Digital Markets Act (DMA): Where is the Council Headed to?

Any public official you speak to will tell you that the negotiations over the DMA are moving fast. This is certainly good news as the declared objectives of the DMA, i.e., to ensure contestability and fairness for digital markets, are more desirable than ever. While multiple texts are circulating containing amendments of European Parliament committees and the Council of the European Union to the original proposal of the European Commission, two documents drew my attention. The first one (which is 370 pp. long!), dated 1 October 2021, includes a table comprising comments of the Member States on the second compromise text of the Slovenian presidency. The second document (which is 105 pp. long), dated 12 October 2021, comprises the third compromise text of the presidency. These documents are interesting in that they allow the reader to grasp not only the direction the Council is headed to, but also some of the fault lines that still remain between Member States. They also indicate that while some Member States, in particular France, Germany and the Netherlands, support a maximalist view of the DMA, other Member States, such as Ireland and Luxembourg, convey the concerns raised by the digital platforms they host.

So, let us have a look at the some of the most interesting features of these documents.

First, it is fair to say that overall the support of the Member States for the DMA does not seem to be waning. To the contrary, some of the amendments proposed seek to strengthen the DMA and address some gaps that may be taken advantage of by designated gatekeepers to escape its provisions.

Second, while there is growing support (including in the European Parliament) for the insertion of web browsers and digital voice assistants in the list of core platform services, these services still do not figure in the list of core platform services contained in the third compromise text of the presidency. I regret that these services are not yet included because, as noted by the German government in its comments on the second compromise text of the presidency, web browsers and digital voice assistants are typical gateways between businesses and end users, and are gaining a growing role as entry points for whole markets. In my view, it makes more sense to include these services within the list of core platform services than cloud computing services, which do not exercise any intermediation functions.

Third, regarding designation, the third compromise text of the Slovenian presidency is still very much in line with the original proposal of the Commission. Unlike in the European Parliament, where the greens and the democrats are seeking to expand the number of platforms that would be captured by the DMA (a position that would unavoidably weaken the DMA and its enforcement and would not be prudent in my opinion), Member States are generally aligned in keeping the number of designated gatekeepers small. The third compromise text provides that the methodology to calculate the number of monthly active end users and yearly active business users referred to at Article 3(2)(b) of the DMA proposal will be set in Annex to the Regulation.

Fourth, although a detailed discussion of the status of the obligations contained in Articles 5 and 6 of the DMA would go beyond the scope of this blog post, it is fair to say that the second and third compromise texts of the Slovenian presidency did not put forward any major alteration to these obligations, which despite the heavy lobbying of companies that are likely to fall under the scope of the DMA, are largely holding steady. One should, however, note that Article 6(1)(c) now provides that gatekeepers shall “not be prevented from taking to the extent strictly necessary and proportionate measures enabling end users to protect security in relation to third party software applications or software application stores.” While safeguarding user security is desirable, it should be ensured that this process is not abused by Apple and Google to protect their respective app store monopoly in the guise of user security. 

Finally, two issues of considerable importance for some Member States are (i) the need to ensure the future proofness of the rules applied to designated gatekeepers, and (ii) the role of national competition authorities in the DMA enforcement process. With these issues in mind, on 7 September 2021, the Dutch, French, and German governments issued a joint paper on Strengthening the DMA and its Enforcement.

As to the former issue (i.e., the need to ensure that the DMA is future proof), the joint paper proposed a new Article 16(a) that would allow the Commission to “impose proportional and necessary measures to safeguard contestability and fairness in digital markets, following a market investigation.” While the adoption of this Article 16(a) was proposed by the Netherlands and France as part of their comments on the second compromise text of the presidency, this provision did not make it into the third compromise text.

As to the latter issue (i.e., the role of national competition authorities), the joint paper observed that “enforcing the DMA will need substantial dedicated staff with expertise to match the resources of the gatekeepers”, and thus national competition authorities should be able to “properly support the Commission and contribute with their capacities in the DMA enforcement, within a referral system similar to the one currently already in use in merger control.” Concretely, the paper suggested the addition of a new Chapter (X) in the DMA proposal, which would be titled “Cooperation and coordination with national competition authorities”, and which would give a greater role in the enforcement process to these authorities. Once again, the ambitious proposal made by these Member States did not make it into the third compromise text of the presidency. What the presidency proposes is a more conservative Article 32a labelled “cooperation and coordination”, which envisages a more modest role for national authorities in the enforcement of the DMA with the “competent authority of the Member States” being allowed, on its own initiative, to “conduct an investigation into a case of possible non-compliance with the [DMA] in its territory.” The opening of enforcement proceedings by the Commission would, however, relieve national competent authorities of the possibility to conduct such an investigation or to run it where it is already pending.   

All in all, the negotiations between the Member States seem to progress nicely under the Slovenian presidency, although France, Germany and the Netherlands may be disappointed that their ambitious proposals on future-proofness and the increased role of national competition authorities in the DMA enforcement have not made it to the latest compromise text of the Council. These negotiations have, of course, not yet ended, and opportunities to take a more aggressive stance on some aspects of the DMA proposal will arise in the months to come.

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