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New rules for platform services since 12 July 2020 Part I: why a new regulation and who is affected?

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Working Paper 19/4/21
New rules for platform services since 12 July 2020
Part I: why a new regulation and who is affected?
R. Feltkamp
1
and V. Dantinne
2
Table of contents
I. Introduction .................................................................................................................................... 2
II. Purpose of the OIS Regulation ........................................................................................................ 2
III. Scope of application ................................................................................................................... 3
III.A. Services under scope ................................................................................................................... 3
III.A.1 Online intermediation services ............................................................................................. 4
III.A.2. Online search engines .......................................................................................................... 6
III.B. Conditions related to the persons purchasing the services in scope .......................................... 6
III.C. Services expressly out of scope ................................................................................................... 7
1
Professor at law Free University of Brussels (VUB), PREC/BuCo; lawyer at the Brussels Bar.
2
Lawyer at the Brussels Bar
I. Introduction
1. Online intermediation services, such as platform-based services are, since 12 July 2020 subject
to a new set of rules that apply directly throughout the European Union.
These rules are imposed by Regulation (EU) 2019/1150 of the European Parliament and of the Council
of 20 June 2019 on promoting fairness and transparency for business users of online intermediation
services (hereafter the “OIS Regulation”). These rules are directly applicable, because no transposal of
the rules to national law is required for them to apply.
2. The Regulation sets out new transparency requirements for online intermediation services and
search engines which will be accompanied by the development of new, complementary methods of
dispute resolution
3
.
3. We will assess the new rules and the practical impact they have for businesses that operate
online.
4. This first part of our contribution assesses the purpose of this new requirements (II) and the
scope of application (III) of the OIS Regulation. The aim is to make clear why these rules have been
elaborated and for which type of activities the OIS Regulation applies.
This will allow businesses to further determine whether they need to take into account or not these
rules.
In following contributions we will take a deeper dive into the practical consequences of the different
provisions of the OIS Regulation, including the contractual aspects of the OIS Regulation.
II. Purpose of the OIS Regulation
5. One might wonder why the EU is bothered to come up with a new set of rules to apply to
online intermediation services.
The main aim is to ensure the functioning of the internal EU market.
6. The OIS Regulation is justified by the European Commission because of the specific role the
online intermediation services play in the digital economy. Online intermediation services, such as
online platforms or online search engines, are according to the European Commission, key enablers of
entrepreneurship and new business models, trade and innovation, which can also improve consumer
welfare and which are increasingly used by both the private and public sectors
4
. They offer access to
new markets and commercial opportunities allowing undertakings to exploit the benefits of the
3
P. VAN CLEYNENBREUGEL, « Chapitre V. - Interventions dans le comportement des plateformes en tant
qu’acteurs économiques professionnels dans leurs différentes qualités » in Plateformes en ligne et droit de
l’Union européenne, 1e édition, Bruxelles, Bruylant, 2020, pp. 305-421
4
Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting
fairness and transparency for business users of online intermediation services, OJ L 186, 11.7.2019,
(hereafter “OIS Regulation”), visa 1
internal market. These services also allow consumers in the EU to exploit those benefits, in particular
by increasing their choice of goods and services, as well as by contributing to offering competitive
pricing online.
7. At the same time, the European Commission realised that these services also raise challenges
that need to be addressed in order to ensure legal certainty and fair treatment. The European
Commission established that many businesses and especially SMEs are dependent on the services
offered by online platforms or online search engines. This increasing dependence often results in the
providers of those services having superior bargaining power, which enables them to behave
unilaterally in a way that can be unfair and that can be harmful to the legitimate interests of their
businesses users. Indirectly this can also harm the interests of consumers in the EU
5
. As examples the
OIS Regulation refers to fact that these service providers might unilaterally impose on business users
practices which grossly deviate from good commercial conduct, or are contrary to good faith and fair
dealing
6
.
8. The OIS Regulation is intended to address such potential imbalances in the online platform
economy. It wishes to enhance the proper functioning of the internal market by laying down rules to
ensure that business users of online intermediation services are granted appropriate transparency,
fairness and effective redress possibilities. In turn it is expected that this will indirectly help to improve
consumer trust in the online platform economy.
III. Scope of application
9. The OIS Regulation has a specific scope of application.
First of all, it only applies to certain services (III.A.). Secondly, the scope of application is delimited by
conditions related to the persons that purchase such services (III.B.). Finally, certain services have
explicitly been exempted from application of the OIS Regulation (III.C.).
