What Next for the Digital Markets Act?

The Digital Markets Act is part of a package of measures designed to improve fairness and contestability in digital markets. Designated gatekeepers must now ensure their compliance reports are submitted to the European Commission by 7 March 2024. Our Competition & Antitrust team examine why this deadline marks just the first significant milestone in the early stages of this new regime.

The deadline for gatekeepers to comply with the Digital Markets Act (DMA) is 7 March 2024. The question on everyone’s minds is - what next?

Gatekeeper designation: the first big milestone completed

Under the DMA, the European Commission can designate an online platform as a ‘gatekeeper’ if it provides a core platform service that is an important gateway for business users to reach end users, which is assessed by reference to certain quantitative thresholds. The gatekeepers are:

• Alphabet
• Amazon
• Apple
• ByteDance
• Meta, and
• Microsoft

Gatekeepers have six months from the date of the European Commission’s decision to designate them as a gatekeeper to fully comply with their DMA obligations for each of their designated core platform services.

Gatekeeper compliance reporting now fast approaching

Under Article 11 of the DMA, gatekeepers are required, within six months of being designated, to submit a report to the European Commission describing the measures they have implemented to ensure compliance with the obligations under Articles 5, 6, and 7 of the DMA. The European Commission will need to consider the gatekeepers’ Article 11 compliance reports and assess whether, and to what extent, the gatekeepers are satisfying their respective obligations under the DMA.

Interestingly, Article 11 also requires gatekeepers to publish a non-confidential summary of this report. Since the DMA imposes obligations on gatekeepers regarding their business users and end users, we expect gatekeepers’ compliance efforts to be closely scrutinised not just by the European Commission but also by third parties. This transparency requirement is likely to facilitate third parties in making submissions to the European Commission and/or bringing legal action in the courts where they perceive a breach of the DMA has occurred.

Will the EC deploy its significant enforcement toolkit?

The DMA gives the European Commission significant powers, similar to those under competition law; it can:

• Open investigations
• Issue requests for information
• Interview individuals
• Carry out dawn raids, and
• Impose fines of up to 10%, or 20%, of worldwide turnover

What remains to be seen is how the European Commission will react to any potential infringements of the DMA at this early stage in the life of this new legislation. Will the European Commission come down hard on gatekeepers by using these powers, or will it opt-in favour of cooperation and dialogue, at least for an initial period? The general consensus is that the European Commission’s approach will likely depend on the gatekeeper’s overall attitude and approach to DMA compliance and, of course, the European Commission’s enforcement priorities.

Potential for private enforcement in the national courts

Although the European Commission is the sole enforcer of the DMA, the text of the DMA clearly contemplates the possibility of private enforcement. Article 39 of the DMA provides a framework for cooperation between the European Commission and the national courts, which is almost identical to the mechanism under EC Regulation 1/2003. In addition, the European Commission’s view as set out in its Q&A on the DMA is that:

“[t]he DMA is a Regulation, containing precise obligations and prohibitions for the gatekeepers in scope, which can be enforced directly in national courts. This will facilitate direct actions for damages by those harmed by the conduct of non-complying gatekeepers”.

Therefore, private actions for injunctive relief and damages at the Member State level are certain to ensue. In an effort to avoid fragmentation, we fully expect the European Commission to closely cooperate with national courts, including by making written and/or oral submissions, as provided for under Article 39. It is also likely that we will see national courts stay proceedings if the European Commission decides to open related investigations.

Ireland as a potential forum for DMA litigation

Since there is currently no harmonisation instrument similar to the Damages Directive, the rules applicable to private actions under the DMA will be determined by the national courts.

Ireland is an obvious forum for private DMA enforcement, since it is where most of the gatekeepers have their EU headquarters. In Ireland, competition proceedings are typically entered in the Competition List of the High Court. However, proceedings for an infringement of the DMA, which provides a basis for EU law-based tort liability claims, are likely to be entered into the Commercial List of the High Court. This approach generally involves more active case management and a quicker trial. The Commercial List has a dedicated sub-list for complex technology disputes, which are heard by specialist judges. This is an important feature of the Irish litigation landscape as DMA litigation is likely to involve detailed expert evidence regarding the substance of the alleged infringement and technological issues, in addition to the quantum of damages sought.

Next steps

The impending 7 March 2024 deadline for gatekeepers to submit their compliance reports to the European Commission marks just one significant milestone in the early stages of this new regime. The impact and effectiveness of the DMA will be determined in large part by how, and to what extent, the obligations on gatekeepers are enforced after this date, by both the European Commission and private litigants.

For expert advice on this and other aspects of the DMA, please consult a member of our Competition & Antitrust team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.