From 12 July 2020, any business (whether or not EU-based) providing an online platform or search engine to business users in the EU and the UK must comply with a new EU regulation designed to promote fairness and transparency. Platform use terms may need to be re-written and must contain certain mandatory information.
The EU regulation on platform-to-business relations (the “P2B regulation”) applies in all EU member states, including the UK. The P2B regulation seeks to:
- create a fair, predictable, sustainable and trusted online business environment for smaller businesses and traders on online platforms;
- enhance transparency and redress obligations for business users of online platforms; and
- prevent regulatory fragmentation across the EU.
The P2B regulation applies to all online intermediation service providers and online search engines. This includes e-commerce marketplaces, social media services, app stores and price comparison tools. The P2B regulation also differs from much of the EU’s digital regulatory output in that the regulation is not consumer-focused: it applies to business users of online intermediation services (and corporate website users in relation to online search engines) who use those services to offer goods and services (or form contracts with) consumers in the EU.
Importantly, whether or not the P2B regulation applies does not depend on the location of the platform provider or the chosen governing law of the platform. So, Asian or U.S.-based platform providers must comply as long as their platforms or search engines are offered or provided to business users in the EU.
The P2B regulation excludes online payment services, online advertising tools or online advertising exchanges, which are not provided with the aim of the facilitating the initiation of direct transactions or contractual relationships with consumers.
The P2B regulation applies to me – what do I need to do?
To comply with the P2B regulation, you will need to ensure that the terms & conditions for the platform are written in plain and intelligible language, are easily found and include certain information.
If you are an online intermediation service provider, your terms & conditions must include, among other information:
(a) a description of the grounds on which you may base your decisions to suspend, terminate or otherwise restrict the use of your services by business users;
(b) information regarding the overall effects of the terms & conditions on the ownership and control of intellectual property rights of business users;
(c) information on how you treat and rank goods or services offered by your company or by business users controlled by you, compared to goods and services offered by third-party business users;
(d) information on how and under which conditions a business user can terminate its contractual relationship with you;
(e) a description of the data access policies to provide the business user with a better understanding of the data to which your company or the business user may or may not have access;
(f) information on how business users can use the internal complaint-handling system; and
(g) the names of two or more mediators with whom your company and business users can engage to attempt to reach an agreement to settle, out of court, any disputes that may arise.
If the P2B regulation applies, an online platform cannot suspend or terminate a business user without first providing a statement of reasons; the business user can complain, and the matter could go to mediation.
If you are an online search engine, your terms & conditions must include, in a publicly available statement, a description of:
(a) the main parameters that are significant in ranking all indexed websites and their relative importance;
(b) the potential effects on ranking as a result of any direct or indirect remuneration paid by business users; and
(c) how you treat and rank goods or services offered by your company or by business users that you control, compared to goods and services offered by third-party business users.
What is the notice period for changing terms & conditions?
If you need to change your terms & conditions to comply with the P2B regulation, you should notify your business users of the proposed changes at least 15 days before applying them (subject to any exceptions provided in the P2B regulation). This is the minimum notice period. If, because of the changes, business users need to make complex adaptations, a longer and more proportionate notice period should apply. This is designed to prevent significant disruption to business users’ operations due to sudden changes to terms & conditions.
What can a business user do in the case of non-compliance with the P2B regulations?
Any terms & conditions that are not written clearly and intelligibly will be void. Where a business user feels that the relevant terms & conditions are not satisfactory, it may:
(a) use the internal complaint-handling system; during this process, an online intermediation service provider may self-determine that all or parts of its terms & conditions are not clear.
(b) engage mediators, who may conclude that the terms & conditions lack the required clarity.
(c) take the online intermediation service provider or search engine to court.
Jai Mudhar, London Trainee Solicitor, contributed to the drafting of this alert.