On 6 September 2023, the European Commission adopted the first “designation” decisions under the Digital Markets Act (or “DMA”). Those decisions designate as “gatekeepers” certain tech companies which offer core platform services that meet specific quantitative criteria (e.g., they reach 45 million end users). We are now gearing up for effective compliance, which will play a significant role in levelling the playing field in digital markets.
Since one of the main rationales for the DMA is to address the weaknesses of competition law, a “hot topic” in digital regulation circles is whether proceedings under the DMA will make the enforcement of competition rules obsolete. This blog post explains why this is not likely to happen for three reasons: the DMA does not cover practices that may be addressed through competition law; the Court’s case law suggests that it is possible to have enforcement action under the DMA and enforcement action under competition rules against the same conduct; and the competition rules that Member States have enacted (or will probably enact) to regulate platforms can be enforced against problematic practices (at least to the extent they do not contradict the DMA).
Setting the scene
When we talk about competition law (in the EU), we do not exclusively refer to Articles 101 and 102 TFEU. The competition regime comprises the Treaty provisions on competition and national competition rules. Moreover, in addition to the national equivalents to 101 and 102 TFEU, which prohibit agreements restrictive of competition and abuses of dominance respectively, there are other rules banning certain types of unilateral conduct. Those can form part of national competition law (consider, for instance, Section 19a of the German Competition Act).
The DMA establishes that it is without prejudice to the application of all those rules (see Recital (10) and Article 1(6)). This “without prejudice” clause suggests that the DMA is meant to complement (rather than replace) competition law enforcement. However, clearly, the situation is more complex than what this clause suggests. For example, though the DMA (and any enforcement action arising therefrom) is without prejudice to EU and national competition rules, questions are raised in relation to the double jeopardy rule (also known as the “ne bis in idem” principle). For example, can National Competition Authorities (“NCAs”) launch antitrust proceedings against a gatekeeper if the Commission has already adopted a non-compliance decision under the DMA that condemns the practice the NCA wants to investigate? In other words, in such cases, does the DMA replace or complement competition law?
In order to understand the relationship between the DMA and competition law, it is useful to distinguish between the practices regulated by the DMA and the practices that are not regulated by the DMA.
Practices not regulated by the DMA
The DMA has been drafted in narrow terms. In other words, it establishes detailed and prescriptive rules. For example, the DMA does not prohibit self-preferencing in general; it prohibits self-preferencing in ranking (Article 6(5)). What is more, this prohibition covers a specific set of core platform services, such as search engines and video-sharing platforms. Notably, the prohibition in question does not apply to operating systems. In a similar vein, the DMA does not prohibit gatekeepers from pre-installing their own services or setting them as default on users’ devices; the DMA (only) requires gatekeepers to enable switching if users so wish (see, for instance, Article 6(3) and 6(6)). Similar remarks can be made on the narrow scope of the other obligations and prohibitions the DMA establishes.
The DMA is highly unlikely to replace competition law in the case of practices it does not cover – especially if (a) it is crystal clear that those practices are not regulated by the DMA, and (b) those practices affect businesses that have the resources to pursue an antitrust complaint.
Practices covered by both the DMA and competition rules: The ne bis in idem principle
The situation becomes much more complex in the case of practices covered by both the DMA and competition law. In such cases, we cannot exclude a duplication of proceedings that concern the same practice. What is unlikely to happen is that those two sets of proceedings will be brought by the Commission. This is because the DMA establishes per se prohibitions and does not require the Commission to define the relevant markets; prove that the platform under scrutiny is dominant; and establish anti-competitive effects. Put bluntly, the DMA offers the Commission a shortcut and there is no apparent reason as to why the Commission would prefer the long (and painful) path of competition law to address the same conduct.
However, let’s assume that a national competition authority may decide to apply competition law to the same conduct that has been subject to DMA proceedings. In these cases, we need to consider whether the ne bis in idem principle is triggered to the effect that the second set of proceedings should be discontinued.
The ne bis in idem principle is enshrined in Article 50 of the Charter of Fundamental Rights of the EU, which establishes that no one should be tried or punished again for an offence for which he or she has been finally acquitted or convicted within the EU.
This principle has two components: (a) the “bis” component according to which there must be a prior final decision condemning a practice, including a decision adopted by the Commission finding an infringement of the DMA, and (b) the “idem” component based on which the offender and the facts should be the same. Establishing whether the “bis” condition is met does not pose any difficulties. I will therefore focus on the “idem” requirement.
