Implementing the P2B Regulation correctly - this is how it's done!

Implementing the P2B Regulation correctly - this is how it's done!

P2B Regulation is the name of Regulation (EU) 2019/1150 to promote fairness and transparency for business users of online intermediary services. Digital distribution is a prevalent business model in today's age. Many online traders rely on the use of online platforms such as intermediary services or search engines to effectively distribute their goods and services to the end customer. First and foremost, small and medium-sized enterprises rely on such trading strategies.

The platform operators form an interface between online retailers and consumers. This position gives them considerable market power, which has experienced little regulation in recent years. As a result, allegedly unjustified account blockings, cancellations of product placements or sudden downgradings in the offer ranking have occurred time and again. In particular, the lack of transparency of such processes at the expense of online traders is criticised.

The European legislator reacted to this development by enacting Regulation (EU) 2019/1150 to promote fairness and transparency for commercial users of online intermediary services. Since 12 July 2020, the so-called "P2B Regulation" ("Platform-to-Business Regulation") has set limits to freedom of contract in order to ensure an obvious and fair approach in the business policy of platform operators.

P2B Regulation: who is obliged?

The P2B Regulation applies to both online intermediary services and online search engines (Art. 1 P2B Regulation). Online intermediary services are understood to be those services that mediate the initiation of transactions between online traders and end customers by enabling online traders to offer their goods and services to end customers on a platform. It is irrelevant whether the final conclusion of the contract takes place via the platform itself, a linked website of the online trader or in the shop. Intermediary services generally include e-commerce marketplaces (e.g. Amazon Marketplace), hotel and travel booking portals (e.g. Booking.com), app stores (e.g. Google Play or Apple AppStore) as well as price comparison portals (e.g. Google Shopping) or social networks (e.g. Facebook).

Online search engines, on the other hand, represent services that enable their users to search the internet based on a keyword or a comparable entry (e.g. Google Search, Yahoo!, Bing, etc.).

Adaptation of terms & conditions (T&C) according to P2B Regulation

In contrast, purely business platforms without consumer participation (B2B platforms) or pure peer-to-peer intermediaries without the participation of commercial users (P2P) are explicitly excluded from the scope of the P2B Regulation. Nor does the regulation oblige online payment services, company-owned websites or online advertising exchanges or online advertising tools.

From a geographical point of view, it is initially irrelevant where the brokerage or search service is based. In any case, providers are obliged to do so if they make their platform available to commercial users with a registered office in the European Union. In addition, the regulation applies to platform operators who address consumers established within the EU.

The P2B Regulation obliges the platforms to be more transparent and fair by primarily stipulating design and information obligations within the general terms and conditions.

First of all, the T&C must be unambiguous and clearly formulated according to the P2B Regulation (Art. 3.1 a) P2B Regulation) and must be easily accessible at all times - i.e. also before the conclusion of the contract (Art. 3.1 b) P2B Regulation), otherwise they are void.

Information obligations arise for platform operators regarding additional sales channels or partner programmes that could be used by online traders as further marketing opportunities (Art. 3.1 d) P2B Regulation). Furthermore, it must be explained to what extent the T&C  affect the IP rights (intellectual property rights) of the commercial users (Art. 3.1 e) P2B Regulation).

An amendment to the terms & condiorions requires prior notice of at least 15 days. Longer periods may have to be observed if the changes to the T&C entail necessary technical or business adjustments. The commercial user has the right to terminate the contract within these periods. However, if the online trader places new goods or services on the platform before the deadline expires, this is generally considered a waiver of the deadline (Art. 3.2 P2B Regulation).

Furthermore, the general terms and conditions of online intermediary services must clearly state why and to what extent the use of the platform can be suspended, blocked, terminated or otherwise restricted. The abstract reprimands for a "violation of the terms of use" that are common in the business practice of intermediary services are no longer permissible without further ado under the P2B Regulation. Instead, platform operators are obliged to disclose to commercial users the exact reasons for any restrictions on the seller's account (Art. 4 P2B Regulation).

If further goods or services of third parties are offered to consumers on the internet platform in addition to the offers of the respective online trader (so-called ancillary goods/services), the general conditions for this must be discussed in the terms & conditions. At the same time, the T&C must inform whether the commercial user himself is entitled to offer his goods and services alongside the offers of others (Art. 6 P2B Regulation).

