A few months ago, the P2B regulation became directly applicable in the European Union. Important developments have occurred in online brokerage services in the context of e-commerce platforms.
In an increasingly digital world where online brokerage services (i.e. platforms that connect different users to make a transaction) and search engines play an essential role, P2B regulation does not aim to protect consumers, but in this case the male users of these services are businesses.
although, (European Union) Regulation 2019/1150 promoting fairness and transparency for business users for online brokerage services (P2B) has been around for more than half a year, there have been important developments that could affect you regarding the penal system. The P2B regulation does not contain a sanctions regime, but “delegates” each member of the European Union the responsibility to adopt the legal tools they deem necessary to ensure compliance with this regulation. It is time for “enforcement action,” so failure to comply with P2B can have serious consequences depending on the specific country in which the violation occurred. Below we have provided some examples of consequences for non-compliance with P2B.
However, before we get into the P2B punishment system, let’s start with a brief reminder of its key aspects.
What is a business user?
This term refers to any natural person who acts in a commercial or professional capacity, or any legal person who provides goods or services to consumers through online brokerage services (e-commerce platforms) for purposes related to commerce, business, crafts or profession.
Key obligations of the P2B Regulation
The purpose of P2B is to avoid situations in which a business user may be adversely affected by platform decisions and to establish principles that the platforms can handle. In this way, the power imbalance between the relevant business user and the platform is “regulated” in some way so that the business user has certain rights.
To achieve this goal and prevent unfair situations, the P2B regulation mandates a series of actions.
- Transparency in terms and conditions for business users:
- Use of vague, confusing, or unclear terms is prohibited. It must be available at all stages of the contractual relationship (including the pre-contracting stage).
- The reasons for suspending, terminating or restricting user accounts should be clear.
- Only terms and conditions can be changed with a minimum notice period of 15 days. During this period, the concerned business user can cancel the contract with the online brokerage firm.
- Online brokerage service provider platforms must ensure that the identity of the business user is clearly visible.
- Suspension, restriction or termination of accounts: It is necessary to inform the business user affected by any of these situations in detail about the reasons for suspension, termination, etc. In addition, the commercial user must be given the opportunity to provide clarification about the facts that led to the suspension, restriction, or termination of the services provided. If the suspension or termination is due to a third-party notice, the content of the notice must be provided to the affected business user.
- Transparency in ranking and visibility criteria: A very important topic in online brokerage platforms for services is where a business user is displayed or profile in relation to other business users and thus their appearance. Currently, the P2B regulation requires online brokerage platforms to define key rating criteria in their terms and conditions. If the parameters include potential for improvement through reward, this should also be included. However, there is no obligation to disclose how the platform’s algorithms work. With regard to this commitment to transparency, the European Commission It has been published Some guidelines to facilitate compliance.
- Differentiated treatment of its own products: In the event that the platform offers its products or services (directly or through third parties) in a differentiated manner, its description must be included in the terms and conditions, including the main economic, commercial or legal considerations that underlie the differential treatment.
- Data Access: The terms and conditions must describe the technical access the platforms have for personal data provided by business users or consumers to provide an online mediation service.
- Restrictions imposed in other ways on the offer of goods or services under different circumstances: Any possible restriction under the platforms of the business user’s offerings of his goods or services on other platforms and under other circumstances must be duly justified in the Terms and Conditions.
- Complaints and Internal Mediation System: Online mediation service providers should establish an internal system (which can be outsourced) to deal with complaints received from business users. It should be processed easily, free of charge, and within a reasonable period of time. Information about the system must be included in the General Terms and Conditions. In addition, two or more mediators should be appointed to resolve out-of-court disputes with business users. Mediation is voluntary.
- Legitimacy of Associations in Litigation: The P2B regulation includes the legitimacy enjoyed by these users so that, provided there is a legitimate interest, they can file legal claims with the aim of preventing or prohibiting any violation by an online mediation service provider.
