Digital Markets Act can protect consumers and stimulate European tech businesses, says Andreas Schwab

New tool needed to tackle problems of fast-growing digital tech, says Parliament's rapporteur.
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By Andreas Schwab

Andreas Schwab (DE, EPP) is a member of IMCO, on behalf of which he recently led a delegation to Silicon Valley

13 Dec 2021

For the European Union, the Digital Markets Act is an opportunity to transfer the rules of the social market economy to the digital space. We have learned from the many protracted EU antitrust cases against the largest digital platforms over the last 10-15 years that the current EU competition rules were unable to promptly and appropriately address the issues.

Therefore a new tool was needed to tackle the problems and draw some red lines for these fast-growing digital techs. This is what the DMA is designed to do, by establishing a catalogue of proven anticompetitive practices that will automatically be forbidden in future.

The so-called ‘gatekeepers’ will therefore have to prove that they are not behaving in a way that harms the market and the burden of proof will be reversed. With these requirements for gatekeepers, more competition and innovation in digital markets will be possible, to the benefit of SMEs, European digital start-ups and European consumers.

“To address the concerns properly on the digital markets, the DMA will focus on controlling the largest digital companies, which have been shown to cause the greatest threats to competition in digital markets”

In order to address the concerns properly on the digital markets, the DMA will focus on controlling the largest digital companies, which have been shown to cause the greatest threats to competition in digital markets. Therefore, higher thresholds are needed for a targeted scope of application, thereby making clear that the majority of companies will not be affected (in particular not SMEs). That way, we will also avoid bureaucracy and growth obstacles for SMEs and start-ups. Only the largest companies should fall within its scope.

Another point concerns the list of ‘Core Platform Services’ (CPS). Gatekeepers will be those companies that meet the thresholds and provide at least one CPS. The CPS list has been limited to markets where real competition problems were identified, such as online intermediation services, search engines, social networks, video-sharing platforms, messenger services, operating systems, virtual assistants, cloud computing and online advertising. Moreover, the advertising market will be made more transparent with targeted measures.

Protracted legal proceedings should also be avoided by reversing the burden of proof such that gatekeepers must ensure automatic compliance with the list of ‘do’s and don’ts’, instead of the European Commission having to find wrongdoing. The Commission can now take action at an early stage before the behaviour of gatekeepers causes harm; that increases competition in digital markets and raises consumer welfare.

Only the Commission will control compliance with the rules; however, the expertise of the national competition authorities is also fully included in the process. The latter are supposed to supp ort the EU Executive in monitoring the DMA rules as part of a ‘High level Group of Digital Regulators’.

In this framework, national authorities can exchange knowledge on best practices and support the Commission’s work with measures such as dawn raids and requests for information. However, the decision-making power in the proceedings lies exclusively with the Commission.

A ‘renewed consent’ for targeted advertising was introduced into the text. Protecting consumers from manipulation through personalised targeted advertising that exploits psychological vulnerabilities is generally enshrined.

“With these requirements for gatekeepers, more competition and innovation in digital markets will be possible, to the benefit of SMEs, European digital start-ups and European consumers”

Targeted advertising per se can also be useful, such as to reduce advertising costs and to facilitate scaling-up for start-ups and SMEs and the GDPR already provides the appropriate framework for processing personal data. It is now necessary to ensure that gatekeepers do not abuse these specifications to the detriment of third-party providers.

Moreover, new rules to tackle the ‘killer acquisitions’ problem have been introduced, such as a mechanism to inform the national competition authorities of all acquisitions a gatekeeper intends to make. It means that the Commission will be able to assess all the relevant acquisitions in the digital and data area under the Merger Control Regulation by trigging art 22 of the Regulation (EC) 139/2004.

Finally, a temporary ban of acquisitions was introduced as a potential structural measure for non-compliance procedures under article 16: it is an ex-ante, temporary and a general measure similar to the ex-post specific structural remedies in competition law.

The first step is done: the European Parliament will vote on the proposal in the next Plenary and then the Trilogue will start at the beginning of next year. The way forward has already been mapped out, the common goals already outlined for an EU-wide agreement: the DMA will represent a milestone in the construction of a competitive and flourishing European digital market 

Read the most recent articles written by Andreas Schwab - The EU ushered in a new era of digital regulation. Will the US follow suit?

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