A new Regulation, known as the Platform to Business Regulation or the Online Intermediation Services Regulation, will come into force on 12 July 2020. It applies to online intermediation service providers, namely online platforms which allow third party businesses users to offer goods or services to consumers (“OISPs”). These include online e-commerce marketplaces, online software application services (such as app stores), and online social media services. The Regulation also affects online search engines, but this article focusses on the impact it will have on OISPs.

Before delving into the detail, it is critical to understand the rationale behind the Regulation. The Regulation has arisen due to concerns that some OISPs may be abusing their bargaining power to the detriment of their business users, who can be very dependent on the OISPs’ services. The Regulation seeks to re-balance the playing field by imposing certain restrictions and obligations on OISPs, with a view to ensuring that their business users have appropriate transparency, fairness and redress possibilities. Keeping this context in mind is important when seeking to understand and ensure compliance with the Regulation.

Which online platforms will be affected by the Regulation?

The Regulation applies to providers of online intermediation services (“OIS”), being services which:

  • constitute an information society service (namely, any service normally provided for remuneration at a distance, by means of electronic equipment for the processing and storage of data, at the individual request of a recipient of the service);

  • allow business users to offer goods or services to consumers, with a view to facilitating the initiating of direct transactions between business users and consumers, irrespective of where or indeed whether those transactions are actually concluded; and

  • are provided to business users on the basis of a contractual relationship with the provider of the service.

In terms of geographic scope, the Regulation applies to OIS which (i) are provided or offered to business users established in the EU and (ii) allow those business users to offer goods or services to consumers located in the EU. The Regulation could therefore apply even if the OISP is located outside of the EU or if a non-EU law governs the contract between the OISP and the business user.

What changes will OISPs need to make?

Some of the Regulation’s key requirements are listed below. Where such requirements apply in relation to terms and conditions, such terms and conditions are those between OISPs and their business users for the provision of OIS, but only where such terms and conditions are unilaterally determined by the OISP (for example, an OISP’s standard T&Cs).

  1. Changes to terms and conditions. The Regulation requires that terms and conditions:
    • are drafted in plain and intelligible language. To comply with this requirement, terms and conditions should not be vague, unspecific, contain misleading language or lack detail on important commercial issues. Some OISPs will need to significantly edit their existing T&Cs in order to comply with this requirement; and

    • include provisions dealing with specific topics, including:

      • the main parameters determining ranking and the reasons for their relative importance;

      • details of the OISP’s rights to restrict, suspend or terminate a business user’s use of the OIS, and details of the business user’s rights to terminate;

      • a description of the access (or absence thereof) that business users have to data which is provided to or generated through the OIS; and

      • information relating to the OISP’s complaint-handling system, and the names of at least two mediators that the OISP will engage with if a dispute arises.

  2. Restrictions on modifying terms and conditions. The Regulation restricts how OISPs can modify terms and conditions. For example, changes must be notified to the business user on a durable medium and generally with at least 15 days’ advance notice.

  3. Restrictions on the OISP’s termination rights. The Regulation restricts an OISP’s ability to restrict, suspend or terminate the provision of OIS to a particular business user. The OISP must give a statement of reasons for its decision on a durable medium to the business user. In a termination scenario, such statement must normally be provided at least 30 days in advance. The business user must also have the opportunity to clarify the facts and circumstances of the restriction, suspension or termination through the OISP’s complaint-handling system.

  4. Visibility of the business user’s identity. OISPs must ensure that the identity of the business user providing goods or services through the OIS is clearly visible.

  5. Obligations in respect of complaints and disputes. OISPs are subject to obligations regarding complaints and disputes with their business users. These include obligations to engage in mediation and provide an internal complaint-handling system to deal with complaints from business users. OISPs must also make certain information relating to its complaint-handling system publicly available, and update it at least annually. Such information includes the total number of complaints lodged, the main types of complaints, the average time period needed to process the complaints, and aggregated complaint outcome information.

What are the risks of non-compliance?

Non-compliance with the Regulation could result in business users raising disputes through the courts or mediation. For example, breaches of some of the requirements applicable to terms and conditions could make all or part of the OISP’s terms and conditions unenforceable. Trade organisations which represent business users could also take enforcement action to stop or prohibit non-compliance, and each Member State must set and apply its own enforcement measures.

Other EU rules for online platforms

The Regulation is a minimum harmonisation measure, meaning that Member States can retain or introduce national legislation which goes beyond its requirements. Indeed, some Member States have already done so. Therefore, whilst the Regulation may reduce the extent of regulatory difference in this area across Europe, online platforms will still have to consider whether there are additional regulatory requirements under local laws.