Doing business through online platforms: Council agrees its position
30 Nov 2018 11:42 AM
The EU is introducing new rules which will offer business users in the EU a more transparent, fair and predictable online platform environment , together with an effective system for seeking redress. The proposed regulation is the first EU legislative act that addresses relations between online platforms and the businesses using them.
The Council yesterday agreed on its position on the draft regulation, paving the way for the opening of negotiations with the European Parliament.
Margarete Schramböck, Austrian Federal Minister for Digital and Economic Affairs yesterday said:
Businesses are increasingly moving online in order to reap the benefits of e-commerce. We are making sure that online platforms across the EU operate in a fully transparent and predictable manner. The new rules are a crucial stepping stone towards the completion of the digital single market.
The main goal of the regulation is to establish a legal framework that guarantees, in the first instance, transparent terms and conditions for business users of online intermediation services. Business users are then also guaranteed, within this framework, effective possibilities for redress when these terms and conditions are not respected.
The online platforms to be covered by the regulation include online market places, online software application stores and/or online social media, as well as online search engines, irrespective of their place of establishment, provided they serve business users that are established within the EU and that they offer goods or services to consumers who are also located within the EU.
As regards transparency, platforms are required to use clear and easily accessible terms and conditions of their online intermediation services. They should provide a statement of reasons each time they decide to suspend or terminate the use of their services by a business user. Furthermore, the platforms should disclose publicly the main parameters determining the ranking of business users in search results, as well as any differentiated treatment that they grant to goods and/or services offered directly by them or through any business falling under their remit. Finally, they should disclose the grounds (economic, commercial, legal etc.) for restricting the ability of business users to offer different conditions to consumers outside the platform.
Concerning redress mechanisms, the regulation obliges all platforms (apart from the smallest, as clearly defined in the regulation) to set up an efficient and swift internal complaint-handling system and to report annually on its effectiveness. It also requires platforms to list in their terms and conditions two or more mediators for cases when the internal complaint-handling system is not able to resolve a dispute between their business users. The regulation establishes the right of representative organisations, associations or public bodies to initiate judicial proceedings against platforms that do not comply with the requirements of the regulation. Finally, the regulation empowers Member States to set out penalties when there are infringements of the regulation. The regulation invites the Commission to encourage platforms to set up bodies of independent specialised mediators, draw up codes of conduct and regularly assess the functioning of the new rules.
Member states have stressed the need for the regulation to apply twelve months from the date of its publication in the Official Journal of the EU.
The Council will now start negotiations with the European Parliament with the aim of reaching an agreement as soon as possible.
Online platforms are key enablers of digital trade. At present, more than a million EU businesses trade through online platforms in order to reach their customers, and it is estimated that around 60% of private consumption and 30% of public consumption of goods and services related to the total digital economy are transacted via online intermediaries.
While offering great potential in terms of efficient access to (cross-border) markets, European businesses cannot fully exploit the potential of the online platform economy due to a number of potentially harmful trading practices and a lack of effective redress mechanisms in the Union. At the same time, online service providers concerned face difficulties operating across the single market due to emerging fragmentation.
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