Posted on Dec 06, 2018
Rules requiring online platforms to end unfair practices to businesses and set up effective redress mechanisms have been approved by the European Parliament's Internal Market Committee.
Online intermediation services, such as e-commerce market places (e.g. Amazon, eBay) and search engines (e.g. Google Search) would be required to implement a set of measures to ensure that their contractual relations with businesses (e.g. online retailers, hotels and restaurants businesses, app developers) are transparent and fair, under a draft law voted on in the committee on Thursday.
The proposal would also apply to app stores (e.g. Apple App Store, Microsoft Store), social media (e.g. Facebook, Instagram) and price comparison tools (e.g. Skyscanner, TripAdvisor). MEPs decided that operating systems acting as intermediaries between business users and consumers should also be covered by these rules.
Potentially harmful trading practices, such as sudden, unexplained changes in terms and conditions, suspending accounts, delisting products and ranking issues, as well as a lack of effective redress mechanisms, are among the problems in platform-to-business (P2B) relations.
The rules approved by MEPs would require online platforms to:
- explain the reasons for removing goods or services from search results or delisting them;
- provide a description of the parameters determining the ranking;
- disclose, when displaying the results, whether a ranking has been influenced by direct or indirect remuneration, among other factors;
- provide business users with anonymised information regarding their online reputation (ratings and reviews), which could help them to improve their performance;
- make the terms and conditions clear and intelligible; in cases where changes to the terms and conditions require the business user to make significant technical adjustments to their goods or services, the notice period should be at least 30 days instead of 15 days;
- not disclose the data generated by the transactions of a business user to third parties for commercial purposes without consent;
- put an end to the unfair trading practices listed in this regulation (“black-list” introduced by MEPs in Annex I);
- not restrict traders’ ability to offer the same goods and services to consumers under different or the same conditions through other online intermediation services;
- set up an internal complaints-handling system (small platforms would be exempted) and facilitate out-of-court dispute resolution.
The proposal would also give businesses the possibility to sue platforms collectively, if they fail to deal with complaints properly.
Christel Schaldemose, who is steering this legislation through Parliament, said: "I am very satisfied with the series of compromises we agreed upon today. Our result will greatly improve the Digital Single Market. Despite the fact that this regulation is in essence a business-to-business regulation, the changes we make will ultimately lead to improvements for the consumer. With this regulation, we will ensure a fair and transparent future for online platforms, which both traditional businesses, online platforms as well as consumers will benefit from.
“Online platforms are playing an increasingly important role for both businesses and consumers. Therefore, our aim is to ensure a level playing field without any unfair trading practices. This regulation will definitely make the relationship between the platforms and the businesses more fair and more transparent, which ultimately will be to the advantage of the consumer”, she added.
The mandate to start negotiations with the EU Council was approved in the committee by 28 votes to six, with no abstentions. Talks among the co-legislators can start once the plenary gives its green light. Ministers agreed on their position on 29 November.
It is estimated that around 60% of private consumption and 30% of public consumption of goods and services related to the total digital economy are transacted via online intermediaries.
This will be the first piece of legislation at EU level to address platform-to-business relations.
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