By Patrick Van Eecke and Anne-Gabrielle Haie
From July 12, 2020 onwards, new European rules will oblige online platforms to take several additional measures, including reviewing their terms and conditions, establishing a data policy and creating a complaint handling system. The Platform to Business Regulation is directed towards companies that offer platforms to other companies who want to service consumers. Typical examples are online market places, app stores and search engines.
Online platforms: unfair trading practices?
Online platforms play a prominent role in the digital economy. According to Copenhagen Economics, more than one million EU enterprises trade through online platforms in order to reach their customers, and it is estimated that around 60 percent of private consumption and 30 percent of public consumption of goods and services related to the total digital economy are transacted via online intermediaries. Online platforms have brought important benefits to the society and the economy. They cover a wide range of activities,including online advertising platforms, marketplaces, search engines, social media and creative content outlets, application distribution platforms, communications services, payment systems, and platforms for the collaborative economy.
In 2016, the European Commission launched a comprehensive assessment of the online platform ecosystem. This analysis identified a number of issues that needed to be addressed. In particular, it highlighted a number of concerns about unfair trading practices taking place on online platforms. The European Commission identified the following issues:
- platforms imposing unfair terms and conditions, in particular for access to important user bases or databases
- platforms refusing market access or unilaterally modifying the conditions for market access, including access to essential business data
- the dual role that platforms play when they both facilitate market access and compete at the same time with suppliers, which can lead to platforms unfairly promoting their own services to the disadvantage of these supplier;
- unfair ‘parity’ clauses with detrimental effects for the consumer and
- lack of transparency − notably on tariffs, use of data and search results − which could result in harming suppliers’ business activities.
In order to address these pitfalls, the European Institutions adopted, on June 20, 2019, Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services The Regulation on platform-to-business relations, also called the P2B Regulation, will become applicable from July 12, 2020 onwards, which means that online platforms will need to comply with the new requirements imposed on them by this date.
What is the purpose of the P2B Regulation?
The purpose of the Regulation is to ensure that business users of online intermediation services and corporate website users in relation to online search engines are granted appropriate transparency, fairness and effective redress possibilities. The Regulation aims at:
- increasing innovation opportunities in the online ecosystems through binding rules and enhancing transparency to foster trust and fairness in the market
- laying down common rules based on transparency, dispute resolution and monitoring
- providing greater regulatory predictability for businesses
- providing greater legal certainty for platforms and general online search engines within the EU.
To whom does it apply?
The Regulation applies to online intermediation services and online search engines that aim to connect EU businesses and professional websites with EU consumers . This includes:
- online e-commerce market places, including collaborative ones on which business users are active
- online software applications services, such as application stores and
- online social media services, irrespective of the technology used to provide such services.
It applies irrespective of any monetary payment.
However, it does not apply to online payment services or to online advertising tools or online advertising exchanges, which are not provided with the aim of facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers. This means that the Regulation does not apply to:
- peer-to-peer online intermediation services without the presence of business users
- pure business-to-business online intermediation services which are not offered to consumers
- online advertising tools and online advertising exchanges which are not provided with the aim of facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers
- search engine optimisation software services as well as services which revolve around advertising-blocking software and
- technological functionalities and interfaces that merely connect hardware and applications.
The Regulation applies to providers regardless of whether they are established in a Member State or outside the Union, provided that the following cumulative conditions are met:
- the business users or corporate website users are established in the EU
- the business users or corporate website users should, through the provision of those services, offer their goods or services to consumers located in the EU at least for part of the transaction.
In other words, the Regulation applies to online intermediation service providers and search engine service providers that provide their services to businesses established in the EU which in their turn offer goods or services to consumers located in the EU (eg, app stores, social media pages, online market places)
Which rules should B2B online platforms comply with?
Providers of online intermediation services must ensure that they comply with the following requirements.
