Fairness and transparency in online trading

Background
Online platforms and search engines dominate Internet trading. Unilateral business conditions, non-transparent algorithms and rankings are unfortunately not uncommon. A stop has been put to this in the EU for Companies such as Amazon, Google, eBay, booking.com, etc. On 26/04/2018, the European Commission presented a draft regulation to promote fairness and transparency for business users of online exchange services.

The aim of the Regulation is to ensure a fair, predictable, sustainable and trustworthy online business environment and to simplify market entry. The Regulation will apply if (i) the user is established in the EU and (ii) he offers his products or services to consumers residing in the EU via an on-line exchange service. Therefore, neither citizenship of a Member State nor residence in the EU is required.

Increased transparency
Providers of online exchange services must in future ensure that their terms and conditions are easily understandable and accessible. Possible reasons for removing or blocking a user from a platform must also be explained in advance. Changes to the terms and conditions require an appropriate minimum notice period. A (temporary) discontinuation must be justified.

In addition, the following information must be specified in the terms and conditions: (i) data access, i.e. which data has been generated and made available by whom under which conditions; (ii) information on the treatment of offering own goods or services on the website in comparison to those offered by users; and (iii) the use of most-favoured-nation clauses.

In addition, general criteria for the ranking of products and services must have been defined.

Effective dispute resolution
As users naturally have limited opportunities to enforce their claims against them due to their dependence on online intermediation services, providers of online switching services must set up an internal complaint handling system. This does not apply to small companies due to the costs involved.

For an out-of-court settlement of disputes, the online intermediation services must in future announce in their terms and conditions independent and qualified mediators with whom they cooperate in the case of an out-of-court settlement of disputes.

In addition, associations should have the right to enforce the new rules on transparency and dispute resolution in court on behalf of companies.

Code of conduct
Providers of online intermediation services and associations are invited to develop specific codes of conduct on these new rules.

Author: Christina Hummer