Online marketplaces (Amazon, Booking…) – suspended or terminated seller’s account – legal recourse
What can a merchant do when her or his account with an online marketplace (Amazon, Booking…) is suspended, terminated or when unfavourable changes to the general terms and conditions are imposed?
Due to their business size and high visibility, some online marketplaces have become indispensable for merchants who offer their products and services via the internet.
In many cases it concerns small businesses or independent merchants whose activity and financial viability is largely dependent on one or more of these online marketplaces.
While in some instances the eviction of an unscrupulous merchant from an online marketplace is legitimate, there are cases in which such a situation may be unjustified.
In practice, this kind of decision is often based on an algorithm that replaces the analysis of the situation by an individual. Moreover, even in the case of personalised treatment, the relevant services are subject to numerous complaints about their lack of transparency and availability.
Until recently, from a legal point of view, the means of action available to users (i.e. merchants) remained difficult to implement. This was due to a lack of appropriate regulation.
The situation is now different.
Indeed Regulation (UE) n°2019/1150 known as P2B or Platform To Business, (the « Regulation »1 is in force since 12 July 2020. On 5 March 2021, Luxembourgish legislator enacted a law in order to implement some technical measures pursuant to the Regulation (the « Law»2).
In a nutshell, the purpose of the Regulation is to protect merchants against possible abuses that could be committed by online marketplaces acting as intermediaries between merchants and consumers. For this protection to be effective, a specific legal action is now contemplated by the Law.
Scope of the Regulation
It is an open secret that one of the main multinationals targeted, without being specifically mentioned in the Regulation, is the Amazon group.
However, the Regulation has a much wider scope and applies to :
- providers of online intermediation services, i.e. online trading platforms or search engines (service providers3) ;
- any person or business who, through online intermediation services, offers goods or services to consumers for purposes related to their commercial activity (users4).
Regulation applies to services that enable platform users (merchants) to offer goods or services to consumers, with a view to facilitating the engagement of direct transactions between these users and consumers.
Relevant services shall be provided on the basis of a contractual relationship. The condition of remuneration is not required5.
The Regulation does not apply to online payment services, online advertising tools or online advertising exchanges.
Nor does it apply when the user is acting in a non-professional capacity (Airbnb if conditions are met).
The Regulation is based on three main areas.
Increase of transparency
According to the Regulation, the general terms and conditions offered by a service provider shall meet the following conditions:
- be drafted in plain and intelligible language and easily available;
- the grounds for decisions to suspend or terminate or any other restriction shall be clearly defined;
- the main parameters determining a ranking shall be communicated to users to help them to understand how to positively influence on their ranking. Where ranking can be influenced by remuneration, the possibilities and effects of such remuneration shall be described.
In addition, a number of communications shall now be provided through a durable medium.
Preventing unfair commercial practices
In view to balance the relationship between service providers and users, the Regulation provides for safeguards to protect merchants in the event that the online platform decides to restrict or prevent access to the services it offers. These safeguards include:
- notification of a statement of reasons : where a service provider decides to restrict or suspend the provision of its services to a user, it shall communicate the reasons of its decision at the latest at the time it takes effect. In the case of termination of services, a statement of reasons shall be communicated at least 30 days before the termination takes effect, even if some exceptions still apply6;
- the right to clarify the facts and circumstances, to make comments : in the event of restriction, suspension or termination of services, the user shall be given the opportunity to clarify the facts and circumstances within the internal complaints process;
- notice period : changes to the general terms and conditions can only be applied after a notice period, which may not be less than fifteen days.
Setting up of a dispute resolution system
In order to promote alternative dispute resolution, the Regulation requires service providers to:
- set up an internal complaints handling system. This system shall be easily accessible, free of charge and shall ensure handling within a reasonable time;
- provide for the use of impartial and independent mediators to facilitate an out-of-court settlement of any disputes that may exist with business users concerned.
Given the costs of setting up and running these systems, the Regulation exempts from these obligations any service provider that is considered a small business7.
Rapid and effective legal remedies
The safeguards provided by the Regulation would be ineffective without appropriate legal remedies. For this reason, the Law provides for the possibility for a user to open legal action for an injunction (action en cessation) against a service provider who fails to comply with the obligations of the Regulation8.
This kind of procedure has a double advantage:
- it follows the form of the summary procedure (procédure de référé), thus guaranteeing rapid processing of cases;
- it allows for a decision on the merits of the case (and not a provisional decision, as it is normally the case with a summary procedure).
The possibility of opening legal action is also recognised, upon certain conditions, for certain organisations or associations.
The Law also provides that any failure to comply with injunctions or prohibitions resulting from a Luxembourg court decision may be sanctioned by a fine of up to EUR 1 million9.
The legal framework implemented by the Regulation is the first targeted attempt by the European Union to regulate the large digital operators (internet giants).
The Regulation will undoubtedly have a very strong impact on the evolution of relationships between service providers and their users.
Indeed, insofar as a risk of sentence on service providers is now clearly identified, they will have to, if they have not already done so, significantly amend their commercial practices in order to comply with their obligations.
2 Loi du 5 mars 2021 relative à certaines modalités de mise en œuvre du règlement (UE) n° 2019/1150 du Parlement européen et du Conseil du 20 juin 2019 promouvant l’équité et la transparence pour les entreprises utilisatrices de services d’intermédiation en ligne. – Legilux (public.lu) (only available in French version);
3 The targeted platforms and search engines are mainly (but not only) those with a global dimension. The Regulation applies to providers of such services, whether they are established in a Member State or outside the Union, provided that two cumulative conditions are met. The first is that business users or users of business websites shall be established in the EU. The second is that the business users or users of business websites shall offer, through the provision of these services, their goods or services to consumers located in the Union for at least part of the transaction (see Article 1(2) of the Regulation);
4 According to Article 2(1) of the Regulation, this means: any individual acting in the course of his trade, business or profession or any legal person who, by means of online intermediation services, offers goods or services to consumers for purposes relating to his trade, business, craft or profession;
5 For further details, please refer to Article 2 (2) of the Regulation;
6 The various exceptions to the 30-day notice period are derived from Article 4(4) of the Regulation. They may apply, inter alia, in the case of (i) a regulatory obligation imposed on the service provider and (ii) illegal or inappropriate content, security risks of a good or service, counterfeiting, fraud, malware, spam, data breaches, other cyber security risks or a good or service not suitable for minors;
7 On this point the Regulation refers to recommendation 2003/363/EC which defines a small enterprise “as an enterprise which employs fewer than 50 persons and whose annual turnover or annual balance sheet total does not exceed EUR 10 million“;
8 Article 2 of the Law provides that: “the action for injunction shall be brought in accordance with the procedure applicable before the summary proceedings court in accordance with Articles 932 to 940 of the New Code of Civil Procedure. The judge presiding the chamber of the district court sitting in commercial matters shall rule as the judge on the merits. The time limit for appeal is fifteen days“;
9 Article 5 of the Law.
If you would like more information on any of the above, or have any other questions, do not hesitate to contact us.
During a legal consultation, all the elements of your case can be considered and the exchange from client to lawyer will take place in order to analyse your legal situation in a concrete and confidential manner.
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