Marketplace: Legal Definition and Issues

The digital economy has transformed consumer habits and upended traditional business models. At the heart of this revolution, marketplaces (digital marketplaces) are now a major economic sector that raises many complex legal questions. Between uncertain contractual characterisation, shared responsibilities and strengthened European regulation, these platforms operate in a legal environment undergoing profound change. This article examines the legal definition of marketplaces and analyses the main issues arising for operators, professional sellers and consumers.

Legal definition of the marketplace

Conceptual and economic approach

A marketplace is defined as a digital platform that brings together sellers (professionals or individuals) and buyers, without the platform operator owning the goods or services marketed. This marketplace definition fundamentally distinguishes these platforms from classic e-commerce sites where the site owner sells its own products directly. The characterisation of e-commerce and how it differs from neighbouring notions are detailed in our article on the legal definition of e-commerce.

Article 2 of European Regulation 2019/1150 of 20 June 2019 (known as the "Platform-to-Business Regulation") defines online intermediation services as "information society services that allow businesses to offer goods or services to consumers, with a view to facilitating the initiating of direct transactions between those businesses and consumers".

This European approach emphasises three constituent elements: the nature of an information society service, the intermediation function, and the aim of facilitating direct transactions between third parties.

Legal characterisation under French law

French law does not provide a unified marketplace definition in a single text. The legal characterisation is built around several regimes:

Hosting provider status: Article 6-I-2 of Law No. 2004-575 of 21 June 2004 on confidence in the digital economy (LCEN) defines hosting providers as "natural or legal persons who ensure, even free of charge, for making available to the public through online public communication services, the storage of signals, writings, images, sounds or messages of any kind provided by recipients of those services".

Payment service provider: Where the marketplace handles financial flows, it may be characterised as a payment institution within the meaning of Article L. 522-1 of the French Monetary and Financial Code, subject to authorisation by the ACPR (Autorité de contrôle prudentiel et de résolution, the French prudential supervision and resolution authority).

Commission agent or agent: If the marketplace acts in its own name on behalf of the sellers, it may be recharacterised as a commission agent (commissionnaire) (Articles 94 to 96 of the French Commercial Code) with the obligations that follow.

Distinction from related models

The marketplace is distinguished from several close business models:

The direct e-commerce site, where the operator sells its own products. In that case, it acts as a professional seller with all the obligations of the French Consumer Code.

Price comparison sites, which direct users to other sites without hosting commercial content. They fall under the advertising regime and do not handle transactions.

Collaborative platforms of the sharing-economy type (Airbnb, BlaBlaCar), which connect individuals for one-off services and are often subject to specific sector regulations.

Applicable regulatory framework

Strengthened European regulation

The Digital Services Act (EU Regulation 2022/2065 of 19 October 2022) introduces a harmonised framework for digital services. It distinguishes several categories of platforms according to their size and impact, with graduated obligations.

Online platforms within the meaning of Article 3(j) of the DSA are defined as "a hosting service that, at the request of a recipient of the service, stores and disseminates information to the public, unless that activity is a minor and purely ancillary feature of another service".

For very large online platforms (more than 45 million monthly active users in the Union), the DSA imposes enhanced obligations: assessment of systemic risks, mitigation measures, annual external audits and algorithmic transparency.

Transposition into French law

Law No. 2022-300 of 2 March 2022 aimed at improving consumer protection partially transposes these obligations. The Autorité de régulation de la communication audiovisuelle et numérique (Arcom) is designated as the French digital services coordinator.

Article L. 111-7-1 of the French Consumer Code, arising from this law, requires platforms to inform consumers clearly of the identity and contact details of the professional seller, and of whether consumer law applies.

Specific sector obligations

Fight against counterfeiting: Article L. 324-12 of the French Intellectual Property Code requires platforms to take measures against counterfeit products, in particular by setting up a reporting mechanism.

Product safety: EU Regulation 2019/1020 on market surveillance imposes on marketplaces obligations to check the conformity of the products put up for sale.

Digital taxation: Law No. 2019-759 of 24 July 2019 creating a tax on digital services subjects marketplaces exceeding certain thresholds (€750 million of worldwide turnover, €25 million in France) to a 3% tax.

Liability of marketplace operators

Limited liability regime

The fundamental principle rests on the distinction between editorial liability and hosting liability. Article 6-I-2 of the LCEN establishes limited liability for hosting providers: they cannot be held liable for the content hosted if they do not actually know of it or if, as soon as they know of it, they act promptly to remove it.

