Switzerland prohibits geo-blocking of Swiss online buyers
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Key Contacts
As of 1 January 2022, any geo-blocking of Swiss customers in long distance trading and online shopping will be prohibited.
Background: high price island Switzerland
Anyone living in or visiting Switzerland quickly notices that many products are much more expensive here than abroad. In Switzerland, we use the buzzword "high-price island" to describe this fact. Consequently, Swiss customers often cross the virtual border to buy the same products abroad at a lower price on a foreign internet site. Some online stores redirect Swiss customers to the Swiss site where the product is higher priced. To ensure non-discriminatory purchasing for customers in Switzerland in the context of long-distance trading, a new article 3a was introduced to the Swiss Unfair Competition Act (UCA) and will enter into force on 1 January 2022.
Prohibition to discriminate Swiss customers in e-commerce
The main aim of the new provision is to render it possible for Swiss customers to "shop like a local" on the internet. Importantly, the new article 3a UCA does not impose any duty to actually ship goods to or provide services in Switzerland. It only seeks to prevent discrimination against Swiss customers.
According to the new article 3a UCA, unlawful discrimination occurs when foreign online retailers:
- discriminate against customers in Switzerland regarding presumably better foreign prices or payment conditions;
- deny them access or partial access to their online portal; or
- redirect them to another versions of the online portal than the one originally visited without customer consent unless there is an objective justification for the discrimination. Such an objective justification may especially derive from the regulatory framework in Switzerland or intellectual property rights.
In addition, the new law provides for sector-specific exceptions, and excludes e.g. electronic communications services, public transportation services, health services, gambling and lotteries, and audio-visual services from the scope of the provision.
Due to the nature of the legislative process, little guidance exists on the interpretation of the new article 3a UCA. From the parliamentary discussions it emerges that the Swiss legislator was guided by the EU geo-blocking regulation when drafting the new article 3a UCA, which is reflected by the fact that the wording of the Swiss provision is similar to the EU regulation. As a result, even though the EU geo-blocking regulation does not apply directly to Switzerland, Swiss courts will likely take the EU law into consideration when assessing future cases under article 3a UCA.
Impact in practice
Swiss law does not provide for administrative or criminal procedures or sanctions in case of a violation of the new geo-blocking provisions, but Swiss customers will have to enforce the provisions in civil court. They can request that a Swiss court prohibit an imminent or existing infringement or award damages. However, corresponding Swiss court judgments directed against foreign companies must be enforced abroad. In addition, while Swiss consumer organisations or even the Swiss government can also institute such court proceedings, they are only expected to do so in selective and rare cases. Therefore, whether the new Swiss ban on geo-blocking will have much impact in practice remains to be seen.
Nevertheless, companies offering goods and services to Swiss customers in long-distance trading are advised to verify their compliance with the new Swiss rules on geo-blocking and to ensure they are not discriminating against Swiss customers. In particular, redirecting a Swiss customer based on location and without the customer's prior active and informed approval to a website other than the one the customer attempted to access fulfils the requirement of article 3a UCA and is, therefore, unlawful.