Since 12 July 2020 online platforms have to comply with the EU Platform-2-Business Regulation. In this blog we will focus on the question of sanctions and enforcement: what should online platforms fear if they do not comply with the P2B Regulation? In our view, the only really effective instrument could be collective actions by representative organisations of business users.
For a detailed discussion of the new rules in the P2B Regulation check out our Whitepaper.
Being compliant with the P2B Regulation is not easy
The P2B Regulation has two main pillars, one of which is transparency. This includes obligations to provide certain information in the platform’s general terms and conditions. These information requirements for a large part consist of open rules.
For instance, the P2B Regulation requires that an online platform informs its business users on the grounds it can invoke to suspend, terminate or restrict the use of its platform. But to what detail should the online platform inform its users? Merely stating that “a violation of the terms and conditions” can lead to termination or suspension is probably not enough. It is however almost impossible to predict upfront all the situations that might justify termination or suspension.
See for instance clause 15 of the terms & conditions of Dutch platform bol.com. Bol.com can terminate a business account:
“for example, if bol.com suspects a violation of one or more of the applicable terms and conditions, in case of fraud, if the Business Seller leaves bol.com’s invoices unpaid, if there is an infringement of bol.com’s or third parties’ intellectual property rights or if the use of the Account disrupts the proper functioning of bol.com’s Environment or, in bol.com’s opinion, may be detrimental to bol.com’s or third parties’ good name.”
That bol.com has chosen these open norms is understandable but it seems unlikely that a court would consider it compliant with the P2B Regulation.
The same applies for the Amazon terms and conditions. These even give Amazon the right to “terminate for convenience”, meaning that it does not need a reason to terminate. We can also safely assume that the Amazon terms and conditions do not comply with the requirement of being drafted in “plain and intelligible language”. The P2B Regulation stresses that many business users are micro or small enterprises with limited legal understanding. Also, it seems that information regarding ranking or differentiated treatment is nowhere to be found.
Sanctions in case of non-compliance
So what do bol.com and Amazon have to fear for their likely non-compliance with the P2B Regulation?
There is one sanction for non-compliance contained in the Regulation itself. Terms and conditions of the online platform, or specific provisions in the terms and conditions, that do not comply with the requirements of article 3 paragraph 1, shall be considered null and void. They will be deemed never to have existed. The same applies to any changes to the terms and conditions that have not been notified in line with the requirements of article 3 paragraph 2.
So what would this mean for the bol.com and Amazon examples above?
Can a bol.com seller argue that termination of his account was unlawful since the terms and conditions do not stipulate the possible grounds with enough detail, even if the termination was completely reasonable? Can an Amazon seller argue that the terms and conditions are not applicable at all since they are insufficiently clear and intelligible?
I do not think that a Dutch court would go so far. So then what?
Enforcement of the P2B Regulation
Article 15 of the Regulation states that the EU Member States must ensure adequate and effective enforcement and should stipulate measures in case of infringement. What type of measures that should be is left up to the Member States. The measures should however be effective, proportionate and dissuasive.
Countries with specific enforcement schemes
So far, only the UK and Spain have implemented new legislation providing for specific measures. The two countries have chosen completely different enforcement mechanisms.
The UK has chosen to leave enforcement to the courts and not to implement regulatory oversight. If business users are of the opinion that an online platform has violated the P2B Regulation, it is up to them to take the online platform to court. The UK Online Intermediation Services for Business Users (Enforcement) Regulations 2020 provide that business users can bring actions for non-compliance with Articles 3 (terms and conditions), 4 (restriction, suspension and termination) and 8 (specific contractual terms), also for damages.
We note that the P2B Regulation will continue to apply after the Brexit Transition Period, although its territorial scope will be limited to situations in which online platforms offer their service to business users established in the UK.
Spain on the other hand has chosen for governmental regulatory oversight and fines. The Spanish bill is still under discussion in the senate, but it seems that supervisory authority and sanctioning competence will be granted to the Ministry of Economic Affairs and Digital Transformation. In Spain, online platforms that violate the P2B Regulation will the risk fines up to a maximum of € 150,000.
Enforcement of the P2B Regulation in the Netherlands
The Dutch government has remained silent on the way the P2B Regulation should be enforced, as have most other EU Member States. This can mean two things. Either the Dutch legislator will still propose a specific enforcement regime, for instance by bringing the P2B Regulation within the supervisory competence of the Dutch Authority for Consumers and Markets. This seems unlikely.
The other, more likely possibility is that the government intends to leave it up to the affected business users themselves to directly rely on the P2B Regulation before the courts, as is the case in the UK. Such is possible, since EU Regulations (unlike Directives) are directly applicable in the Member States.
So if a business user feels that an online platform has terminated his account without providing an adequate substantiation of the reasons, he might rely on the P2B Regulation to have his account reinstated.
But what to do if the online platform has not provided sufficient information on ranking or differentiated treatment in its terms and conditions? It would be very difficult for a single business user to get a court order obligating the online platform to amend its terms and conditions. Under Dutch law, the business user would have to show some sort of harm or detriment due to the incompliance, which seems like an arduous task.
Also, individual business users might be hesitant to bite the hand that feeds them because of limited financial means, a fear of retaliation and choice of law and forum clauses in terms and conditions.
The EU legislator has however anticipated this.
Collective redress under the P2B Regulation
Article 14 of the P2B Regulation provides for the possibility for organizations and associations representing business users to take action before national courts. Such actions should be aimed at stopping or prohibiting infringements of the P2B Regulation and preventing future damage.
The requirements seem to be less stringent than those of general collective claims law in the Netherlands, as laid down in article 3:305a of the Dutch Civil Code. Most importantly, under the P2B Regulation, the collective organisation does not need to show that there is a concrete and homologous interest among the business users that it represents.
It remains to be seen however whether courts will nonetheless apply the requirements of article 3:305a DCC to collective claims under the P2B Regulation.
Another interesting point is that article 14 read in conjunction with recital 44 seems to stipulate that the collective actions can be based on the law of the Member State where the action is brought. This possibly sets aside choice of law clauses in the online platform’s terms and conditions.
Organisations that want to bring a collective action should meet certain criteria. In particular, they must be properly established, be of a non-profit making character and pursue their objectives on a sustained basis. Those requirements should prevent ad hoc establishment of organisations for the purpose of specific actions, or for the sake of making profits.
There is a list of organizations and associations that have been appointed by the Members States as to fulfil the requirements laid down in the Regulation. The list can be consulted here. So far, only Austria seems to have submitted its list of organizations.
All in all, the collective redress option may prove the most powerful instrument to force online platforms to comply with the P2B Regulation.