Geo-Blocking Regulation (Revocation) (EU Exit) Regulations 2019
Baroness Vere of Norbiton
That the draft Regulations laid before the House on 14 March be approved.
Relevant document: 22nd Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)
Baroness Vere of Norbiton (Con)
My Lords, this statutory instrument will revoke EU regulation 2018/302, commonly known as the geo-blocking regulation, and the Geo-Blocking (Enforcement) Regulations 2018 in the event of the UK exiting the EU without a withdrawal agreement. This recognises that, in the event of a no-deal exit from the EU, there would be no way to effectively enforce the geo-blocking regulations on behalf of UK customers.
“Geo-blocking” is the term used to describe traders discriminating against customers on the basis of the nationality or location of the customer. The EU’s geo-blocking regulation prohibits certain forms of geo-blocking. This includes through mandating access to all versions of a website in the EU; preventing discrimination between EU customers when distance shopping, online or otherwise; and preventing discrimination in payment terms accepted.
In practice, the geo-blocking regulation means that a UK consumer who wants to buy a toy train from a German retailer can do so in the same way as a German customer. For example, a German toy retailer cannot redirect a UK customer to the English version of the website without their explicit consent and needs to grant the customer access to all other versions of the website. Moreover, the toy retailer cannot apply different prices for the same product—excluding VAT—or refuse payments with a certain brand of credit card from a UK customer if that brand of credit card is accepted from German customers. The German retailer is not under any obligation to deliver the goods anywhere beyond their existing delivery area. If delivery is not offered to the UK, the UK customer will have to either collect the product from the retailer’s premises or make their own arrangements for onward delivery.
This regulation came into effect on 3 December 2018. The geo-blocking regulation does not apply to copyrighted online content, such as movies, e-books and video games. This would include services such as Netflix and Spotify.
The Geo-Blocking (Enforcement) Regulations 2018 are complementary, and enable the domestic enforcement of the geo-blocking regulation, giving powers to certain regulators and acknowledging the right of consumers to bring claims directly against infringing traders. These regulations came into force on 3 December 2018, the same day that the other geo-blocking regulation came into effect. In the event of a no-deal exit from the EU, the geo-blocking regulation will be transposed directly into UK law under the European Union (Withdrawal) Act 2018 as retained EU law. The Geo-Blocking (Enforcement) Regulations 2018 will also continue to have effect, unless revoked.
It is necessary to revoke both these pieces of legislation, as it will not be possible to effectively enforce the geo-blocking regulation on behalf of UK customers after a no-deal exit from the EU. This is because EU regulators would no longer be obliged to bring actions against businesses through EU mechanisms for cross border co-operation, UK civil and commercial judgments would no longer be automatically enforced in EU member state courts, and the UK Government cannot unilaterally enforce the geo-blocking regulations across the EU.
It is not possible to replicate the benefits of the geo-blocking regulation for UK customers in domestic law. The provisions of the regulation do not apply to transactions occurring solely within one country. Therefore, there is no benefit to UK customers in retaining a version of the geo-blocking regulation which applies only to the UK. Furthermore, if we do not revoke the geo-blocking regulation, it would result in a competitive disadvantage for UK traders. They would have to continue giving EU customers preferential treatment, while EU traders would not need to do the same for UK customers. For example, without revoking the regulation, in a no-deal scenario a UK theme park would continue to be obliged to offer the same prices and conditions to both a French family and a British family. However, even if we retain the regulation, a French theme park would be able to apply discriminatory practices—in terms of pricing, for example—between a French family and a British family. To avoid this asymmetry in the EU’s favour, we propose revoking the geo-blocking regulation in the UK.
The effect of this statutory instrument is simple—the retained EU law version of the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 will be revoked in the event of a no-deal exit from the EU. The substantive rules contained within the regulation will no longer have effect in the UK after that regulation is revoked.
It is important to note that this legislation will continue to operate in the EU. As such, UK businesses operating in EU markets will still have to comply with the EU regulation when dealing with EU consumers. This means, for example, that a UK trader will have to offer the same conditions for customers in the Netherlands and Spain. However, the UK trader will be able to offer different conditions to UK customers.
