aka: the Platform-to-Business ("P2B") Regulation
1 What is this proposal about?
Many businesses sell goods and services through online platforms such as Booking.com, Google or Amazon ("Online Intermediation Services"; "Online Search Engines") and depend on them to find potential business partners, reach consumers and conclude contracts ("Business Users"). However, Business Users face many difficulties in the online economy:
- Business Users often are not in a position to negotiate the terms and conditions;
- Online Intermediation Services or Online Search Engines may change their terms and conditions without prior notice in a disadvantageous way;
- some platforms may favour their own services or products;
- Business Users are unaware of the ranking system, which is crucial for their success, as the platforms' rankings of goods and services massively impact consumer choice.
Hence, this dependence on Online Intermediation Services or Online Search Engines may potentially harm Business Users and endanger their businesses in the long term, as these platforms have superior bargaining power.
The aim of the European Parliament and of the Council is therefore to set mandatory rules to ensure transparent, fair, predictable and sustainable treatment of Business Users by online platforms as well as effective opportunities for redress.
2 What exactly is planned in terms of content?
According to the final text of the proposal prepared by the European Parliament and the Council (COM/2018/238 final – 2018/0112 (COD)), Online Intermediation Services and Online Search Engines will be obliged, among others:
- to draft terms and conditions in clear and unambiguous language and to notify Business Users of any planned modifications; these modifications should not be implemented before the expiry of a reasonable notice period. If the strict regulations are not observed, the terms and conditions will not be legally binding for Business Users;
- to justify its decision without undue delay in case of a suspension or termination of its services for a Business User; the objective grounds for decisions to suspend or terminate shall be regulated in the general terms and conditions;
- to set out in their terms and conditions the main parameters determining ranking and the reasons for the relative importance;
- to provide a description of any differentiated treatment which they give in relation to goods or services;
- to provide a description of what data generated via their services can be accessed and under what conditions;
- to provide an internal system for handling complaints from Business Users which is easily accessible and allows Business Users to lodge complaints directly with the platform. They shall also be obliged to provide one or more mediators in the terms and conditions for cases where complaints could not be resolved within the internal complaint-handling system.
Once the regulation enters into force, it will be directly applicable in the EU Member States eliminating the need for additional rules in those countries. Interestingly, the regulation will apply to Online Intermediation Services or Online Search Engines regardless of whether they are established in a Member State or outside the EU, provided that the Business User is (i) established in the EU and (ii) offers its goods or services through the Online Intermediation Service or an Online Search Engine to consumers located (irrespective of their place of residence or nationality) in the EU at least for part of the transaction.
It remains to be seen how the regulation will impact the online business environment and how small businesses will benefit from it. Additional care will be required when drafting terms and conditions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.