On 12 July 2020, the Platform to Business Regulation (EU) 2019/1150 ("P2B Regulation") on promoting fairness and transparency for business users of online platforms and search engines became directly applicable in Member States of the European Union ("EU") and, as a result of the Brexit transition period, the United Kingdom ("UK").
The P2B Regulation requires online platforms and search engines based anywhere in the world which offer services to commercial users in the EU or the UK to increase fairness and transparency when dealing with such commercial users, including by refraining from certain practices deemed to be unfair and implementing an internal complaints-handling system. The effect of the P2B Regulation is that non-compliant terms and conditions are null and void. The P2B Regulation leaves space open for EU Member States to legislate for additional sanctions for infringement of the P2B Regulation.1
Online platforms and search engines offering services to businesses in the EU and the UK should determine whether they are subject to the P2B Regulation and, if they are, ensure that their contractual relationships with business users of their services are compliant with the P2B Regulation.
To help online platforms and search engines achieve compliance with the P2B Regulation, the European Commission published a Questions & Answers document to provide guidance to businesses on the main provisions of the regulation.
Who does the P2B Regulation apply to?
The P2B Regulation applies to online intermediation services ("OIS")2 and search engines3 anywhere in the world that provide services to business users (including private individuals acting in a commercial or professional capacity) in the EU and the UK to enable them to reach consumers in the EU or the UK.
The P2B Regulation has extraterritorial application. It does not matter where the provider of the OIS or search engine is established, as long as it facilitates transactions between EU / UK businesses and EU / UK consumers. For example, an online platform that is based in the United States of America but allows EU business to reach EU consumers through advertising their product would be in scope of the P2B Regulation and the provider of the service would have to comply with the P2B Regulation's requirements.
Different types of OIS are covered by the P2B Regulation. In short, these are online platforms which have a contractual relationship with a business user and which enable the business user to offer its goods or services to consumers (e.g. by directly listing or advertising its products). The most common examples of OIS are e-commerce marketplaces, hotel and travel booking websites, price comparison websites, app stores and social media services on which businesses can offer or advertise their goods or services to consumers.
The P2B Regulation does not apply to:
- pure business-to-business OIS which are not offered to consumers;
- peer-to-peer OIS without the presence of business users;
- online advertising tools which are not provided with the aim of facilitating the initiation of direct transaction and which do not involve a contractual relationship with consumers; and
- online payment services.
What does the P2B Regulation require providers of OIS to do?
- Review (and if applicable) amend their terms and conditions
Among other obligations, providers of OIS must ensure that their terms and conditions with businesses:
- are drafted in plain and intelligible language and are easily available to the business users at all stages of their commercial relationship (including in the pre-contractual stage);
- set out grounds for decisions to suspend or terminate or impose any kind of restriction upon the provision of the OIS to business users;
- set out the conditions under which the business users can terminate the contractual relationship;
- include general information regarding the effect of the terms and conditions on the ownership and control of intellectual property rights of the business users;
- include a description of the technical and contractual access of the business users to any personal and non-personal data which the business users or consumers provide for the use of the OIS concerned or which are generated through the provision of those services;
- (if applicable) set out the main parameters determining the ranking and the reasons for the relative importance of those main parameters; and
- (if applicable) set out any differentiated treatment which they give, or might give, in relation to goods or services offered to consumers by either the provider itself or any business users which the provider controls.
Importantly, any changes to the terms and conditions with businesses must be notified to the business users and not be implemented before the expiry of at least 15 days' notice (or a longer notice period when this is necessary to allow business users to make technical or commercial adaptations to comply with the changes).
Providers of OIS should also not impose any retroactive changes to the terms and conditions with businesses, except when they are required to respect a legal or regulatory obligation or when the changes are beneficial for the business user.
- Provide reasons for restricting, suspending or terminating the OIS services
If a provider of OIS decides to restrict or suspend the services to a given business user, it should provide the business user with a statement of reasons for the decision before the restriction or suspension takes effect.
If a provider of OIS decides to terminate the whole of its services to a given business user, it should provide the business user with a statement of reasons for the decision at least 30 days before the termination takes effect (unless certain limited exceptions in Article 4(4) of the P2B Regulation apply).
- Implement an internal complaint-handling system for business users and identify mediators which they are willing to engage to attempt to settle any dispute with a business user
Providers of OIS have to implement an internal system for handling the complaints of business users which is easily accessible, free of charge and ensures handling of the complaint within a reasonable time. The internal complaint-handling system must comply with the requirements set out in Article 11 of the P2B Regulation.
Providers of OIS also have to identify in their terms and conditions two or more mediators (meeting the criteria in Article 12 of the P2B Regulation) with which they are willing to engage to attempt to reach an agreement with business users on the settlement, out of court, of any disputes with the business user.
The requirements to have an internal complaint-handling system and to identify mediators does not apply to small enterprises providing OIS with fewer than 50 members of staff and less than €10 million in turnover.
What does the P2B Regulation require providers of search engines to do?
- Set out the main parameters and their relative importance which determine ranking on the search engine
Providers of search engines have to set out the main parameters, which individually or collectively, are most significant in determining the ranking on the search engine together with the relative importance of such parameters. This information should be provided in an easily and publicly available manner, drafted in plain and intelligible language, and be kept up to date.
Where a provider of an online search engine alters the ranking order in a specific case or delists a particular website following a third party notification, the provider shall offer the possibility for the corporate website user to inspect the contents of the notification.
- Set out if they give any differentiated treatment to goods or services offered through the search engine
Providers of search engines need to provide a description of how they treat and rank goods or services offered by themselves or by corporate website users they control4 compared to those offered by other corporate website users. The description should refer to the main economic, commercial or legal considerations for such differentiated treatment.
What is the effect of Brexit on the P2B Regulation?
The P2B Regulation (known in the UK also as "Online Intermediation Services Regulation" or "OIS Regulation") is directly applicable in the UK as of 12 July 2020 and will become a part of UK law at the end of the Brexit transition period.
On 3 July 2020, the UK Government published a draft statutory instrument amending the P2B Regulation with respect to the UK at the end of the Brexit transition period (e.g. by removing reference to the EU and EU institutions in the UK version of the P2B Regulation). However, the rules and requirements applying to providers of OIS and search engines in the UK will remain substantively the same as before the end of the Brexit transition period.
The European Commission's Questions & Answers document can also be helpful to providers of OIS and search engines in the UK, but the document should be read carefully in light of changes made to the P2B Regulation which will be applicable in the UK at the end of the Brexit transition period.
1 For example, in the UK, the enforcement of the P2B Regulation will be under the Online Intermediation Services for Business Users (Enforcement) Regulations 2020 and business users will be able to bring court actions against online platforms and search engines that do not comply with the requirements of the P2B Regulation.