The Digital Markets Act (DMA): rules for digital gatekeepers to ensure open markets
The DMA has entered into force on 2 May 2023. Its general objective is to ensure contestability and fairness for the markets in the digital sector by setting rules for companies that fulfil the conditions of ‘gatekeepers’ that are set out in the DMA. The rules set out in the DMA should ensure that gatekeepers, such as large online platforms, do not abuse their power.
“Gatekeeper” criteria
According to Article 3 of the DMA, an undertaking shall be designated as a gatekeeper when meeting three cumulative criteria:
(a) it has a significant impact on the internal market; (b) it provides a core platform service (CPS) which is an important gateway for business users to reach end users; and (c) it holds (or is about to have) an entrenched position.
Core platform services (CPS)
The services that are designated as ‘core platform services’ are exhaustively listed in Article 2(2) of the DMA and include the following:
Accordingly, if a company does not provide any of the above services, the DMA is not applicable to that company. However, a company that provides a CPS can only be designated as a “gatekeeper” if it also meets the other criteria: the CPS must be an important gateway for business users to reach end users, the company must have a significant impact on the internal market and hold an entrenched position.
Although the test is based on the qualitative criteria, they are presumed to be fulfilled once the respective quantitative thresholds are met. Effectively, the DMA establishes a rebuttable presumption that the qualitative criteria are satisfied when a CPS-provider meets the quantitative thresholds. Accordingly, when an undertaking fulfils the quantitative criteria listed below, it must notify the European Commission, but the undertaking may rebut the presumption by demonstrating with substantiated arguments that it nonetheless does not meet all qualitative criteria. On the other hand, the Commission may also determine on the basis of a market investigation that an undertaking qualifies as a gatekeeper by meeting the qualitative criteria, even if not all of the quantitative thresholds are met. In doing so, the Commission will consider the factors listed in Article 3(8) of the DMA, including the size of the undertaking, its number of users and ability for user lock-in, any network/conglomerate/scale and scope effects, and the potential catch-all ‘other structural business or service characteristics’. The Commission will also take into account foreseeable developments such as planned concentrations.
Qualitative criteria – Article 3(1) |
Respective Quantitative criteria – Article 3(2) |
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The undertaking has a significant impact on the internal market |
The undertaking achieves an annual Union turnover equal to or above EUR 7,5 billion in each of the last three financial years, or where its average market capitalization or its equivalent fair market value amounted to at least EUR 75 billion in the last financial year, and it provides the same core platform service in at least three Member States. |
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The undertaking provides a core platform service which is an important gateway for business users to reach end users; and |
The undertaking provides a core platform service that in the last financial year has at least 45 million monthly active end users established or located in the Union and at least 10 000 yearly active business users established in the Union. |
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The undertaking enjoys an entrenched and durable position in its operations, or it is foreseeable that it will enjoy such a position in the near future. |
Threshold (2) above relating to the CPS has been met in each of the last three financial years. |
Obligations of gatekeepers
What does this mean for gatekeepers? The new rules will establish special obligations for them (do’s and don’ts):
Gatekeeper “DO’s” |
Gatekeeper “DONT’s” |
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allow third parties to inter-operate with the gatekeeper’s own services in certain specific circumstances |
treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper’s platform |
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allow their customers to access the data that they generate while using the gatekeeper’s platform |
prevent consumers from associating with businesses outside their platforms |
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provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper |
preclude users’ freedom to remove any pre-installed software or app |
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allow their business users to promote their product and sign contracts with their customers outside the gatekeeper’s platform |
track end users outside of the gatekeepers’ core platform without their effective consent with the aim of targeted advertising |
What’s next?
Within two months since the moment DMA is applicable (at the latest on 3 July 2023), the CPS – providers that meet the quantitative thresholds will have to notify the Commission. The Commission will designate them as “Gatekeepers” within 45 working days, at the latest by 6 September 2023. Following their designation, gatekeepers will have six months to start complying with the requirements set forth in the DMA, which is by 6 March 2024 at the latest.
Enforcement
In case of non-compliance by gatekeepers, the Commission can impose fines of up to 10% of the company’s total worldwide annual turnover, or 20% in the event of repeated infringements, and can also impose periodic penalty payments not exceeding 5 % of the average daily worldwide turnover in the preceding financial year per day. However, the financial liability of each undertaking in respect of the payment of the fine shall not exceed 20 % of its total worldwide turnover in the preceding financial year. Additional remedies may be required in case of systematic infringements.
