Online platform B2B practices
European Commission set to legislate on trading practices of online platforms
Background
The EU was prompted to consider the introduction of a possible law tackling unfair trading practices of leading online platforms following the receipt of a number of complaints since 2015.
Companies such as Spotify and Deezer made complaints to the European Commission that online platforms have abused their position as a gateway to customers to promote their own services or impose unfair terms and conditions.
The EU was prompted to consider the introduction of a possible law tackling unfair trading practices of leading online platforms following the receipt of a number of complaints since 2015.
Companies such as Spotify and Deezer made complaints to the European Commission that online platforms have abused their position as a gateway to customers to promote their own services or impose unfair terms and conditions.
Therefore, last summer, the European Commission launched a study into the business practices of online platforms to identify whether they were operating in a “fair and innovation friendly business environment”.
The development
On 10 May 2017, the Commission announced the initial results of the investigation which revealed that some platforms were:
• delisting products or services without due notice and
• restricting access to data or not making search results transparent enough.
As a result, by the end of 2017, the Commission has stated that it will prepare a legislative instrument to address the issues of possible unfair contractual clauses and trading practices identified in platform-to-business relationships.
Further to this, on 31 May 2017, the Committee on Legal Affairs published a report addressed to the European Commission highlighting some additional problematic unfair B2B trading practices being undertaken by some online platforms such as:
• lack of transparency (eg in search results, data usage and pricing)
• unilateral changes in terms and conditions
• promotion or advertising of sponsored results whilst diminishing the visibility of non-paid results
• possible unfair terms and conditions (eg in payment solutions, and possible abuses of the dual role of platforms as intermediaries and competitors) and
• failing to provide appropriate redress mechanisms for contractual issues.
The report recommends that the Commission “clearly defines liability for platforms and to take appropriate actions to ensure that platforms do not abuse their dominant positions to the
detriment of businesses and consumers”.
The European Commission’s proposals have taken the industry by shock, with EDiMA calling the announcement to legislate a “complete contradiction” of the Commission’s communication last
year that promised not to introduce sweeping legislation.
Why is this important?
Online platforms should brace themselves for incoming legislation addressing their trading practices with other businesses by the end of this year. Although it is still unclear as to where we might land, it is likely that platforms should begin reviewing their terms and conditions and related contracts with other businesses, in anticipation of the new legislation, to ensure that they do not:
• contain unfair terms on customers
• lack transparency in relation to data usage, price etc and
• ensure that they contain appropriate mechanisms for obtaining redress.
The development
On 10 May 2017, the Commission announced the initial results of the investigation which revealed that some platforms were:
• delisting products or services without due notice and
• restricting access to data or not making search results transparent enough.
As a result, by the end of 2017, the Commission has stated that it will prepare a legislative instrument to address the issues of possible unfair contractual clauses and trading practices identified in platform-to-business relationships.
Further to this, on 31 May 2017, the Committee on Legal Affairs published a report addressed to the European Commission highlighting some additional problematic unfair B2B trading practices being undertaken by some online platforms such as:
• lack of transparency (eg in search results, data usage and pricing)
• unilateral changes in terms and conditions
• promotion or advertising of sponsored results whilst diminishing the visibility of non-paid results
• possible unfair terms and conditions (eg in payment solutions, and possible abuses of the dual role of platforms as intermediaries and competitors) and
• failing to provide appropriate redress mechanisms for contractual issues.
The report recommends that the Commission “clearly defines liability for platforms and to take appropriate actions to ensure that platforms do not abuse their dominant positions to the
detriment of businesses and consumers”.
The European Commission’s proposals have taken the industry by shock, with EDiMA calling the announcement to legislate a “complete contradiction” of the Commission’s communication last
year that promised not to introduce sweeping legislation.
Why is this important?
Online platforms should brace themselves for incoming legislation addressing their trading practices with other businesses by the end of this year. Although it is still unclear as to where we might land, it is likely that platforms should begin reviewing their terms and conditions and related contracts with other businesses, in anticipation of the new legislation, to ensure that they do not:
• contain unfair terms on customers
• lack transparency in relation to data usage, price etc and
• ensure that they contain appropriate mechanisms for obtaining redress.