December 17, 2018

The Internal Market Committee of the European Parliament has approved a proposal for a Regulation under which online intermediation services, such as e-commerce market places (e.g. Amazon, eBay) and search engines (e.g. Google Search) would be required to implement measures to ensure that their contractual relations with businesses (e.g. online retailers, hotels and restaurants businesses, app developers) are transparent and fair.

The proposal would also apply to app stores (e.g. Apple App Store, Microsoft Store), social media (e.g. Facebook, Instagram) and price comparison tools (e.g. Skyscanner, TripAdvisor). Operating systems acting as intermediaries between business users and consumers would also be covered by the rules.

The idea is to prevent potentially harmful trading practices, such as sudden, unexplained changes in terms and conditions, suspending accounts, delisting products and ranking issues. The Regulation would also provide for an effective redress mechanism.

Under the new rules, online platforms would have to:

• explain the reasons for removing goods or services from search results or delisting them;
• provide a description of the parameters determining the ranking;
• disclose, when displaying the results, whether a ranking has been influenced by direct or indirect remuneration, amongst other factors;
• provide business users with anonymised information regarding their online reputation (ratings and reviews), which could help them to improve their performance;
• make the terms and conditions clear and intelligible; where changes to the terms and conditions require the business user to make significant technical adjustments to their goods or services, the notice period would be at least 30 days instead of 15 days;
• not disclose the data generated by the transactions of a business user to third parties for commercial purposes without consent;
• put an end to the unfair trading practices listed in the Regulation (i.e. a “black-list”);
• not restrict traders’ ability to offer the same goods and services to consumers under different or the same conditions through other online intermediation services; and
• set up an internal complaints-handling system (small platforms would be exempted) and facilitate out-of-court dispute resolution.

The proposal would also give businesses the ability to sue platforms collectively if they fail to deal with complaints properly.

The European Parliament now has a mandate to start negotiations with the EU Council and talks can start once the plenary gives the green light. To read the European Parliament’s press release in full, click here.