Online platforms will be subject to new fairness and transparency requirements.
What's the issue?
The European Commission estimates there are approximately 7000 online marketplaces and platforms operating in the EU, ranging from tech giants to startups. 43% of small and medium companies in the EU are thought to use online marketplaces to sell products and services. The EC is concerned that the platforms and marketplaces often have considerable bargaining power compared to their business users trading on them.
What's the development?
As part of the Digital Single Market project, the EC proposed a new Regulation intended to create "a fair, transparent and predictable business environment for businesses and traders when using online platforms". Political agreement on the draft Regulation on fairness and transparency in online platform trading (the Online Platforms Regulation or OPR) has been reached.
The draft Regulation now needs to be formally adopted. The final text had not been published at the time of writing but the compromise text can be found here. We will provide further analysis when the final version of the full text is available.
The OPR will introduce:
- A ban on certain unfair practices – for example, suspension or termination of a seller's account without clear reasons, failure to provide terms and conditions in plain and intelligible language, and failure to give adequate notice for changes to terms and conditions. Definitive termination will require 30 days' advance notice.
- Transparency requirements for marketplaces and search engines which will have to disclose the main parameters used to rank goods and services on their site.
- An obligation on platforms to disclose any advantage given to their own products over others, and explain what data they collect and how they share and use it.
- A requirement for all but the smallest platforms to set up an internal complaint handling procedure for their business users. Platforms will need to offer mediation options to businesses.
- The ability for business associations to sue platforms for non-compliance with the Regulation. Member States will also be able to appoint public authorities with enforcement powers. Businesses will be able to make complaints to those bodies.
What does this mean for you?
The new rules will apply primarily to online platforms and marketplaces, and, in relation to rules on transparency, to search engines. They will apply 12 months after the OPR comes into effect. It is unclear what the impact of Brexit will be on whether or not the UK implements the same or equivalent rules.
