For many companies, online platforms are important sales channels that provide access to large groups of potential customers. At the same time, it can be costly for such ‘business users’ to switch platforms, which may create lock-in effects. This may make businesses dependent on access to an online platform, which may place them in a potentially vulnerable position. There are also situations in which online platforms favour themselves and their own products. The Netherlands Authority for Consumers and Markets (ACM) very recently launched an investigation into Bol.com, for instance, in connection with possible unfair favouring of the platform and certain business users.
Increased attention is being paid to the role of online platforms in the digital economy and the dependency of users due to lock-in effects. These issues have prompted the European legislature to set rules at Union level regarding the relationship between online platforms and business users, known as Platform-to-Business Regulation (EU) 2019/1150 (the P2B Regulation).
The P2B Regulation has been in force since mid-2020, but an investigation by the ACM has shown that a majority of businesses offering online products and services are unfamiliar with it. Moreover, it has so far not been possible to enforce compliance with the P2B Regulation under administrative law in the Netherlands. On 25 March 2024, the Lower House will consider a bill assigning the enforcement of the P2B Regulation to the ACM. It will also give the ACM the power to impose fines of over €1 million or 10% of the offender’s turnover, whichever is higher.
In this blog, we answer four questions about the significance of the P2B Regulation for platforms and business users.
- What is the P2B Regulation?
The P2B Regulation aims to offer business users more clarity and transparency about the behaviour of online platforms. The Regulation imposes transparency obligations on online platforms in their relationship with business users that offer goods or services to consumers through such a platform. It aims to make the services provided by platforms and the applicable conditions more predictable, so that business users can organise their business operations accordingly.
In support of the regulation, the European Commission (the Commission) has published Guidelines on the transparency of their ranking on online platforms. On 14 April 2023 already, the ACM also published Guidelines explaining how it interprets the rules in the Regulation.
- To which companies does the Regulation apply?
The Regulation applies to online intermediation services and online search engines (platforms, for short), such as online marketplaces for meals, hotel stays or clothes (such as Thuisbezorgd.nl and Zalando); app stores (such as the Google Play Store and the App Store); comparison sites for energy contracts or flight tickets (such as Skyscanner and Independer); and social media (such as LinkedIn and Facebook).
The regulation applies to all platforms in the European Union. It makes no difference how much turnover a platform generates or how many users are active on a platform (unlike under the Digital Markets Act, for instance). Smaller, Dutch platforms therefore also fall within the scope of the regulation. However, the application of the regulation is limited to business users established in the European Union that offer their goods or services via online platforms to consumers located in the Union.
- What obligations apply to platforms?
The P2B Regulation creates various obligations for online platforms, the main ones of which are addressed below.
(a) Ranking and visibility
Most prominent is the mandatory transparency regarding rankings. The ranking of the business user’s offer or profile in relation to other business users may have a major impact on many platforms. The P2B Regulation requires online intermediation platforms – such as Uber and Airbnb – to disclose their key ranking parameters in their terms and conditions, such as personalisation, the effects of artificial intelligence, and user reviews. That way, it is clear to business users beforehand how the ranking takes place. If the ranking parameters can be influenced by payment, that must be stated.
If the platform offers products or services of its own in a differentiated manner (self-preferencing), a description of this differentiated treatment must also be provided, including the key considerations behind the differentiated treatment.
If platforms impose restrictions on business users regarding the application of different conditions when selling via other channels, that must be substantiated. That can be done, for instance, by prohibiting business users from offering a better price or terms on their own websites. Apart from the P2B Regulation, such parity clauses may also be contrary to competition law. See this blog on that subject.
However, the Regulation does not obligate platforms to provide detailed insight into the operation of ranking mechanisms. Access to algorithms cannot be enforced under the P2B Regulation.
(b) Dispute resolution: complaints procedure and mediation
The Regulation also obligates business users to have an internal dispute resolution system for platforms in place. The platform must deal with all complaints within a reasonable period and communicate the outcome to the complainant in an individualised and substantiated manner. Platforms must also appoint at least two independent mediators. Platforms with fewer than 50 employees or a turnover of less than €10 million are exempt from this obligation. Business users are not obligated to use this complaint handling system before initiating legal proceedings.
(c) General terms and conditions
General terms and conditions must be drawn up in a clear and understandable form. This means that they (a) must be specific and detailed, and may not be vague about important business aspects, thus allowing business users to have reasonable expectations regarding the crucial aspects of the contractual relationship; and (b) may not contain misleading language.
Business users must also be given timely notice of proposed changes to the general terms and conditions, and reasonable notice of at least 15 days before the changes take effect. Moreover, changes to the terms and conditions must be easily accessible, for instance by providing them on a ‘durable data carrier’, such as via e-mail, and not just via a pop-up message on the platform forum. A platform also may not simply terminate a contract with a business user without reasonable justification.
Also, platforms must state whether they provide data to third parties if that provision is not necessary for the proper functioning of the platform services, stating the purpose of such data exchange and the possibilities for business users to object to it.
(d) Platform modifications must be announced in good time
If business users need to make technical or commercial changes, a proportionate notice period must be given to enable them to comply with the changes. This could include situations in which:
- features of the platform to which business users had access are removed in their entirety or are added; and
- business users need to change their goods or reprogramme their services in order to continue using the platform.
- What are the risks if platforms fail to comply with the regulation?
The ACM will be designated as the regulator for the P2B Regulation in the Netherlands. It will oversee only platforms that give access to Dutch business users or to business users with Dutch customers. The ACM intends to enforce the regulation and encourages business users to report any related abuses.
The ACM may impose fines of up to €1,030,000 or 10% of the platform’s annual turnover, whichever is higher, for violations of the P2B Regulation.
Business users may also invoke the P2B Regulation in civil courts. The regulation expressly states that organisations representing business users may take legal action against online platforms that fail to fulfill their obligations under the P2B Regulation.
A look ahead
The P2B Regulation has so far not been enforced by the authorities and enjoys little recognition among business users of online platforms. However, in view of the upcoming enforcement opportunities for the ACM, both platforms and business users are well advised to take note of the requirements arising from the P2B Regulation and to assess the impact on their business operations.
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