A digital single market: Europe regulates marketplace practices

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The European Union is pursuing its commitment to a single digital market. EU negotiators have just settled on an agreement to regulate the relationship between online platforms and traders. The goal? To create a fair, transparent and sustainable environment in Europe. We’re looking at the various elements of this agreement, which affects 7,000 online platforms operating in the EU.

1 in 2 companies use marketplaces

Marketplaces have become a must in Europe. According to a survey conducted by Eurobarometer, 42% of EU companies are using these platforms to sell their products/services online. These marketing channels always attract more retailers that are ready to make themselves known or to develop their activity abroad. In response, some unfair commercial practices have begun to appear on the European market. This has caused the EU to take matters into its own hands in order to provide solutions to clean up the market while maintaining the momentum already established.

To download > Succeed on marketplaces.

In 2016, the Commission revealed that there were certain areas where additional efforts were needed to ‘guarantee a European ecosystem that’s trustworthy, legal and innovation-based”. Two years later, the Commission proposed a regulation on fairness and transparency in online trade. This project is now continuing to structure itself with the conclusion of a political agreement in February 2019 by the European Parliament, the Council and European Commission.

“Today’s agreement marks an important milestone in the digital single market, which will benefit the millions of European companies that rely on digital platforms to reach their customers. Our goal is to banish some of the most unfair practices and establish a criteria of transparency, while preserving the great advantages of online platforms, both for consumers and for businesses,” says Andrus Ansip (Vice President for the single digital market).

This agreement mainly covers unfair practices, the transparency of online platforms and the settlement of disputes.

Ending unfair practices

With these new rules, digital platforms will no longer have the right to suspend or close a seller’s account suddenly and without explanation. If the seller’s account is suspended by mistake, the platform will be forced to reactivate it.

The general conditions of sale on these platforms must be easily accessible and clearly stated. In the event of changes to these conditions, marketplaces will have to inform the sellers at least 15 days in advance to allow them to adapt accordingly.

More transparency

E-commerce platforms will also need to be more transparent. For this, both marketplaces and search engines will have to communicate their classification criteria used for goods/services sold on their platform. The goal is to allow sellers to have as much information as possible to help them optimise their visibility on the site concerned.

Platforms that sell other companies’ products alongside their own will have to provide all the same advantages that they give to their products to their third-party sellers.

These platforms will also have to be open about the data they collect and how it’s used.

Set up a dispute resolution

In the event of a dispute or complaint, e-commerce platforms will have to provide vendors with a claims processing system. In the event of a conflict, they should, if necessary, provide alternatives in the form of a mediator.

Note: Some platforms will be exempt, based on their workforce or turnover.

And in the future?

According to Mariya Gabriel (Commissioner for the Digital Economy and society), “these rules are the first of their kind in the world, and they ensure a fair balance between stimulating innovation and protecting our European values. They will improve the relationships between businesses and platforms, making them more balanced and transparent, and will ultimately provide great benefits to consumers. We will closely monitor developments in this area, particularly through our online platform observatory”.

For all EU member countries, these new rules will come into force 12 months after their implementation in the coming weeks. A review will then be carried out to ensure that they remain in line with the evolution of the market.

To read > The end of geoblocking opens new doors to European e-commerce.

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Maud Leuenberger

Editorial Project Leader @lengow