The Geo-Blocking (Enforcement) Regulations 2018 made changes to the Enterprise Act 2002 to allow for the domestic enforcement of the Geo-Blocking Regulation. This SI does not undo the changes made to Schedule 13 to the Enterprise Act 2002 by the Geo-Blocking (Enforcement) Regulations 2018. These changes were already undone by a separate statutory instrument; namely, the Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2019. These regulations were debated and approved by your Lordships’ House on 15 January 2019, and were made on 6 February 2019.
It is important to highlight that failure to revoke the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 would not preserve UK customers’ rights. Those rights will, in effect, be lost if the UK leaves the EU without a deal. The only effect would be to continue to impose obligations on UK traders, while providing no benefit to UK customers.
The subject matter of this statutory instrument is partially devolved in Scotland, Wales and Northern Ireland. It has been consented to by the Welsh and Scottish Administrations. The Northern Ireland Civil Service was notified in line with the protocol agreement in place during the absence of the Northern Ireland Executive. I take this opportunity to warmly thank the devolved Administrations and the Northern Ireland Civil Service for their ongoing co-operation.
I beg to move.
Lord McNally (LD)
My Lords, as this is the last item of business it would be very easy to nod it through. However, in the debate on the previous SI, the noble Lord, Lord Deben, made the point that this House is playing a very important part in what he described as the Alice in Wonderland situation of Parliament legislating on Monday to prevent a no-deal Brexit, and then on Tuesday legislating to avoid the worst consequences of a no-deal Brexit. It is important that these statutory instruments are probed. They may seem to be simply belt-and-braces exercises, and the Minister delivers her arguments with such an upbeat lilt that you think there cannot be any problems, but it is worth probing a little deeper and showing the absolute absurdity and danger of what is proposed.
Let us remember that this is part of a great creation of the European Union: the single market and its operation. That single-market concept was the great work of Lord Cockfield, actively supported by Mrs Thatcher, in the 1980s. It was one of the great pieces in the puzzle of creating the European Union. Yet, as the Minister explained in her positive manner, no benefits are forthcoming from this SI—or from any of them. We are doing an exercise in damage limitation.
The Minister clearly explained what geo-blocking means. It is,
“the term used to describe traders discriminating against customers on the basis of the nationality or location of the customer”.
That is the very heart of the single market. She was fair in frankly pointing out—as did the Minister in the other place, Kelly Tolhurst—that, so far as the consumer is concerned, by leaving the European Union we move out of the protections which this legislation provided, and that:
“UK businesses operating in EU markets will still have to comply with the EU regulation when dealing with EU consumers … A failure to revoke the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 would not preserve UK customers’ consumer rights. Those rights will in effect be lost if the UK leaves the EU without a deal. The only effect would be to continue to impose obligations on UK traders while providing no benefit to UK customers”.—[Official Report, Commons, 2/4/19; col. 977.]
It is lose, lose, lose. In short, EU traders would not have any obligations to treat UK customers in line with the geo-blocking regulation.
As the Minister also explained, this regulation does not require a company to deliver a physical product to all EU locations. It also exempts digital copyrighted content, including e-books, computer games and streaming services such as Netflix, and audio-visual content and transport services. However, the EU is obliged to assess whether to lift these exemptions in 2020. This is a perfect example of the lunacy of Brexit. We are moving into a data revolution—an age of e-commerce. Yet we are now stepping back; we will not be at the table when the EU sets the standards in these areas. We will again be left, as the noble Lord, Lord Deben, rightly put in another context, waiting, watching and listening for what others decide.
Lord Howarth of Newport (Lab)
I got the impression that we were, in important respects, setting the standards for legislation in relation to data issues—for example, the duty of care that has just been proposed by the Government. Does the noble Lord not agree that what is sauce for the goose is sauce for the gander? EU traders wanting to do business in the UK following Brexit will have to obey our laws, just as we have to obey their laws when trading within the EU, so there is actually a reciprocal balance here.
