Although the, Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services (P2B Regulation) has been already applicable for over half a year, there have been important developments that can affect you, related to the sanctioning regime. The P2B Regulation does not contain any sanctioning regime but, instead, has “delegated” in each EU member the responsibility of adopting the legal tools they consider necessary to ensure compliance with this regulation. The time for putting “enforcement” measures into place has come, so not complying with the P2B Regulation may have severe consequences, depending on the specific country where the breach occurs. Below, we have included some examples of the consequences of not complying with the P2B Regulation.
However, prior to jumping into the sanctioning regime of the P2B Regulation, we should start with a brief reminder of its main aspects.
What is a business user?
This term refers to any private individual acting in a commercial or professional capacity, or any legal person which, through online intermediation services (e-commerce platforms) offers goods or services to consumers for purposes relating to its trade, business, craft or profession.
Main obligations of the P2B Regulation
The aim of the P2B Regulation is to avoid situations where the business user may be negatively affected by decisions of the platform and establish the principles by which platforms can treat them. This way, the imbalance of powers between the relevant business user and the platform is somehow “regulated” so the business user has certain rights.
In order to meet this objective and prevent unfair situations, the P2B Regulation imposes a series of measures.
- Transparency in the general conditions for business users:
- Vague, confusing or unclear terms are prohibited. They must be accessible at all stages of the contractual relationship (including the pre-contractual phase).
- The reasons for suspending, terminating or restricting user accounts must be clear.
- The general conditions can only be changed with a minimum of 15 days' notice. During this period, the affected business user may terminate the contract with the online intermediation service provider.
- Online intermediation service provider platforms shall ensure that the identity of the business user is clearly visible.
- Suspension, restriction or termination of accounts: It is necessary to inform the business user affected by any of these situations about the reasons of suspension, termination, etc. in detail. In addition, the business user must be given the opportunity to clarify the facts that have led to the suspension, restriction or termination of the services provided. If the suspension or termination has been originated by a notification from a third party, the content of the notification should be provided to the affected business user.
- Transparency in the ranking and visibility parameters: A very important topic in online service intermediation platforms is the place where the offer or profile of the business user is located with respect to the others business users and therefore its visibility. On this point, the P2B Regulation requires online intermediation platforms to report the most significant ranking parameters in their general terms and conditions. If the parameters include the possibility of improvement through remuneration, this must also be included. However, there is no obligation to disclose how the platform's algorithms work. In relation to this transparency obligation, the European Commission has published some guidelines to facilitate compliance.
- Differentiated treatment of its own products: In the event that the platform offers its own products or services (directly or through third parties) in a differentiated manner, the description in this regard must be included in the general terms and conditions, including the main economic, commercial or legal considerations underlying the differentiated treatment.
- Access to data: The general conditions must include a description of the technical access that the platforms will have to the personal data provided by the business users or consumers for the provision of the online intermediation service.
- Restrictions to the offer of goods or services under different conditions by other means: Any possible restriction by the platform to offers made by the business user of its goods or services on other platforms and under different conditions, must be duly justified in the general conditions.
- Internal complaints and mediation system: Online intermediation service providers shall establish an internal system (which may be outsourced) to process complaints from business users. It should be easy and free of charge, and processed within a reasonable period of time. Information about the system must be included in the general conditions. In addition, two or more mediators must be appointed to resolve out-of-court disputes with business users. Mediation is voluntary.
- Legitimacy of associations to bring legal actions: The P2B Regulation includes the legitimacy that these users have so that, provided there is a legitimate interest, they can bring legal actions with the aim of preventing or prohibiting any breach committed by online intermediation service provider.
Special obligations regarding search engines
The principles of the previously described measures apply to search engines, although in a different way, since the users of search engines do not necessarily have a contractual relationship with them. Obligations relevant to search engines include:
- Content ranking: The parameters that are most significant in determining the ranking and the relative importance of each parameter must be set out. They must be public and easily accessible, drafted in a simple and understandable manner.