III.A. Services under scope
10. The OIS Regulation concerns specifically online intermediation services(commonly known
as platforms) and “online search engines”.
If a business does not offer these services, the OIS Regulation does not apply (but other more general
rules aiming at ensuring fairness and transparency may still apply).
11. A first step is thus to have a view on what the OIS Regulation understands as falling under these
services.
5
Recital 2 OIS Regulation.
6
C. CASTETS-RENARD, « Titre 1 - Régulation du marché dans l’économie des plateformes » in Droit du marché
unique numérique et intelligence artificielle, 1e édition, Bruxelles, Bruylant, 2020, p. 134
III.A.1 Online intermediation services
12. What the regulation states as “online intermediation services” are online platforms. To qualify
as an online intermediation service, the services must meet the following 3 conditions
7
.
1) Information Society services
13. The first condition is that the services must be “information society serviceswithin the
meaning of Article 1, 1), b) of Directive (EU) 2015/1535 of the European Parliament and of the Council.
This implies that the services must concern any service normally provided for remuneration, at a
distance, by electronic means and at the individual request of a recipient of services.
According to the aforementioned directive an information society service is a service contracted
without the parties being present, which is initially sent and also received at its destination by means
of electronic equipment for the processing and storage of data.
In other words, any service that is provided fully online against remuneration is an information society
service. Annex I of the aforementioned directive provides a list of what is not considered an
information society service.
This first element of the definition of online intermediation services concerns the relation between the
provider of the online intermediation service and its client: only if information society services are
provided to such clients, the OIS Regulation applies.
Hence, if any element of the service provision between the provider of online intermediation services
requires a physical exchange or delivery, the OIS Regulation does not apply.
2) Offering goods or services with a view to facilitating the initiating of direct transactions
14. The second condition is that these services must allow business users to offer goods or
services to consumers, with a view to facilitating the initiating of direct transactions between those
business users and consumers, irrespective of where those transactions are ultimately concluded.
This second element of the definition implies that only information society services which enable
offering of goods or services by business users to consumers, are concerned. I.e. any service of making
available a website or online application through which business users can offer goods and services, is
referred to by this second element of the definition of online intermediation services.
Whether in fact a transaction is concluded between the business user and a consumer is not relevant.
It is required, but sufficient that the service aims at facilitating the initiation of such transaction.
It is irrelevant whether the transactions are ultimately concluded online, on the online portal of the
provider of online intermediation services in question or that of the business user, (in part) offline or
in fact not at all, meaning that there is no requirement for any contractual relationship between the
business users and consumers as a precondition for online intermediation services falling within the
scope of the OIS Regulation. It is also not relevant whether these transactions between business users
and consumers involve any monetary payment.
7
Art. 2 OIS Regulation.
Whether the service also allows for transactions to be concluded between business users is also not
relevant. As soon as the service enables the possibility to conclude a transaction regarding goods or
services to consumers, the second condition is fulfilled.
A business user is defined as any private individual acting in a commercial or professional capacity
who, or any legal person which, through online intermediation services offers goods or services to
consumers for purposes relating to its trade, business, craft or profession
8
. The term “business user
is a new term compared to term “trader” generally used until now in the context of commercial
practices (see e.g. the Directive 2005/29/EC of the European Parliament and of the Council of 11 May
2005 concerning unfair business-to-consumer commercial practices (“any natural or legal person who,
in commercial practices covered by this Directive, is acting for purposes relating to his trade, business,
craft or profession and anyone acting in the name of or on behalf of a trader”) or Directive (EU) 2011/83
of the European Parliament and of the Council of 25 October 2011 or Directive (EU) 2019/770 of the
of the European Parliament and of the Council of 20 May 2019 (“means any natural person or any legal
person, irrespective of whether privately or publicly owned, who is acting, including through any other
person acting in his name or on his behalf, for purposes relating to his trade, business, craft or
profession in relation to contracts covered by this Directive”) or the notion undertaking used in EU
competition law or Belgian Business law.
It follows from the definition of business user that it refers to natural or legal persons that use the
online intermediation services to offer good or services to consumers for business or professional
purposes, whether it concerns a main or ancillary business or profession. It seems to also encompass
public entities which offer services or goods to consumers while using information society services.
A consumer refers to any natural person who is acting for purposes which are outside this person’s
trade, business, craft or profession. The reference to consumer in this sense is justified by the fact that
the dependent position of business users has been observed by the European Commission principally
in respect of online intermediation services that serve as a gateway to consumers in the form of natural
persons.
3) Contractual relationship
15. The third condition to qualify as online intermediation services is that the service must be
provided to business users on the basis of contractual relationships.
