, one

giant leap for Commission copyright policy?’, (European Intellectual Property Review 2016), 321, 323.

[57] Ibid. ft.47.

[58] Evidence based consumer policy, <https://ec.europa.eu/info/strategy/consumers/consumer-protection/evidence-based-consumer-policy_en> last accessed on 06. February 2018.

[59]Ibid. ft. 49, 45.

[60] Art. 2 (g).

[61] ‘EU works through details of geo-blocking ban, ‘Reporting the EU – 2017’, <http://eureporting2017.mediajungle.dk/2017/03/09/double-edged-sword/> last accessed on 5 February 2018.

[62] Art. 3 (1), (2).

[63] Art. 3 (2) second sentence.

[64] Art. 5.

[65] Article 4(1).

[66] See Recital 35 and Article 6, Regulation to end unjustified geo-blocking, ibid. ft.

[67] Ibid. ft. 12, 16.

[68] Directive 2006/123/EC of the European Parliament and the Council, of 12 December 2006 on services in the internal market, OJ/2006/L 376, 36 – 68.

[69] Thomas Papadopoulos, An overview of the Services Directive, Durham Student Law Journal, (2010), 65 – 72, at p 66; Loder, The Lisbon Strategy and the politicization of EU policy-making: the case of the Services Directive, Journal of European Public Policy (2011) Vol 18, 566 – 583.

[70] Europe’s Digital Single Market hits the Bulgarian rocks, Politico, 14.03.2018, available under https://www.politico.eu/article/mariya-gabriel-digital-single-market-on-the-rocks/ last accessed on 27.04.2018.

Hristo Kirilov

Реферандер в Общия съд на Европейския съюз.