Promoting fairness and transparency for business users of online intermediation services (b2b)

The Commission adopted a proposal for a regulation on promoting fairness and transparency for business users of online intermediation services on 26 April 2018. According to the proposal, online intermediation service providers and online search engines are required to implement a set of measures to ensure transparency and fairness in the contractual relations they have with online businesses using such online platforms to provide and sell their services to customers across the EU. The Federation of Finnish Enterprises (FFE), representing over 105 000 Finnish small and medium-sized enterprises, expresses its concern over the effects the proposal might have on entrepreneurs.

Important to ensure the balance between the rights and obligations

The growing number of transactions through online intermediation services has led to increased dependency of such business users, including small and medium-sized enterprises, on those services to reach their customers. Due to increased dependency, the ones providing such services are having greater bargaining power which is enabling them to behave in unfair way, if they want to. This could harm the legitimate interests of their business users and indirectly therefore also the European consumers. The unfair and harmful trading practices are hampering the full realization of the online platform potential and affecting negatively to the proper functioning of the internal market.

EFF sees that while maintaining the contractual freedom is important, it is also undeniable that the number of self-employment and small enterprises is constantly increasing and therefore their interests have to be taken into consideration when talking about uneven contractual partners and their bargain power. Therefore, EFF supports that type of an approach to be taken also in this platform proposal.

There is already similar national legislation in force in Finland in order to ensure well-balanced and proportionate contractual rights and obligations and therefore it is not allowed to have such a provision in the contract that is clearly disproportional towards one or another contractual party.

EFF sees that it is important to ensure the balance between the rights and obligations, whereas also the proportionality of terms and conditions on B2B-contractual relations in order to ensure the proper functioning of the internal market. The contractual relations are not solely problematic between platform users and providers, but they pose the same problems in other B2B-contracts as well as in cases where the contracting entity is a public authority. Therefore, this should be considered with a wider scope.

More specifically

Subject-matter and scope

Regulation is set to lay down rules to ensure that business users of online intermediation services and corporate website users in relation to online search engines are granted appropriate transparency and effective redress possibilities. However, the proposal is based on idea that the online intermediation service provider would always be the bigger contractual party with greater bargain power. A platform may as well be led by a small enterprise or even one single entrepreneur. Therefore, the proposal should take into consideration the think small first- principle, in other words, whether the obligations laid down in the proposal are enforceable also within the smallest enterprises. Otherwise it should be considered whether small and medium-sized companies should be left out of scope of certain provisions.

Terms and conditions

According to the proposal, the online intermediation service providers are required to notify the business users concerning any envisaged modification of their terms and conditions with a reasonable notice period. However, it is not clear whether in this case also disproportionate, unexpected and unfair terms and conditions may be accepted if they just are transparent and the modifications are notified in a reasonable time. In addition, it is unclear whether the online platform providers may restrict the business user to end the contract, even if the modifications in terms and conditions could be seen significant.

Internal complaint-handling system

Providers of online intermediation services are required to provide an internal system for handling the complaints of business users. The provisions of this Article, however, do not apply to providers of online intermediation services that are small enterprises within the meaning of Article 2 (2) of the Annex to Recommendation 2003/361/EC 29. EFF sees this as a very good approach since especially collection and publication requirements are heavy burden for small companies.

Mediation

Providers of online intermediation services are required to identify in their terms and conditions one or more mediators with which they are willing to engage to attempt to reach an agreement with business users on the settlement out of court. According to the proposal, providers are also liable of a reasonable portion of the total costs of mediation in each case in question. However, it is not stated in the proposal which party is allowed to commence the mediation process. If the business user has the right to activate the process, the cost liability may be unbearable for a small enterprise-led platform, especially if there happen to be several separated processes undergoing at the same time. Therefore, the mediation process should be on voluntary basis or at least small enterprises should be left out of the scope as stated in Article 9.

Tiina Toivonen Mira-Maria Kontkanen
Head of legal affairs Advisor for EU-Affairs
Federation of Finnish Enterprises Federation of Finnish Enterprises