US fashion brand Guess is the first “victim” of the new EU geographic blocking regulation, which came into force at the beginning of the month. The European Commission has fined Guess with almost 40 million euros for discriminating consumers in Croatia and a number of new EU member states in its online store, reports Jutarnji List on December 19, 2018.
The Brussels investigation has shown that Guess had fragmented the EU single market by setting 5 to 10 percent higher prices for buyers from Bulgaria, the Czech Republic, Estonia, Croatia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. Simply put, if someone from the aforementioned new members of the European Union bought a Guess product over the internet, they automatically paid for it more than buyers from old EU members, according to the EU findings. The European Commission has assessed that this is improper business practice, which is the result of consumer discrimination on the basis of the geographical location. It is also considered to be an obstacle in the development of internet commerce and the single EU digital market. Therefore, Brussels has fined Guess with 39,821,000 euro. The penalty which was initially supposed to be issued has been cut in half because Guess was “cooperating,” explained the European Commission.
“There are many illogicalities in online trading, and consumers are suffering. After Guess has been punished, we hope that it will be a warning to others,” said Biljana Borzan (SDP), a Croatian Member of the European Parliament. Similar examples abound in the package delivery business, which is closely related to online retail.
The EU now intends to prevent such practices because the Union wants to encourage the development of online retail trading, which grows at an annual rate of 22 percent. However, according to EC data, only 15 percent of Europeans buy online products from other EU member states, and one of the main reasons is geoblocking.
Ilija Rkman, the former president of the Croatian Consumer Protection Society, agrees with Borzan. “Our statistics show that our consumers mostly complain about material failures of products they have bought, as well as about their warranties. It is hard to believe that a new smartphone or a home appliance can break down so very soon after the purchase. This is an indicator of double standards for consumers in the old and new EU member states,” warned Rkman.
Because of all this, Rkman says that the consumer protection situation in Croatia is not as good as it should be. It has improved somewhat, but Croatia is still at the bottom of the EU. “Consumer protection should be a priority for the government. Today, it is considered a part of the protection of human rights,” Rkman said.
Borzan agrees that there is still much work to be done to strengthen consumer protection. “Our consumers complain less often than those from more developed countries, who fight for their rights,” concluded the Croatian MEP.
More news on the activities of Croatia’s MEP Biljana Borzan can be found in our Politics section.
Translated from Jutarnji List (reported by Adriano Milovan).
