Private enforcement of the Digital Markets Act (DMA): David v Goliath

The DMA aims to make the markets in the digital sector fairer and more contestable by setting rules for companies which qualify as ‘gatekeepers’. Gatekeepers are large digital platforms providing so called core platform services, such as online search engines, app stores and messaging services which connect business users and end users.  The rules set out in the DMA aim to ensure that gatekeepers do not abuse their position. Business and end users can play a role in their enforcement.

1. DMA Enforcement

The DMA can be enforced in three ways. Firstly, the European Commission has the exclusive power to designate core platform providers as gatekeepers and can carry out inspections, send requests for information, and impose interim measures and fines upon these gatekeepers. Secondly, national competition authorities may, after a preliminary investigation, provide relevant information to the Commission for further action. Thirdly, businesses and end users can bring proceedings against gatekeepers in case of non-compliance with DMA obligations.

As the DMA’s provisions are sufficiently precise and unconditional, they create individual rights and can be considered to have direct effect. They may therefore be relied upon directly before the national courts by business users and end users of the core platform services. The DMA contains several specific obligations, such as the requirement for gatekeepers to provide access and use options for business users. Article 39 suggests that business users and end users will be empowered to submit claims at any stage, without prior intervention of the Commission. Thus, as in other fields of EU law, the national courts are entrusted with the effective protection of individual rights under the DMA via actions for injunctive relief and damages claims.

2. The rights of (small) businesses under the DMA

Besides setting rules for gatekeepers, the DMA creates opportunities for other businesses by way of access to markets in which the gatekeepers had closed ecosystems, or offered only restrictive conditions with which the user had to comply.

The key rights of a business under the DMA, as set out in articles 5-7 are:

Pricing freedom – Article 5(3)

• Businesses can determine their pricing strategy on designated gatekeepers’ platforms. There should be no restrictive conditions dictating pricing practices elsewhere. Businesses are free to offer their products for a lower price via another platform or its own webshop.

Freedom to promote and conclude transactions outside of the platform – Article 5(4)

• A gatekeeper may not prevent businesses from dealing directly with each other outside of the platform. A business is free to directly approach customers, also if they were initially recruited through the platform, with offers and enter into contracts with them, also outside the platform.

Fair play – Article 6(2)

• Data generated by businesses on designated BigTech platforms, which is non-public, may not be used by such platforms to compete with the businesses.

App distribution – Article 6(4)

• Businesses have the right to run their own app store, distribute their apps through alternative app stores and sideload their apps on all designated OS (iOS, Android mobile and Windows PC). Businesses can communicate directly with their customers. App developers have more chance of making a success of their app.

Fair ranking – Article 6(5)

• BigTech’s designated platforms can no longer unfairly promote their own products or services above those of business users of the platform in search results or ads (self-preferencing).

Interoperability – Article 6(7)

• Businesses can develop and offer innovative services to users of designated OS (iOS, Android mobile and Windows PC). Gatekeepers must allow interoperability free of charge.

Effective access to data – Article 6(10)

• Businesses can gain valuable insights from the data generated by their services or user interactions on gatekeeper platforms, including performance metrics and user behaviour. Businesses must be provided effective, high-quality and continuous real-time access to this data free of charge.

If a gatekeeper infringes any of these rights, business or end users could pursue a claim before the national court.

3. private enforcement under the DMA

For business users or end users of online platforms of gatekeepers it is important to be able to raise complaints without delay.  Delayed access to the market or expansion on a market costs money. Business users and end users can invoke the direct effect of articles 5 to 7 of the DMA to bring an enforcement action (for an injunction or damages. The DMA provides that the Commission can intervene in such proceedings by submitting an expert opinion.

3.1 Right to full compensation

As confirmed by the Court of justice of the European Union, full compensation for damages caused by non-compliance with EU law is complementary to fines imposed by the Commission. In addition to its compensation function, the right to damages has a deterrent effect. It is an additional disincentive for non-compliance.

3.2 Joint and several liability

The principle according to which several entities and persons participating in an infringement are jointly and severally liable may also apply to the DMA. According to article 2(1) of the DMA, a gatekeeper is defined as “an undertaking providing core platform services, designated pursuant to Article 3″. An undertaking is defined in Article 2(7) of the DMA as “an entity engaged in an economic activity […], including all linked enterprises or connected undertakings that form a group through the direct or indirect control of an enterprise or undertaking by another”. These definitions both reflect competition law concepts as interpreted by the CJEU. They could give rise to the conclusion that all group entities are jointly and severally liable. The liability under the DMA will reflect the specific characteristics of each gatekeeper.

3.3 Quantification and estimation of harm

If private enforcement is used to claim damages, the claimant shall have to quantify the harm caused by the gatekeeper’s conduct. In the case of digital markets and the broad range of platform-related practices that the DMA targets or prohibits this is challenging. The damage depends on several factors, such as the specific DMA infringement, its scope, duration and impact. Some challenges are similar to those faced when quantifying damages for certain exclusionary or exploitative conduct under Article 102 of the TFEU. Other difficulties arise in cases involving infringements of specific data-related obligations and prohibitions. Thus, national courts could benefit from guidelines regarding the estimation of damages, or guidelines providing sufficient basis for such an estimation of damages.

3.4 Follow-on and stand-alone actions

As with the private enforcement of EU competition law, both follow-on and stand-alone actions are possible in relation to (alleged) infringements of the DMA. Follow-on actions can rely on the binding effect of Commission decisions finding an infringement of the DMA pursuant to Article 39(5). However, follow-on actions cannot be expected soon, as the obligations of the DMA only apply since March 2024.

In the aftermath of (binding) designations of gatekeepers, stand-alone actions seeking to enforce obligations and prohibitions under the DMA might be seen earlier. With regard to stand-alone actions, Article 8(1) of the DMA potentially leads to a shift in the burden of proof, as it requires gatekeepers to “ensure and demonstrate compliance with the obligations laid down in Articles 5, 6 and 7″ of the DMA.

4. Comment

The DMA is still in its infancy. Its success has yet to be proven. One factor which would increase the chance of success would be private enforcement. Private enforcement is difficult if it involves proceedings against a market party on which  you are reliant. Nevertheless, there are companies which dare to speak up against the BigTech giants. At a conference organized by the European Competition Network in Amsterdam in June 2024,   the CEO of Bol.com stated that Chinese e-commerce platform Temu has grown with tactics that are “not only aggressive”, but also predatory and non-compliant with sector regulations. She also stated that social media platforms such as TikTok that are “evolving into marketplaces.” Her suggestion was that both parties should be investigated/monitored by the European Commission. Likewise, the CEO of Dutch mapping company TomTom said that TomTom was struggling to integrate its services with those of Google and other tech gatekeepers, and called for the Commission to take action to increase interoperability. The question is whether the Commission has the resources to respond to such calls for action. If that is not the case private enforcement is a realistic alternative. Bringing proceedings is never cheap but private enforcement of the DMA should be easier than private enforcement of competition rules. This is particularly the case if the relief sought is an injunction requiring the gatekeeper to comply with its obligations under the DMA. If the claimant is (also) seeking damages, quantification will be the key challenge. Given the costs of barriers to markets, such actions have a good chance of paying-off in the long run.