The DGCCRF and Online Platforms’ Duty to Inform Consumers
An in-depth analysis of the results of the French market surveillance authority's investigation of digital platforms and their duty to their users.
On April 21, 2020, the DGCCRF (Directorate General for Competition, Consumer Affairs and Fraud Control), the French market surveillance authority, published the result of its investigation on digital platforms, and more specifically, their duty to inform. This investigation was conducted 2 years after the entry into force of new obligations in the European Union. Here are the lessons learnt after 73% of the controlled platforms were found non-compliant, analysed by Sylvie Gallage-Alwis and Lorène Massé, respective Partner and Paralegal at Signature Litigation.
Online selling, which is often referred to as electronic commerce or e-commerce, is the exchange of goods and services between two parties via electronic networks, in particular the internet. It is a specific type of selling that refers to all commercial transactions carried out from the website of a seller or through emails exchanged between potential co-contracting parties.
Whilst originally online selling referred to websites dedicated to creating business relations between professionals, in particular for calls for bids (B2B), its definition now extends to several other types of platforms, including those connecting professionals and consumers (B2C) and those connecting consumers, individuals and non-professionals, who want to sell their goods or services directly between themselves (C2C).
[Online selling] is a specific type of selling that refers to all commercial transactions carried out from the website of a seller or through emails exchanged between potential co-contracting parties.
- Legal framework for online platforms
The main European Regulation in the field of e-commerce and online platforms is Directive 2000/31/EC of the European Parliament and of the Council of June 8, 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, which created a regulatory framework for business transactions on the internet.
This Directive was strictly transposed in France in law no. 2004-575 of June 21, 2004 for Trust in the Digital Economy, which defines electronic commerce as “the economic activity whereby a person offers or provides at a distance and electronically services or goods“.
On October 7, 2016, the French Digital Republic Law no. 2016-1321 was enacted, whereby its Article 49 created Article L. 111-7 of the French Consumer Code. This Article makes a distinction between two types of activities of operators of online platforms (search engines, marketplaces and collaborative platforms): (i) listing or classification and (ii) bringing different parties together for the conclusion of an agreement for the sale or exchange of goods, services or content.
- New obligations to inform consumers
Article L. 111-7 of the French Consumer Code lists the information to be provided by operators of online platforms to consumers in a “faithful, clear and transparent” way, including:
- the “general conditions of use of the intermediation service offered and on the listing, classification and delisting of the content, goods or services“;
- the “existence of a contractual relation, financial relation or remuneration to its benefit [if] they have an impact on the classification or listing“;
- the “capacity as advertiser and the rights and obligations of the parties in civil and tax matters“.
Decree no. 2017-1434 of September 29, 2017, which came into force on January 1, 2018, specifies the conditions of the application of this Article, depend on the nature of the activity of operators of online platforms. It provides that they “must indicate in a special section the listing, delisting and classification conditions“, this section must be “directly and easily accessible from all the pages of the website” and contain the following information:
- the “conditions surrounding the listing and delisting of contents and offers of goods and services“;
- the “criteria of default classification“;
- the “existence of a financial relation or remuneration between the operator and the listed offeror“;
- the “classification criterion used as well as the definition of this criterion […] in a legible and easily accessible manner, on each result page“.
- High rate of non-conformities
The DGCCRF has conducted a survey targeting 44 online platforms to check their conformity to the above information obligations, concluding that there was a “high rate of non-conformities” with 32 out of the 44 companies failing to comply with the Decree.
According to the operators of online platforms, the Decree entered into force only recently (2018), hence not giving sufficient time to become compliant. There is also no information on the applicable regulations making it difficult for them to know what to do exactly.
The DGCCRF have argued that the new provisions containing the new obligations had been the subject of a very broad consultation and of an information letter issued by the DGCCRF reminding operators of the applicable obligations.
According to the operators of online platforms, the Decree entered into force only recently (2018), hence not giving sufficient time to become compliant.
Some of the concepts of the new obligations are also the source of interpretation difficulties.
For example, the section referred to in the Decree, which states that operators must include information on the listing, delisting and classification conditions, has led businesses to consider that their general terms and conditions could act as the “section” or that two different sections could exist. The DGCCRF answered that “the concept of section is defined as a specific section guaranteeing that the information is directly and easily accessible to the consumer“.
Several operators are unwilling to precisely define this criterion as they consider that doing so would be tantamount to revealing one of their trade secrets. Indeed, the use of algorithms is a major aspect of the operation of online platforms.
The DGCCRF explains that for consumers to trust the digital economy, it is necessary to provide them with objective information, including regarding the definition of the classification criteria used and the indication of the main parameters applied, always in accordance with the principle of confidentiality of trade secrets.
All the above non-conformities have given rise to the application by the DGCCRF of 21 administrative police measures, 8 warnings and 4 reports of administrative fines. While most platforms quickly defined and implemented the appropriate corrective measures, many of them are still yet to take action. It will now be interesting to see whether the DGCCRF conducts another similar survey next year and whether the applied penalties will become stricter.