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On February 14, 2019, the European Commission, European Parliament, and Council of the European Union reached agreement on new rules designed to ensure a fair, transparent and predictable business environment to the benefit of both end consumers and entrepreneurs using third party online platforms for their business (such as hotels that offer rooms through booking platforms or app developers who distribute their software through app stores). The new rules will be implemented by way of an EU regulation to be adopted by the Council and European Parliament.

Authors: Michaela Westrup

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The EU’s decision-making institutions agreed to implement the following rules under the new regulation:

  1. Online platforms will have to revise their terms and conditions to make them more transparent and easier to understand. Business users must be notified of changes at least 15 days in advance to give them the opportunity to adjust to the changes. A longer lead time must be granted where the necessary amendments are not straightforward.
  2. Online platforms selling goods or services, in addition to acting as intermediaries in the sale of third party products or services, will have to disclose how they treat and classify their own goods and services in comparison to third party products (e.g., whether they give preferential treatment to their own product offering). Business users must also be informed of how search results and rankings are influenced (e.g., whether they take into account the payment of commission).
  3. If ranking is influenced by an agreement between the platform and a business user (e.g., the payment of an additional commission or advertising fees), the platform must disclose this fact.
  4. Terms and conditions to be agreed with business users will have to detail, in particular:
    • What goods and services an intermediary platform offers to consumers other than those of the business user, and what additional goods and services that business user can offer.
    • The additional distribution channels through which the platform will offer the business user's goods and services.
    • The type of data the platform shares with other commercial users.
    • If the business user is prohibited by the intermediary platform from offering goods and services through other channels on different terms and conditions (under so-called ”most favored nation” or “MFN” clauses), the platform must provide reasons for this restriction.
  5. Online intermediary platforms will not be allowed to prevent their business users from making their identity known to end customers.
  6. If an intermediary platform wants to block or shut down a business user’s account, it will have to give prior warning (generally 30 days in advance) and provide reasons. Platforms will also have to store user data in order to be able to reactivate a user account in the event that the account is wrongly shut down.
  7. Intermediary platforms will have to introduce mechanisms to ensure fast and effective settlement of disputes with business users:
    • The platforms will have to establish an internal complaints management system and publish data on the functioning of the system (number of complaints, time spent addressing complaints, etc.).
    • In order to save time and money, the platforms will have to nominate mediators in their terms and conditions, with a view to settling disputes out of court.
  8. Associations and organizations representing business users will be able to take action before domestic courts to challenge non-compliant behavior by online intermediary platforms and search engines.