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June 14, 2019

EU transparency obligations for online platforms

The EU is introducing new rules which will provide businesses with a more transparent, fair and predictable online business environment, as well as an efficient system for seeking redress. The new regulation adopted by the European Council addresses relations between online platforms and businesses and, it is being claimed, will enable EU businesses to reap the full benefits of the digital economy.

The main aim of the regulation is to establish a legal framework that guarantees transparent terms and conditions for business users of online platforms, as well as effective possibilities for redress when these terms and conditions are not respected.

The online platforms 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.

To improve transparency, platforms are required to use plain and intelligible terms and conditions for the provision of their online intermediation services. They must provide a statement of reasons each time they decide to restrict, suspend or terminate the use of their services by a business user.

Furthermore, 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. They should also disclose the description of the main economic, commercial or legal considerations for restricting the ability of business users to offer different conditions to consumers outside the platform.

To provide effective redress, the regulation obliges all platforms (apart from the smallest, as clearly defined in the regulation) to set up an efficient and swift internal system for handling complaints, 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 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. The regulation also gives member states the power to set out penalties in line with their national systems when there are infringements of the regulation.

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