The Digital Markets Act (“DMA”) will apply from 2 May 2023. In anticipation of this, the European Commission (“Commission”) has sought feedback via a public consultation on the draft DMA Implementing Regulation (“IR”) between early December and 9 January 2023.
The draft IR addresses a range of procedural aspects concerning the DMA, including gatekeeper designation and core platform service notifications, opening of proceedings, the right to be heard, and access to the file. By contrast, the draft IR so far is silent on the Commission’s investigative powers during the gatekeeper designation process and the process of further specifying the obligations set out in Article 6 DMA (both of which gatekeepers will undoubtedly be eager to learn more about).
The Commission is aiming to publish the final IR before Spring, and it will apply from the same date as the DMA. Whilst the draft IR may still be subject to changes before the final version is adopted, it already provides valuable insights into the Commission’s thinking. How stakeholder feedback might affect these issues in the final IR remains to be seen.
Two themes in the draft IR – each further outlined below – are particularly noteworthy:
- First, it touches upon the potential delineations of core platform service under the DMA, an issue which can have important ramifications for future enforcement: delineating one core platform service from other services in the context of digital ecosystems which are often designed to be seamless could prove rather complex.
- Second, the draft IR displays a certain tension between achieving a “rapid and effective investigatory and enforcement process” (Recital 3 IR) while also ensuring that rights of the defence of the parties to the proceedings are effectively protected. The Commission’s emphasis on speed in DMA enforcement may require some notable departures from the traditional procedural framework for antitrust.
Notification and delineation of core platform services
Companies will have to submit information regarding the DMA’s quantitative and qualitative thresholds, and notify the Commission of any core platform services (e.g., online intermediation services or online search engines) that they operate. The draft IR sets out the information that potential gatekeepers will need to provide in the “Form GD” which has been set up to this end. For each core platform service, the company must also provide any plausible alternative delineation. Such delineation could be narrower or broader than the delineation that the company actually believes to be relevant. This is reminiscent of the obligation in the Form CO to address plausible alternative product and geographic market definitions, although those notifying via the Form GD will not initially have the benefit of Commission and Court precedent to draw upon, as is the generally case when submitting a Form CO.
The delineation of core platform services could prove a complex and important exercise: they set the analytical framework for – and will impact the scope of – many of the obligations imposed on gatekeepers. A number of prohibitions in the DMA are designed to prevent gatekeepers from leveraging their position in one core platform service to the advantage of other services within their ecosystem. This includes, for example, prohibitions on combining or cross-using personal data from one core platform service with other gatekeeper-provided services (Articles 5(2)(b)-(c) DMA), and on tying different core platform services (Article 5(8) DMA).
As such, a wider definition could enable a gatekeeper to rely on a broader set of personal data and functionalities within the same core platform service. Although a narrower definition could conversely reduce the amount of personal data and functionalities a gatekeeper could rely on within the same core platform service, it might also mean that certain sets of personal data or functionalities outside that definition escape the reach of some DMA obligations. The Commission might also consider if it needs to maintain a certain degree of analytical consistency in how different gatekeepers’ core platform services are delineated, or whether differentiation among those gatekeepers is such that the Commission could aim for delineations that help tailor the application of DMA obligations to the characteristics of individual gatekeepers and their core platform service(s).
To navigate the notification requirements and facilitate the speed of the process, companies may engage in pre-notification discussions with the Commission when preparing their notification forms. This too resembles the merger control procedure when submitting a Form CO.
Procedural aspects – expediency and rights of the defence
In addition to providing details regarding notification of core platform services, the draft IR clarifies a number of procedural aspects. As noted above, a theme noticeable in several of the procedural points of the draft IR is the balancing of rights of the defence with the expediency of proceedings.
Page limits. For each distinct core platform service, gatekeepers can submit a notification of up to 50 pages. The same page limit applies to replies to preliminary findings. The limit is 25 pages per core platform service for substantiated arguments that the undertaking does not meet the qualitative thresholds where the quantitative thresholds are met, and a limit of 30 pages applies to reasoned requests that obligations should be suspended or exempted under Articles 9 or 10 DMA. The use of page limits under the draft IR appears to be inspired by the limits imposed on submissions to the EU Courts, but feedback to the public consultation has already indicated concerns over such limits given the novelty and potential complexity of gatekeeper notifications under the DMA. Given the ramifications of being designated as a gatekeeper, 50 pages per core platform service will be seen by some as the Commission attempting to balance speed against the DMA’s commitment that “rights of defence of the gatekeeper, undertaking or association of undertakings concerned shall be fully respected in any proceedings” (Article 34(4) DMA). These page limits can be waived where it is “objectively impossible to deal with particularly complex legal or factual issues within the relevant page limits” (Article 4 IR), which will likely be a high bar to clear.
Hearing Officer. The draft IR does not provide for a Hearing Officer throughout the non-compliance procedure, a traditional safeguard under the EU Merger Regulation. This is another example of a measure that will increase the expediency of proceedings but raises further questions regarding the adequacy of the gatekeepers’ rights of defence under the DMA.
Right to be heard. Gatekeepers have the right to be heard regarding the Commission’s preliminary findings on a number of points, including compliance with substantive DMA obligations, market investigations regarding gatekeeper designation and systemic non-compliance, interim measures, commitments to comply with DMA obligations, and non-compliance and fining decisions. However, the draft IR does not provide for oral hearings; gatekeepers will seemingly be limited to making written submissions only. Any arguments by the gatekeeper must be “succinct” and supported by evidence.
Time Limits. Under the DMA, undertakings may submit their observations to the Commission concerning preliminary findings within a time limit set by the Commission in those preliminary findings, which may not be less than 14 days (and thus the time limit may vary from case to case). Because the Commission has a degree of discretion in setting time limits under the DMA, the draft IR attempts to strike a balance between the gatekeeper’s rights of defence when deciding the time limit and the desired “expediency of proceedings” (Article 10(1) IR). Gatekeepers might therefore face a deadline of as little as two weeks to respond to preliminary findings.
Access to file. Under the draft IR, the Commission must grant access to file “to the extent that it is necessary to enable [the gatekeeper] to exercise its right to be heard” (Article 8(1) IR). This includes at least non-confidential versions of all documents mentioned in the preliminary findings and a list of all documents contained in its file (from which the gatekeeper can request certain documents). If the gatekeeper wishes to access documents included on this list, it must send a substantiated request to the Commission explaining why access is necessary to exercise its right to be heard. If the document originator has identified business secrets or confidential information in the document, “access shall take place according to the modalities and within the time limit set out in a Commission decision” (Article 8(5) IR). Absent such confidential information, the Commission must grant access to the document.
Role of third parties. The DMA gives the Commission the right to consult third parties where it intends to adopt a non-compliance decision against a gatekeeper, when communicating preliminary findings, and at certain stages during market investigations. Third-party statements will be treated as non-confidential, subject to requests for redaction of information identifying the third party, and unless the Commission indicates otherwise. This is distinct from the position under the EU’s merger control regime, where third parties always have the option to provide non-confidential version of their submissions.