Casting your mind back to June 2019, you might be forgiven for reminiscing about a summer time spent outdoors and not thinking about Regulation 2019/1150 on promoting fairness and transparency for business users of online intermediation services (aka the "P2B Regulation"), unfortunately this year we have to deal with both Covid-19 and the P2B Regulation.
So why has the EU come up with this new regulation? The P2B Regulation is part of a thrust of EU legislation aimed at fostering a strong single digital market and regulating such digital marketplace by promoting a greater degree of transparency and fairness between platforms and their business users.
Although the EU has had consumer protection legislation for a while, there was not much available to protect businesses. Basically, the P2B Regulation acknowledges that (a) not all Business to Business contracts are made equal and (b) some businesses need protection, transparency and accountability from the bigger players (i.e. platforms, social media, search) through which they trade with consumers.
Here are the key questions you should (promptly) ask yourselves and the practical steps to consider by Sunday 12th July.
1. I am not a European company - does it apply to me? Quite possibly – as extraterritoriality strikes again - Article 1(2) of the P2B Regulation indicates that it does not matter where the online intermediation services or search engines are based, as long as the platform facilitates transactions between businesses and consumers based in the EU, then the P2B Regulation applies to you. Also for those of you who thought that the UK may be out of scope because of Brexit - this is not the case - as implementation of the P2B Regulation falls within the Brexit transition period!
2. So what type of businesses are in scope? It is not really about the business as a whole but about the service(s) you offer. An Online Intermediation Service (i.e. in scope service!) is essentially an online platform which enables businesses to transact with consumers. The P2B Regulation therefore applies online marketplaces such as eBay, Amazon and many others.
3. What should I do? First consider if you are in scope (in doubt, give us a call and we will tell you). If you are, you will to implement – as soon as possible – changes to your currents policies, terms of service and internal processes to comply with the P2B Regulation.
These key changes are:
- Notice Period: There should be a 15 day minimum notice period provided to business users of proposed changes to terms and conditions (potentially longer is such changes require a business user to implement technical or commercial changes to comply with the updated terms).
- Termination: You should provide a statement of reasons for decisions to terminate, suspend or otherwise restrict the provision on online intermediation services to a business user and include information on the conditions under which business users can terminate the contractual relationship with you.
- Complaints system: Ensure that you have (or set it up) an internal system for handling complaints for business users.
- Mediation: Identify two or more mediators with which your business users and you will willingly engage with to settle disputes arising from the services.
- IP Rights: Include information on how your terms and conditions impact the ownership and control of business users' IP rights.
- Differentiated Treatment: Describe any differentiated treatment provided, or potentially provided, in relation to goods or services offered to consumers on the platform.
- Ranking: Set out the main parameters for determining ranking of business users' services or goods, and the reasons for the relative importance of those identified parameters.
- Data access: Describe the technical and contractual access, or lack of access, of business users to any personal data or other data which is generated through provision of the services.
- Distribution Channels: Include information on any additional distribution channels and potential affiliate programmes through which you might market goods and services offered by business users.
Obviously, there are a lot of changes to be made to your standard commercial terms and conditions and you will need to also ensure that your terms are (a) plain and intelligible as well as (b) easily available to business users at all times (including at the pre-contractual stage)!
However, it is essential that you also examine your policies and processes in light of the P2B Regulation. The aim of this regulation is not only to have clearer terms but actual accountability, transparency and effective redress mechanisms for business users.
What happens if I do not (fully) comply? Whilst the list above seems straightforward, the devil is in the detail especially as we are still waiting for the European Commission's guidance on the P2B Regulation. A failure to comply means that – in addition to individual member states' enforcement actions - the infringing terms will be void and unenforceable. This could, in theory, spread to an entire set of terms and conditions if they were not draft in plain and intelligible language, but could also nullify updates to terms and conditions, if proper notice periods are not observed for example. Imagine being left with a contract without enforceable limit of liability and limited contractual recourse. No one wants to spend time in unnecessary – but time consuming - litigation!
If you have any concerns or questions about the P2B Regulation and its effect on your business, give us a call and we'd be happy to help you figure out your P2B plan and assist you implementing it.
With thanks to Louis Muncey for this help with this article!
If you want to hear more on this topic, please also listen to Dr Kuan Hon and my podcast on the subject: