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    Platforms in a pickle by the introduction of the platform to business regulation

    If you electronically facilitate the conclusion of transactions, you may be an online intermediary. If so, please be aware that you might have to amend your contractual terms and organize certain operational practices to comply with the EU regulation on promoting fairness and transparency for business users of online intermediation services or "P2B-Regulation" before 12 July 2020.

    This article aims to answer two questions relevant to online platforms: does this regulation affect me and if it affects me, what should I do?

    Who me? Yes you…

    The P2B-Regulation imposes obligations on two types of online platforms: online intermediaries and online search engines. Of the two definitions, "online intermediary" raises the most eyebrows as it potentially encompasses a myriad of organizations. In the remainder of this article we will therefore only focus on online intermediaries.

    Online intermediaries are defined as parties that offer services to (small) businesses or "business users" on a contractual basis and that, in turn, enable these business users to offer goods or services to consumers, with the aim of facilitating transactions between those business users and consumers. The geographical reach of the regulation is limited to online intermediaries with business users in the European Union that target European-based consumers. 

    This definition encompasses traditional intermediaries, such as online marketplaces (Bol.com). However, due to the broad and open-ended description, the regulation also ensnares a larger group of companies and individuals, such as online software application stores (Apple App Store), social media, content and communication platforms (Instagram used by makers/artists), online review and booking sites (Skyscanner) and other sites on which goods (Deliveroo) or services (Helpling) are offered. For the scope, seize is irrelevant. The P2B-Regulation does not distinguish between intermediaries with thousands of business users and those with only one or a few (e.g. a website of a hotel also facilitating ordering transportation or third party excursions, for which the hotel gets a commission).

    Platforms are only considered intermediaries when they act as a "crucial gateway" between business users and consumers. The degree of control that a platform is able to exercise over the initiation of a transaction is paramount. Factors indicative of such control are the ability of an intermediary to impose its own terms or collect a fee. Examples of platforms that fail to meet the "crucial gateway" criterium include: online advertising exchanges, online ad serving tools, payment services, search engine optimisation software and services that merely connect hardware and applications. However, the lines remain blurred and by changing its business model a platform might find itself subject to the obligations of the Regulation.

    If me, then what? 

    If an online intermediary falls within the scope of the P2B-Regulation, it may have to make significant changes to its general terms and condition and business organization. At its core, the regulation imposes four obligations:

    1.     Ensure that general terms and conditions are compliant with P2B-Regulation

    The general terms and conditions must be drafted in plain and clear language and be easily accessible to business users throughout every stage of the contracting process.

    Moreover, the general terms and conditions must include:

    • whether an online intermediary can suspend, terminate or otherwise restrict services to business users and its grounds for doing so;
    • information on additional distribution channels or affiliate programs through which goods/services could be marketed;
    • information on the effect of the general terms and conditions on the business user's IP rights;
    • important ranking parameters, accompanied by a motivation;
    • information on any ancillary goods/services offered by the online intermediary / third parties and the conditions under which business users can offer their own ancillary goods/services;
    • information on differentiated treatment of goods/services, if any;
    • grounds for termination by business users; 
    • description of the technical and contractual access to information, provided or generated by business users, after the expiry of a contract;  
    • description of the technical and contractual access to (personal) data provided or generated by business users and consumers; and
    • information on complaint handling systems and mediation (see 4).

    An online intermediary must also take into account a mandatory 15-day notice period prior to amending its general terms and conditions. During this period, business users can elect to terminate the agreement rather than agree to new conditions.

    General terms and conditions, or specific provisions thereof, that fail to meet the information requirements or that are distributed in lieu of the mandatory notice period are void. The regulation also authorizes certain business user interest groups to initiate proceedings against non-compliant online intermediaries before a national court.

    2.     Disclose business user's identity

    Under the P2B-Regulation online intermediaries must ensure that the identity of the business user (the trading identity of the business with whom the customer will be contracting) is clearly visible. For certain online booking platforms this means adding functionality to the website.

    3.     Motivate decision to restrict, suspend or terminate services

    If an online intermediary decides to restrict, suspend or terminate its services, it must share and motivate its decision before it takes effect. If the intermediary terminates all services at once, it must serve the notice 30 days in advance. This rule forces platforms to develop and implement an effective system for dealing with decisions to restrict, suspend or terminate services. 

    4.     Implement complaint and dispute settlement mechanisms

    The P2B-Regulation requires online intermediaries to implement complaint and dispute settlement mechanisms outside a formal court setting. More specifically:

    • All but the smallest online intermediaries (i.e. those with less than 50 employees and an annual profit or balance total of less than EUR 10 million), are required to set up an internal complaint handling system. They must publish information about its functioning and effectiveness on an annual basis.
    • Online intermediaries must appoint at least two specialized mediators, who it will work with on a voluntary basis to resolve issues with business users.

    Take-aways

    • Check if you fall within the scope of the P2B-Regulation.  
    • Review your general terms and conditions to ensure that all necessary information is included.
    • Redesign your website or online environment to ensure that the business user's identity is visible. 
    • Set up a complaint handling system and a system for motivating any decisions to restrict, suspend or terminate services. 
    • Appoint at least two mediators that meet the P2B-Regulation requirements.