The deal between the European Parliament and the Council reached on 24 March 2022 with regard to the Digital Markets Act (DMA), was followed by final approval of the legislative text by the Parliament on July 5 2022 and by the Council on 18 July 2022. The DMA introduces rules for providers of digital core platforms, so-called 'gatekeepers'. The DMA aims to prevent these gatekeepers from imposing unfair conditions on businesses and end users, in order to foster competition.
Here we look at the definition and designation of gatekeepers, probably the most heavily debated aspect of the DMA.
Articles 2 and 3 of the DMA (note that all references are to the 6 July 2022 version of the DMA unless otherwise stated) contain the elements that make up the definition of a gatekeeper. According to Article 2, gatekeepers are undertakings (a concept well known in competition law) that provide a “core platform service” and which are designated as gatekeepers under Article 3. Article 2(2) provides an exhaustive list of the core platform services:
For categories i, ii, iv, v and ix, the DMA applies existing definitions from EU legislation. For the others the DMA creates its own definitions. Although the list is exhaustive, Article 19 allows for core platform services to be added to or removed from the list after a market investigation of the Commission, following which it has to send a legislative proposal to the Council and Parliament.
In order for an undertaking that provides core platform services to be designated as a gatekeeper, three additional qualitative criteria have to be met as set out in Article 3(1). These are linked to a number of quantitative presumptions:
If all of the quantitative presumptions are met, an undertaking has to notify the Commission within two months. In its notification the potential gatekeeper can provide arguments to demonstrate that in the specific circumstances in which the relevant core platform service operates, the qualitative requirements for being designated as a gatekeeper are not met.
After receiving a notification in accordance with Article 3(3), the Commission has to decide whether or not to designate the relevant undertaking as a gatekeeper on the basis of the notification within 45 working days after being notified and also has to list the core platform services which the gatekeeper is deemed to carry out. The designation decision can be amended, reconsidered or repealed at any time if there are substantial changes to the facts on which the designation decision was based or if the decision was based on incomplete, incorrect or misleading information. The Commission is also obliged under Article 4 to review the status of designated gatekeepers and the core platform services they offer once every three years, to verify whether their designation is still justified or needs to be amended or repealed.
Even if an undertaking does not meet the Article 3(2) quantitative thresholds, the Commission can still decide, on its own initiative, to designate an undertaking as a gatekeeper on the basis of the qualitative criteria. In this case the Commission is required to conduct an extensive market investigation, within a non-binding 12-month timetable in accordance with the procedure laid down in Article 17.
If an undertaking qualifies as a gatekeeper, a wide number of obligations are imposed on it under Articles 5, 6 and 7. These vary depending on the core platform services listed by the Commission in its designation decision. A number of these obligations show striking similarities with or are directly derived from some of the bigger competition law cases of recent years against the large tech companies. These obligations deal with issues such as self-preference, free(r) access to app stores, use of big data and merger control (see more). Significant fines can be imposed for non-compliance.
During the legislative process leading up to finalisation of the DMA, the Commission emphasised that it needed the DMA to enable it to speed up its enforcement process in fast moving digital markets. Although the first part of the decision making process has been significantly accelerated in the DMA, the judicial review of these decisions will still take time. In that respect it will be very interesting to see how the interplay between designation decisions and financial penalty decisions will work in practice. One can only assume that once the Commission has designated certain undertakings as gatekeepers for certain services, the first fines will follow relatively quickly. But what will happen to these fining decisions if the presumed gatekeeper successfully challenges its original designation as a gatekeeper in the EU courts? Especially if, for example, the annulment of the designation decision covers only parts of that decision.
Although there is little doubt that the tech giants which are the target of the DMA will meet the quantitative thresholds for some of their services, it remains to be seen whether the Commission decides to list more of their services as core platform services, because of their position in other markets.
Stephan Manuel Nagel and Alexander Schmalenberger look at the main elements of the DMA.
1 of 6 Insights
Paolo Palmigiano looks at the UK's answer to the EU's Digital Markets Act.
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Debbie Heywood looks at the EC's plans to tackle the data dominance of the tech giants under the incoming Digital Markets Act.
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The UK government has proposed one of the most significant reforms of UK competition law in recent years. Paolo Palmigiano looks at the key issues.
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Marco Hartmann-Rüppel and Stefan Horn look at the interaction between the DMA and Member State competition law, and at the role of the national competition authorities.
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