Lord McNally
I have heard the noble Lord intervene time and again over the last year about this reciprocity—I am getting like President Trump in my pronunciation. We are talking about a market of 70 million and a market of 500 million. One of the things that was said in 2016 was that they need us as much as we need them. Oh, do they? How pathetic. Something I used to say when I worked in public relations, talking to big companies, is that it takes years and decades to build a reputation and you can lose a reputation in an instant. We built 700 years of competent parliamentary democracy and we have lost it in two years of madness, mostly egged on by people such as the noble Lord, who has this strange idea that the rest of the world is just waiting to co-operate with our wisdoms. I think I might have provoked him, but I do not know.
Lord Howarth of Newport
I just gently put it to the noble Lord that Brexit is about recovering our democracy. Also, surely sensible people are going to want to go on doing business and trading with each other, whether or not one particular bloc is larger than the other.
Lord McNally
We have heard it all. If you seek your memorial, look about you at the mess and the chaos that that kind of arrogance has led this poor country into.
We face a data revolution. One thing that our retail industry is having to grapple with now is how we deal with the move of retail from the high street to online and the repercussions of that. All that is going to be far better dealt with in co-operation with our nearest neighbours, and we will miss out not just on the benefits to the UK consumer but on the power to engage and influence the implementation of the digital single market.
I said this in one of the earlier debates but I will repeat it. I was the Minister for Data Protection from 2010 to 2013 and I went to one of the early meetings discussing the GDPR in Lithuania. I remember sitting through a whole afternoon and noticing at the end of the day that one of the people round the table had neither intervened, spoken nor voted or anything. I turned to the British ambassador and said, “The guy at the end of the table has not said anything or taken any part”. He said, “Ah, that’s the Norwegian. They can attend, they can listen but they can’t involve themselves in the decisions”. Welcome to the world we are about to enter. So much for sovereignty; so much for bringing back power. You are in power when you are at the table where the big decisions are made. That is where the noble Lord is wrong and I think history will judge him harshly.
As is the custom in such circumstances, we will of course see this instrument go through. The noble Baroness explained how the devolved part of it will be done and explained about Northern Ireland. The only other clarification I would like is this: if the shutters came down, what about processes that were already under way? If you had already purchased something or you were already selling something, how would the law apply in those circumstances? I am not going to say that we have no objection otherwise, but let us say that we give a wry grin as we let this go through.
Lord Griffiths of Burry Port (Lab)
My Lords, I begin by refuting what the noble Lord, Lord McNally, said about himself. There can be no comparison between him and the President of the United States; it may be that neither of them knows how to pronounce reciprocity, but the President would not know what it meant either. Let it be said also that the little exchange between my noble friend Lord Howarth and the noble Lord, Lord McNally, is indicative of where our manner of conducting these discussions has got us. Two people, for whom I have respect—and, indeed, affection—are capable of having a real bout of reciprocal hostility, if not animosity—
Lord Howarth of Newport
I have absolutely no hostility towards the noble Lord, Lord McNally. I am very fond of him; please correct the record.
Lord Griffiths of Burry Port
In my professional life as a mediator, I used to succeed in instances such as this. Clearly I have done it again.
On the question before us, we on these Benches and many on the other side believe there should be a permanent and comprehensive UK-EU customs union, a close alignment with the single market, dynamic alignment on rights and protections, and clear commitments on participation in EU agencies. Earlier this afternoon we were talking about the break-up of such reciprocal arrangements. Worries have been expressed about what will happen in areas where we have fruitfully collaborated over the years if and when we come out of the European Union.
Hundreds of Brexit-related statutory instruments have been laid since June 2018. How much time in this and the other Chamber have we spent debating them? I refer again, as I inevitably do when talking about an SI, to the talented people working in our Civil Service who have been required to do the work of a drudge—trawling through legislation, instruments and regulations going back over 40 years—to bring the statute books into alignment with each other. It is a sheer waste of time.
