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February 4, 2020
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EU Platform-to-Business Regulation: Fairness and Transparency in the Digital Age?

Online intermediation services enable entrepreneurship and innovative business ventures, which can be crucial for the success of businesses that use such services to reach consumers. Consumers have embraced the use of online intermediation services, therefore a competitive, fair, and transparent online ecosystem where companies behave responsibly is also essential for consumer welfare.

The EU Platform-to-Business Regulation (Regulation) on fairness and transparency for business users of online intermediation services puts in place a harmonised framework for minimum transparency and redress rights. It protects companies that depend on online platforms for reaching consumers, while safeguarding the innovation potential of platforms. The new rules started applying 12 July 2019.

Please find below figures in relation to online intermediation services (Source: https://bit.ly/3b9HpLS)

  • 1 million EU businesses are already selling goods and services via online platforms
  • more than 50% of small and medium enterprises selling through online marketplaces sell cross-border
  • for 2017, the European Business-to-Consumer (B2C) e-commerce turnover was forecasted to reach around €602 billion, at a growth rate of nearly 14%

Online platforms share key characteristics, including the use of information and communication technologies to facilitate interactions between users, collection and use of data about such interactions, and network effects.

The purpose of this Regulation is to contribute to the proper functioning of the internal market by laying down rules to ensure that business users of online intermediation services and corporate website users in relation to online search engines are granted appropriate transparency, fairness and effective redress possibilities.

The Regulation shall apply to online intermediation services and online search engines provided, or offered to be provided, to business users and corporate website users, respectively, that have their place of establishment or residence in the Union and that, through those online intermediation services or online search engines, offer goods or services to consumers located in the Union, irrespective of the place of establishment or residence of the providers of those services and irrespective of the law otherwise applicable. However, itshall not apply to online payment services or to online advertising tools or online advertising exchanges, which are not provided with the aim of the facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers.

The Regulation defines ‘Online Intermediation Services’ as services which meet all of the following requirements:

(a) they constitute information society services within the meaning of point (b) of Article 1(1) of Directive (EU) 2015/1535 of the European Parliament and of the Council (12);

(b) they 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, irrespective of where those transactions are ultimately concluded;

(c) they are provided to business users on the basis of contractual relationships between the provider of those services and business users which offer goods or services to consumers;

Importantly, the Regulation stipulates that providers of online intermediation services shall ensure that their terms and conditions:

(a) are drafted in plain and intelligible language;

(b) are easily available to business users at all stages of their commercial relationship with the provider of online intermediation services, including in the pre-contractual stage; 11.7.2019 Official Journal of the European Union L 186/69 EN ( 13) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004, p. 1).

(c) set out the grounds for decisions to suspend or terminate or impose any other kind of restriction upon, in whole or in part, the provision of their online intermediation services to business users;

(d) include information on any additional distribution channels and potential affiliate programmes through which providers of online intermediation services might market goods and services offered by business users;

(e) include general information regarding the effects of the terms and conditions on the ownership and control of intellectual property rights of business users.

Moreover, the Regulation provides for restriction, suspension and termination of the provision of its online intermediation services to a given business user in relation to individual goods or services offered by that business user.

Of course, the relevant exchange of personal information also comes into play, with a significant interplay between the EU Platform-to-Business Regulation and the EU General Data Protection Regulation (GDPR). Specifically, the Regulation stipulates as regards access to data that providers of online intermediation services shall include in their terms and conditions a description of the technical and contractual access, or absence thereof, of business users to any personal data or other data, or both, which business users or consumers provide for the use of the online intermediation services concerned or which are generated through the provision of those services.

Through the description referred to above, providers of online intermediation services shall adequately inform business users in particular of the following:

(a) whether the provider of online intermediation services has access to personal data or other data, or both, which business users or consumers provide for the use of those services or which are generated through the provision of those services, and if so, to which categories of such data and under what conditions;

(b) whether a business user has access to personal data or other data, or both, provided by that business user in connection to the business user’s use of the online intermediation services concerned or generated through the provision of those services to that business user and the consumers of the business user’s goods or services, and if so, to which categories of such data and under what conditions; 11.7.2019 Official Journal of the European Union L 186/73 EN

(c) in addition to point (b), whether a business user has access to personal data or other data, or both, including in aggregated form, provided by or generated through the provision of the online intermediation services to all of the business users and consumers thereof, and if so, to which categories of such data and under what conditions; and

(d) whether any data under point (a) is provided to third parties, along with, where the provision of such data to third parties is not necessary for the proper functioning of the online intermediation services, information specifying the purpose of such data sharing, as well as possibilities for business users to opt out from that data sharing.

Nonetheless, the aforesaid shall be without prejudice to the application of Regulation (EU) 2016/679, Directive (EU) 2016/680 and Directive 2002/58/EC.

The extent of compliance remains to be seen however. Key issues and practical considerations arise which impact the majority of organisations and address gaps in compliance. It is particularly important for organisations to increase awareness through training of all stakeholders involved. It will be interesting to see how the EU’s liability and safety rules for digital platforms, services and products can be enhanced with a new Digital Services Act as well. Ultimately, this interrelated, multidisciplinary legal framework should make a significant contribution to fairness and transparency for business users of online intermediation services and to improving personal data conditions, and to protect the privacy of every citizen.

K. A. Kourtellos & Co LLC is an independent, multi-practice law firm based in Limassol, CYprus. We are trusted counsel to individuals, families, and businesses worldwide.

Our areas of expertise are Corporate and Commercial, Private Client, Real Estate and Infrastructure, Energy, Banking and Finance, Technology, IP and Data Protection, Dispute Resolution, Reputation and Crisis Management, Environmental and Shipping.

 

Please do not hesitate to contact us if you require further information or support on such matters.

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