In June 2019 the EU published a new Regulation to promote fairness for business users of intermediation services. These include app stores, comparison/review sites, market places, hotel booking platforms etc. Legislation came into effect this month in the UK to enforce this Regulation, and (unless repealed) it will remain in place post Brexit. A business user is any person or trading entity who makes profit from promoting its goods or services on a marketplace or search engine.
What do providers (and users) of intermediation platforms need to know?
The Regulations put in place new rules which apply to:
(1) The terms on which business users can use the service including, amongst other things:
Requirements for terms to be in plain and intelligible language;
Making terms easily available to business users, including in the pre-contractual stage, in a durable form;
Make clear the grounds for decisions to suspend or terminate or impose any other kind of restriction upon, in whole or in part, the provision of their online intermediation services;
Impose notice periods for termination or suspension of the services; and
Impose written notice requirements before any changes to the terms can be made, and a right for the user to end the contract if it doesn’t agree to the change.
(2) Service providers must explain the main parameters which are used to determine rankings on their service, including the impact of any payments by the user, and how this can influence rankings.
(3) Written notification requirements prior to suspension or termination.
(4) The introduction of a complaints process which users can follow if their use of the service is being ended.
There are some exemptions available to small providers, classed as those with fewer than 50 employees and a turnover of less than €10 million.
What is the impact of a breach of the Regulations?
Business users may bring a claim for claim against a service provider for some breaches of the Regulations relating to the content of the service T’s and C’s. However, the contract (or non-compliant part of it) could be found by to be void and not enforceable against the business user.
Service providers may also find themselves under the scrutiny of a variety of public enforcement bodies (such as the CMA, Ofgem, FCA) or even trade associations which have legitimate interest in representing business users, all of which can apply for injunctions if there is a breach of the Regulations. As a result, businesses could find themselves having to deal with enforcement by multiple organisations.
For more information, contact us at email@example.com.
Technology Update by Alison Hastie - Partner at Aria Grace Law 31.07.2020