On February 14, 2019, the European Commission proudly announced in a press release that the night before, the European Parliament, the Council of the European Union and the European Commission reached a political deal on the first-ever rules aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.
The new Regulation is part of the strategic plan of the European authorities to establish a digital single market and has its origin in the Commission Communication on Online Platforms of May 2016. As a result, in April 2018 the Commission presented the proposal of a new regulation.
The new rules will apply to companies such as Google AdSense, DoubleClick , eBay and Amazon Marketplace, Google and Bing Search , Facebook and YouTube, Google Play and App Store, Facebook Messenger, PayPal, Zalando and Uber.
After having conducted a series of studies, workshops and a large public consultation, the European Commission explained in its 2016 Communication the importance of creating in Europe a favorable environment for the development of new online platforms. Indeed, the statistics are very disappointing: only 4% of the world’s market capitalization is represented by online platforms created in Europe. The champions in the field are the United States and Asia.
On the basis of this observation, the Commission has drawn up a list of challenges for the European lawmaker as follows:
- Ensuring a level playing field for comparable digital services
- Ensuring that online platforms act responsibly
- Fostering trust, transparency and ensuring fairness
- Keeping markets open and non-discriminatory to foster a data-driven economy
- Safeguarding a fair and innovation-friendly business environment
2 years after the Communication of the Commission, the new Regulation was born.
First of all, what are the conditions for the application of the regulation?
- companies using online platforms must have their place of establishment or residence in the European Union and
- goods or services must be offered to consumers in the Union.
(the place of establishment or residence of the providers of these services is not relevant to the application of the Regulation).
A strengthened obligation of transparency
The Regulation makes online platforms subject to transparency by obliging them to ensure that their terms and conditions:
- are drafted in a clear and unambiguous manner;
- are easily available for business users at all stages of their commercial relationship with the provider of online intermediation services, including in the pre-contractual stage;
- set out the objective grounds for decisions to suspend or terminate, in whole or in part, the provision of their online intermediation services to business users.
Online platforms will have to indicate in their terms and conditions the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters
Where those main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users to the provider of online intermediation services concerned, that online platform shall also include in its terms and conditions a description of those possibilities and of the effects of such remuneration on ranking.
Differentiated treatment of goods or services
The online platform shall also include in their terms and conditions a description of any differential treatment they give on the one hand in relation to goods and services offered to consumers through these online intermediation services, either by the supplier himself or by any user enterprise controlled by that supplier and, secondly, in relation to other business users.
Access to data
The platforms will have to establish a description of the technical and contractual access, or lack of such access for business users, to any personal data or other data, or both, that user companies or the consumers transmit for the use of the online intermediation services concerned or which are generated through the provision of those services.
Prohibition of certain unfair practices
Prohibition of modification of the terms and conditions without notice
Any proposed amendment of terms and conditions shall be notified to users and the notice period shall be at least 15 days from the date on which the online platform notifies the business users concerned about the envisaged modifications.
Prohibition of suspension or termination without cause
Under Article 4 of the Regulation when intermediation service provider decides to suspend or terminate, in whole or in part, providing its services to a given user company, it shall provide the business user without undue delay, with the motivation for such a decision.
New avenues for dispute resolution
Internal complaint-handling system
Providers of online intermediation services will have to provide an internal complaint handling the complaints from user companies.
The platforms shall identify in their terms and conditions one or more mediators with which they are willing to engage to attempt 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 by means of the internal complaint-handling system.
The Regulation specifies the conditions that mediators shall met in order to be able to carry out their mission.
Judicial proceedings by representative organizations or associations and by public bodies
Organisations and associations which have a legitimate interest in representing user undertakings or entities using a corporate website, as well as public bodies established in the Member States, shall have the right to bring an action before the national courts in the Union, in accordance with the rules of the law of the Member State in which the action is brought, with a view to putting an end to or prohibiting any infringement, by providers of online intermediation services or on-line search engines.
Coming into force
As it is announced by The European Commission, the new rules will apply 12 months after its adoption and publication, and will be subject to review within 18 months thereafter, in order to ensure that they keep pace with the rapidly developing market. The EU has also set up a dedicated Online Platform Observatory to monitor the evolution of the market and the effective implementation of the rules.
Online platforms regardless of your size, start drafting your new terms and conditions!