The EU is proposing to pass a Regulation on promoting fairness and transparency in online intermediated trade (the Proposal). The Proposal in its current form would introduce new regulation into B2B relationships.
Who would be caught?
Anyone providing an 'online intermediation service'. This means a platform that takes 'any purposeful action ... as part of an information society service in the commercial relations between business users on the one hand and consumers on the other hand' (Art 2). In plain English, the Proposal is expressly stated (Recital 16) to be targeted at:
- 'online e-commerce market places'1
- 'online software application stores'2
- 'online social media'3
- 'collaborative economy platforms'4
and although not specifically called out in the current draft, our understanding is that the intention is also to capture:
- search engines5
- travel brokers / agents6
- comparison tools / platforms7
The P2B Proposal as drafted would catch any such platform, regardless of size or nationality.
The broad scope of the Proposal means that there may be unintended consequences. The vast majority of modern online operators will need to comply (not just the larger US players) and will come with an associated compliance burden.
What are the potential impacts?
- T&Cs will need to be changed for business users. T&Cs for business users will need to include new details on a broad range of matters, including:
- grounds for business account suspension / termination;
- the parameters used for ranking how businesses are surfaced on the platform;
- transparency as to the access (or otherwise) that the business user will have to data;
- transparency about any preferential treatment given to a platform's own services;
- if the platform terms require business users to contract on platform provided terms (eg standard EULAs, minimum/default terms, etc) then 'economic, commercial or legal' reasons must be provided; and
- details of a newly mandated complaints handling system for business users, including a predetermined mediation route.
- Greater notice of any changes to T&Cs will need to be given. Platforms would be required to give a minimum of 15 days prior notice of any changes to their terms. Indeed, longer notice may be required depending on the facts, as platforms need to take into account 'the nature and extent of the anticipated changes and their consequences for the business user concerned' when deciding how much notice to give.
- Restrictions on terminating / suspending a business relationship. If a business user's account is terminated or suspended, the platform will need to give individualised reasons for the termination.
- A formal complaints system for business users will be required. Business users of any reasonably sized platform (more than 50 employees or turnover greater than EUR 10m per annum) will be entitled to lodge complaints via that system, and platforms will be required to consider and follow them up 'within short time-frames' and in an 'individualised manner'. Simply pointing users to FAQs is unlikely to be compliant. In addition, every 6 months platforms will need to publish reports on the operations of their complaints system.
- Increasing consumerisation of B2B relations and collective redress. The Proposal requires business terms to be 'clear and unambiguous'. In addition it would allow trade bodies and other representative organisations to take court action against a platform to enforce the terms of the Regulation (i.e. collective redress). The Proposal also envisages industry codes of conduct to be put into place.
Anyone operating or relying on an online platform(s) should pay close attention to the Proposal as it passes through the EU's legislative process and consider the potential implications. Current timing is reported to be April 2018.