The European Commission has proposed legislation to promote fairness and transparency for users of online intermediation services. At the time of this publication, the European Commission believes it will be adopted and become law; the effective date would be the third quarter of 2019. An EU regulation will have a direct effect on every EU Member State. While the regulation’s implementation date may seem far away, assuming it will be adopted, there is much that should be done by impacted entities before the effective date.
Who is the regulation directed at?
The regulation is principally directed at online intermediary service providers, namely online platforms where either (a) the transaction and payment takes place on the platform, typically with the platform charging a commission (e.g., Airbnb), or (b) the platform facilitates a commercial transaction, and while the transaction may not occur via the platform, there is a contractual relationship between the supplier (business user) and the platform (e.g., Facebook). Obviously, the regulation has significant, practical consequences for the users of such platforms.
The regulation addresses certain business practices between an operator and the business user, which the European Commission deems to be unfair. It can be assumed it will have a significant impact on the way the business user and the platform operator will work together. It would apply to online platforms that support vendors who provide products or services to customers located in the EU. This might represent only a subgroup of all users of an online platform, but it will be necessary for an online platform to consider the extent it is willing to have contractual relations with EU business users, compared to non-EU business users.
What online platforms must do
Under the regulation, online platforms must include in their terms and conditions a description of the main parameters determining ranking, namely the order in which the results are displayed.
In addition, an online platform might be vertically integrated and so offer goods or services that compete with those of the business users. If so, the terms and conditions must include a description of any preferential conditions (whether legal, commercial or technical) that apply to the online platform and its own goods or services — compared to the goods or services of business users.
Further, online platforms will need to determine and then clearly state their data policy. They must identify what data is collected from business users and customers and inform them whether they have the ability to access this data; if so, they must identify on what terms such data will be provided to business users. In addition, to the extent an online platform is aggregating data, it must inform business users and again identify whether it has taken data; if so, it must identify on what terms such aggregated results will be provided to business users.
Finally, online platforms will need to describe their internal complaint-handling system and include this description in their terms and conditions. Annually, an online platform must publish information on the functioning of its internal complaint-handling system, including information on the number of complaints lodged, the subject matter of the complaints and the time to process the complaints. Anticipating that some complaints will not be resolved, an online platform must identify mediators to whom a complainant can seek redress. Whether or not mediation is pursued, either party remains able to go to court to seek redress.
Read the full article here.
EY legal contacts:
Kiran S. Desai – EU Competition Law Leader
Stefan Krüger – Digital IP Law Leader