Relevance of the DMA for online inter­mediation services

The European Commission (“Commission”) designated Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft as gatekeepers in September 2023. In May 2024, Booking was added to the list. The seven gatekeepers operate a total of 24 core platform services (“CPS”). All CPS are characterised by the fact that they act as an interface between a large number of end users on the one hand and commercial users on the other.

One of these CPS are the so-called online intermediation services. The DMA understands online intermediation services as being internet-based services which act as intermediaries to allow direct transactions to be initiated between commercial users and end users. This broad and technology-neutral definition covers above all online marketplaces, app stores, price comparison portals, and hotel and flight booking portals. Seven online intermediation services have already been designated as CPS: Amazon Marketplace, Apple’s App Store, Booking.com, Google Maps, Google Play, Google Shopping and Meta Marketplace.

As of 7 March 2024, known as “DMA compliance day”, the first six gatekeepers had to have implemented the obligations under the DMA. Since then, affected users and competitors such as app developers (see our article on Noerr News) and online intermediation services have been able to submit complaints to the Commission or the German Federal Cartel Office and actively participate in the official proceedings in order to promote public enforcement of the DMA’s provisions by the Commission. Apart from supporting public enforcement efforts of the DMA, online intermediation services also have the option of private enforcement of the DMA obligations before the national courts.

What obligations are especially relevant for online intermediation services?

Against this backdrop, the question arises which DMA obligations are particularly relevant for online intermediation services of gatekeepers and rival online intermediation services.

Articles 5 to 7 of the DMA contain over twenty obligations, many of which have a direct impact on online intermediation services designated as CPS. In addition, the obligations in particular lead to enforceable rights for competing online intermediation services. The two most important obligations that are likely to have far-reaching effects on the rights and opportunities of competing online intermediation services are elaborated on below.

Prohibition of parity clauses – Article 5(3) DMA

In particular, gatekeepers have to allow commercial users to distribute their products on different – and above all, better – terms on competing online intermediation services or through their own sales channels.

The ban not only covers wide parity clauses involving an obligation not to offer better terms through other sales channels than through the gatekeepers’ online intermediation services. The prohibition also includes parity clauses obliging commercial users to offer terms that are at least as favourable through the gatekeeper’s online intermediation services as through third-party online intermediation services. In addition, the prohibition covers narrow parity clauses, i.e. the obligation not to offer different or better terms through one’s own sales channels.

The DMA thus aims to increase differentiation between the terms on which products and services are offered in order to improve price competition for the benefit of end users and to promote competition for rival online intermediation services of the gatekeeper.

The assessment of wide and narrow parity clauses under Article 101 TFEU leads to diverging decisions by competition authorities and courts within the Member States. The new Vertical Block Exemption Regulation stipulates in respect to online intermediation services that only wide parity clauses cannot be group exempt. The DMA rules are therefore more extensive as they capture narrow and wide parity clauses alike.

Significance of this provision for online intermediation services and commercial users: Commercial users of the gatekeepers’ online intermediation services are entitled to distribute their products and services via rival online intermediation services and their own sales channels without restrictions and – like rival online intermediation services – are called upon to report violations by gatekeepers to the Commission in a complaint or using the newly created whistleblowing tool.

Prohibition of self-preferencing – Article 6(5) DMA

Moreover, the ban on “self-preferencing” under Article 6(5) of the DMA is relevant. Gatekeepers are prohibited from giving preference to their own products in rankings, thus making it easier to find them than similar competing products. Ranking encompasses the algorithmic process which determines how goods and services being offered are visually displayed or acoustically reproduced. The definition is deliberately broad; it is sufficient if only one single result is presented and in which form. Furthermore, gatekeepers are obliged to make the ranking transparent, fair, and non-discriminatory.

With this rule, the DMA wants to prevent gatekeepers from using their strong market position on the CPS markets to transfer their market power onto markets for downstream services and products without having to face competition on the merits. Furthermore, the rule also aims to avoid protection of existing market positions through self-preferencing.

The DMA’s ban on self-preferencing is based on the prominent antitrust case Google Shopping, which has been ongoing for almost 15 years and prompted the Commission to impose a record fine. The Commission found that Google Search favoured its own price comparison service Google Shopping over third parties’ competing services. The DMA’s ban on self-preferencing is broader than this decision. It applies to all CPS, and therefore especially to online intermediation services such as online marketplaces, app stores, price comparison portals, hotel and flight booking portals and naturally also search engines.

Significance of this provision for online intermediation services: Rival online intermediation services are entitled to be ranked fairly and not put at a disadvantage in comparison to the gatekeeper’s own online intermediation services. They are called upon to report infringements by the gatekeepers to the Commission in the form of a complaint or by using the newly created whistleblowing tool.

How can online intermediation services enforce their rights?

Online intermediation services can submit complaints to the Commission or Germany’s Federal Cartel Office and actively take part in the official proceedings in order to support public enforcement of the provisions of the DMA by the Commission. Although the Commission is the only authority enforcing the DMA, with national authorities only playing a supporting role, the national authorities are also able to carry out preliminary investigations if authorised to do so by the respective Member State and thus can serve as a first point of contact for complaints by third parties.

The Commission recently created a Whistleblower Tool with which parties will also be able to submit anonymous reports.

Besides public enforcement of the DMA by the Commission, online intermediation services also have the option to engage in private enforcement (more background information on this subject can be found in our article on Noerr News). If gatekeepers infringe obligations under the DMA, affected parties will be able to bring civil actions for injunctions (including interim relief) before the national courts in the EU and file claims for damages where appropriate.

Once the Commission have found a breach of the DMA, follow-on actions for damages against gatekeepers will also be possible. In the 11th Amendment to the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB), the German legislature extended the binding effect of Commission decisions familiar from antitrust law to include Commission decisions on the DMA.

What’s next?

The Commission should complete its meanwhile initiated non-compliance investigations concerning Alphabet, Apple, and Meta within twelve months. Of particular relevance to online intermediation services is whether and to what extent Alphabet is in breach of the prohibition of self-preferencing under the DMA by its display of Google Search. Besides this, it will be interesting to see whether the Commission will initiate proceedings against Amazon due to alleged self-preferencing of its own brand products on Amazon Marketplace.

Online intermediation services and other affected parties may in principle also take action against the gatekeepers by supporting the Commission in the public enforcement of the DMA obligations or through private enforcement in national courts even before the Commission’s proceedings are concluded.

The book “New Digital Markets Act – A Practitioner’s Guide” recently published by Jens Peter Schmidt and Fabian Hübener is our take on the background, implementation and compliance with the DMA. For further advice and individual solutions concerning the DMA and related competition matters, do not hesitate to contact us.