Greater fairness and transparency in online intermediation services

In an age of growing digital commerce, consumers are frequently opting to engage with intermediation services and as a result more and more businesses are relying on these platforms to generate custom. This has triggered pressure for the services to be further regulated and in response the European Union (EU) has now agreed the final text for new EU regulation “promoting fairness and transparency for business users of online intermediation services” (the “Regulation”).

The Regulation: who, what and why

The Regulation will apply to any online intermediation service which is available to consumers in the EU, regardless of where the service provider itself is located.

Online intermediation service providers offer an online platform or marketplace for businesses to sell their goods or services to end users. Examples are comparison websites such as Compare the Market and widely known sites such as Amazon or Booking.com.

The purpose of the Regulation is to promote reliable, fair and sustainable business practices and to prevent platform service providers from operating in a manner which is damaging to the millions of businesses which rely on them.

The provisions of the Regulation will require online intermediation service providers to:

• only suspend or terminate a business user’s access to the platform where it has a legitimate reason for doing so;
• ensure that terms and conditions are clear and easily accessible;
• provide information regarding its access to personal data or other data which business users or consumers provide via their platform;
• be transparent about the grounds for restricting business users from offering the same goods and services to consumers under different conditions, when the goods and services are not provided through the intermediation service provider’s platform;
• provide advanced warning of changes to terms and conditions, so that business users have sufficient time to adapt to them;
• disclose the process used to rank contentious search results; and
• be transparent about any advantage given to its own goods and services over those of other business users.

The implications of non-compliance

If a regulated platform fails to comply with the relevant provisions they may face court proceedings brought by either business users or any organisation or association that has a legitimate interest in representing the platform users.

It is foreseeable that platform providers will face significant fines if they fail to prioritise fairness and transparency, although specific figures have not yet been confirmed.

Where are we now?

We do not yet know when the Regulation will come in force. However we do know that there will be a 6 month grace period (from the date that the Regulation is published in the Official Journal of the European Union) before the Regulation becomes applicable in all EU member states.

Looking forward

If the Regulation comes into force during any agreed Brexit transition period, we can expect to see the provisions adopted into domestic legislation. If not, the UK may still follow suit and adopt similar legislation to protect UK business users. In any event, it will still be important for domestic platform providers to achieve compliance with the Regulation if their platform is accessible to users within the EU.

On this basis, intermediation service providers should ensure that they have in place robust policies and procedures covering: search result rankings, usage suspension and the treatment of their goods and services in comparison to those of other business users.

We also recommend reviewing and updating terms and conditions for compliance with the Regulation and reviewing complaint handling procedures to ensure that they are adequate.