With 1 million businesses already selling goods and services via online platforms across the EU’s internal market, large online platforms are subject to increased regulatory scrutiny. The EU Commission is currently conducting impact assessments and has provided several proposals around its long-planned Digital Services Act package (DSA) and the so called New Competition Tool (NCT), more specific drafts of which are expected to be released in late 2020 or early 2021.
In a nutshell, the DSA proposal aims to modernise the current legal framework for digital services by means of two main pillars: first, clear rules framing the responsibilities of digital services to address the risks faced by their users and to protect their rights; and, second, the introduction of ex ante rules covering large online platforms which act as “gatekeepers” (whereas it remains to be seen under which criteria a platform provider would qualify as having “gatekeeper” power; this generally refers to providers which allegedly have a certain degree of control over online platform ecosystems).
In addition to these proposals, the EU regulation on platform-to-business relations (Regulation (EU) 2019/1150, the P2B Regulation), quietly came into force on 12 July 2020 – already introducing significant constraints to the contractual freedom of a number of online intermediaries, and provided for new rights for business users which rely on the services they provide.
Who is subject to the P2B Regulation?
Online intermediation service providers that enable EU-based business users to reach consumers in the EU are subject to the P2B Regulation. While the definition of online search engines is straight-forward, the definition of online intermediation services is a new concept. The recitals of the P2B Regulation describe e-commerce marketplaces, app stores and social media for business as the most prominent examples of covered services. However, the exact scope of application is not entirely clear, e.g. whether some delivery service platforms would be considered as an information society service or not remains to be seen.
In contrast, the P2B Regulation does not apply to online payment services or to online advertising tools or online advertising exchanges, which are not provided with the aim of the facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers. This means, B2B-only platforms are generally not covered by the scope of the regulation.
Interestingly, whereas the regulation primarily targets large platforms, SME online intermediation services do still fall within the scope of the P2B Regulation.
How do you comply with the P2B Regulation?
Service providers covered by the regulation will need to ensure compliance in several areas, most prominently by reviewing and possibly changing their terms and conditions (T&Cs), and several other requirements must be met.
- Download our P2B Regulation report and checklist for further requirements and considerations.
The P2B Regulation leaves it to the member states to determine the enforcement mechanisms for adequate and effective enforcement of the P2B Regulation (Article 15), although it also requires that representative bodies with a legitimate interest are able to take action before competent national courts (Article 14(1)). Thus, depending on the law of the member states, not only could such organisations initiate e.g. injunction proceedings, but they might also be able to seek damages on behalf of business users.
Against this background and the fact that non-compliance with the regulation could lead to T&Cs being declared invalid, providers which are subject to the P2B Regulation should review their compliance with the obligations that it imposes. This could include the following:
Review existing T&Cs to make sure that they meet the new requirements, both in terms of transparency and substance, on a regular basis. Any updates need to be conducted in line with (in particular) the notice requirements under the P2B Regulation.
Update their contract management systems in order effectively to manage the new notice obligations in a compliant manner.
Ensure that they comply with the new transparency requirements in their terms and conditions, in particular concerning information on ranking of goods and services and search results. Care is needed here: these disclosure obligations potentially engage confidential information and should be assessed in each individual case in order to avoid unnecessary disclosure of valuable information. Furthermore, considering that even temporary changes to main parameters may need to be reflected (e.g. possibly in the course of “Black Friday” deals etc) and this could trigger changes to T&Cs / upfront notification obligations, companies are well-advised to consider this early on to avoid multiple updates in the future. In this regard, it should be noted that the Commission is currently working on guidelines concerning ranking to help online intermediation services and online search engines better understand this obligation.
Last but not least, a complaint handling system needs to be set-up, or, if one already exists, sufficient information about the system must be provided to business users, including regarding mediation options (see above).