EU reaches agreement on Digital Markets Act (DMA)

Last night, Thursday 24 March, the European Parliament, the Council of the European Union and the European Commission reached an provisional agreement on the EU Digital Markets Act (DMA). After a record legislative journey of only 15 months, this effectively ends the trilogue negotiations – some technical details are still being worked out at official level.

We have previously written about the substantive debates in Brussels here and here. What are the results of the negotiations, how to proceed with enforcement, and what is the timeline from now on?

Big Tech curbed

The DMA shifts the focus of combating abuse of market power in the digital economy from an ex-post approach via antitrust cases at EU or Member State level, to ex-ante regulation, including a list of do’s and don’ts for so-called gatekeepers in the tech sector. Gatekeepers are companies with a market capitalisation of at least €75 billion or annual turnover of €7.5 billion, and at least 45 million monthly users.

The DMA will have a significant impact on the market power of the big tech companies, as soon as the legislation has been adopted. Users will be allowed to remove pre-installed apps, gatekeepers will no longer be allowed to favour or ‘rank’ their own services when searching for them and app stores will have to allow alternative payment options for consumers. In addition, messaging services such as Telegram, Whatsapp and iMessage should be able to interoperate and communicate with each other.

Companies that fail to comply with the obligations can be fined up to 10 percent of the worldwide annual revenues. In case of repeated violations, this can increase to 20 percent and the Commission can even prevent the company from acquisition efforts.

Effective enforcement

Throughout the negotiation process, the need for effective enforcement became an increasingly common refrain in Brussels. A solid legal text is one thing, but if companies and organisations cannot be held to the letter and spirit of that text, it’s toothless. During trilogue negotiations, therefore, extra attention was paid to the provisions that addressed enforcement.

In the end, it was decided that the European Commission will have the central role in enforcement. The Directorate-General for Competition (DG COMP) is already investigating how it can (re)structure its internal organisation to carry out this task. It is also likely that new Commission employees will have to be hired specifically for the enforcement of the DMA. MEP Schwab, rapporteur for the EP, even suggested that the Commission should hire people from national competition authorities.

In the Netherlands, the Personal Data Authority, the Consumer and Market Authority, the Media Authority and the Financial Markets Authority took a shot across the bow by establishing the Digital Regulation Cooperation Platform (SDT). This cooperation must, among other things, facilitate the enforcement of the DMA, but also of the DSA and the Data Act.

Time will tell to what extent the relevant national and EU authorities will be able to properly enforce the DMA.

Timeline

Now that the political negotiations are over, a formal process of enactment, translation and legalisation will commence. The DMA is expected to enter into force in October, but the main new obligations (Art. 5 and 6) will only become effective in 2023, allowing companies to take preparatory measures. The timeline (as expected):

Public Matters advises companies and other organisations that are active in the tech sector, or which are impacted by the DMA, DSA and other tech related legislation. See this page for more information.