Five themes from the European Parliament’s first effort to reshape the EU’s Digital Markets Act

The Rapporteur (Andreas Schwab) of the lead committee responsible for the Digital Markets Act in the European Parliament published a draft report on 1 June. The draft fires the starting gun on what is likely to be a highly contentious reshaping of the Act over the next year.

While the draft does not radically overhaul the Act, it proposes a number of key amendments of scope which we break down into five key themes below:

  • Only the biggest fish to fry. While the initial draft prompted questions over its intended targets, the proposed amendments would limit the Act to the largest digital platforms: requiring any gatekeeper to operate at least two qualifying “core platform services” and increasing the quantitative thresholds for platforms to presumptively qualify as gatekeepers. However, once in the net, the amendments would make it more difficult to escape: platforms meeting the quantitative thresholds would have reduced opportunities to contest their classification as gatekeepers. An outcome that may raise trans-Atlantic hackles, given the revised Act would be even more focused on a handful of U.S. platforms.
  • More intrusive and prescriptive rules. While the amendments do not rework the Commission’s patchwork quilt of rules for gatekeepers, the draft report’s amendments would tighten the screws. In particular, the restriction on gatekeepers “self-preferencing” their own services through ranking and display has been significantly reinforced; gatekeepers would have to treat their ‘own product or services, as a separate commercial [entities] that [are] commercially viable as a stand-alone service[s].’ The Act thus threatens to become more, not less, prescriptive; notwithstanding calls for a more principles-based approach.
  • Don’t underestimate the role of national enforcement. The draft report also reminds us that the national courts have a potentially pivotal role in applying the DMA’s rules. Users will, in principle, have the right to enforce the DMA’s rules in national courts as well as relying on the Commission to police the new rules. The challenge for national courts will be interpreting the complex and broad rules: raising the prospect of significant national and European litigation as the precise scope of the DMA’s rules are fought out in a variety of courts.
  • Limited role for national authorities. In contrast, despite calls for concurrent enforcement for national regulators, the amendments would give them only a consultative and supportive role. A “High-Level Group of Digital Regulators” would be able to make recommendations and advise the Commission on the DMA; and the Commission would be able to enlist the support of national regulators in market investigations. National regulators would, however, not be empowered to take their own decisions under the DMA: leaving the Commission firmly in the driving seat.
  • Need for speed. The amendments to the proposal impose even more ambitious timelines across the board, shortening Article 6 investigations (from 6 to 4 months), market investigations (from 24 to 18 months), a gatekeeper’s deadline to notify meeting the thresholds (3 months to 1 month) and even the period after which the DMA will become effective after entry into force (from 6 months to 2 months). The message is clear – the rules should apply as of yesterday and enforcement should be faster.
What didn’t make it?

The other side to the draft report is what did not make the final cut: in particular, a broad market investigation power permitting the Commission to assess and impose tailored remedies on gatekeepers has allegedly been left on the cutting floor (for now). However, the debate over whether the Commission should have more flexible powers to intervene is likely to continue as the Act continues its way through the European legislative machine.

What next?

The Rapporteur will present the report to the Internal Market and Consumer Protection (IMCO) Committee on 21 June 2021, where MEPs will have the opportunity to table and discuss amendments. Other Committees will play a supporting role and the final report is then due – at present – for adoption by the EP in December 2021.

In parallel, the Council of the EU, which must come to an agreement on the text with the EP, published a progress report on the DMA which was endorsed on 27 May 2021 (here) and will outline its full position at the end of the year.

From 2022, the EP and the Council will negotiate a common position. France, which will then hold Presidency, has outlined its aim to reach an agreement on the final text of the DMA in mid-2022.