P2B Regulation – How to adapt Platform services and Search Engines

Summary: Since 12 July 2020, new rules apply for platform service providers and search engine operators – irrespective of whether they are established in the EU or not. The transition period has run out. This article provides checklists for platform service providers and search engine operators on how to adapt their services to the Regulation (EU) 2019/1150 on the promotion of fairness and transparency for commercial users of online intermediation services – the P2B Regulation.

The P2B Regulation applies to platform service providers and search engine operators, wherever established, provided only two conditions are met:

(i) the commercial users (for online intermediation services) or the users with a company website (for online search engines) are established in the EU; and

(ii) the users offer their goods/services to consumers located in the EU for at least part of the transaction.

Accordingly, there is a need for adaption for:

• Online intermediation services, e.g. online marketplaces, app stores, hotel and other travel booking portals, social media, and
• Online search engines.

The P2B Regulation applies to platforms in the P2B2C business in the following constellation (i.e. pure B2B platforms are exempt):

Provider -> Business -> Consumer

The article follows up on the introduction to the P2B Regulation here and the detailed analysis of mediation as method of dispute resolution here.

 Checklist how to adapt the general terms and conditions of platform services

Online intermediation services must adapt their general terms and conditions – defined as (i) conditions / provisions that regulate the contractual relationship between the provider of online intermediation services and their business users and (ii) are unilaterally determined by the provider of online intermediation services.

The checklist shows the new main requirements to be observed in the general terms and conditions (“GTC”):

1. Draft them in plain and intelligible language (Article 3.1 a)
2. Make them easily available at any time (also before conclusion of contract) (Article 3.1 b)
3. Inform on reasons for suspension / termination (Article 3.1 c)
4. Inform on additional sales channels or partner programs (Article 3.1 d)
5. Inform on the effects of the GTC on the IP rights of users (Article 3.1 e)
6. Inform on (any!) changes to the GTC on a durable medium, user has the right of termination (Article 3.2)
7. Inform on main parameters and relative importance in the ranking (incl. possible influence of remuneration), without algorithms or business secrets (Article 5.1, 5.3, 5.5)
8. Inform on the type of any ancillary goods/services offered and any entitlement/condition that users offer their own goods/services (Article 6)
9. Inform on possible differentiated treatment of goods / services of the provider or individual users towards other users (Article 7.1, 7.2, 7.3)
10. No retroactive changes to the GTC (Article 8a)
11. Inform on conditions under which users can terminate contract (Article 8b)
12. Inform on available or non-available technical and contractual access to information that the Service maintains after contract termination (Article 8c)
13. Inform on technical and contractual access or lack thereof for users to any data made available or generated by them or by consumers during the use of services (Article 9)
14. Inform on reasons for possible restrictions on users to offer their goods/services elsewhere under other conditions („best price clause“); reasons must also be made easily available to the public (Article 10)
15. Inform on access to the internal complaint-handling system (Article 11.3)
16. Indicate at least two mediators for any out-of-court settlement of disputes (Article 12)

These requirements – apart from the clear, understandable language of the GTC, their availability and the fundamental ineffectiveness of retroactive adjustments to the GTC – clearly go beyond what e.g. the already strict German law on general terms and conditions requires.

Checklist how to adapt the design of platform services and search engines

In addition, online intermediation services and online search engines must adapt their design and, among other things, introduce internal complaint-handling. The checklist shows the main design requirements for:

a) Online intermediation services

1. Make identity of commercial user clearly visible (Article 3.5)
2. State reasons for suspension / limitation / termination of services (Article 4.1, 4.2)
3. Explain possible differentiated treatment of goods / services of providers themselves or users in relation to other users (Article 7.1, 7.2, 7.3), see above
4. Set an internal complaint handling system, with publicly available info, annual updates (Article 11, 4.3)

b) Online search engines

1. Explain the ranking’s main parameters and their relative importance, public, easily available, always up to date (incl. possible influence of remuneration), without algorithms or trade secrets (Article 5.2, 5.3, 5.5)
2. If ranking changes or delistings occur due to notification by third parties: offer to inspect such notification (Article 5.4)
3. Explain possible differentiated treatment of goods / services of providers themselves or users in relation to other users (Article 7.1, 7.2, 7.3)

The European Commission will provide guidelines regarding the ranking rules in Article 5, as announced in the P2B Regulation – see the overview here. At the same time, providers of online intermediation services and online search engines shall draw up codes of conduct together with their users.

Practical Tips

• The Regulation significantly affects contractual freedom as it obliges platform services to adapt their general terms and conditions.
• The Regulation is to be enforced by „representative organisations“ or associations and public bodies, with the EU Member States ensuring adequate and effective enforcement. The European Commission will monitor the impact of the Regulation in practice and evaluate it for the first time on 13.01.2022 (and every three years thereafter).
• The P2B Regulation may affect distribution relationships, in particular platforms as distribution intermediaries. Under German distribution law, platforms and other Internet intermediation services acting as authorised distributors may be entitled to a goodwill indemnity at termination (details here) if they disclose their distribution channels on the basis of corresponding platform general terms and conditions, as the Regulation does not require, but at least allows to do (see also: Rohrßen, ZVertriebsR 2019, 341, 344–346). In addition, there are numerous overlaps with antitrust, competition and data protection law.