New EU Platform to Business Regulation - what you need to know if you trade online
The EU Platform to Business Regulation (the “Regulation”) came into force in the UK on 12 July 2020.
It introduces new rules on how search engines and online platforms interact with businesses that use them to sell their products and services.
The Regulation will continue to apply in UK after the end of the Brexit transition period, subject to any amendment by the UK government.
Which platforms are subject to the Regulation?
The Regulation is designed to target marketplace platforms and applies to all “online intermediation services”. It appears this definition includes platforms such as social media platforms, marketplaces, hotel booking platforms, comparison websites and app stores (essentially online marketplaces).
So social media platforms such as Facebook, Twitter, LinkedIn, and online marketplaces such as Amazon, Booking.com and the App Store will all be subject to this new Regulation.
The Regulation is the first EU legislation targeting the B2B contractual relationships between operators of online platforms and businesses wishing to use those services to reach consumers in the EU.
Platforms which will be exempt from the Regulation include online advertising tools and online advertising exchanges where no contractual relationship between the business user and the consumer is projected, for example online payment services or online advertising tools and exchanges.
Peer-to-peer networks that do not interface with consumers, or pure consumer peer-to-peer platforms that do not involve businesses, are also exempt.
SMEs with fewer than 50 staff members and generating less than €10 million turnover are also exempt from certain obligations, namely the obligation to set up internal complaint-handling mechanisms, and from the obligation to name mediators.
Key provisions of the Regulation
The Regulation is essentially designed to promote fairness and transparency for business users of online marketplace platforms. It will prevent online intermediaries from exploiting their perceived power to impose unfair terms on businesses using their services.
The key provisions introduced by the Regulation are as follows:
- Transparency: The terms and conditions must be in plain and clear language. There must be transparency around how business users/products/services are ranked, the effect of paying for improved ranking, any preferential treatment and any ancillary goods that can be offered.
- Termination / Suspension: The terms and conditions must detail the circumstances in which the platform provider can suspend, terminate or impose any kind of restriction on the use of the platform. The platform provider must also provide 30 days’ advance notice of any termination / suspension, with clear reasons for such termination / suspension (this provision is subject to some exemptions, for example, when the trader has repeatedly breached the terms and conditions).
- Intellectual Property Rights: Platform providers must also explain the effect that the terms and conditions have on the trader's ownership and control of their IP rights.
- Variation: If the platform provider proposes that any changes made to the terms and conditions then they must provide a minimum 15 day notice period and a right for traders to terminate if they do not agree to the proposed changes. Changes made without adhering to the notice period will be null and void.
- Access to Data: The terms and conditions should detail the data concerning business users or consumers that the parties have access to, and any third parties with whom the platform provider proposes to share that data.
- Options: The terms and conditions must indicate the availability of other channels for the sale of the trader's goods and services.
- Mediation: An internal complaint handling system must be set up and at least two mediators must be identified so that businesses can lodge complaints directly with the platform provider (NB. SMEs are exempt from some of these rules).
It should be noted that Terms and Conditions which do not comply with the above requirements will be null and void and businesses are able to pursue legal action directly against a platform provider which is not compliant with the Regulation.
Businesses that will be caught by the provisions of the new Regulation should ensure that their platform terms and conditions are compliant with it.
Reviewing current terms and conditions and, if necessary, issue updated platform terms and conditions to all existing traders in accordance with the notice requirements and obligations detailed above should be a priority.
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