Tilly Clarke, Associate Solicitor, Cripps LLP, looks at whether you can charge more to overseas customers, with this handy guide for businesses supplying goods and services in Europe.
EU law prevents businesses from supplying their services, including the distribution of goods, on different terms to customers based in different European countries, unless the difference can be objectively justified. The principle of non-discrimination on the basis of nationality or country of residence applies to prices but also to all other terms on which the services are provided – such as availability, access and delivery.The rules apply not only to the terms upon which services are provided, but also to adverts, promotional literature and to websites.
This is not new law, being in place since 2009, but there is evidence (from customer complaints received by the European Commission) that some businesses are still failing to understand in what circumstances they can have different terms for non-UK customers and what might constitute unlawful discrimination.
Barring some limited exceptions, all services are affected by the rules on non-discrimination including distribution of goods and services (retail and wholesale), tourism and leisure, rental and leasing, professional services and recruitment. Discrimination can range from a straightforward refusal to supply to customers based in another country to less obvious requirements concerning country of credit card issuance, the place of delivery or a customer’s IP address.
The extent to which the supply of just goods is covered by the rules is still unclear, but it is safer to assume that the rules do apply to most businesses selling goods because where retailers provide customer advice, after-sales or any other type of service along with the goods supplied this will bring all of the business within the scope of the legislation. Also, recent guidance to consumers from the European Commission indicates that it considers that the EU law, upon which the UK legislation is based, applies to the distribution of goods, and the guide gives examples of businesses selling goods on-line (like an on-line toys retailer) as being caught by the non-discrimination requirements.
Outright refusal to supply to different countries will usually be very hard to justify, as in most cases increasing costs or applying different terms should make the supply of the service possible. Refusing to supply or applying different terms for supplying services just on the basis of a customer’s nationality is always going to be more difficult to do lawfully.
You may however be able to make some differences to your terms of supply, including charging a higher price for your services, if have an objective justification (i.e. a real commercial reason). So for example, higher prices might be chargeable if you have to incur additional costs because of particular rules or regulations applicable in a different member state or you might be able to refuse to accept payment on a foreign credit card because of the fraud risk. You will not be obliged to provide a service (e.g. e-books, music or movies) to customers in countries where you don’t have the requisite licence so that providing the service there would cause you to infringe intellectual property rights. Even different market conditions, including different seasonal demands due to varying holiday dates or different pricing by competitors, might be acceptable justifications, but what is lawful will be based on the specifics of your particular business. If you want to have different terms for different EU countries, you will need to look at the justification for this on a country by country basis.
For more info, contact Cripps LLP