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Online Intermediation Services – fairness and transparency for business users

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Online Intermediation Services – fairness and transparency for business users

Online intermediation services can be considered key to business models, trade and innovation, which can improve consumer welfare, and which can be used by both private and public sectors. The European Union (EU) has published a regulation (Regulation (EU) 2019/1150)[1] so as to enable the monitoring of online intermediation services and to potentially secure consumers from threats that appear. Ultimately, the aim is to enable the Union to achieve a fair and transparent treatment for the business users who use online platforms, giving them more effective options for redress when facing potential difficulties, creating a more predictable and regulatory environment for online platforms within the EU.

“Online intermediation service”- means services:

a)      which constitute information to the society,

b)      which allow business users to offer goods or services to consumers, with a view of facilitating the initiating of direct transactions between those business users and consumers (irrespective of where those transactions are ultimately concluded)

c)      provided to business users on the basis of contractual relationships between the provider of those services and business users which offer goods or services to consumers

General features of Regulation 2019/1150:

  • Providers of online intermediation services shall ensure that they have terms and condition, drafted in plain language and are easily available to business users at all stages of their commercial relationship, including pre-contractual stage.
  • Upon any restriction, suspension and termination, the online intermediation services are expected to provide business users with a statement of reasons for its decision, at least 30 days prior to termination taking effect and on a durable medium.
  • There shall be a description sufficient so as to enable business users or corporate website users to obtain an adequate understanding of whether, and if so how and to what extent, the ranking mechanisms take into account:

a) the characteristics of the goods and services offered to the consumers via the online intermediation services or online search engine;

b) the relevance of those characteristics for those consumers;

c)the design characteristics of the website used by corporate website users.

Of course, online intermediation service providers are not expected to disclose algorithms or any information that can harm the search result, which can potentially lead to deception of consumers through manipulation.

  • It is expected that there should be a description about the economic, commercial or legal considerations included in the terms and conditions, when there is differentiated treatment through specific measures taken by the provider of online intermediation services or the provider of the online search engine, relating to any of the following:

a)      direct remuneration charged for the use of online service concerned and that includes any remuneration that involves functionalities or technical interfaces

b)      ranking or other settings applied by the provider that influence consumer access to goods offered through the online intermediation services by other business users

c)      access that the provider may have personal data or any other data, which business users provide for the use of online intermediation services or online search engines

  • Codes of conduct should be available by providers of online intermediation services and by organisations and associates representing them together with business users that are intended to contribute to the proper application

Enforcement rights:

Representative organisations and public bodies shall have a self-standing right to take action before national courts and to counter any non-compliance with the regulation by providers of online intermediation services and search engines. EU countries will in addition provide effective public enforcement mechanisms.

Judicial proceedings can be raised by organisations and by public bodies as long as they satisfy the following criteria:

a)      established in accordance with law of a Member State

b)      a body that pursues objectives that are in the collective interest of the group of business users or corporate website users that they represent

c)      have a non-profit making character

d)      their decision-making policy is not influenced by third-party providers of financing, in particular by providers of online intermediation services

The Regulation has also introduced an alternative mediation mechanism to secure an option of facilitating the out-of-court settlement of disputes with business users, taking into account the cross-border nature of online intermediation services.

The Regulation shall enter into force on the 12 July 2020. There will be an evaluation of the Regulation by January 2020 and will follow every three years. It will essentially assess the impact and effectiveness of any established codes of conduct to improve fairness and transparency and also access the effect of the Regulation on any possible imbalances in the relationship between providers of operating systems and their business users.

Footnote

[1] Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32019R1150.

 

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