The Geo-blocking Regulation: state of play and a closer look at Italy

Law No. 37 of 3 May 2019 for the fulfilment of obligations arising upon Italy from membership of the European Union (the so-called "European law") has given the ICA the responsibility of supervising the application of the Regulation, which aims to prevent unjustified geographical restrictions and other forms of discrimination based on nationality, place of residence or place of establishment of customers within the internal market.

In carrying out this new function, the ICA can make use of its competences and powers in the field of consumer protection against unfair commercial practices. In this regard, the ICA may: initiate proceedings on its own initiative or after a complaint of any interested person; carry out inspections at the company’s premises; request documents or information relevant to ascertaining the alleged violation; and take action, also via interim measures. If an infringement is found, the ICA may prohibit the practice by imposing fines up to 5 million euros and may order the publication of the ICA decision at the expense of the sanctioned company.  

The ICA has already begun to exercise this new power. Indeed, the Authority has opened several proceedings for possible discriminations in violation of EU Regulation No. 260/2012 establishing technical and business requirements for credit transfers and direct debits in euros. A further investigation under EU Regulation 302/2018 has been opened 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. In particular, the alleged violations relate to the so-called “iban discrimination”. This prevents creditors from making distinctions among its clients on the basis of their bank domiciliation, and on “geo-blocking” restrictions, which limit or block access to a website or provide different contents on the basis of the geographical position of the consumer (PV7 - Telepass -Addebiti su IBAN estero; PV9 - Enel -Violazione normativa sul geoblock).  

It is worth noting that the measures qualified as "geo-blocking" by the Authority in its application fall, in certain circumstances, within the scope of Articles 101 or 102 TFEU. Antitrust law already prohibits agreements between suppliers and distributors that limit the latter's ability to sell their products online and to make sales (at least of a passive nature) outside certain territories. For example, the possible existence of such agreements that include geo-blocking restrictions may violate both competition law and the Regulation, exposing companies to a double risk of sanctions. On the other hand, the Regulation (Article 6) expressly provides that "the provisions of agreements that require traders, in relation to passive sales pursuant to Regulation (EU) No. 330/2010, to act in violation of the prohibitions established by the Regulation are automatically null and void". In this case, the nullity of these agreement can no longer be prevented even in the event of a positive outcome of the antitrust analysis pursuant to Article 101(3) TFEU, as it will result from the violation of the Regulation, which must be considered special. 

Therefore, the development of this parallel application of the EU competition rules and the geo-blocking rules will have to be carefully monitored, also taking into account the likely impact of the expected reform of the regulation on vertical agreements. 

Further information concerning the ICA decisions in Italian, can be found here (PV7 - Telepass -Addebiti su IBAN estero) and here (PV9 - Enel -Violazione normativa sul geoblock). 

For more information please contact Federico Marini Balestra or Lucia Antonazzi.