Commission’s new Digital Markets Act to combine ex ante rules and competition tool

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The European Commission is preparing a new Digital Markets Act, which would combine the ex ante rules for gatekeeper platforms, part of the Digital Services Act (DSA) Package, and the so-called New Competition Tool into a single legislative proposal. The new instrument would address both gatekeeper platforms and online markets with ‘signs of movement’ towards oligopoly or monopoly. This information was corroborated by Executive Vice-President Margrethe Vestager during her speech at the Fordham Competition Conference on 8 October, where she elaborated that the combined initiative to address digital markets will have ‘two complementary pillars, a combination of ex ante regulation and case-by-case enforcement’.

What will the Digital Markets Act include?

The new Digital Markets Act will include two of the Commission’s proposed tools to address digital services: ex ante rules for gatekeeper platforms and to so-called New Competition Tool, both of which were subject to public consultations.

According the latest intelligence, the ex-ante rules for ‘gatekeeper’ platforms would address the issue of the level playing field in European digital markets, where, according to the European Commission, currently a few large online platforms act as gatekeepers. The Commission defines gatekeepers as intermediary services that are de facto unavoidable for business users in the digital economy seeking to access their markets in the European Union. The term is closely related to the notions of “companies with strategic market status” and is not necessarily linked to the traditional market dominance concept, as many gatekeepers typically operate across multiple markets simultaneously. The rules will be aimed at ensuring that consumers have the widest choice and that the EU single market for digital services remains competitive and open to innovation.  According to a draft blacklist of banned practices and whitelist of obligations for gatekeeper platforms, the rules will focus on practices in relation to data, self-preferencing, and bundling and tying, such as: a prohibition of exclusive use of data, unless ensuring non-differentiated sharing; a ban of preferential display/ranking; a ban on exclusive pre-installation; and audit of gatekeeper services and general compliance, including a notification of planned mergers, acquisitions, partnerships and new activities. The Commission also includes a “greylist” that would apply for unfair practices where intervention by the competent regulator is required. It includes a ban to restrict the use of business users’ data, a ban to propose different prices for similar services if one of them is operated by the gatekeeper, and obligations to share click-and-query data.

The New Competition Tool will address structural competition problems and its scope would be limited to the digital sector and not to the entire economy, as previously suggested by Executive Vice President Vestager. According to her, certain structural risks for competition such as tipping markets were not addressed by the current rules, which prompted the exploration for a ‘possible new competition tool that would allow addressing such structural competition problems, in a timely and effective manner.’ After establishing a structural competition problem through a rigorous market investigation during which rights of defence are fully respected, the new tool should allow the Commission to impose behavioural and where appropriate, structural remedies. However, there would be no finding of an infringement, nor would any fines be imposed on the market participants. The new instrument could allow Brussels to intervene early when it identifies companies at risk of acquiring an entrenched position in a certain market and could deal with markets harmed by entry barriers, consumer lock-in or data accumulation.

Next steps

The Digital Markets Act is tentatively expected to be published together with the DSA on 2 December 2020. Additionally, the European Parliament will hold a final plenary vote on its three reports on the DSA, concerning commercial and civil law rules for commercial entities operating online, improving the functioning of the Single Market, and fundamental rights issues on 20 October 2020.

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