Marketplace

Author: Enguerrand Marrique

A marketplace is a web-based service enabling the sale of goods or the provision of services by third-party vendors. While the marketplace operator can also provide goods (of which it has full ownership) or services (through its own employees), this activity amounts merely to at distance/online sales. The marketplace operators process themselves or have built-on tools to process the payment of the good or service by users in favor of the third-party vendors. The marketplace may or may not collect a fee for its intermediation service. Vendors can be businesses or consumers. The target users can similarly be both coming from business or retail backgrounds.

Within marketplaces, sharing economy platform operators facilitate transactions between providers and users. The transaction can relate to the temporary use of/access to a good intermediation service, or any service between providers acting outside their professional activity and users. The range of this notion is largely challenged in the literature and should only encompass the narrowest sense (else, it would equal the notion of ‘marketplace’).

Marketplaces act as ‘points-of-control’. Their influence on the underlying supply of goods or services is thus questioned under vertical restraints theories in competition law. Because they are points of control, policymakers can also use them to ensure compliance with certain economic policies, especially in tax matters (e.g., by imposing reporting duties).

The third parties providing goods or listing offers for services on these marketplaces can either be businesses or individuals. It widens therefore the opportunities for individuals to offer goods and services on a frequent basis, without having to enter within the scope of consumer protection legislations. Indeed, consumer protection legislation often requires the service provider or the seller to be a business. Two situations qualified as unfair may thus arise because the marketplace hides the identity of the third parties as well as the frequency of the transactions occurring within that seller/provider. On the one hand, businesses will try to pass off as individuals selling goods or offering services without consumer protection warranties. On the other hand, individuals may grow an activity as large as a business and evade legislation applicable to that business (in terms of consumer protection but also in terms of licensing), creating thus a situation of unfair competition. This is the crux of many judicial challenges to ensure parity between ‘brick-and-mortar’ and ‘click-and-mortar’ businesses (especially in the so-called sharing economy).

Because goods and services are offered by third parties on marketplaces, the issue of the liability of the platform is often raised, notably in terms of intellectual property rights where the platforms have due diligence duties to ensure that trademark and copyrights protections are not infringed (see notice-and-takedown). Additionally, policymakers, incumbent marketplaces who feel unduly harmed by the unfair competition of click-and-mortar businesses also seek to find the platforms liable for other forms of illegal goods, services, or activities (e.g., with regards to license requirements). The success of this assertion varies largely from country to country.

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