Regulating Big Tech – Digital Markets Act – Need to know
The Digital Markets Act (DMA) imposes several obligations on firms designated by the European Commission as "gatekeepers" of core platform services, for example online search engines, online social networking services, operating systems, web browsers and virtual assistants.
By imposing the obligations, the regulation aims to end unfair practices and conduct which is harmful to competition and end users by the companies acting as gatekeepers in the online platform economy.
Under the DMA, a firm will be considered as a designated gatekeeper if three criteria are met.
First, the company must have a significant impact on the European market which is determined by the company’s turnover. The criterion is presumed to be met if the company’s annual turnover in the EU is at least 7.5 billion Euro in each of the last three years, or if its average market capitalisation is at least 75 billion Euro in the last financial year and it provides the same core platform service in at least three EU countries.
Second, the firm in question must provide a core platform service that is an important gateway for business users to reach end users. This criterion is presumed to be met if the core platform service has at least 45 million monthly active end users and at least 10.000 yearly active business users established or located in the EU in the last year.
Lastly, the firm must enjoy an entrenched and durable position. If the first two criteria have been met in each of the last three years, this criterion is presumed met.
Companies meeting all the criteria are required to notify the Commission without delay and provide the Commission with the relevant information on the criteria being met. Failing to notify the Commission can lead to fines up to 1 % of the firms total worldwide turnover the preceding year, emphasizing the importance of firms being familiar with the obligations and complying with the Regulation.
Firms designated by the Commission as gatekeepers must comply with several obligations set out in the DMA. In addition to several restrictions on the use of data collected by the gatekeeper being set out, the gatekeeper is required to refrain from for example requiring business users or end users to subscribe to, or register with, any further core platform service as a condition for being able to use any of that gatekeeper’s core platform services. Further, the gatekeepers must refrain from preventing business users from offering the same products or services to end users through third-party online intermediation services or through their own direct online sales channel at prices or conditions that are different from those offered through the online intermediation services of the gatekeeper. Gatekeepers must also refrain from ranking its own products or services better than equivalent products or services offered by third parties on its platform.
In addition, several administrative obligations are imposed on the gatekeepers, including an obligation to report to the Commission the measures implemented to ensure compliance and an obligation to introduce a compliance function independent from the operational functions of the gatekeeper reporting directly to the management body of the gatekeeper.
By imposing the obligations on gatekeepers, the Regulation seeks to complement the Article 101 and 102 TFEU and corresponding national legislation, by regulating the gatekeepers’ conduct ex ante ensuring competition in digital markets. The DMA provides the relevant authorities with a new tool to improve competition in digital markets.
Some cases on Article 102 TFEU appears closely related to the unwanted behaviour addressed by the Regulation. For example, Google’s favouring of its own shopping comparison service in Google search results over competing shopping comparison services in T-612/17 Google Shopping, which was found to be an abuse of dominance, appears to also being contrary to the obligations set out by the DMA. In future matters, the question of whether proceedings shall pursue the conduct under the TFEU, or the DMA can be raised. If both regulatory frameworks are applicable, opening proceedings under the DMA appears to be the more efficient choice.
The DMA also crosses paths with competition law as the Regulation requires gatekeepers to inform the Commission of any intended concentration within the meaning of the Merger Regulation, regardless of whether the concentration is notifiable to the Commission under the Merger Regulation or to a national competition authority under national merger regulations.
The DMA came into force in November 2022 and is applicable from May 2nd, 2023. The Regulation is currently being reviewed by the EEA EFFTA-states, including how the Regulation should be adjusted to address the challenges of the two-pillar system.
Actuality in Norway
In relation to the Norwegian market, the NCA has competition law in digital markets high on the agenda. In fact, it is one out of four main priorities. Even tough not many Norwegian companies will qualify as gatekeepers, if any, the Norwegian market comprises a vast number of tech companies operating in companionship or in competition with the gatekeepers. For these companies, the DMA is of utmost importance to defend its legal rights.
Simonsen Vogt Wiig
Simonsen Vogt Wiig is well placed to provide excellent legal advice in the sector. It’s sector practice groups both within Tech and EU/Competition law is highly recognised and ranked among the top Norwegian law firms.