This protection is not absolute. The case law, in particular the judgment of the Cour de cassation of 17 February 2011 (Tiscali/Dargaud case), specifies that the hosting provider loses the benefit of this limitation if it plays an active role such as to give it knowledge or control of the content.

Monitoring and removal obligations

Marketplaces must put in place notification mechanisms allowing third parties to report unlawful content. Article 6-I-5 of the LCEN requires the provision of an "easily accessible and visible mechanism enabling any person to bring to their attention" unlawful data.

The removal period is not precisely defined by French law, but the case law generally accepts a "reasonable" period that varies according to the nature of the content and the seriousness of the infringement. The DSA now specifies that platforms must process notifications "without undue delay" and inform the notifier of their decision.

Liability towards consumers

The legal characterisation of the marketplace directly affects its liability towards end consumers. Three main scenarios emerge:

Mere hosting provider: The marketplace assumes no contractual liability towards the buyer. The contract is formed directly between the seller and the buyer.

Commission agent or active intermediary: If the marketplace sets the price, manages stock or controls the conditions of sale, it may be recharacterised as a professional seller and assume the obligations of the Consumer Code (conformity guarantee, right of withdrawal, after-sales service).

Payment service provider: Where it handles financial transactions, the marketplace assumes specific obligations to secure payments and protect against fraud.

Contractual and commercial issues

Relations with professional sellers

Contracts between marketplaces and professional sellers raise problems of contractual imbalance. Since July 2020, the Platform-to-Business Regulation has imposed several transparency obligations:

Clear terms and conditions: Article 3 of the Regulation requires that the terms and conditions be "drafted in plain and intelligible language" and set out the "main parameters determining ranking".

Notice of changes: Substantial changes to the terms and conditions must be notified with at least 15 days' notice, increased to 30 days for changes affecting the ranking of results.

Statement of reasons for suspensions: Article 4 requires prior, reasoned information in the event of suspension or restriction of a seller account, except in cases of obvious urgency.

Management of commercial data

The exploitation of data generated by transactions is a major economic issue. Article 9 of the Platform-to-Business Regulation regulates access to data: marketplaces must describe "the scope, nature and conditions of access and use" of the data they collect.

The GDPR applies fully to marketplaces that process personal data. They must in particular:

• Appoint a data protection officer if they employ more than 250 people
• Carry out impact assessments for high-risk processing
• Respect the principles of data minimisation and purpose limitation

Intellectual property and counterfeiting

Marketplaces face a permanent challenge in combating counterfeiting. Article L. 324-12 of the French Intellectual Property Code requires them to "put in place an easily accessible and visible mechanism enabling holders of intellectual property rights to report unlawful content".

The case law is gradually developing an enhanced obligation of means. The judgment of the Court of Justice of the European Union of 12 July 2011 (L'Oréal/eBay) specifies that platforms must adopt preventive measures against repeat infringement, without however imposing a general obligation of monitoring. On the rights holders' side, the means of protecting and defending a trade mark or a creation are examined in our article on the intangible assets of the company.

Consumer protection

Enhanced pre-contractual information

Article L. 221-5 of the French Consumer Code, as amended by Ordinance No. 2021-1734 of 22 December 2021, requires marketplaces to inform the consumer clearly on several points:

• The identity of the seller and whether the seller is a professional or an individual
• The contact details enabling the seller to be effectively contacted
• Whether or not consumer law applies, depending on the status of the seller

This information obligation conditions the legal validity of the sale and may engage the marketplace's liability in the event of default.

Dispute handling and mediation

Marketplaces must put in place internal complaint-handling mechanisms. Article L. 616-1 of the French Consumer Code requires them to offer a mediation service for consumer disputes, or to refer consumers to a competent mediator.

The Platform-to-Business Regulation supplements this arrangement for disputes between professionals by requiring an accessible and free "internal complaint-handling system".

Right of withdrawal and guarantees

The question of the right of withdrawal on marketplaces depends on the status of the seller. For sales between professionals and consumers, the statutory period of 14 days applies (Article L. 221-18 of the French Consumer Code).

The marketplace may be held jointly liable for the exercise of the right of withdrawal if it intervenes actively in the commercial relationship or if it collects the price on behalf of the seller.

