The Digital Markets Act is here: What is it all about?

On 1 November 2022, the Digital Markets Act (“DMA”) enters into force. Together with the Digital Services Act, the DMA is one of the key elements of the EU’s digital strategy. The DMA aims to ensure the contestability and fairness of markets in the digital sector, to promote innovation and to better protect consumers.

The DMA establishes a set of criteria allowing it to identify certain large online platforms as so called “gatekeepers”, and assigns them rules of conduct (do’s and don’ts). Gatekeepers are companies providing core platform services that allow business users essential access to end users. The DMA defines in total ten core platform services, such as online search engines (e.g. Google), operating systems (e.g. Microsoft), web browsers (e.g. Chrome), virtual assistants (e.g. Alexa) and online social network services (e.g. Facebook). The Gatekeeper must also have a certain impact on the internal market which is measured by its turnover. Further, the core platform services the gatekeeper offers must be an important gateway for users which is generally measured on the basis of monthly active users.

At the heart of the DMA are a list of obligations aimed at ensuring that gatekeepers do not unfairly undermine the contestability of core platform services. The DMA lays down directly applicable obligations and prohibitions as well as obligations that can be defined in more detail in the future. These rules of conduct or do’s and don’ts are bolstered by the compliance, monitoring and reporting duties to which gatekeepers are subject.

The DMA empowers the European Commission to supplement the list of gatekeepers' obligations so as to keep obligations up to date. In addition, the European Commission may initiate a market investigation if it wishes to (i) designate a company as a gatekeeper outside its regular procedure for doing so, (ii) investigate systematic non-compliance with the obligations or (iii) include new core platform services in the scope of the DMA. In addition to conferring far-reaching investigative, inspection and decision-making powers on the European Commission, the DMA provides for the imposition of penalties (e.g. fines of up to 20% of worldwide turnover as well as behavioural and even structural remedies) in order to ensure its effectiveness.

The European Commission has the sole competence to decide whether to designate a company as a gatekeeper, and to enforce the DMA. The national competition authorities are required to coordinate with the European Commission and may initiate investigations into a gatekeeper or potential breaches of the DMA obligations in the relevant Member State. Nevertheless, only the European Commission has the competence to take decisions.

National courts applying the DMA, must not render a decision which runs counter to a decision adopted by the European Commission under the DMA. The DMA gives third parties a number of rights of participation and indirect means of redress that can be asserted before the European Commission, national competition authorities and national courts.

The rules of the DMA will begin to apply six months after its entry into force, i.e. as from May 2023.

The DMA is highly ambitious project that will put the existing business models of the large tech companies to the test. However, the crucial question is whether the European Commission will have the capacity and resources to effectively enforce the DMA - existing resources of the Directorate-General for Competition and the Directorate-General for Communications Networks, Content and Technology are being allocated, in addition, new staff will be recruited and a new Chief Technology Officer will oversee enforcement.