Relations between marketplaces and sellers proposed to be enshrined in law

Marketplaces may remove the right, at their discretion, to block sellers or write off their funds in the form of fines. The rules by which sites will be able to impose such sanctions are proposed to be fixed by amendments to the draft law of the fifth antimonopoly package, which is now being considered in the State Duma. Aleksey Kozhevnikov, CEO of ANO Digitalization and New Technologies and a member of the Public Council of the Federal Antimonopoly Service of Russia, sent the corresponding proposal to the relevant Duma Committee.

Kozhevnikov sent his appeal at the end of December 2022 to the chairman of the Committee for the Protection of Competition of the State Duma Valery Gartung (Fair Russia). A copy of the letter was also sent to the deputy head of the FAS, Sergei Puzyrevsky, follows from the text of the letter, which Vedomosti has read. The direction of the appeal to Vedomosti was confirmed by Kozhevnikov. Vedomosti also sent a request to the FAS.

Kozhevnikov proposes to introduce a chapter into the law “On Protection of Competition”, which would prohibit platforms from certain actions or inactions used to conclude transactions between sellers and buyers, follows from the appeal. In particular, it is proposed to prohibit marketplaces from restricting sellers’ access to services, suspending or terminating the provision of services to sellers without their written or electronic notification “indicating motivated reasons, facts and circumstances that are the basis for such refusal.” The actual suspension or termination of the seller’s access to the platform must take place no less than 14 days after such notification. It is also proposed to ban “the write-off of the seller’s funds without the advance provision to such seller of documented evidence confirming the fact of violation on the part of the seller.”

The proposed measures may be included in the list of amendments to the draft laws of the “fifth antimonopoly package”. In the summer, a bill on regulating the activities of electronic trading platforms was submitted to the State Duma by the government, in November it passed the first reading, and amendments are now being collected for the second reading. In particular, the new draft law introduces the concept of “network effect”, i.e. the influence of any one platform on the general conditions for the circulation of a product or on the possibility of eliminating other market participants.

The current law “On Protection of Competition” already provides for the possibility of recognizing the dominant position of a digital platform if its market share exceeds 35%, Kozhevnikov notes in his letter. “Better rules need to be put in place to regulate the unacceptable non-market behavior of digital platforms to protect entrepreneurs from abuses of market power,” he writes.

The Committee for the Protection of Competition of the State Duma held parliamentary hearings in December 2022 to consider industry proposals, Gartung told Vedomosti. According to him, the committee collects amendments to the bill until February 17. The deputies can consider the draft in the second reading, taking into account all the amendments received, in March 2023, the deputy added.

The platforms themselves fundamentally disagree with Kozhevnikov’s position on the need for additional regulation of relations between sites and sellers.

“Most of Kozhevnikov’s proposals have already been regulated by civil law and do not require additional regulation,” an Ozon representative told Vedomosti. According to him, conscientious market participants already follow the industry principles developed at the FAS site, as well as the interaction standards developed with the participation of the Ministry of Industry and Trade and the Association of Internet Trade Companies (AKIT, unites Ozon, Wildberries, DNS “Citylink”, “M Video”, “Eldorado”, etc.).

Shares the point of view of Ozon and the president of AKIT Artem Sokolov, who noted that if the marketplace violates the provisions prescribed in the offer, the seller has the right to go to court. According to him, the obligation of marketplaces to provide open access to detailed detailed information about all fines, deductions, and other actions is spelled out in industry standards adopted on the site of the Ministry of Industry and Trade, which were signed by all platforms and associations uniting sellers. “And even if such a clause is included in the fifth antimonopoly package, to which it essentially has nothing to do, all the same, such a dispute can only be resolved within the framework of legal proceedings, where the plaintiff will have to prove that there was a violation,” he believes.

“Marketplaces are not interested in reducing the number of entrepreneurs on the site, but it is important for us that sellers comply with consumer rights and all the requirements of regulators,” said a Wildberries representative. The interlocutor added that the suspension of cooperation with the entrepreneur “can only be in case of violation of the law and significant violations of the provisions of the offer (for example, when selling goods prohibited for sale)”.

Mechanisms for deleting seller accounts from marketplaces, rules for charging fines, etc. are currently not regulated by the current legislation, lawyer Alexei Minaev disagrees with Sokolov. “This is a private law relationship: something is partly regulated by law, partly by self-regulation standards, partly by a marketplace and seller agreement,” he notes. As for the current legislation, digital platforms, including marketplaces, must comply with the requirements of the law “On Information”, “On Protection of Consumer Rights”, as well as the provisions of the Civil Code and the Code of Administrative Offenses, the lawyer added.

“Platforms are striving to develop industry-wide rules for self-regulation. For example, in recent years, a number of platforms, including marketplaces, have signed the basic principles of interaction between participants in digital markets, standards for interaction between marketplaces and suppliers, a charter of professional ethics for ad placement services, and other self-regulation standards,” he concluded.