EU deals blow to marketplaces

The European Union has created a new set of rules that want to create a fair and transparent environment in which companies can trade on online marketplaces. The platforms are banned from, among others, unilaterally suspending accounts.

2.35 billion in lost turnover

The EU feels the major online platforms are too powerful and wants to return some transparency and fairness to marketplaces like Booking.com or Zalando, as no fewer than half of the small and medium European companies who trade on such market places have said they have experienced problems, leading to an enormous 2.35 billion euros in sales lost.

The EU wants to make the SME stronger: “Today’s agreement marks an important milestone of the Digital Single Market that will benefit millions of European companies relying on digital platforms to reach their customers. Our target is to outlaw some of the most unfair practices and create a benchmark for transparency, at the same time safeguarding the great advantages of online platforms both for consumers and for businesses”, Vice-President for the Digital Single Market Andrus Ansip said.

Greater transparency

Among these practices are sudden suspensions of accounts: any account suspension will have to include a clear reason and the possibility to appeal. Sudden changes in terms and conditions will also be banned: changes will need 15 days of prior notice and – also important – the EU now demands that changes be provided “in plain and intelligible language”. Should conflicts still occur, the platforms will have to create a clear complaint-handling system. Only the smallest platforms can obtain an exemption for this.

If a platform also sells on its own marketplace, the new rules demand that they clearly state how it promotes its own products over others and how it uses the data it obtains from external sellers.

“In line with demands”

Should problems still arise, the EU suggests trade organisations to handle the complaints in court rather than (vulnerable) individual companies, and even the member states themselves can do so. One such organisation is EuroCommerce, which represents European retailers and says in a preliminary reaction that it “always supported the Commission approach, largely supported in the Council position, of establishing broad transparency obligations, rather than the Parliament’s approach of a detailed blacklist of what they called unfair trading practices”.

“From what we have read, the direction agreed in the trilogue is closer to the Commission and Council approach, which if correct is in line with what we have called for. The new Platform Observatory will be able to monitor application of the new rules in a proactive way, and, as we have seen in recent action by the Austrian competition authority, competition law already gives regulators a range of tools to address anti-competitive practices by powerful players in the market”, a spokesman replied to RetailDetail’s inquiry.