From July 12, 2020 the Regulation (EU) 2019/1150 of the European Parliament and of the Council of June 20, 2019 on promoting fairness and transparency for business users of online intermediation services (P2B Regulation) will apply. It will have direct effect in EU member states. Providers of online intermediate services and providers of online search engines that provide their services to businesses in the EU with activities vis-à-vis consumers in the EU should determine whether they are subject to the P2B Regulation and if so, prepare for the new rules of the P2B Regulation.
1. Who is subject to the P2B Regulation?
The P2B Regulation applies to online intermediate services and online search engines provided to business users and corporate website users established in the EU, where those business users and corporate website users offer goods or services to consumers located in the EU through those online intermediate services or online search engines (Art. 1 para. 1). Pursuant to recital 11 of the P2B Regulation examples of online intermediation services include (i) online ecommerce market places (including collaborative ones), (ii) online software application services (such as application stores), and (iii) online social media services (e.g., on which companies present their products and through which consumers can reach the company’s website via a link on the social media platform). As expressly stipulated in the P2B Regulation (Art. 1 para. 2), it shall apply irrespective of the place of establishment of the providers of online intermediate services and online search engines, i.e., it covers providers regardless of whether they are established in a member state or outside of the EU. Due to the broad scope not only large US players, but also many other P2B platform providers will be subject to the P2B Regulation. Online payment services and online advertising tools or online advertising exchanges are excluded (recital 11).
2. Subject Matter of the P2B Regulation
The purpose of the P2B Regulation is to grant business users of online intermediation services and corporate website users in relation to online search engines transparent, fair and effective redress possibilities (Art. 1 para. 1). The reason for such platform rules is according to its recitals that “online intermediation services are key enablers of entrepreneurship and new business models, trade and innovation” (recital 1) that “can be crucial for the commercial success of undertakings who use such services to reach consumers” (recital 2).
3. How to comply with the P2B Regulation?
If subject to the P2B Regulation, online intermediate services (to which most of the provisions of the P2B Regulation apply) and online search engines must comply with a number of new requirements.
a) Online Intermediate Services
Online intermediate services (defined in Art. 2 para. 2) must update their terms and conditions and implement/adapt certain procedures. In detail, for example:
- Terms and Conditions: Providers of online intermediation services must ensure that their terms and conditions, inter alia
- are easily available to business users at all stages of their commercial relationship (including the pre-contractual stage),
- set out the grounds for decisions to suspend or terminate or impose any other kind of restriction upon the provision of their online intermediate services to business users, and
- include information on any additional distribution channels and potential affiliate programs through which providers of online intermediation services might market goods and services offered by business users (Art. 3 para. 1)
- In case of a violation of these transparency rules, the respective provision(s) of the terms and conditions shall be null and void (Art. 3 para. 3).Furthermore, providers of online intermediation services must provide in their terms and conditions, among other things, the following:
- the main parameters determining the ranking (Art. 5 para. 1) and, if applicable, a certain description of the possibility to influence ranking against any direct or indirect remuneration and its effects (Art. 5 para. 3),
- if applicable, a description of the type of ancillary goods and services offered and whether and under which conditions the business user may offer its own ancillary goods and services (Art. 6 para. 1),
- a description of differentiated treatment which they give to their own group of company’s goods or services (Art. 7 para. 1),
- information on the conditions under which the business users can terminate the contractual relationship with the provider of the online intermediate services (Art. 8 lit. b),
- a description of the technical and contractual access, or absence thereof, to the information provided or generated by the business user, which they maintain after the expiry of the contract (Art. 8 lit. c),
- a description of access of the business user to personal data and other data provided or generated by the business user after expiry of the contract. (Art. 9 para. 1),
- where applicable, grounds for a restriction of the ability of business users to offer the same goods and services to consumers under different conditions through other means (Art. 10 para. 1),
- all relevant information relating to the access to and functioning of their internal complaint-handling system (Art. 11 para. 3), and
- information on two or more mediators with which they are willing to engage to settle disputes between the provider and the business user (Art. 12 para. 1).
- Changes to Terms and Conditions (Art. 3): Providers of online intermediation services must provide for a (at least) 15 day minimum notice period for changes of their terms and conditions and business users concerned have the right to terminate the contract (Art. 3 para 2). In case of violations of the new rules for terms and conditions they shall be null and void (Art. 3 para. 3). Under certain circumstances, the notice period does not apply or can be waived. Also, retroactive changes to terms and conditions may generally not be imposed (Art. 8 lit. a).
- Restriction, Suspension or Termination of Services (Art. 4): Where a provider of online intermediation services decides to terminate its services to a certain business user, it must provide for a (at least) 30 days notice period and a statement of reasons for such decision. Under certain circumstances, the notice period does not apply. The restriction or suspension of the services requires a prior statement of reasons.
- Internal Complaint Handling System (Art. 11): Providers of online intermediation services must provide for an internal system for handling the complaints of business users and such system must comply with certain requirements set out in the P2B Regulation.
b) Online Search Engines
Online search engines must comply, inter alia, with the following rules:
- Ranking (Art. 5): Providers of search engines must provide an up to date, easily and publicly available description drafted in plain and intelligible language that sets out the main parameters determining the ranking of links (including the possibility to influence ranking against any direct or indirect remuneration and its effects). If a provider of an online search engine has altered the ranking order due to a third party notification, the provider must offer the possibility to inspect the contents of the notification.
- Differentiated Treatment (Art. 7 para. 2): Providers of online search engines must provide for a description of any differentiated treatment which they give to their own group of company’s goods or services.
Adequate and effective enforcement must be ensured by the member states (Art. 15 para. 1). Member states are not obligated to provide for ex officio enforcement or to impose fines (recital 46). Representative organisations or associations that have a legitimate interest as well as public bodies have the right to take actions against online intermediation services or online search engines to stop or prohibit any noncompliance (Art. 14 para. 1).
5. Unanswered Questions
Although the P2B Regulation is quite descriptive, in particular the following aspects remain unclear:
- The P2B Regulation does not include legal consequences in case of violations against the P2B Regulation (except that terms and conditions shall be null and void in case of a violation of certain new rules on the terms and conditions (see above)). It remains to be seen what type of sanctions for infringements of the P2B Regulation the member states will implement (e.g. via public authorities and/or via civil litigation).
- The applicability of the P2B Regulation depends on whether the business user directs it offerings to EU consumers. Since this is something the providers of online intermediation services and providers of online search engines cannot control, it remains to be seen how this will be dealt with in practice (e.g. contractual arrangements).
- The P2B Regulation contains some rules for terms and conditions. Although it explicitly states that the P2B Regulation “shall not affect national civil law, in particular contract law”, it will be interesting to see how it correlates with existing national law and whether there is much or little need for amendments, e.g. the German law on standard business terms applies to a large extent also in B2B relationships and already includes strict requirements.
- In B2B relationships, the parties are generally free to choose the governing law. However, it is likely that the EU legislator intended that the provisions of the P2B Regulation shall apply even if the parties have chosen non-EU law as governing law (the P2B Regulation might be seen as mandatory law within the meaning of Art. 9 ROME I Regulation).
Providers of online intermediate services and providers of online search engines that provide their services to businesses in the EU with activities vis-à-vis consumers in the EU should prepare for the new rules of the P2B Regulation and amend their terms and conditions, respectively update their website information accordingly. Customers of such services may proactively reach out to their providers and request information on any amended terms and conditions. In case of lack of such amendments, customers should review the respective national laws regarding the legal consequences and enforcement options.