On the 14th of April, we had the pleasure to have Professor Guido Smorto (University of Palermo), a Jean Monnet Chair fellow, for a lecture on “Bridging the Fairness Gap Rethinking B2B Digital Contracts: Through the Lens of Offline Regulation”.
Professor Smorto provided a very comprehensive overview of the disparities in power and knowledge characterising the platform economy. In particular, he focused on a frequently overlooked aspect, i.e. the difference in bargaining power between online platforms and business users, who are often start-ups or small and medium enterprises.
In the EU, the P2B Regulation has sought to address this imbalance adopting rules on fairness and transparency. However, as Guido Smorto pointed out, this legislative response relies primarily on procedural safeguards without addressing the root cause of the problem or recognising substantive protection.
How to empower business users vis-à-vis platforms? Smorto interestingly turns to a completely different area of law and the offline context: Directive 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain. The context is different, but the sector is affected by similar structural problems: resource asymmetries between the parties, gatekeepers controlling the access to the market, lock-in risks, etc. Here, however, practices such as unilateral contract modifications, unfair risk transfer clauses, or retaliation are banned by the law, and enforcement actions can be initiated by the public authority.
If the objective of the EU is to restore fairness, this offline world example may offer a useful model for its online counterpart.
However, this does not appear to be the direction taken by the European policy-maker. More concerningly, Smorto concludes by highlighting a controversial change, framed as “simplification”, within the Digital Omnibus package. The latter proposes to repeal the P2B Regulation on the grounds that its provisions are largely covered in other instruments such as the Digital Services Act and the Digital Markets Act. With surgical precision, Smorto demystifies this claim by showing examples of the loopholes that would remain if this proposal were enacted (i.e. no 15-day notice in case of modification of terms, no obligation for the platform to disclose commercial self-preferencing or differentiated treatment, lack of transparency regarding parity clauses).
The simplification is a mantra that has become increasingly dominant in the EU policy-making. Guido Smorto’s lesson suggests we should carefully deconstruct such narratives, showing how to use the hermeneutical tools of the jurist to unpack and challenge them.
