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Planned EU Law Looks to Boost Cross-Border Ecommerce

Proposed legislation would target geoblocking, other inhibitors

May 26, 2017 | Retail & Ecommerce

Acknowledging that ecommerce in the EU “is not functioning as smoothly as it could,” the European Commission has proposed legislation to remove some of the pain points thought to limit cross-border ecommerce between EU member nations.

The three-prong plan will address “unjustified” geoblocking of ecommerce buyers from EU nations outside of the seller’s own; improve oversight of cross-border delivery services while compelling them to be more transparent about pricing; and strengthen enforcement of consumers’ rights.

“All too often people are blocked from accessing the best offers when shopping online or decide not to buy cross-border because the delivery prices are too high or they are worried about how to claim their rights if something goes wrong,” said Andrus Ansip, vice president for the European Commission’s Digital Single Market initiative. “We want to solve the problems that are preventing consumers and businesses from fully enjoying the opportunities of buying and selling products and services online.”

Digital Buyers in Select Countries in Europe Who Make Domestic vs. Cross-Border Digital Purchases, Oct 2016 (% of respondents)

The legislation would ensure that both online and offline consumers who want to buy products and services in another EU country would not face discriminatory prices, sales or payment conditions, unless justified by legal requirements. Under the proposed law, rerouting consumers from other EU countries back to a country-specific website, or asking them to pay with a debit or credit card from a certain country, would be considered discrimination.

The regulation would not, however, force ecommerce sites to offer EU-wide delivery.

The delivery regulations attempt to address complaints that high delivery charges for cross-border shipping prevent more ecommerce from occurring across the EU. The European Commission noted that prices charged by postal operators to deliver a small parcel to another EU country are often up to five times higher than domestic prices, without a clear explanation of why.

The delivery regulation is expected to foster competition by introducing greater price transparency.

In order to boost consumer trust in cross-border commerce, more powers will be given to national authorities to better enforce consumer rights. Such authorities will, for example, be able to check whether websites geoblock digital shoppers; order the immediate take-down of websites hosting scams; and request information from domain registrars and banks to detect the identity of traders.

Cross-border ecommerce is already a common practice in many countries in the region, though only a minority of shoppers engage in it. In an October 2016 survey by PayPal and Ipsos, about one-quarter to one-third of digital buyers in Europe’s three largest economies—the UK, Germany and France—had made a cross-border digital purchase in the previous year. Cross-border purchase rates were highest in Ireland and Portugal.

If effective, those figures could be noticeably higher when the European Commission plans to review the regulations’ effectiveness in 2019.

—Cliff Annicelli

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