- Terms and conditions
Terms and conditions must :
- be drafted in plain and intelligible language
- be easily available to business users at all stages of their commercial relationship with the provider of online intermediation services
- set out the grounds for decisions to suspend or terminate or impose any other kind of restriction upon the provision of their online intermediation services to business users
- include information on any dditional distribution channels and potential affiliate programmes through which providers of online intermediation services might market goods and services offered by business users
- include general information regarding the effects of the terms and conditions on the ownership and control of intellectual property rights of business users
- not impose retroactive changes, except when they are required to respect a legal or regulatory obligation or when the retroactive changes are beneficial for the business users
- include information on the conditions under which business users can terminate the contractual relationship with the provider of online intermediation services
- include a description of the technical and contractual access, or absence thereof, to the information provided or generated by the business user, which they maintain after the expiry of the contract between the provider of online intermediation services and the business user.
Business users must be informed of any modification of the terms and conditions. Providers of online intermediation services need to respect a reasonable notice period depending on the nature of the modification (minimum is fixed at 15 days) unless a business user gives an explicit agreement for this period to be shortened.
Non-compliant terms and conditions should be null and void, that is, deemed to have never existed, with effects erga omnes and ex tunc. This should however only concern the specific provisions of the terms and conditions which are not compliant.
- Restriction, suspension or termination of accounts
Providers of online intermediation services will have to provide business users with the reasons for restricting or suspending individual products/services.
In case of definitive termination of the online intermediation service offered, the platform will provide the business user concerned with a statement of reasons at least 30 days in advance.
The provider of online intermediation services must give the business user the opportunity to clarify the facts and circumstances in the framework of the internal complaint-handling process.
Providers of online intermediation services must set out in their terms and conditions the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters.
Providers of online search engines must set out the main parameters, which individually or collectively are most significant in determining ranking and the relative importance of those main parameters, by providing an easily and publicly available description, drafted in plain and intelligible language, on the online search engines of those providers.
Where the main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users or corporate website users to the respective provider, that provider shall also set out a description of those possibilities and of the effects of such remuneration on ranking.
- Ancillary goods and services
Where ancillary goods and services, including financial products, are offered to consumers through the online intermediation services, the provider of online intermediation services must set out in its Terms and conditions a description of the type of ancillary goods and services offered and a description of whether and under which conditions the business user is also allowed to offer its own ancillary goods and services through the online intermediation services.
- Differentiated treatment
Providers of online intermediation services and providers of online search engines must set out a description of any differentiated treatment which they give to their own products and services or to other business users. That description must include the main economic, commercial or legal considerations for such differentiated treatment.
- Access to data
Providers of online intermediation services must include in their terms and conditions a description on what data generated through their services can be accessed, by whom and under what conditions.
- Restrictions to offer different conditions through other means
Where providers of online intermediation services restrict the ability of business users to offer the same goods and services to consumers under different conditions through other means, they must include the grounds for that restriction in their terms and conditions and make those grounds easily available to the public. Those grounds shall include the main economic, commercial or legal considerations for those restrictions.
- Redress mechanisms
Providers of online intermediation services must provide for an internal system for handling the complaints of business users (small enterprises with less than 50 staff members and generating ≤€10 million turnover are exempted from this obligation).That internal complaint-handling system must be easily accessible and free of charge for business users and shall ensure handling within a reasonable time frame. Providers of online intermediation services must provide in their terms and conditions all relevant information relating to the access to and functioning of that internal complaint-handling system.
Providers of online intermediation services must identify in their terms and conditions two or more mediators with which they are willing to engage to attempt to reach an agreement with business users on the settlement, out of court, of any disputes between the provider and the business user arising in relation to the provision of the online intermediation services concerned, including complaints that could not be resolved by means of the internal complaint-handling system.
Representative organisations or associations will be able to defend businesses in courts against possible infringements by providers of online intermediation services and providers of online search engines.
When will the rules become applicable, and what should you do?
The rules of the P2B Regulation will become applicable from July 12, 2020 onwards.
By this date, if you are a company active in offering online intermediation services or online search engine services, you should in particular:
- review your terms and conditions
- implement a process for restricting, suspending and terminating the service to individual users
- review and explain your ranking parameters
- review and explain the modalities of differential treatment between your own offers and those of users
- establish your data policy
- establish an internal system for handling complaints
- appoint mediators.
Companies working with online platforms should require their service providers to ensure that the above action items have been complied with.
Please contact Patrick Van Eecke, Anne-Gabrielle Haie, or your usual DLA Piper contact if you would like further assistance.