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Platforms-to-Business Regulation

On 26 April 2018, the European Commission published a Proposal for a Regulation on promoting fairness and transparency for business users of online intermediation services aimed at safeguarding “a fair, predictable, sustainable and trusted business environment in the online economy”.

During a subsequent press conference hosted by Mariya Gabriel, Commissioner for the Digital Economy and Society, and Sir Julian King, Commissioner for the Security Union, it was indicated that this proposal is intended as a ‘light touch approach’ taking into account both the rights and values of citizens, and the great responsibility platforms bear.

Measures contained within the proposal promote greater transparency in relation to terms and conditions, ranking of goods and services, delisting and suspension of users from a platform, treatment of data, and contract clauses. More efficient dispute resolution is also identified as a key proposal whereby providers of online intermediation services are required to set up an internal complaint-handling system, and associations representing businesses will be granted the right to bring court proceedings on behalf of businesses. In line with previous draft texts, the paper also establishes an EU Observatory to monitor the impact of the new rules, with a view to enabling the Commission to follow up on today’s legislative proposal if appropriate. The Commission will review the need for further measures in three years.

Background

The increasing reliance of European businesses on online platforms has led to a shift in the online marketplace, creating new dependencies and imbalances of power. However, the cross-sector nature of platforms means that there are a variety of regulations which apply in some way or another, but do not regulate online platforms in their entirety. This loophole led to fairness in platform-to-business (P2B) relations being recognised as one of the European Commission’s three priority areas in its mid-term review of the Digital Single Market (DSM) strategy in May 2017. 

Since the launch of the DSM in May 2015, the Commission initiated a comprehensive assessment of the social and economic role of online platforms, encompassing a public consultation, Eurobarometer studies, studies and scientific workshops. This process aimed to explore both the opportunities for innovation and the regulatory challenges associated with online platforms. Guiding principles for future policy in this area centre on ensuring a level playing field for comparable digital services, the responsible behaviour of online platforms to protect core values, transparency and fairness safeguarding user trust and innovation, and open and non-discriminatory markets in a data-driven economy. 

Along with the adoption of a resolution within the European Parliament in June 2017, a public consultation on fairness in platform-to-business relations was subsequently launched, concluding in November 2017. Throughout this process, the European Commission sought to maintain a balanced and predictable liability regime for online platforms, identifying significant room for improvement in business-to-business (B2B) relations between platforms and suppliers. Concerns in relation to legal uncertainty and fragmentation across different Member States lead to a legislative instrument proving the most favourable option throughout  subsequent negotiations.

In the interests of determining how online platforms could be better regulated to enhance trust, transparency and fairness, the European Commission also conducted a Behavioural study on transparency in online platforms, published in April 2018. The study focused on three key areas: criteria for ranking and presentational features of search results; the identity of contractual parties; and quality controls on consumer reviews, ratings, and endorsement systems. In brief and in conclusion, greater online transparency is deemed central to decision-making; increases trust and confidence in the online environment, and increases the probability of product selection. The findings of the study were intended to shape the Commission’s “New Deal for Consumers” package along with further actions targeting online platforms.

Following discussions and subsequent trilogues between the Council of the EU and the European Parliament throughout 2018 and 2019, the platform-to-business regulation was published in the EU Official Journal on 11 July 2019, and the Regulation will apply as of July 12, 2020. It is expected that the European Commission will review the text by January 2022.

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