Yesterday, when I stood here to make my contribution to the debate about the new White Paper on online harms, it was such a relief after what had preceded it to talk about something proper again. We miss all of that. For example, today I have been told when we will be able to discuss advertising and the internet—a debate that was put back from last Thursday, when it was scheduled, to later in April because we had to replace it with seven amendments to the European Union (Withdrawal) (No. 5) Bill which were full of animosity and sheer vindictiveness. I have never heard a debate like that in my life.
We regret the fact that these exit SIs have become a manic tick-box exercise. The Government have wasted two and a half years to sort out a deal. We have been buried in Parliament by the mountain of work that has ensued for those of us sitting here. Before I came, and yesterday, I read endless documents about not particularly interesting details simply to create the impression that I know what geo-blocking is. The Government have recklessly pushed through EU legislation with no proper consultation, no impact assessment and wholly inadequate parliamentary scrutiny. It will come home to haunt us. Mistakes will have been made. We cannot possibly get it all right under this pressure and without the normal, conventional delays that are necessary in taking through amendments to legislation. We will make mistakes, and we will recognise that as we go on.
It worries me that people have been so worried about betraying the conventions and the constitutional arrangements of the workings of this and the other House when they have been so cavalier in the way they have flouted convention in presenting these statutory instruments.
This instrument is, I have to admit, a logical measure to cope with the needs of our statute book in the event of a no-deal Brexit, 72 hours before the most recent date set for us to exit. We can assume only that since nobody wants a no-deal exit, we will get one only if we allow ourselves to wander into it. The danger is that even so, that is exactly what will happen.
This SI raises the same old questions which other and previous ones raised. On the matter of consultation, for example, in the explanatory document we are told that on 18 January this year a letter was written to Ministers in the Scottish and Welsh Governments and to the civil servants in the Northern Ireland Department for the Economy. The Minister said that the Welsh Government had given their assent, which I am aware of from my contacts with the Assembly in Cardiff. However, while I know some of the concerns that were raised by the Welsh, I would love to have known about the other questions and concerns; in other words, we are told that consultations took place between the Government and these bodies, but we who have to debate the instrument have no knowledge of the ground covered in those consultations or where the sticking points might have been so that we might perhaps apply our minds to those areas for consideration.
Similarly, “interested business groups” were consulted —the CBI, the Federation of Small Businesses, the British Retail Consortium and, listed in a footnote, the Association for UK Interactive Entertainment—but again, there is no mention of the concerns that might have been raised during these consultations. That would have helped me much more than much else I have had to read as I have tried to shape my mind in response to the instrument before us. We are told that the consultation took place, but there is nothing to help us with the material and the ground that was covered in those consultations.
It is more than a tad ironic that we now find ourselves needing to revoke a regulation which became effective a mere four months ago. Think of all the work which British as well as other officials put into the careful framing of this regulation. Now, so soon, we are preparing to send it into oblivion. It is vital that the reciprocity envisaged by this regulation should somehow be maintained in the event of our leaving the EU. This is such an important area of collaboration and a joint approach to handling our business affairs that it seems a travesty for British customers and businesses to be left with fewer rights than they now enjoy, or rights that have to be recreated and reconstructed from the ground upwards when they already exist. I would like to know from the Minister whether the perceptible shortcomings with regard to the advantages to British businesses and customers can and will be corrected, and in what manner.
On this last matter, the Explanatory Memorandum suggests:
“Regulators in other EU states would be very unlikely to enforce the Regulation on behalf of UK customers as the framework for cross border cooperation will be repealed in a ‘no deal’ exit from the EU”.
Later in the same document, we read that, if we fail to revoke this regulation,
“UK traders would continue to have obligations to EU customers under the Regulation while UK customers are unlikely to receive any of its benefits”.
I have noticed this question of likelihood in previous SIs. It is such an odd word to have in a document that states how the law will be modified in order to harmonise it with the demands of our statute book. Likely or unlikely? Who thinks that it is unlikely? What level of unlikelihood is there? Who has asked anyone any questions to lead them to think that it would be either likely or unlikely?
