The pressure to finalise the Digital Markets Act (“DMA”) during the current French Presidency is strong, and the ambition is to complete the DMA before the French elections in spring. As the DMA is one of the most important new pieces of legislation for the business community, the Confederation of Swedish Enterprise is following the ongoing legislative work closely.
Importantly, the DMA must establish:
A harmonised, fair and effective regulatory framework
Both the Council and the European Parliament, in their respective versions of the DMA, have put forward a number of amendments regarding how to implement and enforce the DMA. These amendments go further than the European Commission’s original proposal, in particular in describing how cooperation between the Commission and the Member States should work.
To establish an effective co-operation procedure is of course important. Importantly though, as the Confederation of Swedish Enterprise has expressed in an early opinion, the European Commission must be the sole enforcer of the DMA. Creating a greater role for Member State competition authorities could lead to more-fragmented and less-clear implementation and enforcement. It would also result in more actors for the gatekeepers to interact with. Although the current holders of the Presidency, France, together with Germany and the Netherlands have previously pushed for a more significant role for Member States, this has been rejected in the Council’s final position. All three versions of the DMA maintain, for the trilogues, that the European Commission should remain in the driving seat for enforcement. Such an arrangement is natural, as the core platform services targeted by the DMA operate across borders, often at a global level.
To provide for a more harmonized regulatory framework on digital markets, Swedish enterprises wish to also highlight important clarifications that have been suggested to the introductory article on how the DMA should interact with national legislation. In addition, an important additional proposal to avoid fragmentation means that national courts cannot rule against previous European Commission decisions.
Those with the greatest market power should be covered
The DMA targets a small number of large platforms that function as gatekeepers between business users and end-users, and whose role as gatekeepers is permanent. The European Commission and the Council remain a long way from the European Parliament on the scope of the new legal act, and this is expected to be one of the major negotiating issues during the trilogue discussions.
The DMA will apply to designated gatekeepers, i.e. providers of core platform services. According to the European Commission’s original proposal, which is supported by the Council in its DMA version, eligible operators must have a substantial turnover in the European Union, and must provide one or more core platform services in at least three EU Member States. In any event, the DMA will cover the so-called ‘GAFAM’ companies (Google, Amazon, Facebook/Meta, Apple and Microsoft) as well as a limited number of other large digital service providers.
The European Parliament has, in its version of the DMA, raised the thresholds for the services covered. This position comes as no surprise as the Parliament has proposed to limit the scope in previous draft negotiating positions. The Confederation of Swedish Enterprise has objected to proposals discussed in the Parliament that would limit the scope, without clear justification, so that the regulatory framework only covers non-European operators. It is important that the legislative parties take the criticism that has been voiced seriously - that the DMA risks being perceived as anti-American or that it is being used to achieve technical sovereignty in the European Union.
Proportionate rules that promote innovation, efficiency and investment
The regulatory dialogue (article 7) is important to ensure that the measures taken are both proportionate and relevant to the different core platform services covered by the DMA. Both gatekeepers and users stand to benefit, and compliance is strengthened. Dialogue can help the DMA to achieve its objectives and provide legal certainty by providing additional specifications for the obligations with which gatekeepers must comply. It is welcome - as clarified in both the Council and the Parliament amendments - that interested third parties, business users and end users can contribute voluntarily to the regulatory dialogue.
Concerning the details of the obligations that need to be met, unclear or otherwise conflicting rules must be avoided. In the Confederation of Swedish Enterprise position paper it was pointed out that how the prohibition on combining data relates to the General Data Protection Regulation (“GDPR”) needs to be clarified. The processing of personal data should not run the risk of violating both the DMA and the GDPR. In addition, the DMA must also be clear and stringent in its many references to the GDPR and the right to process personal data with consent.
The Confederation of Swedish Enterprise also see the risk of ambiguities in the European Parliament’s amendment that proposes a ban on targeted marketing to minors. As Member States have been allowed to derogate from the age limit for processing personal data of minors that applies under the GDPR, it is unclear what age the European Parliament’s proposal would refer to.
The Confederation of Swedish Enterprise does not, however, support the European Parliament’s proposal to ban targeted marketing. There are several reasons for this; first, the European Commission’s original proposal - and for that matter the Council’s amendments - already contain restrictions on targeted marketing by prohibiting the combination of data without valid consent. Second, it has been proposed that both the DMA and the DSA should contain increased requirements for transparency of the digital services offered. The DSA also encourages the European Commission to develop EU-wide codes of conduct for online advertising. Targeted online marketing is often a cost-effective method of reaching new customers and markets, particularly for those SMEs that often rely on the marketing services provided by gatekeepers. Rules on targeted marketing already exist in other legislation; it is therefore better to consider increased transparency requirements, rather than bans, that strengthen trust in digital services and marketing efforts.
Digital Markets Act