The EU Platform to Business Regulation might be a game-changer for online suppliers, affiliates and intermediaries setting stringent obligations. This article is based on a post published by my colleagues Patrick Van Eecke and Anne-Gabrielle Haie on DLA Piper’s blog, Technology’s Legal Edge.
From July 12, 2020, new European rules will oblige online platforms, such as search engines, market places, online gaming, and gambling suppliers, and affiliates, to take several additional measures, including reviewing their terms and conditions, establishing a data policy, and creating a complaint handling system.
To whom do the EU Platform to Business Regulation and its obligations apply?
The European Platform to Business Regulation, also called the P2B Regulation, is directed towards companies that offer platforms to other companies who want to service consumers.
The Regulation applies to online intermediation services and online search engines that aim to connect EU businesses and professional websites with EU consumers. This category 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
regardless of any monetary payment. And, based on the categories above, it might also apply to gaming and gambling suppliers and gambling and betting affiliates.
However, it does not apply to online payment services or to online advertising tools or online advertising exchanges, which are not provided to facilitate the initiation of direct transactions and which do not involve a contractual relationship with consumers. This limited scope 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 to facilitate the initiation of direct transactions and which do not involve a contractual relationship with consumers
- search engine optimization software services as well as services which revolve around advertising-blocking software and
- technological functionalities and interfaces that merely connect hardware and applications.
The P2B 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 (e.g., 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.
1. Terms and conditions become more detailed and transparent
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 additional distribution channels and potential affiliate programs 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; and
- add 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 consequence should, however, only concern the specific provisions of the terms and conditions which are not compliant.
2. Restrictions, suspensions or terminations of accounts cannot be unjustified
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 allow the business user to clarify the facts and circumstances in the framework of the internal complaint-handling process.
3. Transparency in rankings of prominence given to goods and services is required
Providers of online intermediation services must set out in their terms and conditions the main parameters determining rankings (i.e., the prominence given to the goods or services offered through online intermediation services) 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 easy 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 rankings 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 the effects of such remuneration on ranking.
4. Ancillary goods and services need to be outlined
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.
5. The differentiated treatment has to be transparent
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.
6. Clear information shall be given on 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.
7. Restrictions to offer different conditions through other means have to be justified
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.
8. 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 in attempting 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 through the internal complaint-handling system.
Representative organizations 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 Platform to Business Regulation become applicable, and what should you do?
The rules of the P2B Regulation will become applicable from July 12, 2020.
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 to avoid negative effects provided by the Platform to Business Regulation.
On a similar topic, you may find interesting the article “Coronavirus makes eCommerce and electronic signature crucial for your business“.
Photo credit Andrew Klimin