Online marketplaces have been around for a while now, however it has become increasingly popular as a result of the COVID-19 pandemic. Consumers are turning more to the online marketplace to buy (or sell) products, services or both due to the ease of browsing the internet in the comfort of their own home. This article will set out the impact of the EU Online Intermediation Regulation or Platform to Business Regulation (“P2B Regulation”) for online marketplaces and platforms.
What is considered an online marketplace?
An online marketplace is an app or website that provides a virtual platform for sellers to share their services or products to potential customers, and then facilitate and manage the sale process once the buyer has decided on their purchase. Online marketplaces are now commonplace and often fundamental to the launch and sustainability of small businesses.
What are the UK rules for online marketplaces?
The key regulation to look out for is the P2B Regulation which came into effect on 12 July 2020 and aims to promote “fairness and transparency” for the business users of online intermediation services. A UK equivalent with the same requirements applies post-Brexit. In short, the P2B Regulations regulates the relationship between the platform provider/online marketplace and the traders who use it to market goods or services to consumers.
Some of the key elements of the P2B Regulations requires:
- terms and conditions to be reviewed and updated in plain and intelligible language;
- 15 day minimum notice period must be given for changes to the T&Cs;
- fair and transparent policies regarding ancillary goods/services and differentiated treatment;
- provision of transparent information on how rankings operate (including disclosure of data collection); and
- implementation of internal complaint handling system and mediation services
The P2B Regulation creates more transparency overall and encourages healthy competition, and in return, it hoped to increase consumer trust and choice. It also specifically anticipates the fluctuating nature of technology and increasing value of data. Platform providers are required to explain in their terms and conditions what data relating to the trader or its transactions may be retained after the relationship ends. Hand in hand with data protection legislation, each party needs to understand and monitor all use of its personal data.
Who does the UK P2B Regulation apply to?
The P2B Regulation applies to online intermediation services (“OIS”) and search engines anywhere in the world that provide services to business users (including private individuals acting in a commercial or professional capacity) in the EU and the UK to enable them to reach consumers in the EU or the UK. This includes online marketplaces, hotel and travel booking platforms, app stores, price comparison tools and social media providers where the consumer does not pay. Example sites include: Expedia, App Store or Google Play, and Linkedin, etc. If the OIS operator has over 50 employees and generates over €10 million turnover, there are additional requirements for them to comply with.
Why is it important to get it right?
If any OIS operator fails to satisfy the requirements detailed in the P2B Regulation, the offending provisions may be deemed null and void, or potentially the entire set of terms in certain circumstances. In practice, this would mean the terms and conditions would be unenforceable against a business user, preventing the operators from relying on the protections they provide.
How can we help?
If you’d like to discuss how the P2B Regulation may impact your business or if you have any specific concerns about compliance with the P2B Regulation, please contact Richard Hugo or another member of Burges Salmon’s Commercial team.