- Notification in case of alteration or exclusion of content: In case of alteration or exclusion of a particular website as a result of a notification from a third party, the webmaster must be given the possibility to examine the content of the notification.
- Differential treatment: In the event that the search engine offers its own products or services (directly or through third parties) in a differentiated manner, a description of the differentiated treatment must be provided, including the main economic, commercial or legal considerations underlying the differentiated treatment.
Enforcement tools: EU member states
As explained above, each EU member state shall decide how to guarantee compliance with P2B Regulation. There is not a sanctioning section in the P2B Regulation, so there are differences in relation to the enforcement tools implemented by EU members. For instance (just a few examples):
- Spain: Not complying with the P2B Regulation may be subject to fines up to EUR 150,000. Besides, business users may submit claims with the relevant civil courts to ask for enforcement or compensation in the event of damages.
- France: Not complying with the P2B Regulation may be subject to, in addition to the nullity and restitution of the unduly obtained benefits, a civil fine not exceeding the higher of the following three amounts:
- EUR 5,000,000;
- three times the amount of the undue benefits received; or
- 5% of the turnover excluding taxes generated in France.
Besides, the Ministry of Economy has further powers in the event of breach of P2B obligations. For instance:
- Enjoin a warning, with reasonable period of time, (i) to comply with and (ii) to cease any practice contrary to the provisions of the P2B regulation;
- Issue an administrative fine, the amount of which may not exceed EUR 15,000 for a legal entity; and
- If the injunction is notified due to a breach punishable by a civil fine, enjoin the operator with a daily penalty to comply not exceeding 0.1% of global turnover (max. 1% total).
- Germany: Federal Ministry for Economic Affairs and Energy has stated that enforcement by the authorities is not envisaged in Germany; rather, enforcement is to take place through civil law instruments.
- Netherlands: The Netherlands plans to implement a sanction system for non-compliance with the P2B Regulation. The State Secretary for Economic Affairs and Climate Policy currently elaborates on a bill which grants the Dutch Authority for Consumer and Markets, the power to enforce the P2B Regulation. The draft bill is expected soon.
- Italy: Italy has envisaged sanctions for not complying with P2B Regulation – though the relevant piece of legislation has not been adopted yet. Indeed, draft bill of the Italian European Law 2019-2020 provides that, in case of non-compliance with P2B Regulation, the same sanctions set forth for abuses of dominant position will apply and will be proportional in their severity to the turnover of the infringer. Although the bill has not been approved and signed into law yet, it clearly shows the intention of the Italian legislator.
- UK: In the UK, the P2B Regulation has been kept with minimal amendments after Brexit. If a platform does not comply with UK P2B Regulation and the business user suffers a loss or damage due to the breach, that loss or damage is actionable by the business user against that provider of online intermediation services. Besides, business users may bring proceedings against the provider of online intermediation services or provider of an online search engine for an appropriate remedy, which includes:
- an injunction (including an interim injunction);
- In Scotland, and interdict (among others);
- Any other appropriate remedy or relief; and
- The publication of the Court decision (with the reputational damages that this may involve).
- Poland: In the event of breach, business users may ask for damages on the basis of the Polish Civil Code and other legal local tools. Enforcement of local authorities is not envisaged.
In view of the above, it seems clear that Regulation 2019/1150 is a clear reflection of the efforts that the European Union is making to regulate what has come to be known as the "online platform economy" and, therefore, it should be taken into account by all the players involved in it and, in particular, by the providers of online intermediation services and search engines.
By now, all intermediation services platforms should have already implemented Regulation 2019/1150. If not, we recommend taking action on it, starting by amending the conditions of the platform according to the requirements of the P2B Regulation. However, this may not be an easy task to be accomplished, so legal assistance may be required.
Authored by Gonzalo Gállego, Victor Mella, Juan Ramón Robles, Theresa Mengler, Weronika Wolosiuk, Chantal van Dam, Julie Schwartz and colleagues from other Hogan Lovells offices for section: Enforcement tools: EU member states.