The EU is introducing new rules which will provide businesses with a more transparent, fair and predictable online business environment, as well as an efficient system for seeking redress. The regulation adopted today by the Council addresses relations between online platforms and businesses.
Predictability is key for business. Companies doing business through online platforms should be fully aware of the terms of this relationship and when necessary be able to seek quick and efficient redress. The new regulation, the first of its kind in the world, will enable EU businesses to reap the full benefits of the digital economy.
Niculae Bădălău, Romanian Minister of economy
The main aim of the regulation is to establish a legal framework that guarantees transparent terms and conditions for business users of online platforms, as well as effective possibilities for redress when these terms and conditions are not respected.
The online platforms covered by the regulation include online market places, online software application stores and/or online social media, as well as online search engines, irrespective of their place of establishment, provided they serve business users that are established within the EU and that they offer goods or services to consumers who are also located within the EU.
To improve transparency, platforms are required to use plain and intelligible terms and conditions for the provision of their online intermediation services. They must provide a statement of reasons each time they decide to restrict, suspend or terminate the use of their services by a business user. Furthermore, platforms should disclose publicly the main parameters determining the ranking of business users in search results, as well as any differentiated treatment that they grant to goods and/or services offered directly by them or through any business falling under their remit. They should also disclose the description of the main economic, commercial or legal considerations for restricting the ability of business users to offer different conditions to consumers outside the platform.
To provide effective redress, the regulation obliges all platforms (apart from the smallest, as clearly defined in the regulation) to set up an efficient and swift internal system for handling complaints, and to report annually on its effectiveness. It also requires platforms to list in their terms and conditions two or more mediators for cases when the internal complaint-handling system is not able to resolve a dispute between business users. The regulation establishes the right of representative organisations, associations or public bodies to initiate judicial proceedings against platforms that do not comply with the requirements of the regulation. The regulation also gives Member States the power to set out penalties in line with their national systems when there are infringements of the regulation. The Commission is invited to:
- encourage platforms to set up bodies of independent specialised mediators,
- draw up codes of conduct and
- regularly assess the functioning of the new rules.
The regulation still has to be signed and published in the Official Journal of the EU. It will enter into force on the twentieth day following publication. It will apply twelve months from the date of publication.
Online platforms are key enablers of digital trade. At present, more than one million EU businesses trade through online platforms in order to reach their customers, and 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.
While offering great potential in terms of efficient access to (cross-border) markets, European businesses cannot at the moment fully exploit the potential of the online platform economy due to a number of potentially harmful trading practices and a lack of effective redress mechanisms in the EU. At the same time, online service providers face difficulties operating across the single market due to emerging fragmentation.