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Online Platforms Have to Change Their General Terms And Conditions!

Online Platforms Have to Change Their General Terms And Conditions!P2B regulation forces platform operators to change their General Terms and Conditions

In June 2019, the EU Parliament adopted a regulation to promote fairness and transparency of online platform operators. It will come into force in all member states as of July this year and could involve some effort for the respective operators.

Online marketplaces, booking and comparison portals are concerned

The new rules are intended to make the so-called “platform to business” transactions more transparent and fairer. Typical platforms are online marketplaces, app stores, social networks or even booking and comparison portals with links to the websites of the listed companies. The only exceptions are pure advertising or payment service providers.

It is no longer just a question of protecting end consumers, but now also of the position of the entrepreneurs trading on these platforms vis-à-vis the platform operators. More than a million European companies now use platforms to offer their goods and services to consumers, so the legislation has recognized that these companies too must be protected against the supremacy of the platform operators.

Market power of suppliers to be contained

Platform-based business models have become an integral part of the digital economy. Platforms hold an outstanding position of power as the interface between providers and consumers. By organizing the only lucrative access to a huge market for many companies, they can also determine the conditions of access. All too often, platform providers have so far made these conditions non-transparent.

Particularly against smaller companies, some providers exploit their dominant position, for example by demanding huge fees for high ranking positions or by displaying products to consumers less or sometimes not at all.

Platform operators must act now

In order to eliminate this power imbalance, the EU has passed the Platform-to-Business (P2B) Regulation. It is intended to reduce fundamental “points of friction” between the online platform industry and the companies represented on the platforms.

The aim of the P2B Regulation is to oblige the operators of online platforms to be more fair and transparent in their dealings with companies that offer their products on the platforms. This could force platform operators to make some adjustments.

General terms and conditions, ranking parameters and complaint management must be adjusted

In order to increase transparency, the general terms and conditions (GTC) provided to the companies by the platforms must be clearly written and easily retrievable in the future. If the GTCs do not meet the requirements of the Regulation, they will be considered null and void. Opaque formulations as well as incomprehensible restrictions or even the complete withdrawal of platform access will thus no longer have any lasting effect.

Besides, the platform providers will be obliged to state and justify the so-called best price clauses. Furthermore, the procedure for the platform internal ranking of the entrepreneurs and the associated presence for consumers must be explained by the providers. Payments which individual companies have made to the platforms for a better ranking must also be disclosed – purely technical algorithms, on the other hand, are not subject to disclosure.

In addition, new, comprehensive information obligations with regard to mediation centers and complaint management should facilitate use and promote the number of out-of-court settlements. These include, for example, internal free complaint systems for commercial users of the platform.

WINHELLER amends your platform terms and conditions

For platform operators, the P2B regulation means some revision work. In particular, the revision of the GTC should be carried out by professionals in order not to run the risk that GTC clauses in all contracts with commercial users of the platform do not take effect.

In addition, it must be determined whether an exceptional situation applies which would allow a deviation from the provisions of the regulation. It is therefore advisable to thoroughly examine whether and which provisions of the P2B Regulation are applicable to the individual platform operator, so that they can be implemented before the P2B Regulation enters into force. Our experienced attorneys will be happy to assist you with your GTC.

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Comprehensive Advice by German Commercial Law Attorneys

Stefan Winheller

Attorney Stefan Winheller has specialized in tax law for about 20 years, especially in the areas of cryptocurrencies, foundations/nonprofits and international tax law.

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