Germany: Platform to Business – What Matters Now?
On 12 July 2020, the P2B Regulation on promoting fairness and transparency for business users of online intermediation services (Regulation EU 2019/1150, “P2B Regulation”) entered into force. It imposes new requirements on providers of platforms and search engines. Not only must general terms and conditions be adjusted, but also the criteria for rankings must be disclosed and new structures put in place, such as an internal complaint-handling system and the appointment of mediators. Companies that have not yet implemented the new P2B Regulation should act now, as infringements can result in costly formal warnings and damage claims from competitors and associations.
Who and what is the P2B Regulation about?
The aim of the P2B Regulation is to better protect business users that use online intermediary services and online search engines to sell their products to consumers. The P2B Regulation therefore imposes new obligations on providers of online intermediation services and online search engines.
Online intermediation services are platforms that enable business users to offer their products to consumers (“platforms”). Thus, trading platforms are covered, as well as portals that arrange hotels and flights. This includes booking portals that redirect the booker to another website, as it is irrelevant whether the transaction is carried out on the platform or elsewhere. Online search engines are websites that browse the entire internet for information relevant to an entered search term.
The P2B Regulation also applies to platform providers located outside the EU, which cannot be evaded by a choice of law clause if the following two conditions are met: (1) The platform or search engine opens its services to business users established or located in the EU; and (2) these business users offer their products to consumers located in the EU.
Platforms solely aimed at private users are excluded. However, if the platform offers its services to private and business users, the provider must comply with the new rules.
What do platform providers have to consider from July 2020 on?
Specifications exclusively for platforms:
Requirements for terms and conditions (“T&Cs”)
T&Cs must not only be formulated clearly and comprehensibly and be easily available at any time, they must also meet new requirements regarding content. For example, the T&Cs must specify the reasons for which the platform may fully or partially deny its services to business users. The business user must be informed about additional distribution channels and affiliate programs he might use to market his goods and services. Also, platform providers must outline the main parameters determining a ranking.
If the platform itself offers ancillary products, the provider must disclose this, as well as inform about the conditions under which the business user may also offer ancillary products. If products that the platform itself markets or controls are treated differently from products of independent business users, this must be explained. Above that, other aspects must be taken into account regarding the T&Cs. Therefore, depending on the current state of the T&Cs, there may be a lot of work to be done by the platforms.
Yet, adapting the T&Cs is not enough. It should also be considered revising the internal processes for changing the T&Cs, as the P2B Regulation sets strict rules for doing so: T&Cs may not be changed retroactively – except for the benefit of the users. Apart from individual exceptions, the platform must inform business users at least 15 days prior to implementing the change. Within this period, the commercial user can terminate the contract with the platform. Disregarding such requirements may cause the respective clauses to be void. In specific cases, this affects the entire T&Cs.
Restricting, suspending and terminating the use of the service
If a platform wants to restrict or suspend its services for a specific business user, it must provide the user with reasons no later than at the beginning of the measure. If the service is completely terminated for a given business user, the reasons must generally be communicated to the user 30 days in advance. In all cases, the user is entitled to use the complaint procedure.
Internal complaint-handling system
The platform must set up an internal system for handling complaints from commercial users, which allows for a swift processing of complaints. The complaint-handling system must be easily accessible and free of charge for the user. The platform must also evaluate the effectiveness of the complaint-handling system and publish the results. This shall include information on the number of complaints submitted, the main types of complaints, the average time taken to process them and aggregated information on the outcome of the complaints.
Mediation
The platforms must participate in mediation attempts. To this end, each platform provider must appoint at least two mediators with whom it is prepared to cooperate if a dispute arises. In principle, the appointed mediators must provide their services within the EU and must fulfill other criteria set out in the P2B Regulation. Having those requirements in mind, the mediation offices of the chambers of commerce will be an option.
Obligations that affect platforms and search engines alike
The following obligations affect both platforms and search engines. However, the rules are not concurrent. Therefore, it remains unclear what search engines have to comply with exactly.
Rankings
If the platform or search engine uses a ranking, the main parameters must be displayed. For a platform, a ranking is any relative prominence given to goods or services. For a search engine, a ranking is the relevance given to a search result.
The P2B Regulation stipulates how the content and design of the ranking is to be explained. In particular, platforms and search engines must explain whether and in what way users can influence the ranking by paying direct or indirect fees. However, it is not necessary to provide the algorithms used. In addition, information can be kept secret if disclosure of such information would create a risk of manipulation. The European Commission will adopt guidelines for implementation. The current status can be observed here. So far, only stakeholder submissions are available.
Differentiated treatment
Platforms must explain the ways in which the treatment of their own offerings or those of the companies they control vary to those of other users.
What sanctions are there?
The P2B Regulation itself does not provide sanctions for infringements. Instead, it is up to the Member States to lay down proportionate and deterrent measures. Both fines and possible claims for damages are possible. Explicitly stipulated is a right to bring action before a court for organizations and associations which have a legitimate interest in representing business users or users with a corporate website.
According to information from the Scientific Services of the German Bundestag, Germany does not consider public enforcement. Rather, the guidelines are to be enforced by means of private law, particularly using the Act against Unfair Competition (Gesetz gegen Wettbewerbsbeschränkungen – “UWG”). The provisions of the P2B Regulation are seen as market conduct rules within the meaning of the UWG, meaning that a platform can be sued for reversing the effects of its actions, refraining from further similar conduct and for damages suffered in case of a violation.
What should platform providers do?
Platforms must:
- check and adapt their T&Cs;
- adapt the processes for changing their T&Cs;
- develop processes to suspend users from the platform or to restrict their use
- establish an internal complaint-handling system; and
- appoint mediators.
In addition, the obligation to inform users about the ranking parameters could be used as an opportunity to review the parameters in order to avoid an unfair configuration
Zum ProfilPaul Voigt Lic. en Derecho, CIPP/E
Partner, Berlin
Zum ProfilWiebke Reuter
Associate, Berlin