Promoting fairness and transparency in online brokerage

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

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

Platforms such as “Booking”, “Expedia” or “Trivago”, in the field of online intermediation, or “Google”, “Ask” or “MSN Search”, such as search engines, are examples of this type of providers that allow us to centralize, in a certain way, the advertising and contracting of services and goods. However, the dependence that can be created around this type of supplier on the part of professionals has led to practices that are not transparent, unfair and contrary to good commercial behavior, which has motivated their intervention through specific regulation.

This is the ultimate purpose of the Regulation of the European Union 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 begin to apply as of July 12, 2020, and which aims to end the practices we mentioned before, caused by the dominant position enjoyed by providers of online intermediation services, who can act in a unilateral and unfair manner, harming the legitimate interests of professional users of this type of service.

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

The main changes brought by this Regulation are the following:

First, the general conditions applicable to relationships between providers of online intermediation services and search engines on the one hand, and professional users on the other, must be drafted in a simple and understandable way, and must be available throughout the business relationship process, both in the pre-contractual phase and in the contracting phase. These should include in detail the regulation given to industrial and intellectual property rights, especially with regard to their ownership and control. Conditions that are not clear or precise enough will be null and void, and, therefore, must be considered as if they had never existed.

On the other hand, changes to these conditions must be given sufficient notice in advance, and in any case within a period not less than fifteen days. The user may end their relationship with the supplier within fifteen days of notification of the modification in case it does not suit their interests.

Secondly, in the event that the provider of online intermediation services decides to restrict or suspend the provision of these services to the professional user, they must communicate this decision beforehand, and must provide the motivation behind it. If the decision consists of the termination of the relationship, said decision, equally motivated, must be given at least thirty days in advance of the date on which it is to take effect. First of all, the provider of online intermediation services must offer the professional user the opportunity to clarify the facts and circumstances that have led to the adoption of such a measure. This deadline will not apply if the decision is due to a legal or regulatory obligation, or the provider can demonstrate that the professional user has repeatedly violated the general conditions that regulate the relationship.

Third, providers of online intermediation services and providers of online search engines must indicate in their general conditions the parameters that govern the classification system of professional users, including the possibility that the classification may be altered through the payment of a price.

Fourthly, providers of online intermediation services must have an internal system for processing complaints, directly managed or through third parties, to respond to complaints made by professional users, based on the principles of transparency and equal treatment; such a system must resolve issues such as possible breaches made by the provider, technological problems related to the provision of the online intermediation service, or the measures that have been adopted by the supplier contrary to the Regulations.

The Regulation does not stop there; one of its most important aspects is that member States can designate or create public bodies that are responsible for defending the interests of professional users through the possibility of filing lawsuits before the country's judicial bodies. The Regulation understands that the lack of financial resources, the fear of retaliation, or the clauses that govern the contractual relationship can be an obstacle for the user to decide to defend their interests directly.

However, the Regulation not only recognizes the legitimacy of these entities; any organization and association that has a legitimate interest in representing professional users will have this capacity recognized, which will allow it to bring actions before the courts with the objective of preventing or prohibiting any breach of its provisions.

For organizations and associations to enjoy this legitimacy, they must meet the following requirements:

• Be properly constituted in accordance with the law of the Member State that applies to them.
• Continuously pursue objectives 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 brokerage services or online search engines. To meet this last requirement, such organizations and associations must have fully published information regarding their members and sources of funding. Judicial bodies must ensure that these requirements are met.

We must remember that in our legal system, legitimacy is regulated by Law 1/2000, of January 7, on Civil Procedure, in its articles 10 and 11. Until now, only consumer and user organizations established to defend their rights and interests, as well as associations whose purpose is to ensure equal treatment between men and women, have been entitled to safeguard the interests of their associates; 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, with regard to compliance with the provisions of the Regulations 2019/1150.

For greater coherence and integrity of our legal system, it would be desirable for our Civil Procedure Act to be amended to include such recognition. Given the political situation in which we find ourselves, with an 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 for such a modification to take place immediately.

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

Therefore, as of July 12, 2020, associations and organizations that understand that their associates suffer from 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 report such practices. This recognition is only a manifestation of the current trend that has been expanding, albeit timidly, the protection system available to consumers and users, in the belief that, in the face of an increasingly globalized market and in which the margin for negotiation is small, professionals must also be protected from practices contrary to good uses, 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 meets the objectives set and to gauge its impact on online commercial transactions, waiting for them to take place in a competitive, fair and transparent framework.

Hortensio Santos (T&L Attorney)

Article published in the January edition From the monthly newspaper CEHAT