Pursuant to the case law of the Court of Justice of the EU, the facts of the case must be “identical” (this was recently confirmed by the Court in bpost – see paragraph 33). Whether the facts are identical is examined by reference to the territory, the relevant product market, and the period during which the conduct in question restricted competition (this was recently confirmed by the Court in Nordzucker – see paragraph 41). Issues regarding the territory and the time period are fairly straightforward. But, what about the relevant product market considering that the DMA does not rely on market definition? One might quickly say that this condition is impossible to apply in the case at hand. On this basis, duplicate proceedings should be possible. However, if we dig a bit deeper, we realise that the core platform services the DMA covers (e.g., online search, social networks) have been found to constitute distinct markets in antitrust cases. For example, in the European Commission’s Google Shopping decision, one of the relevant product markets was the market for search results. In the Bundeskartellamt’s Facebook decision, one of the relevant product markets was the market for social networks. As a result, the definition of the product market under the national proceedings may reflect the core platform service falling under the scope of the DMA. However, this may not apply to all possible scenarios (e.g., a product market in an antitrust decision may have been defined more narrowly than the market for social networks; the term “online intermediation services” covered by the DMA is a broad term that covers a wide array of platforms, ranging from app stores to booking websites, which may not belong to the same market). So, it could be argued that, to the extent that the product market does not correspond to the definition of the core platform service, the ne bis in idem is not triggered because the facts are not “identical”. According to this line of reasoning, duplicate proceedings are possible because the facts are different (the markets affected by the conduct are distinct).
However, if the “bis” and “idem” conditions are satisfied, we would still need to assess whether the duplicate proceedings are compliant with Article 50 of the Charter of Fundamental Rights (as recently clarified by the Court in bpost – see paragraphs 40 et seq.). In conducting this assessment, the Court will consider whether several requirements set by the case law are met. For example, duplicate proceedings would be possible if the objective each instrument pursues is different. In other words, the key matter here is whether the DMA pursues an objective different from that pursued by competition law. Does it? The DMA says that it protects fairness and contestability in the digital sector. But the Court of Justice of the EU is not bound by the text of the DMA, it engages in a more thorough analysis of the ideological premises that underlie a regulatory instrument. Since most of the provisions of the DMA reflect ongoing or completed competition investigations, it would not be unreasonable to say that the DMA protects competition (after all, Article 102 TFEU prohibits a dominant undertaking from imposing on its customers unfair trading conditions). Similarly, one may argue that both instruments seek to complete the internal market (see Protocol 27 attached to the Treaty on the EU, and DMA Recital).
Another issue the Court will assess to determine whether duplicate proceedings are possible is the degree of coordination between NCAs and the Commission (see bpost – paragraph 51). It is worth mentioning that, despite the fact that the original proposal did not establish a system of cooperation between the Commission and the national competition authorities, the final text of the DMA (published in the aftermath of bpost and Nordzucker, which attempted to clarify the ne bis in idem principle in competition proceedings) includes such provisions (see Article 37 et seq.). This is arguably a strong signal that the Commission expects that duplicate proceedings will be brought.
The relationship between the DMA and other rules prohibiting unilateral platform conduct
The remarks on ne bis in idem concern the relationship between the DMA and Articles 101 and 102 or the national equivalents. But what about other rules, including rules that are considered to form part of the national competition regime? One may want to think of Section 19a of the German Competition Act. To answer this question, we need to bear in mind that the overarching objective of the DMA is the completion of the internal market. In other words, its main goal is to avoid regulatory fragmentation. According to Article 1(5):
“In order to avoid the fragmentation of the internal market, Member States should not impose further obligations on gatekeepers for the purpose of ensuring contestable and fair markets”.
This wording suggests that the DMA seeks to achieve maximum harmonisation. But, the beauty of Article 1(5) (some may call it insanity) is that it also establishes that:
“Nothing in the DMA precludes Member States from imposing obligations on […] undertakings providing core platform services, […], provided that those obligations […]do not result from the fact that the relevant undertakings have the status of a gatekeeper within the meaning of the DMA”.
How is the second part of Article 1(5) compatible with its first part? Two key points to consider here are the following: First, Article 1(5), many interpretative recitals, and the DMA Impact Assessment documents set out that the DMA seeks to prevent regulatory fragmentation. This is inextricably linked to the legal basis on which the DMA rests (article 114 TFEU). The choice of legal basis was heavily criticised, and it is likely that it will be subject to judicial review. One way of ensuring that the DMA survives judicial review might be to say that the DMA is about maximum harmonisation, which means that it is meant to pre-empt national rules that prohibit the same unilateral conduct. Second, according to the principle of supremacy of EU law, in cases of conflict between EU and national law, EU law prevails. This means that, if national rules contradict the DMA, those rules may not survive. According to this line of reasoning, the DMA may not be without prejudice to national rules prohibiting unilateral conduct, if there are tensions between the two regimes. There would arguably be no problem where the two regimes complement one another.
So, will the DMA make competition rules obsolete? I don’t believe it will in the case of practices that the DMA does not cover. However, the situation is much less clear in cases where the DMA and competition rules target the same practice. Concretely, it is currently far from clear to what extent the ne bis in idem principle will be triggered in these cases, and it is also not clear to what extent Member States can apply existing rules or adopt new rules that could potentially contradict the DMA.