EU Digital Market Act: main part of the Union’s digital strategy

New EU Digital Market Act (DMA) will fundamentally change existing online trade and services. After the DMA enters into force – it shall apply from 2 May 2023 – digital/online platforms will behave in fair and competitive ways. Generally, new legal means will provide for contestable and fair markets in the European digital sector.   

Historically, the European Commission proposed the DMA – together with the Digital Services Act, DSA – at the end of 2020 to address the negative consequences to the EU single market arising from certain behaviors by online platforms acting as digital gatekeepers. Some large online platforms have been acting as “gatekeepers” in digital markets; hence, the DMA aims to ensure that these digital/online platforms behave in fair and competitive ways.
These two legal acts – the Digital Services Act and the DMA – are forming the main components of the EU-wide digital strategy.
In order to ensure that the new “gatekeeper rules” keep up with the fast pace of digital markets, the Commission will carry out market investigations. These will allow the Commission to: a) qualify companies as gatekeepers; b) update dynamically the obligations for gatekeepers when necessary; and c) design remedies to tackle systematic infringements of the Digital Markets Act rules.
To safeguard a fair commercial environment and protect the contestability of the digital sector it is important to safeguard the right of business users and end users, including whistleblowers, to raise concerns about unfair practices by gatekeepers raising any issue of non-compliance with the relevant Union or national law with any relevant administrative or other public authorities, including national courts.
More in the Regulation on “contestable and fair markets in the digital sector” from 14 September 2022, in: https://eur-lex.europa.eu/legal-content/EN/TXT/?toc=OJ%3AL%3A2022%3A265%3ATOC&uri=uriserv%3AOJ.L_.2022.265.01.0001.01.ENG; and in: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32022R1925&from=EN.

“Gatekeepers”: forced to comply with the rules
Digital services in general and online platforms in particular play an increasingly important role in the economy, in particular in the internal market, by enabling businesses to reach users throughout the Union, by facilitating cross-border trade and by opening entirely new business opportunities to a large number of companies in the Union to the benefit of consumers in the Union.
The Digital Markets Act (DMA) establishes a set of narrowly defined objective criteria for qualifying a large online platform as a so-called “gatekeeper”. This allows the DMA to remain well targeted to the problem that it aims to tackle as regards large, systemic online platforms.
These criteria will be met if a company: a) has a strong economic position, significant impact on the internal market and is active in multiple EU countries; b) has a strong intermediation position, meaning that it links a large user base to a large number of businesses; and c) has (or is about to have) an entrenched and durable position in the market, meaning that it is stable over time if the company met the two criteria above in each of the last three financial years.
Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en

Gatekeeper’s activity can lead, in many cases, to serious imbalances: e.g. in bargaining power and, consequently, to unfair practices and conditions for business users, as well as for end users of core platform services provided by gatekeepers, to the detriment of prices, quality, fair competition, choice and innovation in the digital sector.
A number of regulatory solutions have already been adopted (or presently are under the level of proposal) to address unfair practices and the contestability of digital services at national level, at least with regard to some of them. This has created divergent regulatory solutions among the EU member states, which results in the fragmentation of the internal market, thus raising the risk of increased compliance costs due to different sets of national regulatory requirements.

DMA’s benefits
The following are expected to be the main benefits for companies, consumers and a wide public in implementing the new digital rules:
= Business users who depend on gatekeepers to offer their services in the single market will have a fairer business environment.
= Innovators and technology start-ups will have new opportunities to compete and innovate in the online platform environment without having to comply with unfair terms and conditions limiting their development.
= Consumers will have more and better services to choose from, more opportunities to switch their provider if they wish so, direct access to services, and fairer prices.
= Gatekeepers will keep all opportunities to innovate and offer new services. They will simply not be allowed to use unfair practices towards the business users and customers that depend on them to gain an undue advantage.

Commission’s opinion
“The DMA will change the digital landscape profoundly: hence, the EU is taking a pro-active approach to ensuring fair, transparent and contestable digital markets. A small number of large companies hold significant market power in their hands. Gatekeepers enjoying an entrenched position in digital markets will have to show that they are competing fairly. We invite all potential gatekeepers, their competitors or consumer organisations, to come and talk to us about how to best implement the DMA. After the new digital markets rules were agreed in record time, we are now entering a decisive moment for their application. We now have certainty when the rules will apply and gatekeepers have to change their current unfair practices, which for too long have deprived digital markets of innovative alternatives. It is time for gatekeepers to be designated and to comply with the rules. The Commission is already actively engaging with potential gatekeepers to ensure that compliance with the new rules starts from day one. We will also not shy away from using our enforcement powers should there be indications that obligations and prohibitions are not respected”.
Source: Executive Vice-President Margrethe Vestager’s website/31/10/2022

Perspectives and next steps
The DMA will be applicable as of beginning of May 2023. Within two months, companies providing core platform services will have to notify the Commission and provide all relevant information. The Commission will then have two months to adopt a decision designating a specific gatekeeper. The designated gatekeepers will have a maximum of six months after the Commission decision to ensure compliance with the obligations foreseen in the DMA.
The Commission intends to organise a number of technical workshops with interested stakeholders to receive their views on gatekeepers’ compliance.

More Information on DMA in the following Commission’s websites: = EU Official Journal text; = Digital Markets Act Q&A (updated); and = Digital Markets Act fact page.

 

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