14.02.19 EU new legislation to improve fairness of online platforms' trading practices

Yesterday, on 14.Feb the European Commision announced a change in legislation which is aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.

According to the press release, these are the first rules of this kind anywhere in the world and they will basically make it illegal for marketplaces to kick their merchants off their platform without clear explanation and option to appeal or prohibit intransparent ranking in search results.

Small businesses will particularly benefit immediately from:

A ban on certain unfair practices

- No more sudden, unexplained account suspensions. With the new rules, digital platforms can no longer suspend or terminate a seller’s account without clear reasons, and possibilities to appeal. The platform will also have to reinstate sellers if a suspension was made in error.

- Plain and intelligible terms and advance notice for changes. Terms and conditions must be easily available and provided in plain and intelligible language. When changing these terms and conditions, at least 15 days prior notice needs to be given to allow companies to adapt their business to these changes. Longer notice periods apply if the changes require complex adaptions.

Greater transparency in online platforms

Transparent ranking.

- Marketplaces and search engines need to disclose the main parameters they use to rank goods and services on their site, to help sellers understand how to optimise their presence. The rules aim to help sellers without allowing gaming of the ranking system.

Mandatory disclosure for a range of business practices.

- Some online platforms not only provide the marketplace, but are also sellers on the same marketplace at the same time. According to the new transparency rules platforms must exhaustively disclose any advantage they may give to their own products over others. They must also disclose what data they collect, and how they use it – and in particular how such data is shared with other business partners they have. Where personal data is concerned, the rules of the GDPR apply.

New avenues for dispute resolution.

Today sellers are often left stranded with no ways to appeal or resolve complaints when problems arise. This will change with the new rules.

All platforms must set up an internal complaint-handling system to assist business users. Only the smallest platforms in terms of head count or turnover will be exempt from this obligation.

Platforms will have to provide businesses with more options to resolve a potential problem through mediators. This will help resolve more issues out of court, saving businesses time and money.

When?

The new rules will apply 12 months after its adoption and publication, and will be subject to review within 18 months thereafter, in order to ensure that they keep pace with the rapidly developing market. The EU has also set up a dedicated Online Platform Observatory to monitor the evolution of the market and the effective implementation of the rules.

Full press release link:

http://europa.eu/rapid/press-release_IP-19-1168_en.htm?fbclid=IwAR0zRsYTLe87eK_vLu9ukbwA1KesnRsUGMy-fCpO-4MtKU_swMdanGy_r1Q