Will the power of online platforms be restricted?
Last summer, the European Parliament and the Council adopted Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services. This will have a major impact on the relative contractual freedom that still exists today in such a B2B context. We list a few important interventions.
What’s the occasion?
The EU is firmly committed to improving the daily lives of its citizens and businesses with its Digital Agenda. The impact of technology on trade cannot be underestimated and this is reflected in new EU legislative initiatives. In previous blogs, we have already highlighted European initiatives with a direct impact on consumers. But the position of companies themselves is also influenced by the European agenda.
After all, if you want to offer your products or services online, you will do so either via your own website or by using the platform of online intermediation services. In the first case, your sales will largely depend on your score within the various search engines (such as Google). Suppose, after all, that in a search your online business is treated worse than another online business, without any objective criteria for doing so? In the second case, your success will be entirely determined by how the online intermediation service (such as eBay) treats you. It is possible that a provider of online intermediation services might ban you from the marketplace – your sale would then be largely boycotted.
The EU has found that it is mainly for micro, small and medium-sized enterprises that there is a greater reliance for commercial success on the large online businesses that are global in scale. Hence the emphasis on protecting SMEs and the adoption of Regulation (EU) 2019/1150 promoting fairness and transparency for business users of online intermediation services. It will apply from 12 July 2020.
From then on, when a company uses another company to offer its goods and services to consumers via the internet, these new European rules will have to be taken into account.
To whom does this apply?
The provider of online intermediation services or the search engine provider does not need to be established in the EU at all – it is sufficient for him to target online businesses with an establishment in the EU and an offer of products and/or services in the EU.
Furthermore, the online business is only required to address consumers, either through its own website or through the platform of the provider. Consequently, what is not covered are Peer-to-Peer transactions, pure B2B contracts or when the services are related to only advertising.
What will be protected?
The main objective of the regulation is transparency.
The general conditions of a platform will therefore have to be thoroughly checked. These will have to be sufficiently legible and certain information will become mandatory. For example, it will have to set out, in a clear and comprehensible manner, the impact of such general terms and conditions on the intellectual property rights of the company that uses the platform (in the first place, logos, trademarks or brand names).
Likewise, a platform will not simply be able to determine what it wants in its terms and conditions. The possibilities for limitation, suspension and termination are limited.
Another important difference concerns the transparency in the use of a ranking by the platform or the search engine. This ranking should not be arbitrary, and the most important parameters should be indicated in advance.
An important obligation that will be imposed on platforms is the provision of an internal complaint handling system. This should be based on principles of transparency and equal treatment and should ensure that complaints can be resolved bilaterally within a reasonable period of time.
If you, as an online business, are heavily dependent on these providers of online intermediation services, this new regulation will put a considerable strain on you. After all, you do not just have to agree to proposed general terms and conditions if they do not comply with the regulation.
There will be work to be done for providers of online intermediation services: although the regulation appears to be written to protect SMEs from Internet giants such as Google and Facebook, the size of the company does not matter: even smaller local initiatives can qualify as providers of online intermediation services, and therefore have to comply with this regulation.
The times when the general terms and conditions were interpreted very broadly in a B2B relationship seem to have been under pressure for a long time. This regulation is an additional reason for the platform to check whether the legal framework is still sufficiently enforceable.
If you, as an online business, want more clarity about your rights in relation to platforms, we can always assist you. But also, when you act as a provider pf online intermediation services by offering a platform and want to check whether your general terms and conditions meet the increasingly strict requirements, our e-commerce specialists are ready to assist you.
You can always contact us via firstname.lastname@example.org!
Written by Kris Seyen, Partner deJuristen and Thibault Taffin
December 9, 2019