Online travel platforms and the Platform to Business Regulation: more regulation for the consumer 'gatekeepers'

By Alice Esuola, Robert Turner, Lucy England

07-2020

This July a new Regulation – the Platform to Business Regulation ("P2B Regulation") - is coming into force which will (further) regulate a number of online travel platforms. The P2B Regulation is the first piece of EU legislation aimed directly at the B2B contractual relationships between operators of online platforms and search engines, and businesses seeking to use those services to reach consumers in the EU.

The P2B Regulation (officially Regulation 2019/1150 on promoting fairness and transparency for business users of online intermediation services - and known by some as the OIS (Online Intermediation Services) Regulation) comes into force on 12 July 2020 and will be directly applicable in all Member States from that date.

The primary purpose of the P2B Regulation is to regulate how operators of online platforms and search engines interact with businesses that want to use those platforms / search engines to reach consumers. The success of online platforms and search engines has led to many of them being considered as 'gatekeepers' to consumers, and the European Union has, through the implementation of the P2B Regulation, sought to level the playing field between operators of online platforms /search engines and businesses seeking to sell to consumers.

Here we look at what this new Regulation means for online travel platforms.

Which travel businesses does the P2B Regulation apply to?

It will apply to online travel platforms that provide their services – often intermediation services - to business users, where those business users are:

  • established in the EU; and
  • offer products or services to consumers located in the EU.

Where the platform is operated from does not form part of the applicability test; it only considers the location of the business users and the consumer end users of the platform; if both are in the EU then operators will need to comply with the P2B Regulation.

What does the P2B Regulation cover?

The P2B Regulation places a number of obligations on online platforms in their dealings with business users:

Terms and Conditions:

  • Accessibility. The terms and conditions imposed by platform operators should be clearly and plainly drafted. They should also be made easily available through all stages of the relationship with business users, including at the pre-contract stage.
  • Amendments. In most circumstances, online platforms are required to provide business users with at least 15 days' notice of changes to their terms and conditions.Where the changes might require a business user to make certain technical or commercial adaptations, a longer notice period should be given. Importantly, if a business user does not agree to the changes, they have a right to terminate the contract.
  • Suspension and termination: The online platform's terms and conditions should set out objective reasons to suspend, terminate or restrict access to the service.
  • Rankings. The online platform's terms and conditions should set out the parameters that are used for rankings. If rankings can be influenced by providing the online platform with remuneration, the terms and conditions will need to provide a description of how such remuneration affects rankings.
  • Differentiation. If the online platform provides its own products and/or services and those products and/or services are treated differently to those of its business users, it must provide information about this in its terms and conditions.
  • Mediation. Unless the online platform is a small enterprise (an enterprise with fewer than 50 employees and an annual balance sheet total/annual turnover of less than EUR 10 million), its terms and conditions must provide details of at least two mediators it is willing to engage with for the purpose of dispute resolution. Providers shall engage in good faith in any mediation attempt and bear at least half of the total cost of mediation.

Other important points:

  • Suspension and Termination. If an online platform decides to restrict, suspend or terminate a business user's access to its services, it will, in most circumstances, be required to provide a statement of reasons to the business user before the restriction, suspension or termination takes place.In the case of termination, at least 30 days' notice must be given to the business user, unless the termination is: (i) required by law; or (ii) the result of persistent breach by the business user.
  • Complaints. Unless it classifies as a small enterprise, the online platform will be required to provide a free complaint-handling process to business users.

What happens if online travel platforms don't comply with the P2B Regulation?

  • Provisions null and void. If an online platform fails to: (i) satisfy the accessibility requirements set out above; (ii) comply with the notice requirements when amending its terms and conditions; and/or (iii) set out objective grounds for a suspension, termination and/or restriction of access, the relevant provisions will not be enforceable against a business user.
  • Complaints. The online platform's internal complaints process should allow business users to raise complaints if the online platform fails to comply with its obligations under the P2B Regulation. If a complaint about non-compliance cannot be resolved, business users should be able to refer the complaint to mediation (see above).
  • Collective proceedings. Under the P2B Regulation, non-profit organisations/associations that represent business users, as well as public bodies, are able to pursue legal action against online platforms who fail to comply with their obligations under the P2B Regulation.
  • Legal action. Business users may also choose to pursue legal action against a non-compliant online platform directly.

Brexit

From 12 July 2020, the P2B Regulation will form part of UK law and it will continue to apply after the transition period.  However, it could subsequently be amended by other UK legislation or revoked altogether, as is the case with all EU law that is retained in UK law prior to Brexit.  It is important to note that the P2B Regulation has extra territorial application, so it will continue to apply to an operator of an online travel platform operating in the UK (or elsewhere outside of the EU) where the platform is providing services to business users and consumers which are based in the EU.

Our Commentary

Consumer protection legislation has developed over the last 10 years or so as a response to the unequal bargaining power between business and consumers. It is now widely understood that consumers have certain key protections when interacting with businesses – such as implied terms, obligations on businesses to act fairly and transparently and (for distance contracts) a 14-day cancellation right. The P2B Regulation has extended that focus to the supply side of online marketplaces and seeks to regulate the powerful 'gatekeeper' role that some of the most successful online platforms – many of them in the travel sector - now undertake.

Both the businesses that use travel platforms, such as hotels and airlines, and the travel platforms which advertise and sell travel services to consumers, now need to be mindful of the new rights and obligations in the P2B Regulation. The platform operators will need to ensure their B2B contracts are compliant and the business users should be aware of their enhanced rights in the event that difficulties arise. This Regulation may be tested soon as the travel industry recovers from COVID-19. 

Our International Travel Team advises business in the digital and travel sectors. If you want to find out how the P2B Regulation might affect your organisation, please get in touch.