EU introduces transparency obligations for online platforms

June 20, 2019
The EU is introducing a new regulation with the aim of providing 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 Council of the European Union addresses relationships between online platforms and businesses.
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 methods of redress when these terms and conditions are not complied with.
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 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 criteria for ranking 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 terms to consumers outside the platform.
To provide effective redress, the regulation obliges all platforms (apart from the smallest, as defined in the regulation) to set up an efficient and swift internal system for handling complaints, and to report annually on the complaint handling system’s effectiveness. It also requires platforms to list in their terms 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 court 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.
The European Commission is invited to:
  • encourage platforms to set up bodies of independent specialised mediators,
  • draw up codes of conduct and
  • regularly assess the functioning of the new rules.
The European Commission adopted its proposal for the regulation on 26 April 2018, as part of its Digital Single Market Strategy.
Next steps
The regulation needs to be signed and published in the Official Journal of the EU. It will enter into force on the twentieth day following publication. It will apply twelve months from the date of publication.