Documents considered by the Committee on 3 April 2019 Contents

9Online platforms

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny

Document details

Proposal for a Regulation of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services

Legal base

Article 114 TFEU; Ordinary Legislative Procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Number

(39665), 8413/18 + ADDs 1–3, COM(18) 238 final

Summary and Committee’s conclusions

9.1Trilogue negotiations between the European Parliament and the Council of the European Union on the European Commission’s proposed Platform-to-business Regulation have concluded with political agreement on a compromise text, which is expected to be adopted by the co-legislators in the coming weeks. The Minister requests clearance to support the adoption of the proposal for a Regulation. The written procedure will be used in the Council.

9.2As set out in the Committee’s first report on this proposal on 18 July 2018,74 this draft Regulation seeks to promote fairness and transparency for business users of online intermediation services by establishing a range of regulatory requirements applicable to multi-sided e-commerce marketplaces, app stores, social media, and search engines. In its first consideration of the proposal, the Committee took the view that the level of intervention proposed by the Regulation was generally light-touch, with the focus being on improving transparency in these markets.

9.3On 9 August 201875 the Minister (Lord Henley) wrote to the Committee to inform it that he accepted that the text appeared to “recognise the importance of adopting a proportionate approach, that takes into account both innovation and addressing unfair business practices”. In a further update,76 he noted that the Presidency of the Council had prepared a compromise text which made the proposal more proportionate on a number of sensitive points: for example, it removed the obligation for search engines to disclose the reasons for the relative importance of ranking criteria. The Minister requested a waiver to participate at Competitiveness Council on 29/30 November, at which a General Approach was subsequently agreed which was in line with the UK position.

9.4Trilogue negotiations with the Parliament were somewhat more contentious. The Minister wrote to the Committee on 4 February 2019 to inform it about the key points of disagreement which had not yet been resolved in negotiations. These included the question of whether the scope of the Regulation should be widened to include operating systems (the Government was against their inclusion), whether platforms should be able to suspend business users immediately where appropriate (the Government thought that platforms should retain this ability), and whether differentiated treatment should be banned or simply be subject to transparency requirements (the Government preferred the latter approach).

9.5In its report on 6 February 201977 the Committee granted the Minister a waiver to support the proposal provided that it aligned with the UK position, while noting that, contrary to the Government’s position, there could be a case for the proportionate inclusion of operating systems within the Regulation’s scope.

9.6In his latest update to the Committee, dated 5 March 2019,78 the Minister states that the compromise text was endorsed by Deputy Permanent Representatives on Wednesday 20 February and by the lnternal Market Committee of the European Parliament on Thursday 21 February. The text was formally approved by MEPs at the March plenary session, and the Minister states that it will be adopted by the Council via written procedure at the next possible occasion.

9.7The Minister provides an overview of the late stage changes to the compromise text in the three areas where the Minister was concerned that the final text could be disproportionate:

9.8The Minister also provides a helpful consolidated summary of the main provisions of the proposed Regulation in its final form, which is reproduced below.

9.9As adopted, the main elements of the proposed Regulation oblige platforms to:

9.10The proposed Regulation obliges platforms and search engines to:

9.11The proposed Regulation also obliges platforms to have a free, internal complaints procedure. They must include details on access to and functioning of the complaints system in their terms and conditions, and publish data on its functioning and effectiveness, including the number of complaints lodged, the average time to process them, and aggregated information on the outcome.

9.12Platforms must also nominate two or more mediators with whom they would be willing to work. Small enterprises are exempt from this obligation. The proposed Regulation also sets out the rules for organisations and associations to pursue judicial proceedings on behalf of a business user and sets out enforcement obligations for Member States. The Regulation will apply 12 months after the publication date.

9.13We thank the Minister for his thorough update regarding the outcome of trilogue negotiations regarding the proposal for a Platforms-to-Business Regulation. The Minister reports that the final text is acceptable to the UK, as the European Parliament has been willing to compromise and accept more proportionate provisions on key aspects of the text which were of particular concern to the Government.

9.14Under the proposed Regulation, platforms within its scope (multi-sided e-commerce marketplaces, app stores, social media, and search engines) will retain the power to suspend or restrict access to their services where this is necessary to protect themselves, consumers and other businesses from businesses which breach terms and conditions. Differentiated treatment will continue to be permitted but subject to transparency requirements. Operating systems will be included within the transparency requirements applicable to differentiated treatment, but only to the extent required to prevent platforms from circumventing the rules about differentiated treatment via their operating systems.

9.15As the compromise text strikes an acceptable balance between the need to protect businesses which are dependent on online platforms against unfair treatment and the need to promote innovation in the digital economy by avoiding creating disproportionate obligations on online platforms, which is in line with the UK position on this issue, we now clear this document from scrutiny.

Full details of the documents

Proposal for a Regulation of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services: (39665), 8413/18 + ADDs 1–3, COM(18) 238 final.

Previous Committee Reports

Fifty-fourth Report HC 301–liii (2017–19), chapter 2 (6 February 2019); Forty-fourth Report HC 301–xliii (2017–19), chapter 1 (14 November 2018); Thirty-sixth Report HC 301–xxxv (2017–19), chapter 2 (18 July 2018).


74 Thirty-sixth Report HC 301–xxxv (2017–19), chapter 2 (18 July 2018).

75 Letter from the Minister to the Chair of the European Scrutiny Committee (9 August 2018).

76 Letter from the Minister to the Chair of the European Scrutiny Committee (5 November 2018).

77 Fifty-fourth Report HC 301–liii (2017–19), chapter 2 (6 February 2019).

78 Letter from the Minister to the Chair of the European Scrutiny Committee (5 March 2019).




Published: 9 April 2019