Geoblocking is the practice of preventing consumers in one country from accessing products and services via a website based in another country.
The draft regulation is intended to remove discrimination based on customers' nationality, place of residence or place of establishment and to boost e-commerce, the Council said.
Under the new rules traders will not be able to offer customers different terms and conditions or prices in three situations: where the trader sells goods to be delivered in a country to which the trader offers delivery or to be collected at a location agreed upon with the customer; where the trader provides electronically supplied services, such as cloud services, data warehousing services, website hosting and the provision of firewalls; and where the trader provides services that are received by the customer in the country where the trader operates, such as hotel accommodation, sports events, car rental, and entry tickets to music festivals or leisure parks.
Unlike price discrimination, price differentiation will not be banned, so traders are free to offer different general conditions of access, including prices, and to target certain groups of customers in specific territories, the Council said.
Traders will also not be obliged to deliver goods to customers outside the country in which they offer delivery.
However, traders cannot apply different payment conditions for customers because of their nationality, place of residence or place of establishment, the Council said.
Peter Žiga, president of the Council said: "Shopping online from another EU country in the same way as locals do is something that many citizens expect nowadays. The new rules to stop unjustified geo-blocking will improve considerably the e-commerce economy and give citizens access to a wider choice of goods and services. This can only happen if there is a guarantee of safety and trust for both buyers and sellers."
The agreement was reached by qualified majority, which will allow the Council to begin negotiations with the European Parliament, it said.
The new rules will comply with other EU legislation on cross-border sales such as rules on copyright and on judicial cooperation in civil matters, the Council said.
The European Commission proposed measures in June to make it easier for consumers and companies to buy and sell products online across the EU.
Outlining a "three-pronged" plan, the Commission said it would tackle geoblocking, make cross-border parcel delivery more affordable, and increase consumer confidence through better protection.
A proposed revision of the Consumer Protection Cooperation Regulation would give national authorities more power to enforce consumer rights, allowing them to check whether websites geoblock consumers or break EU rules on after-sales conditions. Regulators would also be able to order the immediate take-down of websites hosting "scams", and request information from domain registrars and banks on the trader behind a site, the Commission said.
The Commission said that more than 1,400 retailers and digital content providers had engaged with its e-commerce sector inquiry and that the responses showed that geoblocking of consumer goods and digital content is "common".
The Commission said 38% of retailers selling consumer goods said that they geoblock consumers located in other EU countries from buying those goods and 12% of all the retailers that responded said there are "contractual restrictions" on cross-border selling for at least one type of product they offer.
Geoblocking is also common among digital content providers, according to the Commission's initial findings. It said that 68% of digital content providers geoblock consumers from some EU countries from accessing the digital content they supply. More than half of the content providers (59%) said they are "contractually required by suppliers to geoblock", according to the Commission.