Promoting fairness and transparency in online brokerage

The Internet has become a true marketplace in which to find all kinds of goods and services; a marketplace that, in general, is not subject to formalities, timetables or geographical limitations, and in which consumers and users interact with suppliers of goods and services, directly or through third parties, in a space that seems to have no limits, making it an indispensable tool for economic growth.

In recent years, many companies have appeared that, aware of the infinite possibilities offered by the online market, offer their services as intermediaries, either directly to the end consumer or, indirectly, through search tools, to all types of professionals, thus becoming an indispensable factor for accessing these new business models.

Platforms such as "Booking", "Expedia" or "Trivago", in the field of online intermediation, or "Google", "Ask" or "MSN Search", as search engines, are examples of this type of providers that make it possible to centralize, to a certain extent, the advertising and contracting of services and goods. However, the dependence that can be created around this type of providers by professionals has given rise to practices that are not very transparent, unfair and contrary to good commercial conduct, which has led to their intervention through specific regulation.

This is the ultimate purpose of the European Union Regulation 2019/1150 of the European Parliament and of the Council, on the promotion of fairness and transparency for professional users of online intermediation services, which will be applied as of July 12, 2020, Its aim is to put an end to the aforementioned practices caused by the dominant position enjoyed by the providers of online intermediation services, who may act unilaterally and unfairly, harming the legitimate interests of the professional users of this type of services.

The Regulation sets the European internal market as the basis for its application, so that its provisions will be mandatory even if the providers of online intermediation services and online search engines are not established in the European Union; it will be sufficient for the professional user to be established in the European Union provided that he offers his services to consumers or users located in the Union, at least for part of the transaction.

The main new features of this Regulation are as follows:

Firstly, the general terms and conditions applicable to relations between online intermediation service providers and search engines on the one hand, and professional users on the other, must be drafted in a simple and comprehensible manner, and must be available throughout the process of the commercial relationship, both in the pre-contractual phase and in the contracting phase. They should include in detail the regulation of industrial and intellectual property rights, especially with regard to their ownership and control. Conditions that are not sufficiently clear or precise will be null and void and, therefore, should be considered as if they had never existed.

On the other hand, modifications to these conditions must be notified sufficiently in advance, and in any case within a period of not less than fifteen days. The user may terminate his relationship with the supplier within fifteen days of notification of the modification in the event that it does not suit his interests.

Secondly, in the event that the online intermediation service provider decides to restrict or suspend the provision of online intermediation services to the professional user, it must give prior notice of such decision, and must provide the reasons on which it is based. If the decision consists in the termination of the relationship, such decision, also with reasons, must be notified at least thirty days prior to the date on which it is to take effect. In advance, the online intermediation service provider must give the professional user the opportunity to clarify the facts and circumstances that have given rise to the adoption of such a measure. This time limit shall not apply if the decision is due to a legal or regulatory obligation, or if the provider can prove that the professional user has repeatedly violated the general conditions governing the relationship.

Thirdly, online intermediary service providers and online search engine providers should indicate in their general terms and conditions the parameters governing the rating system for professional users, including the possibility of the rating being altered for a fee.

Fourthly, online brokerage service providers must have an internal complaint handling system, managed directly or through third parties, to respond to complaints made by professional users, based on the principles of transparency and equal treatment; such system must address issues such as possible breaches by the provider, technological problems related to the provision of the online brokerage service, or measures that have been adopted by the provider contrary to the Regulation.

The Regulation does not stop there; one of its most relevant aspects is that Member States may designate or create public bodies to defend the interests of professional users by means of the possibility of bringing actions before the country's judicial bodies. The Regulation understands that lack of financial resources, fear of reprisals, or the clauses governing the contractual relationship may be an obstacle to the user deciding to defend his interests directly.

However, the Regulation not only recognizes the standing of such entities; any organization and association with a legitimate interest in representing professional users will also have such standing, which will enable them to bring actions before the courts with the aim of preventing or prohibiting any breach of its provisions.

In order for organizations and associations to enjoy this legitimacy, they must meet the following requirements:

• They must be properly constituted in accordance with the law of the Member State that applies to them.
• Pursue objectives on an ongoing basis that correspond to the collective interest of the group of professional users of online intermediation services, which excludes associations and organizations created specifically for this purpose.
• Not for profit.
• Not be financially influenced by a provider of online intermediary services or online search engines. In order to comply with the latter requirement, such organizations and associations must have fully published information on their membership and sources of funding. Judicial bodies shall ensure that these requirements are complied with.

We must remember that in our legal system, standing is regulated in Law 1/2000, of January 7, of Civil Procedure, in its articles 10 and 11. Until now, only consumer and user organizations formed for the defense of the rights and interests of consumers and users, as well as associations whose purpose is to ensure equal treatment between men and women have had legal standing to safeguard the interests of their members; as of July 12, 2020, they will be joined by those associations and organizations that defend the interests of professionals, users of online intermediation services, in relation to compliance with the provisions of Regulation 2019/1150.

For greater coherence and integrity of our legal system, it would be desirable that our Civil Procedure Act be amended to include such recognition. Given the political situation in which we find ourselves, with absolute paralysis of regulatory activity, with numerous Community texts pending adaptation, and with warnings from the European Commission for failing to meet transposition deadlines, it seems difficult that such a modification will take place immediately.

However, it will not be necessary for standing to be recognized by a national regulation, since any European regulation is directly effective and, as such, may be directly invoked by individuals, not only by natural and legal persons, but also by associations and organizations that defend the interests of professional users.

Therefore, as of July 12, 2020, associations and organizations that believe that their members are being subjected to practices contrary to Regulation 2019/1150 by providers of online intermediation services and online search engines will be able to go directly to court to denounce such practices. Such recognition is but a manifestation of the current trend that has been expanding, albeit timidly, the system of protection available to consumers and users, in the belief that, in an increasingly globalized market and in which the margin for negotiation is small, professionals must also be protected against practices contrary to good commercial relations and free competition.

It will be necessary to wait for the monitoring that the Regulation itself entrusts to the European Commission to verify that its application complies with the objectives set and to gauge its impact on online commercial transactions, in the expectation that they will develop within a competitive, fair and transparent framework.

Hortensio Santos (T&L Lawyer)

Article published in the January edition of the monthly newspaper CEHAT