One of the questions that is regularly raised regarding the Digital Markets Act (“DMA”) recently proposed by the European Commission concerns its relationship with and impact on EU competition law. In particular, will EU competition law and competition authorities continue to play an important role in digital markets once the DMA has been adopted? Or will the DMA steal the show?
It is important to recall that one of the reasons why the Commission is proposing the DMA is due to the perceived insufficiency of EU competition law to deal with the challenges created by a small subset of digital platforms, which the proposed DMA refers to as “gatekeepers”. In markets prone to tipping, competition law may be too slow an instrument to deliver timely remedies to address anticompetitive practices by such gatekeepers. This results largely from the fact that in exclusionary cases competition authorities not only have to define markets and find dominance, but they also have the burden of showing the presence of foreclosure effects. Moreover, competition authorities tend to stay away – sometimes misguidedly in my view – from exploitative cases where platforms exploit the dependency of business users on their services to impose unfair terms and conditions on them. There may also be circumstances, e.g., in the absence of dominance, where EU competition law may not provide the right set of tools to competition authorities to challenge harmful practices by gatekeepers.
Once the provisions of the proposed DMA have entered into force, they will not supplant EU competition rules, but complement these rules. In this respect, let’s not forget that Article 102 TFEU has “constitutional” status given its presence in the Treaty. That is the theory of course, but let’s now explore hereafter the possible practical effects of the proposed DMA:
- First, competition law will remain the instrument of choice with respect to digital platforms that have not been designated as gatekeepers per Article 3 of the proposed DMA. While the list of digital gatekeepers will be regularly revisited, it is not the case that all digital platforms that have a dominant position on one or several markets (and thus fall under the scope of Article 102 TFEU) will necessarily be designated as gatekeepers.
- Second, as has been observed by others, many of the prohibitions contained in Articles 5 and 6 of the proposed DMA reflect practices that are or were at the core of competition cases pursued by DG COMP, such as self-preferencing, tying, etc. The prohibitions contained in these articles will have to be complied with on an ex ante basis. Thus, in case of compliance, there will be in principle no need for the users of the platforms to resort to competition law. This should logically diminish the number of competition cases involving gatekeepers.
- Third, there will of course be instances where gatekeepers will engage in problematic conducts that are not covered by Articles 5 and 6 of the proposed DMA. While Article 10 provides a procedure to update the list of practices to be included in these provisions, the addition to the list of one or several practices can only take place after a market investigation, which can take up to 24 months (see Article 17). In the interval, competition law will remain a useful instrument, although given the slowness of antitrust proceedings, even in cases where a market investigation is needed to add the problematic conduct to Articles 5 or 6, the proposed DMA may still provide faster relief than EU competition rules, unless of course the competition authority in question relies on interim measures. One should also note that there are categories of practices that will likely never fall under Articles 5 and 6 because they are not directly linked to the gatekeeping power of the designated gatekeeper. One can, for instance, think of price-related abuses, such as predatory pricing, exclusionary rebates, or margin squeeze. For these practices, competition law will remain the instrument of choice.
- Fourth, as it may not always be entirely clear whether a problematic conduct is covered by Articles 5 or 6 of the proposed DMA, one could potentially see some turf wars between the Commission body in charge of implementing and enforcing the DMA with DG COMP, and the proposed DMA does not seem to provide for any of coordination. The opposite scenario could also occur where neither the Commission body in charge of implementing and enforcing the DMA nor DG COMP want to intervene. This could happen, for instance, if the Commission body in charge of the DMA considers that a problematic practice does not fall within the scope of Articles 5 and 6 (or simply underenforces these provisions) and DG COMP does not want to intervene considering that the matter is better addressed in the proposed DMA. In that scenario, national competition authorities could of course intervene – in particular those that have in their arsenal rules specifically aimed at large digital platforms (such as the Bundeskartellamt) – although they would not be able to provide an EU-wide solution to the problem. This being said, a remedy limited to France or Germany is better than no remedy.
In this respect, we should observe that one of the oddities of the proposed DMA is that it does not contain a complaint procedure. Although I will likely return to this issue in a subsequent post, it is in my view a weakness of the proposed DMA’s enforcement process, which increases the risk of opacity and capture of this process since, if the victims of problematic conducts cannot formally file a complaint to the Commission body in charge of the DMA, they will do it unofficially and the targeted gatekeeper will try to solve the matter in a similar matter. Transparency is key.
We should not forget of course that the DMA is just a proposal at this stage and that it will likely take two years for it to become binding law. It is also hard to predict the extent to which the provisions contained in Articles 5 and 6 will survive the legislative process. In the meantime, competition law will remain the only (or at least the main) source of relief for business users affected by anticompetitive behaviour pursued by large platforms. Moreover, the Commission will also have to ensure that its decisions against large platforms (and likely to be designated as gatekeepers), such as Google, are properly complied with.
(Image source: World Economic Forum)