Recently, two legal acts have been adopted within the European Union that deal with the regulation of so-called online platforms. The first of these acts is Regulation (EU) 2019/1150 of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services (hereinafter referred to as the “Regulation”), which shall enter into force on 12 July 2020 and to which we shall devote closer attention in this legal newsletter. The second act is the so-called modernisation directive, which amends the content of four existing directives in the consumer field, the content of which we shall deal with in more detail in the future.
The Regulation regulates in particular operators of online catalogues of goods (price comparison websites, etc.) and operators of internet search engines. However, within this newsletter we shall not look at the Regulation from the perspective of these operators, but primarily from the position of retail traders. It is primarily retail traders to whom the Regulation is intended to bring a certain degree of protection against these entities, also for the reason that operators of online catalogues of goods or operators of internet search engines in many cases possess considerable market power.
Many of the requirements arising from the Regulation are, in our opinion, unfortunately rather of a formal nature (requirements regarding the content of the terms and conditions of online intermediaries, etc.) and it will be a question whether they will actually be beneficial in practice. Another category consists of certain prohibitions which are intended to serve as protection against the absolute arbitrariness of providers of online intermediation services (regulation of unilateral changes to terms and conditions, immediate termination of contract, etc.).
Most interesting can probably be considered the obligation of online intermediaries and operators of internet search engines to state the rules for the ranking of goods offered. Ranking is, according to the Regulation, understood as “the relative importance given to goods or services offered through online intermediation services or the relevance given to search results by internet search engines, as presented, organised or communicated by the providers of online intermediation services or the providers of internet search engines, irrespective of the technological means used for such presentation, organisation or communication”. Article 5(1) of the Regulation then establishes that “providers of online intermediation services shall set out in their terms and conditions the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters.” The Regulation establishes a similar obligation in Article 5(2) also for operators of internet search engines: “Providers of internet search engines shall set out the main parameters which are individually or collectively most significant in determining ranking, and the relative importance of those main parameters, by providing an easily and publicly available description in plain and intelligible language on their internet search engines. They shall keep that description up to date.” Article 5(3) of the Regulation then adds the obligation to disclose the influence of paid services on ranking: “Where the main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users or users of corporate websites to the provider concerned, that provider shall also provide a description of those possibilities and the effects of such remuneration on ranking…”
However, it cannot probably be expected that even if the operators of online intermediation services or operators of internet search engines fulfil this obligation of theirs, that the information provided by them will be very detailed. Specifically, Article 5(6) of the Regulation states in this regard that “providers of online intermediation services and of internet search engines shall not be required, when complying with the requirements of this Article, to disclose algorithms or any information which, with reasonable certainty, would result in enabling the deception or harm of consumers through the manipulation of search results.” The Regulation also assumes that the European Commission will issue guidelines supplementing the transparency requirements in this area.
Another point which in our opinion is interesting is the requirement for transparency where the operator or a person connected with it offers goods independently within an online catalogue of goods or internet search engine (that is to say in a competitive relationship with other retail traders). Article 7(1) of the Regulation establishes in this regard that “providers of online intermediation services shall include in their terms and conditions a description of any differentiated treatment which they give or may give in relation to goods and services offered to consumers through those online intermediation services by, on the one hand, either that provider itself or any of the business users controlled by that provider, and, on the other hand, by other business users.” The obligation established for operators of internet search engines is conceived similarly.
Online intermediaries who are not small enterprises also acquire the obligation to establish an internal system for handling complaints (of traders offering goods) and the obligation to establish the possibility of mediation. In conclusion, it may be mentioned that the rights arising for traders from the Regulation may also be exercised by their interest organisations.
Josef Aujezdský, Advocate
This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as legal newsletter No. 12/2019 intended for members of this association.
This text was translated from Czech to English using an AI translator.