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On July 11, 2019, the Official Journal of the EU published Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services.
The Regulation, which is part of the legislative initiatives relating to the Digital Single Market, will enter into force 20 days after its publication and will be directly applicable to Member States from July 12, 2020.
The Transparency Regulation is applicable to online intermediation service providers (e.g., collaborative markets, online software application services, social media and app stores) and to search engine providers (including voice searches) offered or available to business users and users of corporate websites whose place of establishment or domicile is located in the EU and that, by means of online intermediation services or online search engines, offer goods or services to consumers located in the Union.
However, the Regulation does not apply to online payment services, online advertising tools or online publicity exchange platforms with a purpose other than promoting direct transactions and that do not entail a contractual relationship with consumers. It will not apply when business users are not participating or to online intermediation services exclusively between companies with no offer to consumers.
As highlighted in the Purpose, business users increasingly depend on online intermediation services to reach end consumers, which entails a greater negotiation capacity on the part of the intermediation service providers, which can act unilaterally and unfairly, harming the legitimate interests of the business users. For their part, search engines can influence the commercial success of users who offer their goods and services via websites. The Regulation seeks to establish a more transparent, fair and reliable digital environment for business users that use the services of providers and search engines.
Among the main obligations that the Transparency Regulation imposes on intermediation services and search engine providers, we highlight the following:
- Changes to the terms of service: as a rule, any change to the terms and conditions applicable to intermediation services will be notified at least 15 days in advance.
- Unilateral termination or suspension of the services: online intermediation service providers that decide to restrict or suspend the provision of their services must provide reasons for the decision in a durable medium.
- Classification conditions (“the relative preeminence attributed to goods or services”): those intermediation services providers that in any way “classify” must describe the main parameters governing that classification (e.g., of goods and services or of business users) in their general terms and conditions, as well as the reasons a specific parameter has greater relative importance than other parameters. If the business users can influence the classification by direct or indirect remuneration paid to the intermediation service provider, that reason must be stated. Search engines must present the “main” parameters that are “most significant” when setting a classification, as well as the relative importance of those parameters. For that purpose, the Transparency Regulation clarifies that disclosing algorithms will not be required and urges the European Commission to publish guidelines for these transparency obligations.
- Differentiated treatment: intermediation service providers must describe in their general terms and conditions any different treatment given or that may be given to business users or providers under their control that offer products or services to end users through their platform, as well as to other business users. That description will mention the main economic, commercial or legal reasons for that treatment.
Furthermore, the Transparency Regulation establishes certain information obligations (e.g., with respect to technical and contractual access to personal data) and establishes that online intermediation services must have dispute resolution systems (free internal complaint processing mechanisms, collaboration with mediators and standing of associations and organizations).
This post is also available in: Español