Undertakings (producers, restaurateurs/caterers, app developers, transporters, etc.) are increasingly using online platforms to promote and sell their goods and services. To regulate the relationship between online platforms and their business users, Regulation 2019/1150 (the "Regulation") was recently adopted at the European level. The Regulation's goal is to better protect business users of online intermediation services, inter alia by obliging online platforms to provide transparency and effective dispute settlement.
Applicable to whom?
In short, the Regulation applies to the relationship between online platforms ("providers of online intermediation services") and business users who offer their goods and services to consumers in the EU through online intermediation services. Business users must have their place of establishment or residence in the EU. This is not required for the online platforms.
The Regulation also applies to online search engines under similar conditions, although they are subject to a more limited set of rules.
The Regulation does not apply to online payment services, online advertising tools or online advertising exchanges, which are not provided with the aim of facilitating direct transactions and which do not involve a contractual relationship with consumers.
Which new rules apply to providers of online intermediation services?
Obligations relating to terms and conditions
The Regulation imposes a number of obligations on providers of online intermediation services regarding their general terms and conditions:
1. The general terms and conditions have to be drafted in plain and intelligible language, and must be easily available at all stages of the commercial relationship, including in the pre-contractual stage.
2. The general terms and conditions must contain a whole range of information:
- the grounds for suspension, termination or restriction of the online intermediation services;
- the additional distribution channels and potential affiliate programmes (such as an application or website) through which providers of online intermediation services might market goods and services offered by business users;
- the ownership and control of intellectual property rights of business users;
- the main parameters determining ranking of business users in the online search results and the reasons for the relative importance of those main parameters as opposed to other parameters;
- ancillary goods and services (e.g. repair services for a specific good) including financial products offered to consumers by the providers of online intermediation services or by a third party;
- any differentiated treatment which can be given in relation to goods or services offered to consumers through online intermediation services and to other business users, and the main economic, commercial or legal considerations for such differentiated treatment;
- the conditions under which business users can terminate the contract with the provider of online intermediation services;
- the technical and contractual access – or absence thereof – of business users to any personal data or other data which business users or consumers provide for the use of the online intermediation services or which are generated through the provision of those services;
- the technical and contractual access – or absence thereof – to the information provided or generated by the business user which is maintained after the expiry of the contract between the provider of online intermediation services and the business user; and
- the access to and functioning of the internal complaint-handling system.
2. Proposed changes of terms and conditions must be notified to the business users on a durable medium and may not be implemented before the expiry of a notice period of at least 15 days. As a principle, changes to terms and conditions cannot be imposed with retroactive effect.
3. The terms and conditions must identify two or more mediators with which the providers of online intermediation services are willing to engage for the out-of-court settlement of disputes.
The Regulation stipulates that terms and conditions that do not comply with certain of these requirements shall be null and void.
In order to increase transparency for consumers, providers of online intermediation services must ensure that the identity of the business user providing the goods or services on the online intermediation services is clearly visible.
Mandatory statement of reasons in case of restriction, suspension or termination of services
When a provider of online intermediation services decides to restrict or suspend its online intermediation services to a given business user, it must provide the business user, prior to or at the time of the restriction or suspension taking effect, with a statement of reasons for that decision on a durable medium.
In the event of termination of the online intermediation services, the provider of online intermediation services must, at least 30 days prior to the termination taking effect, provide the business user with a statement of reasons for that decision on a durable medium. However, there are a few exceptions to this rule, e.g. in case of repeated infringement of the terms and conditions by the business user.
Disputes: internal complaint-handling system and mediation
The Regulation also aims to achieve a fast, effective and accessible mechanism for the settlement of disputes between business users and providers of online intermediation services. In this regard, providers of online intermediation services must provide for an internal system for handling complaints which ensures that complaints of business users are handled within a reasonable time frame. This obligation does not apply to small online platforms with less than 50 employees and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million. Information on the total number of complaints lodged, the main types of complaints, the average time period needed to process the complaints and aggregated information regarding the outcome of the complaints must be made easily available to the public.
As already mentioned, online platforms have to identify two or more mediators in their terms and conditions with which they are willing to engage in case of out-of-court settlement of disputes. Even though mediation remains voluntary, providers of online intermediation services and business users are bound to engage in good faith throughout any mediation attempts. Moreover, providers of online intermediation services are obliged to bear a reasonable proportion of the total costs of mediation in each case.
Which new rules for online search engines?
Providers of online search engines have to set out the main parameters which, individually or collectively, are most significant in determining the ranking, as well as the relative importance of those main parameters. The information must be provided on the online search engines in an easily and publicly available manner, drafted in plain and intelligible language. This information must also be kept up to date. Where the main parameters include the possibility to influence ranking against any direct or indirect remuneration, the provider must set out a description of those possibilities and of the effects of such remuneration on the ranking.
Member States are responsible for the adequate and effective enforcement of the Regulation. The measures provided for must be effective, proportionate and dissuasive.
As mentioned above, the Regulation itself provides that terms and conditions which do not comply with certain requirements will be null and void.
The Regulation also provides that certain organisations and associations that have a legitimate interest in representing business users, as well as public bodies set up in Member States, have the right to take action before competent national courts to stop or prohibit any non-compliance with the requirements of the Regulation.
The Regulation will apply from 12 July 2020 onwards.