New Rules for Online Platforms and their Business Partners in the EU: the P2B Regulation

23 Jun 2020
On 12 July 2020, the Platform to Business Regulation 2019/1150 (P2B Regulation) will become applicable across the EU. Find out more about the new rules affecting online platforms.

The P2B’s Objectives

The P2B Regulation’s objectives are to (i) ensure fair, transparent and predictable treatment of business users by online platforms; (ii) provide more effective redress options and ultimately (iii) create a predictable and innovation-friendly regulatory environment for online platforms.

Currently, EU merchants operating via online platforms (i.e. those businesses that depend on online platforms to reach consumers) may face harmful trading practices. Evidence has shown that practices such as de-listing without reason, unannounced changes to platforms’ Terms and Conditions (T&Cs), and opaque ranking practices can be harmful for businesses, without effective redress to act against them.

The P2B Regulation is expected to generate indirect benefits for consumers, as a result of greater choice and trust, due to the increase of smaller merchants in the platform economy; greater transparency; and positive effects in terms of innovation and data access policies.

The logic behind the P2B Regulation also follows from recent prominent EU antitrust cases, such as Google Shopping, where Google was found to have abused its dominance in the EEA search engine market by illegally favoring its own comparison shopping service, i.e. by awarding prominent placement in its search results to its own service, whilst demoting results of rival services.

Another antitrust probe is currently under investigation on Amazon’s marketplace, with regards to alleged anticompetitive use of sensitive information of independent sellers’ activity and transactions on its platform.

Who is affected by the P2B Regulation?

The Regulation applies to the online intermediation services provided by online platforms to business users established (or having residence) in the EU and offering goods or services to consumers located in the EU, irrespective of the place of establishment or residence.

By way of example, the term “online platform” includes online marketplaces; social media and creative content outlets; application distribution platforms; price comparison websites; collaborative economy marketplaces (to the extent that they host professional users); and online general search engines.

The P2B Regulation does not apply to online payment services or to online advertising tools, online advertising exchanges not provided to facilitate the initiation of direct transactions and which do not involve a contractual relationship with consumers (Article 1(3)).

The scope of the Regulation is limited to B2B relationships involving platforms, therefore individuals participating in the sharing economy on a non-professional basis are excluded. Its aim is in fact to ensure that business users of platforms benefit from appropriate information, fair treatment and effective remedies.

What changes for online platforms?

The P2B Regulation provides that online platforms must:

·         Ensure easily understandable and available T&Cs for professional users;

·         Clearly set out what are the possible grounds for restricting, suspending or terminating their services;

·         In case of any modifications to their T&Cs, notify professional users at least 15 days in advance, which, in case of non-compliance, will be null and void;

·         Act in good faith vis-à-vis professional users. In particular, platforms must: (i) refrain from implementing retroactive amendments to their T&Cs; (ii) provide a termination right to professional users in case of changes to the T&Cs; and (iii) explain whether access rights are given post-termination of their contract;

·         Clearly inform the business users about the T&Cs’ effects on their intellectual property rights, such as trademarks, logos, brand names of business users;

·         Provide a detailed statement of reasons when restricting, suspending or terminating their services. In case of overall termination, this should be done 30 days in advance;

·         Ensure that professional users’ identity be made visible on the platform, for instance by using their logos and trademarks.

Information requirements for platforms’ T&Cs

The P2B Regulation establishes greater information and transparency requirements that online platforms must meet when dealing with professional users. The following practices must be clarified by the provider:

·         Ranking. T&Cs must include the main parameters used to determine the ranking of products and services and their relative importance, and whether it is possible to influence such rankings, for instance, by paying additional commissions;

·         Ancillary goods or services. T&Cs must describe any ancillary goods or services provided by the platform itself;

·         Differentiated treatment. T&Cs must state and describe whether the platform treats any differently its own goods and services compared to those of professional users. For instance, an online platform which offers consumer goods or services through the platform, in direct competition with business users, could be inclined to leverage its control or power (economically or technically) to favor its own goods or services;

·         Technical and contractual access to data (personal or not). T&Cs must describe whether and how the platform may access data provided by either the professional user or consumers, including other data generated through the platform’s use, such as ratings and reviews accumulated by business users on the platform. This may also impact general privacy and data policies, as coherence and (personal) data protection must be ensured;

·         Additional distribution channels and potential affiliate programs. T&Cs must be clear whether and to what extent other channels may be used to market those goods or services;

·         Complaint-handling system. T&Cs must provide information concerning access to and functioning of the system and resort to mediators for dispute resolution (as described below).

New system to handle complaints, mediation and redress

Platforms employing 50+ persons or with an annual turnover of over €10 million must establish and operate an internal complaint-handling system to deal with any compliance and technical issues, as well as complaints against behavior and measures taken by the platform that impact professional users.

Complaints must be processed swiftly and effectively. Their outcome must be communicated individually, in plain and intelligible language. Statistics on those systems shall be published to allow external oversight.

Platforms must identify mediator(s) in order to allow quick and effective dispute settlement.

Self-standing right to act in national courts

Importantly from an enforcement perspective, Article 14 of the P2B Regulation establishes that organizations and associations that have a legitimate interest to represent business users or corporate website users, as well as public bodies set up in Member States, have a right to take action before national courts in the EU.

Therefore, we may witness possible upraises of (collective) cases and actions against online platforms who continue to enact unfair practices against professional users.

What actions should you consider?

If you are an online platform offering intermediation services under the conditions described above, you should consider a thorough review of your T&Cs, related practices and policies.

To comply with the increased transparency requirements, you should consider reviewing your T&Cs and processes and in particular:

·         Define the legal grounds for restriction, suspension and termination of your services;

·         Explain the ranking mechanism and parameters;

·         Review any process that could lead to differential treatment;

·         Envisage a data access policy;

·         Design an internal complaint-handling system and appoint mediator(s).

If you are a business user of online intermediation services or have a corporate website which is ranked on search engines, you should know your rights and ensure the platforms you are dealing with respect the new obligations imposed by the P2B Regulation.

What lays ahead?

More developments in the European Union relevant for online platforms will follow in the coming months and years.

In particular, the eCommerce Directive’s framework, now twenty years old, is likely to be revised by the new Digital Services Act that the Commission plans to propose in order to increase and harmonize responsibilities for online platforms and information service providers and reinforce oversight over platforms’ content policies.

The Commission is also considering establishing ex ante rules to ensure a level playing field in markets where certain large platforms act as gatekeepers. In addition, the Commission is considering new options to address structural competition problems.

The European Commission is currently running an open public consultation on the Digital Services Act’s package, until September 2020. Legislatives proposals are expected by early 2021.

 

 

Do not hesitate to contact us should you require further information and assistance on the issues discussed in this note, or any other IT and data protection law related matter.