This third condition concerns the relationship between the provider of the online intermediation
services and the business user. This relation must be a contractual relation. If services which meet the
first two conditions are provided on the basis of the law, they will not be considered as online
intermediation services.
Conclusion about the “online intermediation services”
16. Taking into account the foregoing, any website or any application allowing business user to
offer online goods or services to consumers fall within the reach of the definition of online
intermediation services. As example the OIS Regulation refers to online e-commerce market places,
including collaborative ones on which business users are active, online software applications services,
such as application stores, and online social media services, irrespective of the technology used to
provide such services.
8
Art. 2 OIS Regulation.
It furthermore follows from the definition that the OIS Regulation does not apply to (i) to peer-to-peer
online intermediation services without the presence of business users, and (ii) pure business-to-
business online intermediation services which are not offered to consumers.
Platforms such as Uber / Uber Eats, Airbnb, Bol.com or Amazon are falling e.g. within the definition. It
is also important to note that the OIS Regulation does not call for conditions of application relating to
size company. Platforms initiated by local initiatives and therefore smaller than giants such as Uber or
Amazon (such as the Belgian companies Proxideal or Librel for examples) therefore also fall within the
definition of online intermediation services.
III.A.2. Online search engines
17. The name of the OIS Regulation is misleading in the sense that it gives the impression to only
regulate online intermediation services (or online platforms). Online search engines are also in the
field of application, in the sense that they allow the good referencing of companies among other
things.
18. An “online search engine” is, according to the OIS Regulation, referring to a digital service that
allows users to input queries in order to perform searches of, in principle, all websites, or all websites
in a particular language, on the basis of a query on any subject in the form of a keyword, voice request
(e.g. the well-known “Siri”), phrase or other input, and returns results in any format in which
information related to the requested content can be found.
The best known search engine is Google. There are however also other search engines such as
DuckDuckGo Search, Bing Search, Ecosia, Lilo, Dogpile Search, Yippy Search, Webopedia Search, the
InternetArchive Search.
19. The OIS Regulation refers in the definition of online search engines to users in general, which
seems to imply that the OIS Regulation applies regardless of whether the user is a professional or not.
20. However, the OIS Regulation only applies for online search engines to the extent they are used
by so called corporate website users”. This term is defined in the OIS Regulation as referring to any
natural or legal person which uses an online interface, meaning any software, including a website or a
part thereof and applications, including mobile applications, to offer goods or services to consumers
for purposes relating to its trade, business, craft or profession.
III.B. Conditions related to the persons purchasing the services in scope
21. Two further conditions must be fulfilled for the OIS Regulation to apply
9
.
1) The online intermediation services or the online search engines must be provided, or
offered to be provided, to business users (as defined above) and corporate website users,
respectively, that have their place of establishment or residence in the European Union.
2) These users offer, through those online intermediation services or online search engines,
goods or services to consumers located in the Union, irrespective of the place of
9
Art. 1 OIS Regulation.
establishment or residence of the providers of those services and irrespective of the law
otherwise applicable.
22. It follows from these two conditions that if an online intermediation service or an online
search engine are provided, the OIS Regulation only applies if the user of the service is established
or residing in the European Union and their clients are consumers located in the European Union.
It is then irrelevant:
- whether the provider of the online intermediation services or the online search engine is
established or residing in the EU;
- whether the client-consumer of the user of the service is residing in the EU; the “location”
in the EU being sufficient for the OIS Regulation to apply.
III.C. Services expressly out of scope
23. The OIS Regulation expressly provides that it does not apply to certain more specific services,
such as
10
:
1) Online payment services: they are considered not to meet the applicable requirements but to
be rather inherently auxiliary to the transaction for the supply of goods and services to the
consumers concerned;
2) Online advertising tools or online advertising exchanges: they are not provided with the aim
of the facilitating the initiation of direct transactions and which do not involve a contractual
relationship with consumers.
In respect of this second exemption it is clarified in the recitals to the OIS Regulation that the
regulation should not apply to search engine optimisation software services as well as services
which revolve around advertising-blocking.
Technological functionalities and interfaces that merely connect hardware and applications
are also not be covered by this Regulation, as they normally do not fulfil the requirements for
online intermediation services. However, if such functionalities or interfaces can be directly
connected or ancillary to certain online intermediation services, the relevant providers of
online intermediation services should be subject to transparency requirements related to
differentiated treatment based on these functionalities and interfaces.
*
* *
10
Art. 1 OIS Regulation.
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