Bye-bye geo-blocking – bye-bye “high price island” Switzerland?
Baker McKenzie
Switzerland is often referred to as the “high price island” of Europe. Why? Because many consumer products and services are significantly more expensive in Switzerland than for instance in Germany, France and/or Italy.
For obvious reasons, this is a thorn in the eye of many – in particular the initiators of the so-called “fair price initiative”, which was submitted as a federal popular initiative back in 2017 – with the objective to prevent that Swiss customers have to pay higher prices compared to customers in neighboring countries. The initiative suggested a ban on geo-blocking to ensure that Swiss customers are not discriminated when shopping online. Geo-blocking is the practice of pushing online shoppers to a version of a website based on their geographic location.
What started off with the fair price initiative, now five years later found its way into Swiss legislation. On 1 January 2022, a new article in the Swiss Unfair Competition Act will enter into force which prohibits price discrimination practices. Under this new article, it is unfair to discriminate regarding price or payment terms a customer in Switzerland on the basis of his nationality, place of residence, place of business, location of his payment service provider, or the place of issue of his means of payment, and in particular to block or restrict access to an online portal, and/or redirect a customer to an online portal version other than the one initially accessed – provided that there is no objective reason for such discrimination.
So will the new year bring full price equality in Switzerland? Unlikely. First, the new provision does not apply to certain services, such as for instance financial services, gambling and lotteries, social services or audiovisual services. Second, geo-blocking and price discrimination shall not be considered unfair if there is an objective reason or justification. And this is an undefined term. This raises many interesting questions, for instance whether price discrimination may be justified by higher shipping fees or burdensome customs procedures that apply when selling to a Swiss customer. It remains to be seen how Swiss courts will interpret what is objectively justified. And third, the new law does not introduce an obligation to deliver goods to or provide services in Switzerland. It merely prohibits different treatment in the case of offers to customers in Switzerland.
And what does that all mean for companies operating in Switzerland as well as in the EU – where geo-blocking was already banned back in 2018? Can (or should) the EU website set-ups simply be used for the Swiss website for compliance with the new law? No. While the EU provisions certainly served as a model (or at least a source of inspiration) for the Swiss law, there are clear differences between the legal frameworks. For example, unlike the EU Geo-Blocking Regulation the new Swiss law applies not only to (end) consumers but also to companies, regardless of whether they are end users or source the goods or services for redistribution or processing.
For this reason it is important to ensure that all e-commerce channels are not discriminatory from a Swiss law perspective and adapt them if necessary. If there is an objective reason for discrimination, the companies involved should document such reasons and regularly revisit and check their existence. While the ban on geo-blocking has to be enforced before civil courts, and does not trigger any criminal prosecution or sanctions, it cannot be ruled out that a civil court would impose a fine in case of repeated violations.