Baroness Vere of Norbiton
My Lords, I thank all noble Lords who have taken part in this short debate this afternoon. I was certainly not intending that the House would nod this one through, but I must be honest with the noble Lord: of all the exit SIs that I have done—and there have been plenty—this one feels fairly straightforward, in that the plan B not to revoke it would not have been fair. I was not expecting that today would be a mini-Brexit debate on the benefits or otherwise of leaving. I thought we had come to an end of those for the time being, but we had one none the less, which is, as always, a pleasure.
I am happy to answer as many questions as I can relating to the SI. A bit of ground was covered. The noble Lord, Lord McNally, talked about the single market, which we are of course the architects thereof, one of whom was the late Baroness Thatcher. UK customers could—I am not saying that they will—benefit from this move. They could get lower prices or better terms; I am not promising that. We cannot necessarily say that it will all be bad news.
Furthermore, UK traders may be able to offer differential pricing that benefits them and UK customers, so I am perhaps not as “doom and gloom” as some noble Lords. While I am not promising that, we must make sure that we do not always think when we debate such legislation that things will necessarily work out badly.
The noble Lord, Lord McNally, talked about the 2020 review. Whether or not we have a close relationship with our near neighbours, we will always look at what they are doing—we would be foolish not to. If we do not have a deal, the 2020 review will be a question of us looking at the situation from far away, but if we do have one, we hope to work in partnership with them in developing the future for digital. Again, I am not quite as miserable as the noble Lord, Lord McNally, regarding digital services and markets for digital content. I believe that the UK is a very significant player in this regard and that we will continue to be so. There is a glass-half-full, glass-half-empty situation going on here.
The noble Lord, Lord Griffiths, asked if we have been able to quantify this at all. Given what I have just said, we have not, because the situation is not entirely clear. It looks as though some 75,000 traders affected by this, in that they will have to think about the way they interact with consumers in different parts of the UK versus the EU. Again, it is not possible to quantify because we do not know how markets and different traders will react. That comes back to the point the noble Lord made about unlikely versus likely—it would depend on future arrangements as well. If there is no deal, in many years’ time we could have future arrangements in digital services and in this area that allow certain things to happen. I am afraid that that is all fairly nebulous, but it is pretty much where we are, given that we do not know where we will be in a few years’ time.
The noble Lord, Lord McNally, asked about proceedings that had already started—or, as I like to call them, in-flight complaints. Our understanding is that claims initiated before exit day that relied on the geo-blocking regulation would still be valid in the UK after exit day, and we will seek to provide legal certainty for businesses, families and individuals who are involved in ongoing cases on exit day.
The noble Lord, Lord Griffiths, talked about the time taken to debate all the SIs. I agree with him on this and I sincerely wish it was not the case. I too desperately miss talking about other things, because there are many other things that I would love to talk about at the moment. However, if there is an upside—I am full of upsides today; generally, this is not like me—it could be that this whole exercise has given our excellent Civil Service a very good opportunity to get to know our legislative framework well. In doing so, I hope it has seen that if—goodness knows—we end up in a no-deal situation, there are opportunities for us to improve our legal framework as we move forward.
The noble Lord, Lord Griffiths, also talked about the consultation and he is right. He quoted the Explanatory Memorandum, which mentions the businesses and groups we have spoken to—the Federation of Small Businesses and the Confederation of British Industry—and I am not aware of any sticking points. The note I have received from the Box says that no concerns have been raised, either by the devolved Administrations or the business organisations; both were neutral on this policy. I presume they looked at plan B and thought, “No, we don’t want that, so we might as well have plan A”, so the consultation for this seems to be fairly uncontroversial.
On Northern Ireland, I take note of the comments made by the noble Lord, Lord Griffiths, and I agree with many of them. I think we would all like to see an Executive restored in Northern Ireland as soon as possible. We are acting within the bounds of the protocol and regulating only where it is necessary. On the future relationship and how Northern Ireland and Ireland work together, we will have to have a conversation with the Irish Government on this and many other areas.
I hope I have answered noble Lords’ questions.