Out-Law News 2 min. read

Digital Markets Act publication triggers looming May 2023 milestone

Digital network abstract map

Online ‘gatekeepers’, and the businesses that use them, have been advised to review their relationships with one another after the EU Digital Markets Act (DMA) was formally published.

The DMA was agreed by EU law makers earlier this year and now been published in the Official Journal of the EU. The DMA will come into force on 2 November 2022. Most of the provisions will apply from 2 May 2023.

Competition law expert Laura Stammwitz of Pinsent Masons said that gatekeepers should use the six-month transition period to “review and, if necessary, adapt their business models, business relationships and contracts”. She encouraged business users to review their relationships with gatekeepers too and be prepared to respond to information requests that the European Commission may send them in future in its role in overseeing compliance with the legislation.

The DMA applies to core platform services provided or offered by ‘gatekeepers’ to business users established in the EU or with end users established or located in the EU. Criteria is set within the legislation for determining which services fall subject to the DMA’s rules. The Commission has powers to designate businesses as gatekeepers should a company reject the notion that they fulfil the criteria for regulation.

Gatekeepers subject to the DMA will be prohibited from undertaking certain practices prescribed in the legislation in respect of their core platform services. This includes dictating the price or conditions business users apply to the same products or services they offer via their platform. Gatekeepers cannot restrict end users’ use of business users’ software made available via their platform either.

Other prohibitions include on using users’ personal data for the purpose of targeted advertising, or on aggregating the users’ data from across the different services they provide, without users’ consent.

Other provisions encourage gatekeepers to open up access to the data generated from use of their platforms by, among other things, putting restrictions on their use of business users’ data where it is not publicly available, and requiring aggregated data to be shared, without charge, on a real-time basis, at the request of business users.

Further rules promote interoperability on gatekeeper platforms and enable platform users to decide which software they wish to use on those platforms. Gatekeepers can restrict access to third-party software on their platforms where the software “endanger[s] the integrity of the hardware or operating system provided by the gatekeeper”.

While the DMA provides the framework for the new rules, more detail on the requirements and on processes relevant to the operation of the Act can be specified in additional implementing legislation. The European Commission has the power to prepare that legislation under the DMA and it has already signalled that it will prepare implementing provisions for publication in the first quarter of next year. It is not clear, from what the Commission has said, exactly what the first set of implementing provisions will address, but it is possible that they could elaborate on how market investigations are to be conducted under the DMA.

The European Commission will be responsible for enforcing compliance with the DMA. Gatekeepers face sanctions for violating the DMA, including potential fines of up to 10% of their global annual turnover. For repeat offences, the penalty could increase to 20% of global annual turnover. If a gatekeeper violates the new rules three times or even more, the Commission could impose a temporary ban on mergers for the business or impose divestment requirements.

Large technology firms face increased regulation in several global jurisdictions. The UK, for example, has established a dedicated Digital Markets Unit (DMU) within the Competition and Markets Authority to oversee compliance – although planned legislation to give the DMU a statutory basis and enforcement powers is yet to be published.

“Firms likely to be caught by the DMA are also active in the UK and therefore, after the DMA takes full effect next year, they will need to look out for future developments in the UK digital regulation regime and be mindful of other relevant compliance obligations,” said London-based competition law expert Tadeusz Gielas of Pinsent Masons.

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