Online Platforms - New European Union Rules for Transparency of Online Intermediation Services
Starting July 12th, 2020, new rules for transparency of online intermediation services shall directly apply in all European Union member states, including in Romania, adopted by Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services (“Regulation (EU) 2019/1150”).
Why was it necessary to adopt these rules?
Most of the time, nowadays, the success of a business depends on its presence in the online environment. Transactions can be completed much faster and easier if you offer goods and services through an online platform: your product will reach the attention of the target audience, and instantly you can sell it.
On a large scale, both businesses and consumers have easily adopted the use of online intermediation services. Thus, a competitive online environment emerged, and where there is competition, clear rules must be applied, for the benefit of all.
Who is targeted by these rules?
business users = any professional (individual or legal entity) who offers goods or services to consumers, through online intermediation services (users);
providers of online intermediation services = any professional (individual or legal entity) who offers online intermediation services to business users;
online search engine = voice requests are comprised herein.
Practically, online e-commerce market places, application stores and online social media platforms are targeted.
For example, a business that sells goods or services to consumers understands the benefits of moving to the Internet and decides to grow through an online platform where it will present its products to the public. It is irrelevant whether the transactions to be concluded involve a payment in cash or that these transactions are partially completed offline. The new measures will be applied in the relationship between this business and the owner of the online platform, for the legal protection of both.
To whom does it not apply?
Even if provided online, the new measures do not apply to:
online payment services;
online advertising tools and online advertising exchanges, which are not provided with the aim of facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers.
peer-to-peer online intermediation services, in the absence of business users who sell goods and services to consumers;
pure business-to-business online intermediation services which are not offered to consumers.
What is it to keep in mind?
Terms and Conditions (T&C)
Although sometimes they are not given due importance, to the extent the Terms & Conditions of a website are not drafted in accordance with the law and do not protect the owner of the website and its users, the latter can be held liable. T&C represents the contract between the service provider and the users, so that the effects are similar to a physically signed contract.
T&C must meet the following requirements:
to be drafted in a simple and intelligible language - the business users have the right to be clearly informed;
to be easily accessible for business users during all stages of the business relationship with the provider of online intermediation services, including in the pre-contractual phase - the online platform must post T&C within an easily accessible section;
to comprise details regarding the suspension, termination, imposition of restrictions in the provision of online intermediation services;
to mention all the additional distribution channels and potential affiliate programs through which business users could sell their goods and services;
to provide intellectual property clauses of the business users.
! Highly important:
Any change of the T&C must be notified to business users by the online platform. Nevertheless, such notification must be made as follows:
on a durable medium = any instrument allowing the consumer or the professional to store information that is addressed to him personally, in an accessible way for subsequent references for an adequate period of time, for information purposes, and allowing the unchanged reproduction of stored information, according to the Government Emergency Ordinance no. 34/2014 on consumer rights in contracts concluded with professionals.
To remember: A simple provision of information on a website does not constitute a durable medium, according to the Court of Justice of the European Union (Case C ‑ 49/11).
However, a private account on the economic operator’s website where the latter uploads pieces of information addressed to the consumer and which it cannot remove or modify unilaterally, could be considered a durable medium.
A proper information can be made via e-mail.
- the changes can only be implemented after the expiration of a notice period of at least 15 days from the date of notification, but a longer period will be required if business users need to make technical or commercial adjustments in order to comply with the changes.
Platforms must not impose retroactive changes to T&C.
What rights do have business users who do not agree with the T&C changes?
Business users have the right to terminate the contract with the provider of online intermediation services before the expiration of the notice period. Nevertheless, in principle, if during the notice period the user provides new goods and services on the online platform, it is deemed that he has waived the notice period and no longer has the right to terminate T&C.
What other rights do users have?
In addition to adequate information through T&C, users also benefit from various rights in relation to the online intermediation platform:
To be visible on the online platform
The users’ identity must be clearly visible on the online platform, by displaying the name and the logo in a visible section.
- To receive a justification for restriction, suspension or termination of the provision of online intermediation services.
In case the platform decides to restrict, to suspend or to terminate the sale of goods and services, it must provide users, before or at the time the restriction or suspension takes effect, a justification for that decision on a durable medium.
If the termination is entirely decided, users have the right to receive at least 30 days before the termination takes effect a justification on a durable medium.
! Attention: An information/justification simply displayed on the platform does not comply with the legal requirements.
To be informed regarding the hierarchy (ranking)
T&C must comprise the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters.
What happens if the online platform is established outside the European Union?
Considering the global dimension of online intermediation services and of online search engines, the new measures also apply to those service providers who are established outside the Union, provided that two conditions are cumulatively met:
(i) users to be established in the Union;
(ii) users must offer their goods or services to consumers located in the Union at least for part of the transaction.
The above-mentioned rules directly apply starting July 12th, 2020, including in Romania. Additionally, the Romanian legislator will adopt measures for the application of Regulation (EU) 2019/1150, in which respect a Draft Government Emergency Ordinance on measures for the implementation of Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services, amending the Competition Law no. 21/1996 was published for public consultation on the Competition Council’s website.
The Draft Ordinance provides the supervisory authority for the application of these measures, namely the Competition Council, which shall also have the attribution to carry out ex officio investigations in order to ascertain and sanction infringement of the rules.
! Attention: Online platforms can be sanctioned even if negligently they do not comply with the rules provided by Regulation (EU) 2019/1150, with up to 1% of their annual turnover.
Author: Andreea Rainer
My name is Andreea Rainer and I am the titular lawyer of Andreea Rainer - Digital boutique Law Firm, which focuses on online legal advice. In the age of creativity, digitalization and entrepreneurship, we have noticed the growing need of actors in various markets, developers of innovative solutions, authors of intellectual creations or those looking for a job to have legal protection. At the same time, it happens that they do not have the vital legal arrangements implemented. As an individual practicing lawyer, I understand the basics of new types of business and bring equally new perspectives. Andreea Rainer - Law Firm offers consulting, legal assistance and representation in the following main areas: Commercial & Corporate Law, Labor Law & Immigration, Digital Law & Data Protection & Electronic Commerce, Intellectual Property Law, Competition Law.