Digital Markets Act
Status: In force
- Since November 2022, applies from May 2023
Summary
EU Regulation introducing rules for the largest online platforms which act as “gatekeepers” between business users and end users. Under the DMA, gatekeepers are required to comply with a set of obligations and prohibitions, and face severe penalties for non-compliance.
Scope
The DMA applies to gatekeepers. To be designated as a gatekeeper, an undertaking must provide one or more “core platform services” (CPS) (e.g., online intermediation services, online search engines etc.) and meet certain (qualitative and quantitative) thresholds (e.g., in terms of its monthly active end users).
Key elements
- Thresholds to meet to be designated as a gatekeeper include inter alia an EU turnover of at least €7.5bn in each of the last three financial years or market capitalisation or equivalent fair market value of at least €75bn in the last financial year, and 45m monthly active end users in the EU and 10,000 yearly active business users established in the EU.
- Gatekeepers are required to comply with the DMA obligations within six months from designation. The first designations are expected no later than September 2023.
- Obligations focus on dos and don’ts relating to: bundling / self-preferencing, interoperability, data portability, data collection, use of and access to data, customer choice and switching, and transparency for advertisers and publishers.
- Gatekeepers will be required to inform the Commission of additional M&A deals in the digital space.
- Severe penalties: Fines of up to 10% of the gatekeeper’s worldwide turnover in case of non-compliance, and up to 20% in case of repeated infringements. Systematic non-compliance may result in the Commission imposing behavioural or structural remedies, e.g. a ban on M&A activity.
Challenges
- Sweeping obligations raise complex questions when applied to diverse gatekeeper business models.
- Interplay with existing EU and national antitrust investigations, new/pending national platform regulations, and other regulations (e.g., the GDPR) remains unclear.
- Imposition of structural remedies and increased scrutiny may restrict future deal-making activity.
UK equivalent
The landmark UK Digital Markets, Competition and Consumers Act 2024 is now law. The Act significantly strengthens powers of the UK regulator (CMA) to investigate and take enforcement action against breaches of competition or consumer protection laws. It also introduces a new ex ante regulatory regime for digital markets, and makes some important changes to the CMA’s mergers and markets regimes.
In-scope businesses will need to consider the interplay between this new UK regime and similar regimes in other jurisdictions, including the EU’s DMA.
Among other reforms, the CMA will be able to impose financial penalties of up to 10% of global turnover for breaches of consumer protection law.