The prohibition of retroactive changes to the terms & conditions also applies. Further disclosure obligations extend to the conditions under which commercial users can terminate the contract and access to information retained by the provider after the end of the contract (Art. 8 P2B Regulation).

The extent to which commercial users have or do not have technical and contractual access to personal data or other data must also be disclosed by the platform operators in their T&Cs (Art. 9 P2B Regulation).

Furthermore, when providing their service, providers often restrict commercial users in their ability to offer the same goods and services to end customers on more favourable terms by other means than through their own intermediary services (so-called most favoured nation clause). If this is the case, the platform operators are obliged under the P2B Regulation to justify this restriction in the T&C (Art. 10 P2B Regulation).

Regulations on ranking according to the P2B Regulation

The presentation of any offers of goods and services on the platforms inevitably takes place in a certain order. How prominent the offers are or where they are made available to consumers has an enormous impact on the sales behaviour of online retailers. With regard to the rankings and the presentation of the different providers or offers, sales channels are obliged to state the always current main parameters and their relative weighting in their general terms and conditions. If commercial users can influence the ranking in return for direct or indirect payment, information on this must also be provided in the GTC. However, information about the exact mode of operation or even the algorithms behind the ranking methods is not required (Art. 5 P2B Regulation).

Differentiation between own and third party offers according to P2B Regulation

It is not uncommon for platform operators to offer their own goods and services via their intermediary services or search engines. All self-preferences of their own offers, for example with regard to rankings, fees or access to data and services, are not inadmissible under the P2B Regulation, but they must be transparently disclosed in the GTC (Art. 7 P2B Regulation).

The complaints system according to the P2B Regulation

Finally, platform operators are also obliged by way of regulation to set up an internal free-of-charge system for any complaints by platform users in order to promote out-of-court settlements of disputes. The commercial user must also be informed about this internal platform complaint management in the GTC. The information regarding the functioning and effectiveness of the complaint management system shall be reviewed at least once a year and updated if necessary. In particular, the number of complaints submitted, the most important types of complaints, the average time taken to process complaints, and summarised information on the outcome of complaints must be included (Art. 11 P2B Regulation).

In addition, at least two impartial and independent mediators with whom the platform operators would cooperate in the event of a dispute must be specified in the GTC. An actual implementation of the mediation procedure, on the other hand, is not necessary. In the event of an attempt to resolve a dispute through mediation, the platform provider in question is entitled to bring an action before a court at any time, before, during or after the mediation (Art.12 P2B Regulation).

Exempt from these obligations are small or medium-sized online platforms that employ fewer than 50 people and whose annual balance sheet does not exceed 10 million euros (cf. Annex to Commission Recommendation 2003/361/EC, Art. 2.2).

Consequences of infringements and enforcement of the P2B Regulation

If T&Cs or their amendments violate the P2B Regulation, they are simply void.

In principle, the P2B Regulation, as European primary law, is directly applicable in the Member States without further acts of transposition. However, the enforcement of the regulation and the implementation of penalties and sanctions are the responsibility of the respective member states (Art. 15 P2B Regulation).

According to the Federal Ministry for Economic Affairs and Energy (BMWi), enforcement of the regulation in Germany is not to be carried out by the authorities, but by civil law instruments. In this context, the BMWi classifies the provisions of the P2B Regulation as market conduct rules within the meaning of § 3a UWG (Unfair Competition Act). A violation of the P2B Regulation would therefore constitute an unfair act, which is inadmissible under § 3 UWG and therefore, according to §§ 8 ff. UWG, which may lead to claims for removal, injunctive relief or damages.

Implementing the P2B Regulation correctly? We help you!

Do you have further questions regarding competition law, are you striving for the conformity of your platform and its T&Cs with the requirements of the P2B Regulation or are you yourself affected by non-transparent rankings and T&C changes? If so, you are welcome to contact us.We are a Munich-based commercial law firm specialising, among other things, in competition law. Our lawyers will support you conscientiously in disputes concerning intellectual property rights and offer you sound advice. Simply describe your concern to us via the following website and we will get back to you:

Implementing the P2B Regulation correctly - this is how it's done!