Regulation (EU) 2019/1150: new rules to protect business users of online intermediation platforms

Written on 22 Jun 2020

Regulation 2019/1150 will become applicable on the 12 of July and online intermediation service providers will be required to comply with certain transparency obligations vis-à-vis the business users of their services, which would entail a fairer environment for operators. In addition, the Regulation leaves certain aspects to the criteria of Member States that would not be completely covered therein (e.g. the imposition of fines in the event of infringements).

During the last few years, the EU has noticed that businesses that provide their goods or services to consumers in the EU (hereinafter, "business users") through online intermediation services are showing some degree of dependency on businesses that provide those services (online intermediation service providers and search engines, which we address together as "platforms"). Such dependency implies a dominant position vis-à-vis business users that enables platforms to commit certain abuses in some cases, a fact that the EU would disapprove of. In this context, the EU has published Regulation (EU) 2019/1150, of 20 June 2019, on promoting fairness and transparency for business users of online intermediation services (hereinafter, "Regulation" or "P2B Regulation"), which provides for a more transparent and fair environment for business users that make use of platform services.

The main purpose of the first provisions included in the P2B Regulation is to ensure the transparency of commercial relationships between platforms and business users. That is, that the terms and conditions of platform services are plain and easily available for business users, as well as that any modification to the terms and conditions is notified with proportionate and reasonable advance to their business users. The Regulation sets out that any term and condition that is in breach of the obligations about terms and conditions under the Regulation shall be null and void.

In addition, the Regulation obliges platforms to observe certain obligations where they decide to restrict, suspend or terminate their services to a particular business user. In particular, platforms shall provide, on a durable medium, the business user concerned in the restriction or suspension of the platform services with a statement of reasons for that decision before or at the time in which the decision becomes effective. However, if the decision implies the termination of the platform services to a particular business user, platforms shall generally provide the relevant statement of reasons 30 days in advance. Also, it is important to note that platforms are obliged to provide an internal system for handling the potential complaints of business users.

The Regulation also sets forth that platforms shall provide details about the main parameters that determine how rankings of business users (for discriminatory purposes) are carried out, without requiring the disclosure of the particular algorithms (which shall remain subject to applicable law on trade secrets). Among other things, platforms shall specify whether it is possible for business users to influence such a ranking by any kind of direct or indirect remuneration to the relevant provider.

P2B Regulation imposes more transparency obligations to platforms in relation to the access that business users may have to data (personal or not) from business users or consumers using their platform services. Among other things, the Regulation establishes that platforms shall inform on whether they provide data to third parties where such provision is not necessary for the proper development of the platform services, specifying the purpose of such data sharing and possibilities for business users to opt out from the data sharing.

In order to ease the relevant enforcement of P2B Regulation, certain organisations and associations with a legitimate interest in the representation of business users, as well as certain public bodies, are enabled to establish the relevant actions before the competent courts and to prevent potential infringements to the obligations set out in the Regulation. The fact that the Regulation entitles these associations and groups to act as representatives of business users leads us to ask whether they shall also be entitled to establish class actions on behalf of any business user concerned in a dispute in relation to infringements under the Regulation (we remind that the Spanish Civil Procedural Act only foresees this possibility in the event of consumer and user associations). However, it is important to note that this entitlement shall not exclude business users from taking any relevant action to ensure due observance of their acknowledged rights in the P2B Regulation.

While the Regulation will be directly applicable in the Spanish jurisdiction, there would be certain aspects of the Regulation that are left to the criteria of Member States. In particular, that is the case of applicable measures in the event of infringements under the Regulation, as the Regulation does not specify what particular actions and remedies may exercise business users and other organisations to defend their rights conferred in the Regulation (other than considering certain terms and conditions null and void).

It is important to note that the Regulation enshrines certain rights and obligations that, up to this date, we are unaware of how they would be enforced in Spain. In addition, no specific law or draft bill to ensure enforceability of the P2B Regulation has currently been made available in Spain. This uncertainty leads us to consider whether specific additional laws would really be necessary, or whether, on the contrary, the current Spanish legal framework provides enough rules to ensure enforceability of the P2B Regulation.

Taking into account the scope of the Regulation, we understand that the provisions included in the applicable laws on general contracting conditions (GCCA) and/or unfair competition (UCA) would be especially relevant for the purpose of ensuring enforceability of the P2B Regulation. In this sense, we understand that if the legislator were to properly develop the sanctioning regime envisaged in the GCCA, the Spanish legal framework would include the dissuasive measures required by the Regulation. Furthermore, an adequate development of the current Spanish legal framework would allow the establishment of claims between businesses in accordance with GCCA in relation to cessation, retraction, and declarative actions, and pursuant to the UCA concerning actions against unfair competition acts.

The Regulation belongs to the set of measures addressed to achieve the digital single market in the EU and its application will imply a more fair and transparent environment for a great share of online operators, which would ultimately favour consumers. In any event, we are still awaiting clarification from the authorities as to how the Regulation shall be enforced in Spain.