Technological and regulatory challenges

Artificial intelligence and recommendation algorithms

The use of recommendation algorithms raises issues of transparency and fairness. Article 24 of the DSA requires very large platforms to provide at least one recommender system option "that is not based on profiling".

Law No. 2016-1321 of 7 October 2016 for a Digital Republic introduces a right to algorithmic explanation for automated administrative decisions, a principle gradually extended to the private sector.

Content moderation and freedom of expression

The balance between combating unlawful content and preserving freedom of expression is a major challenge. The DSA introduces procedural safeguards: a right of appeal against moderation decisions, the possibility of external challenge, and transparency of moderation policies.

Marketplaces must publish transparency reports detailing their moderation actions, with precise data on the types of content handled and the measures adopted.

Forthcoming regulatory developments

The Digital Markets Act (EU Regulation 2022/1925) will apply to marketplaces designated as "gatekeepers" (gatekeepers) that meet strict size and economic impact criteria. These platforms will have to comply with obligations of interoperability and of opening up their services.

The draft European regulation on artificial intelligence will also affect marketplaces that use AI systems for product recommendation or fraud detection, with documentation and risk assessment obligations.

Frequently asked questions

Is a marketplace liable for defective products sold by third parties?

In principle, no. As long as it acts as a mere hosting provider, the marketplace does not assume liability for products sold by third-party sellers. However, if it intervenes actively in the selection of products, the setting of prices or the conditions of sale, it may be recharacterised as a professional seller and will then assume liability for latent defects and lack of conformity under Articles L. 217-3 et seq. of the French Consumer Code.

What are a marketplace's obligations regarding VAT?

Since 1 July 2021, marketplaces that facilitate the sale of goods by sellers established outside the European Union to European consumers are deemed to receive and supply those goods themselves (Article 14 bis of the VAT Directive 2006/112/EC). They must therefore collect and remit VAT under the OSS (One Stop Shop) scheme.

How can a marketplace protect itself against counterfeiting claims?

Putting in place an effective notice-and-takedown mechanism, in line with Article L. 324-12 of the French Intellectual Property Code, is the essential protection. The marketplace must also adopt a policy against repeat infringement, monitor repeat-offender sellers, and cooperate with rights holders within trade mark protection programmes.

Does the GDPR apply differently to marketplaces?

Marketplaces are generally characterised as controllers for the data they collect directly (user accounts, browsing data, analytics). They may be processors for certain services provided to sellers (order management, sales statistics). This dual role requires particular attention to the lawfulness of the processing and to informing the data subjects. On the mapping of processing activities, legal bases and the appointment of a data protection officer, see our analysis of data protection in business.

Can a marketplace impose its pricing terms on professional sellers?

The Platform-to-Business Regulation regulates this contractual freedom. Article 3 requires transparency of the pricing terms and of their evolution. Any substantial change must be notified with at least 15 days' notice. Clauses that create an abusive imbalance may be challenged on the basis of the general law of contract.

What penalties does a marketplace risk if it fails to comply with its obligations?

Penalties vary according to the violation found. Arcom may impose fines of up to 6% of worldwide annual turnover for violations of the DSA. The CNIL may impose penalties of up to €20 million or 4% of turnover for breaches of the GDPR. The civil courts may award damages to victims of contractual breaches or of liability in tort.

How is the liability of marketplaces evolving in respect of hateful content?

The DSA introduces specific obligations to combat unlawful content, including hate speech. Very large platforms must assess and mitigate systemic risks, including risks linked to hateful content. As the French law of 24 June 2020 against hateful content on the internet (Avia law) was largely struck down, it is mainly the European framework that now applies.

Conclusion

The legal analysis of marketplaces reveals a sector undergoing full regulatory structuring, where the balance between technological innovation and the protection of rights remains fragile. The multiplication of European texts (DSA, DMA, Platform-to-Business) is gradually shaping a more precise legal framework, but also raises new challenges of interpretation and practical application.

For marketplace operators, mastering these legal issues is becoming strategic. A legal characterisation that has not been anticipated can radically transform the liability regime and the applicable obligations. The boundary between neutral hosting and active intermediation remains shifting, depending both on the platform's technical choices and on developments in the case law.

Companies that operate or plan to create a marketplace must anticipate these questions from the design stage of their business model. A prior legal audit, including analysis of data flows, contractual terms and moderation systems, is an indispensable prerequisite for any secure deployment in this complex regulatory environment.