Dear Readers,
The EU Digital Markets Act (“DMA”) will impose far-reaching obligations on large technology firms operating in the European Union, and, as a consequence, worldwide. Notably, unlike existing rules, the DMA’s definitions and obligations are designed to work without the need for an effects-based analysis. As such, they reflect the perceived need for speedy regulatory intervention in fast-moving technology markets (by contrast with the perceived lag in the enforcement of existing antitrust rules). The articles in this edition of the Chronicle seek to grapple with the implications of the DMA from a practical perspective.
To open, Linsey McCallum, Antoine Babinet & Gunnar Wolf outline the DMA as a new ex ante tool that is different from and complementary to competition law. Its goal is to ensure that digital markets characterised by the presence of gatekeepers are contestable and fair for all businesses in the EU. The qualitative thresholds set out in the DMA have a strong presumptive effect that can only be rebutted in exceptional circumstances. Once designated, gatekeepers bear the responsibility to comply with the directly applicable obligations that the DMA imposes on them within six months.
Alexandre de Streel builds on an analogy with Greek mythology, making recommendations to ensure that the implementation of the DMA does not end up becoming a Sisyphean task, i.e. one that is laborious and futile. Among the productive suggestions made by the author is that the European Commission should start by clarifying some of the obligations of the DMA on the basis of its overarching objectives (contestability and fairness) and principles (effectiveness and proportionality). Ultimately, the author contends, the success of the DMA will be gauged by the opportunities its creates for new innovators; and whether European digital markets are enlivened, rather than ossified over coming years (as has been seen in other sectoral regulation).
By contrast, Philip Hanspach & Magdalena Viktoria Kuyterink develop a more critical perspective, arguing that the DMA will impose far-reaching obligations on certain technology firms. The DMA’s definitions and obligations are designed to take effect without effects-based analysis. The authors argue that this procedural goal will likely be missed. Rather, by being intentionally vague, the DMA will invite challenges, both on gatekeeper designation and obligations, that will only be resolved through thorough economic analysis.
Developing further on this line of argument, Esther Kelly & Fiona Garside make parallel points, noting that the duration of investigations was one of the key motivating factors behind the DMA. Sensibly, however, they note that a balance must be struck between speedy enforcement and protecting fundamental rights of defense. Commission officials, and, indeed, the text of the DMA itself, have emphasized that it is designed to complement (rather than replace) competition law. The concrete implementation of the DMA will give rise to opportunities as well as challenges: institutions, companies and advisors will need to work together closely to ensure that the DMA meets its objective of promoting consumer welfare without unduly chilling innovation.
Christian Ritz, Benedikt Weiß & Tobias Kleinschmitt take a broader perspective, noting that the power structures in digital markets are currently the subject of the attention of legislators in various jurisdictions. Given the possibility of fines up to 20 percent of the global turnover in case of intentional/negligent failure to comply with the DMA’s core obligations, it is essential for affected companies to familiarize themselves with the DMA and to take the necessary precautions to ensure compliance with the DMA, especially as the DMA itself provides specific compliance obligations that must be implemented.
Taking a step further back, Or Brook & Magali Eben analyze the relationship between EU competition laws, national competition laws, and laws that regulate markets and market participants (e.g. unfair trading practices). The authors argue that the tests codified in the DMA represent a less-than-perfect solution, which is a result of a political compromise rather than legal-economic theory. The paper notes that this solution was at least partially inspired by the test for the resolution of conflicts under Articles 101 and 102 TFEU, and concludes by pointing to the difficulties of transplanting this thinking to the new DMA context.
Finally, Arianna Andreangeli discusses some of the implications of the DMA for the future application of the EU Competition rules in digital markets (and in particular for the continuing protection of the right against double jeopardy, enshrined in Article 50 of the EU Charter of Fundamental Rights). The author questions whether the possibility that the DMA and Articles 101 and 102 TFEU might apply concurrently would be incompatible with this important safeguard. Therefore, could a different approach provide a more balanced response to the need to reconcile effective competition enforcement with the observance of the DMA’s ex-ante framework?
In sum, the articles in this edition of the Chronicle grapple the numerous novel dilemmas posed by the passage of the DMA. Only time will tell whether the new regime will serve to supplement or supplant the existing well-established antitrust rules governing the behavior of companies in technology markets, or whether the rules will have their predicted effect. The authors express divergent views, and this debate will no doubt continue long into the future.
As always, many thanks to our great panel of authors.
Sincerely,
CPI Team
