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Regulating online platforms: piece of the puzzle

Regulating online platforms: piece of the puzzle

Regulating online platforms: piece of the puzzle

08.08.2019 BE law

The new Regulation no. 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services, applicable as of 12 July 2020, is another piece of the puzzle regulating online platforms, this time focussing on the supply side of the platforms.

On 11 July 2019, the new Regulation no. 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services (the “Regulation”) was published in the Official Journal of the European Union. The Regulation shall apply as of 12 July 2020.

Online platforms such as Uber, Airbnb, Deliveroo, Booking.com etc. have gained more and more importance in recent years with their new business models, establishing the so-called online platform economy. While the growth of these platforms has offered many advantages, it has also triggered many questions regarding the applicable legal framework. Recent cases on both European and national level have equally revealed the need for regulation in this field in order to ensure legal certainty.

This Regulation focusses on the supply-side of online platforms and is a first important step in regulating online platforms, establishing rules to ensure a fair, predictable, sustainable and trusted online business environment within the internal market. As online platforms and online search engines usually have a superior position, the Regulation aims to avoid unfair and harmful behaviour by granting business users appropriate transparency, fairness and effective redress possibilities. In the end, building trust and transparency in B2B-relations in the online platform economy will also indirectly improve consumer trust in the said economy.

The Regulation applies to online intermediation services (“OIS”) and online search engines that are being provided to business users and corporate website users. “Business users” are any private individual acting in a commercial or professional capacity who or any legal person which through online intermediation services offers goods or services to consumers for purposes relating to its trade, business, craft or profession. “Business users” are therefore the persons acting on the supply side of the platform. “Corporate website users” are the natural or legal persons who use an online interface (software, website, applications, etc.), to offer goods or services to consumers for purposes relating to its trade, business, craft or profession.

As regards its territorial scope, the Regulation applies to such services that are provided to business users and corporate website users with a place of establishment or residence in the Union and that offer goods or services to consumers located in the Union. The place of establishment or residence of the providers themselves is irrelevant.

The Regulation provides a definition of OIS. In order to qualify as OIS, the services must (i) constitute information society services, (ii) allow business users to offer goods or services to consumers, with a view to facilitating the initiating of direct transactions between those business users and consumers and (iii) be provided to business users based on a contractual relationships between the provider of those services and business users.

The terms and conditions of OIS providers must meet a number of requirements. Amongst others, they must be drafted in plain and intelligible language, be easily available to business users at all contractual stages, set out the grounds regarding restriction, suspension or termination of the services, include information regarding the effects on the ownership and control of intellectual property rights, etc. Terms and conditions that do not comply with such requirements will be held null and void.

The Regulation also provides rules on the restriction, suspension and termination of OIS, requiring – unless certain exceptions apply – a statement of reasons referencing specific facts or circumstances, and a notice period of thirty days in case of termination. The Regulation also imposes more transparency regarding the applicable ranking mechanisms, any differentiated treatments and the access to personal or other data of the business users or their consumers, by the provider, the business user or third parties.

Regarding redress possibilities, the Regulation requires OIS providers to set up an effective, easily accessible and free of charge internal complaint-handling process. Furthermore, OIS providers must identify two or more affordable mediators who are meeting a number of requirements for (voluntary) attempts to settle any disputes out of court, with OIS providers required to bear “a reasonable proportion of the total costs”. Lastly, the Regulation includes the possibility for judicial proceedings by representative organisations or associations and by public bodies before the competent national courts.

Over all, this Regulation focussing on the supply side of the platform economy is an important first step towards regulating online platforms. As such, it becomes one piece of a larger puzzle that is currently composed of this Regulation, certain legislative initiatives and national and European case law. One of the most important questions for the providers of these online platforms at this point in time remains: when, and to what extent, are these providers also bound by sector-specific regulations that apply to the services provided via their platforms?

For now, we further await the forming of the platform-story, with the following chapter probably being the decision of the European Court of Justice in the Airbnb case (Cā€‘390/18).

Team

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