May 17, 2018

The European Commission is proposing new rules for the online platforms “providing small businesses with a safety net in the digital economy”.

The Commission says that the new rules will improve the functioning of the Digital Single Market and follow President Juncker’s State of the Union announcements of 13 September 2017 to “safeguard a fair, predictable, sustainable and trusted business environment in the online economy”.

The Commission says that the aim of the new rules is to create a fair, transparent and predictable business environment for smaller businesses and traders when using online platforms. Businesses such as hotels, traders selling online, app developers, and other similar companies that rely on search engines for attracting internet traffic to their websites are amongst those who will benefit from the new rules.

The Commission explains that almost half (42%) of the small and medium companies who responded to a recent Eurobarometer survey said they use online marketplaces to sell their products and services. According to another study, nearly 50% of European businesses operating on platforms experience problems. The study also showed that 38% of problems regarding contractual relations remain unsolved, and 26% are solved but with difficulties. It is estimated that €1.27-2.35 billion is lost directly in sales as a result.

The new rules will tackle these concerns by:

• increasing transparency: providers of online intermediation services must ensure that their terms and conditions for professional users are easily understandable and easily available. This includes setting out in advance the possible reasons why a professional user may be delisted or suspended from a platform. Providers will also have to respect a reasonable minimum notice period for implementing changes to the terms and conditions. If a provider of online intermediation services suspends or terminates all or part of what a business user offers, the provider will need to state the reasons for this. In addition, the providers of these services must formulate and publish general policies on: (i) what data generated through their services can be accessed, by whom and under what conditions; (ii) how they treat their own goods or services compared to those offered by their professional users; and (iii) how they use contract clauses to demand the most favourable range or price of products and services offered by their professional users (Most Favoured Nation clauses). Finally, both online intermediation services, as well as online search engines, must set out the general criteria that determine how goods and services are ranked in search results;
• resolving disputes more effectively: providers of online intermediation services will be required to set up an internal complaint-handling system. To facilitate out-of-court dispute resolution, all providers of online intermediation services will have to list in their terms and conditions the independent and qualified mediators they are willing to work with in good faith to resolve disputes. The industry will also be encouraged to voluntarily set up specific independent mediators capable of dealing with disputes arising in the context of online intermediation services. Finally, associations representing businesses will be granted the right to bring court proceedings on behalf of businesses to enforce the new transparency and dispute settlement rules; and
• setting up an EU Observatory to monitor the impact of the new rules: the Observatory would monitor current, as well as emerging, issues and opportunities in the digital economy, with a view to enabling the Commission to follow up on its legislative proposal if appropriate. Particular attention will be paid to developments in policy and regulatory approaches all over Europe.

Depending on the progress achieved and based on the insights gained through the EU Observatory, the Commission says that it will assess the need for further measures within three years. To read the Commission’s press release in full, click here.