Proposed Digital Markets Act will be enforced exclusively by the European Commission, but what does it entail?
EU representatives have officially agreed that the European Commission will be the enforcer of the Digital Markets Act, which is set to be ratified on November 25 as part of the bloc’s common position ahead of negotiations with EU lawmakers. The Digital Markets Act or DMA was proposed last year by EU antitrust chief Margrethe Vestager, and aims to prevent large companies from abusing their market power and allow new players to enter the market. The proposed legislation specifically targets these online gatekeepers – companies that control data and access to their platforms- with a list of dos and don’ts, to achieve that goal of curbing any possible abuse of power within the online markets.
The Digital Markets Act is designed to ensure fair and open digital markets.
The DMA establishes a set of narrowly defined objective criteria for qualifying a large online platform as a “gatekeeper”, and specifically targets these platforms. They are defined by their strong economic position, significant impact on the internal market, strong intermediation position, durable position in the market, and/ or solid presence in multiple EU countries. This is expected to benefit consumers by giving them better access to a range of services to choose from, more choices leading to opportunities to switch their providers, as well as direct access to services, and more reasonable prices. In addition, this will provide smaller companies the opportunity to be competitive in online markets.
The act consists of various dos and don’ts which will be monitored by the European Commission.
The act consists of various dos and don’ts which will be monitored by the European Commission to ensure that gatekeepers do not have unfair advantage. These gatekeepers will still be allowed to innovate and offer new services, however they will simply not be allowed to gain an undue advantage. Under the DMA, companies will still be able to allow their business users to access the data that they generate while using the gatekeeper’s platform. Gatekeepers will also continue to have the capabilities to allow third parties to inter-operate with the gatekeeper’s own services in certain specific situations. These companies will still be allowed to provide advertising for companies on their platform with the tools and information necessary for advertisers and publishers to carry out their independent verification of the advertisements they hosted with the gatekeeper. They will also still be able to allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform.
There are some things, however, which will not be allowed under the Digital Markets Act. Gatekeeper companies will not under any circumstances be allowed to rank their own services and products more favourably than similar services or products offered by third parties on the gatekeeper’s platform. Preventing consumers from linking up to businesses outside their platforms will also be disallowed. These companies are also not allowed to prevent users from uninstalling any pre-installed software or app if they wish so, and failure to comply with these guidelines may result in penalties of up to 10% of their annual worldwide turnover, or periodic payments of 5% of their daily turnover.
The European Commission, as the exclusive enforcer of the DMA will be responsible for carrying out market investigations.
The European Commission, as the exclusive enforcer of the DMA will be responsible for carrying out market investigations. This gives the Commission the authority to dynamically update the obligations for gatekeepers when necessary, and also to identify companies as gatekeepers, based on the aforementioned criteria. In addition, the European Commission will be expected to design remedies to tackle systematic infringements of the Digital Markets Act rules, as additional penalties may be imposed after the Commission carries out a market investigation, if they consider the previously mentioned penalties insufficient or inappropriate.