Reaching this point was done in record time, but there are details still to iron out – particularly over who will enforce the rules
Member states find agreement on crucial points of the proposal: Less than a year after the European Commission’s first proposal, the Digital Services Act and Digital Markets Act (DMA) have cleared a significant hurdle on the way to approval and adoption. The European Council adopted its general approach, which will be the Council’s starting point in the trilogue negotiations with the EC and the European Parliament. The Council found an important compromise with the EC and confirmed it as the sole enforcer of the DMA, but competition authorities will still be able to start investigations into possible infringements and send their findings to the EC. This is important considering that France, Germany and the Netherlands wanted a stronger role of national authorities. The Council also puts more emphasis on the role of ecosystems, requiring the Commission to consider “a conglomerate corporate structure or vertical integration of the undertaking” when designating a gatekeeper. This should address weaknesses of the initial proposal.
Negotiations next year will still have their challenges: Earlier this week, the Internal Market and Consumer Protection Committee (IMCO) of the European Parliament also approved its own text of the DMA, and paved the way for the Parliament to reach its position in December. There are already signs that Parliament and Council will have to iron out crucial differences in the negotiations. The IMCO Committee still foresees a stronger role for national authorities, which can advise the EC and contribute to investigations. It is also adding more markets to those where gatekeepers may be designated (connected TVs, virtual assistants, and web browsers). It sets stricter rules for targeted advertising, to be provided only on an opt-in basis, and the maximum level of fines at 20% of a company’s annual turnover (Commission and Council set it at 10%). In cases of systematic non-compliance, the EC would be able to temporarily block the acquisitions of gatekeepers – a power that was neither in the EC’s text nor in the Council’s.
The UK is building a more flexible and effective framework: Both the European DMA and the UK framework for digital markets are still in the making, with a lot to play for in the legislative processes. However, the approach the UK has taken so far appears to be more flexible, as it does not have a predetermined list of markets in which gatekeepers could be identified. It also leaves more room to deciding remedies case-by-case, unlike the DMA which identifies specific conducts that would apply to all gatekeepers. Crucially, the UK framework will set stricter merger rules for companies with Strategic Market Status, whereas the EU framework would only set a reporting obligation for gatekeepers – unless the Parliament has its way on the temporary blocking of acquisitions.