Special obligations related to search engines
The principles of the measures described earlier apply to search engines, albeit in a different way, as there is not necessarily a contractual relationship between search engine users with them. Search engine obligations include the following:
- Content Ranking: The parameters most important in determining the ranking and relative importance of each parameter should be identified. It should be generic, accessible and simple and understandable.
- Content Change or Exclusion Notice: In the event that a particular website is changed or excluded as a result of a third-party notification, the site administrator must be given the opportunity to view the notification’s content.
- Differentiated treatment: In the event that the search engine offers its products or services (directly or through third parties) in a differentiated manner, a description of the differentiated treatment must be provided, including the main economic, commercial, or legal considerations on which the differentiation is based. Psychiatric treatment.
Enforcement tools: European Union member states
As explained above, every EU member state must decide how to ensure compliance with the P2B regulation. There is no sanctions section in the P2B regulation, so there are differences regarding the enforcement tools that European Union members apply. For example (just a few examples):
- Spain: Failure to comply with P2B rules could be subject to fines of up to € 150,000. In addition, business users can file lawsuits in the relevant civil courts to seek enforcement or compensation in the event of damage.
- France: In addition to unjustified withdrawal and recovery of benefits obtained, non-compliance with the P2B regulation may be subject to a civil fine not exceeding the following three amounts:
- 5.000.000 Euros
- Three times the amount of unpaid benefits received; or
- 5% of sales volume excluding taxes, realized in France.
In addition, the Ministry of Economic Affairs has additional powers in the event that P2B obligations are violated. For example:
- A warning notice, with a reasonable period of time, (1) to comply and (2) to stop any practice that violates the provisions of the P2B Regulation;
- Imposing an administrative fine the amount of which may not exceed 15,000 euros for the legal person; And the
- If a breach order is reported punishable by a civil fine, impose a daily fine on the operator for compliance of no more than 0.1% of the global sales volume (up to a maximum of 1% gross).
- Germany: The Federal Ministry of Economy and Energy stated that implementation by the authorities in Germany is unimaginable; Instead, implementation is carried out through civil law instruments.
- Netherlands: The Netherlands intends to introduce a penal system for non-compliance with the P2B regulation. The Minister of State for Economic Affairs and Climate is currently working on a bill giving consumers and markets the power to enforce P2B under Dutch jurisdiction. The bill is expected soon.
- Italy: Italy considered sanctions for non-compliance with the P2B program – although relevant legislation has yet to be adopted. In fact, the Italian European law 2019-2020 states that in the event of non-compliance with the P2B regulation, the same penalties will be imposed for abuse of the dominant position and will be proportional to the offender’s turnover. Although the bill was not passed and signed into law, it clearly demonstrates the intent of the Italian legislature.
- United Kingdom: In the United Kingdom, the P2B regulation has been kept with minimal changes after Brexit. If the platform fails to comply with UK P2B regulations and exposes the business user to loss or damage as a result of the violation, such loss or damage will be corrected by the business user against the online brokerage service provider. Additionally, business users can file lawsuits against an online brokerage service provider or Internet search engine provider for an appropriate fee, including:
- Court order (including temporary court order);
- The ban applies in Scotland (among other things);
- Any other suitable treatment or rest; And the
- Publication of the court’s decision (with any damage to reputation it may cause).
- Poland: In the event of a violation, commercial users can claim compensation based on Polish Civil Code and other domestic legal instruments. Enforcement is not foreseen by local authorities.
In light of the foregoing, it seems clear that Regulation 2019/1150 clearly reflects the efforts of the European Union to regulate what has come to be known as the “ Online Platform Economy ”, and thus should be taken into account by all. Players involved in it, particularly through online brokerage service providers and search engines.
So far, all brokerage services platforms should have already implemented Regulation 150/2019. If not, we recommend that you take action on it, starting with adapting the terms of the platform to the requirements of the P2B Regulation. However, this may not be an easy task to accomplish, so legal assistance may be required.