Retail and Consumer Goods16.10.2020 Newsletter

"E-food": what operators should know about the Platform-to-Business Regulation

Influenced by COVID-19, the food industry is booming. Food is being ordered online with measurably more frequency. "E-food" is trendy: the term describes the buying and selling of food through digital distribution channels. Not only private individuals are making use of this. More and more companies are also occupying this business sector. 

But caution is required: there are several points that companies need to consider when setting up e-food distribution structures. The Platform-to-Business Regulation (Platform-to-Business Verordnung, "P2B-VO"), in particular, will have to be observed under certain circumstances. 

Who has to comply with the requirements of the P2B-VO?

The P2B-VO came into force on 12 July 2020 and has since preoccupied online trading platforms and search engine providers. The purpose of the Regulation is to increase transparency and fairness for the commercial users of online brokering services and search engines. Where consumers network with providers of remunerable services, platform operators gain significant market power: product placements and rankings have a considerable influence over consumer behaviour and thus on suppliers’ profit expectations.

Online brokering services within the meaning of the Regulation include operators of platforms designed to broker transactions between commercial users and consumers (e.g. Ebay). This concerns marketplaces and price comparison portals, for example. Peer-to-peer platforms (e.g. Airbnb) are excluded, provided that no commercial providers are involved.

E-food suppliers are not necessarily bound by the P2B Regulation. The online retail trade, i.e. B2C business in the form of virtual supermarkets, is generally not covered by the P2B Regulation, as commercial users predominantly are not involved. The situation is different for B2B sales platforms. Platform approaches to which the P2B Regulation applies are not yet a widespread option in online food trading. However, business via platforms is picking up speed: hence, for example, there are already e-marketplace operators that include food in their portfolio, such as Amazon. If a new online platform is designed for the sale of e-food and commercial users are involved, then much speaks in favour of it being obliged to meet the requirements of the P2B Regulation

What do companies need to pay attention to with regard to the P2B-VO?

The P2B-VO especially demands clear and comprehensible wording of general terms and conditions (GTC). Here, it is important that the contractual partner is provided with the most important information and that misleading wording is avoided. In addition, the Regulation stipulates the availability of GTC with regard to existing and potential future users. Furthermore, platform operators now have to justify in detail under which circumstances they restrict individual goods or services of traders or even block traders. The providers are obliged to present the determining main parameters of their rankings: they must disclose the reasons for the relative weighting of their main parameters compared to other parameters.

In addition, the establishment of an internal system to process the complaints of commercial users within a reasonable time is mandatory. The use of such a system has to be free and easily accessible. Furthermore, providers are required to annually assess the efficiency of the system and to publish corresponding results. The provider must provide information in its GTC on access to the internal complaint management system and on how it works.

In addition to the internal complaint management system, providers of online brokering services are obliged to participate in all mediation attempts by users according to the principles of good faith.

What do we recommend?

Companies setting up an online platform to sell e-food should check (or have someone check) whether their specific business model falls under the P2B Regulation. If the answer is yes, their GTC must comply with the Regulation. In addition, companies should address the requirements for out-of-court dispute resolution methods to be provided and must ensure disclosure of their ranking methods.

Below, please find a short checklist of the most important points of the P2B-VO to be observed:

  • Specify the GTC: in particular, special attention needs to be paid to the statement of reasons for imposing restrictions on users regarding the use of other distribution channels with regard to so-called best price clauses. Justification and description of the preference given to own/third-party products must be included.
  • Disclosure of ranking methods: platform operators must publicly declare both the criteria for listing and the reasons for using these criteria. How users can directly or indirectly influence the listing must also be clearly stated.
  • Internal processes need to be developed and implemented for restricting, suspending and terminating services vis-à-vis individual users. Internal, cost-free systems for complaints of commercial users are to be set up, allowing for the short-term clarification and resolution of complaints. Moreover, at least two mediators for mediation proceedings have to be specified in the GTC.

The Regulation itself does not provide for sanctions. However, the Member States in turn should adopt mechanisms to enforce the Regulation. Furthermore, associations in particular may take action against the companies (cf. Art. 14 P2B-VO). We therefore urgently recommend that companies observe the P2B Regulation in the constellations explained. We would be happy to advise you in more detail, if required.

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