The P2B Regulation
22nd July 2020
Regulation (EU) 2019/1150 of the European Parliament and the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services, or as it is commonly referred to, the “P2B Regulation”, applies from 12th July 2020.
The P2B Regulation aims to establish a fair and transparent environment for EU-based businesses that use an online intermediation service (OIS) or search engine to provide goods or services to their EU-located consumers.
The term ‘Online intermediation services’ is broadly defined to include online e-commerce market places, online software applications services and online social media services. Popular examples of an OIS include: Airbnb, Facebook, Deliveroo, Etsy, Uber and Booking.com. In recent years, the services of OISs have become critical to many business users selling goods online, and have been criticised for unfair trading practices, such as their preferential use of rankings and the way in which services are suspended for business users.
Key provisions of the P2B Regulation
(1) The Terms and Conditions of an OIS must:
• Be set out in ‘plain and intelligible language’ and be easily accessible to business users, throughout their commercial relationship, including the pre-contractual stage.
• Outline when OIS providers can suspend, terminate or impose restrictions on a business user’s use of the platform.
• Indicate what other distribution channels and potential affiliate programmes are available for the business user to market their products.
• Contain information on the effects of the T&Cs on the business user’s Intellectual Property rights.
OIS providers must notify business users when there will be any changes to their T&Cs, with at least 15 days prior notice. During this notice period, the business user concerned has the ability to terminate the contract with the OIS provider.
(2) In relation to the Restriction, suspension and termination of online intermediation services on the part of the OIS providers the P2B Regulation states that:
• The OIS provider must provide a statement of reasons for either suspending or restricting access to their platform in relation to individual goods or services offered by the business user.
• Where the OIS provider decides to terminate the provision of its service to a business user, it must give the business user a period of at least 30 days before the termination, along with a statement of reasons behind that decision.
(3) New transparency rules for search results and ranking include:
• Search engine providers must keep up-to-date descriptions of parameters that determine ranking on their search engine.
• The T&Cs of OIS providers must contain a description of the parameters which determine ranking on their platform.
• Where ranking could be affected by either direct or indirect remuneration paid by business users, such possibilities must be set out in the T&Cs of the OIS provider.
(4) The P2B Regulation states that search engine providers must set out a description of any differentiated treatment given to their own goods or services offered to consumers through their search engine, in comparison to that of business users. One of the main examples of this is Amazon Marketplace where Amazon’s own products can compete with those of its business users. OIS providers must include this description of differentiated treatment in their T&Cs.
(5) OIS providers must offer an internal complaint-handling system which shall be easily accessible and free of charge for business users. OIS providers shall include information of their internal complaint-handling system in their T&Cs, including how it can be accessed.
The P2B Regulation will apply to all OIS providers, regardless of where they are based, so long as the online platform is being used by an EU-established business to offer goods and services to their EU-located consumers. As the P2B Regulation applies during the Brexit transition period, the UK remains subject to it until the transition period comes to an end. However, the P2B Regulation will continue to apply to UK based OIS providers post-Brexit, due to its extra-territorial application, where services are used by EU established businesses to provide goods and services to EU-located consumers.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at July 2020. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.