Regulation 2019/1150/EU establishes new rules to protect business users and consumers on marketplaces and online platforms. It will come into force from 12 July, 2020 and aims to promote fairness and transparency for business users of online intermediation services.
The focus of the new regulation is the relationship between business users and online intermediation services (marketplaces) and search engines. Notably, the primary objective is to ensure greater transparency in the contractual conditions applied to business users, allowing them to offer their goods and services to consumers (who may be indirectly affected if unable to enjoy balanced offers). The regulation is based on two main guidelines:
- transparency: relating to contractual clauses applied, the criteria adopted in the provision of online services and the management of user data;
- fairness: ensuring equal conditions for users and the online service provider.
It applies to online intermediation services and online search engines that offer business users the opportunity to propose goods or services to consumers and which have the aim of facilitating transactions between business users and consumers. The regulation is applicable if such services are provided respectively to business users and corporate websites users established in the European Union and that, through online intermediation services or online search engines, offer goods or services to consumers located in the European Union, irrespective of the place of establishment or residence of the providers of those services. It underpins contractual relationships between business users who offer B2C (Business to Consumer) goods or services and providers of online intermediation services reaching final consumers.
However, one shortcoming is that it does not apply to peer-to-peer services (between Consumer and Consumer) or exclusively B2B (Business to Business) services. What is more, it does not apply to online payment services or online advertising that does not involve a contractual relationship with the consumer.
Terms and conditions
Terms and conditions are determined by the platform and regulate its contractual relationship with the business users. Providers shall ensure that their terms and conditions:
- are drafted in plain and intelligible language;
- are easily available to business users, even in the pre-contractual stage.
Any change must be communicated with at least a 15 day notice period. In the event that the business user does not accept the changes, he will have the right to terminate the contract.
Restriction, suspension and termination
The platform may restrict, suspend or cease to provide the service to the business user. In this case, the latter must be informed of the grounds for such decision.
Platforms must also set out the main parameters determining the ranking and the reasons for the relative importance of those main parameters as opposed to other parameters.
Providers of online search engines shall 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. The description of the main parameters determining ranking should also include an explanation of any possibility for business users or corporate website users to actively influence ranking against remuneration, as well as an explanation of the relative effects thereof.
Ancillary goods and services
Where ancillary goods and services are offered to consumers through the online intermediation services, either by the provider of online intermediation services or by third parties, the provider of online intermediation services shall include 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.
Providers of online intermediation services and providers of online search engines shall include in their terms and conditions a description of any differentiated treatment which they give, or might give, in relation to goods or services offered to consumers through those online intermediation services by, on the one hand, either that provider itself or any business users which that provider controls and, on the other hand, other business users. That description shall refer to the main economic, commercial or legal considerations for such differentiated treatment.
Specific contractual terms
Providers of online intermediation services shall: not impose retroactive changes to terms and conditions; ensure that their terms and conditions include information on the conditions under which business users can terminate the contractual relationship with the provider of online intermediation services; and include in their terms and conditions 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.
Restrictions on selling through other means
Where providers of online intermediation services restrict business users from offering the same goods and services to consumers under different terms and conditions through other means, they must include the reasons for the restrictions in their terms and conditions and make the grounds for the restriction easily available to the public, except where they are required by EU or Member State law to make such restrictions.
Access to data
The platforms should indicate whether or not they have access to the personal data provided by business users or consumers or which are generated in any case through the provision of those services.
They should also indicate whether business users have access to this data and whether providers share data with third parties.
Internal complaint-handling system and dispute management
The regulation requires the online platform to establish internal complaint-handling systems, indicating the treatable issues (alleged non-compliance by the provider with any obligation of the regulation, technological issues, behaviours and measures adopted by the provider) and the means to resolve such matters. Therefore, platforms should see to making information on the functioning and effectiveness of their internal complaint-handling system readily available (total number of complaints lodged, main types of complaints, the average time period needed to process the complaints).
The regulation also provides mediation for dispute resolution and the possibility for organisations or associations holding a legitimate interest in representing business users or representing corporate website users, as well as public bodies, to take action against providers of online intermediation services or search engines against any violations of the provisions of the regulation.
In a nutshell, although the scope of application of the regulation concerns online intermediation services providers and then business users, the ultimate beneficiaries are still the final consumers.
In fact, the ultimate goal is to contribute indirectly to improving consumer confidence in the digital marketplace economy.
Originally published by Withersworldwide, July 2020
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.