The European Parliament made tech policy history yesterday with its vote on the Digital Markets Act (DMA), which was adopted by 588 votes (more than 98%) in favor versus only 11 against (31 abstentions). It is a mere formality that the EU Council will formalize--after the summer hiatus--a political agreement previously reached between Commission, Parliament, and Council.
The near-unanimous vote shows that the need to combat the abuse of market power by digital gatekeepers is not an ideological issue. It's simply common sense. There is a similarly encouraging trend in the United States, with ever more lawmakers from both sides of the aisle backing the Open App Markets Act (OAMA). It's not a question of left or right that conventional competition law is simply not equipped to deal with the multitude of abuses seen in connection with Apple's and Google's app stores as well as some other digital platforms.
The recitals thoughtfully explain the need for swift and decisive intervention and reflect a profound understanding of the issues involved. Traditional antitrust investigations that take years (and even more years including the appeals) provide abusers of market power with too many excuses--and take too long before they bring about change. The scope and scale of the abuse of market power by some gatekeepers is so dramatic that new laws are needed to remedy market failures. Measures that would have seemed (and actually been) way overreaching 20 years ago must now be put in place because the alternative--letting the abusers get away with the increasing returns of their misconduct--would do too much harm to innovation, competition, the economy at large, and society.
The next steps are for the European Commission to flesh out guidelines and to designate the initial set of gatekeepers to whom the regulation will apply.
The Commission will be the primary--but fortunately not the exclusive--enforcer of the DMA. It is now key that the Commission allocate the prerequisite resources for the monumental tasks ahead. The EU Parliament's DMA rapporteur, Andreas Schwab MEP (EPP-Germany), originally wanted the Commission to assign a staff of at least 180 full-time public servants to the enforcement of the DMA, and is at this stage calling for a headcount of at least 150. In a LinkedIn article, EU internal market commissioner Thierry Breton outlined how the Directorate-General for Communications Networks, Content and Technology (DG CONNECT)--one of two DGs working for him--will staff up for this purpose. The Directorate-General for Competition (DG COMP) under Executive Vice President Margrethe Vestager will also play a key role.
After the DMA has formally taken effect and the Commission has designated gatekeepers in certain markets, the new law can be enforced in national courts, provided that inconsistencies with the Commission's enforcement decisions are avoided. The Commission's decisions are, just like in traditional competition law, reviewable by the Court of Justice of the EU.
EU member states must not enact legislation that conflicts with the DMA, but they are free (if not encouraged) to pass national laws that bolster its enforcement. In Germany, some high-level suggestions for such a legislative initiative have been made by the Monopolies Commission, which is independent but appointed by the country's federal government.
Those proposals are part of a voluminous report on a number of competition issues. In light of the international importance of tackling non-contestable digital ecosystems, the Monopolies Commission published an official English translation (24 pages, PDF) of Chapter V on the potential need for further regulation. The experts welcome the DMA, saying that "the EU has indeed placed itself at the forefront of a global development."
The second paragraph of the executive summary is particularly interesting--especially its last sentence:
"The German legislator can support the enforcement of the DMA in particular with rules to facilitate private actions for injunctive relief and damages. As an accompanying regulatory measure, it could foresee administrative restitution orders according to which gatekeepers must reimburse the profits gained from DMA violations to the damaged market participants – potentially on a lump-sum basis. In addition, the introduction of a fine or criminal liability of the responsible management should be examined." (emphases in original)
Para. 22 of that section of the report elaborates on the idea of criminal liability:
"The German legislature could furthermore also provide for criminal provisions, as also exist in some instances in the law on regulated network industries (cf. sections 95a and 95b of the Energy Industry Act), and when it comes to dealing with data that are secured against unauthorised access (cf. sections 202a-202d of the Criminal Code [StGB]). The problem that arises for instance in cartel prosecution, namely that punitive fines undermine existing leniency programmes, does not apply to violations of the behavioural provisions of the DMA."
Para. 77 discussed the same idea:
"The German legislature should furthermore examine introducing a fine or criminal liability of the responsible management for violations of the behavioural obligations and transparency provisions of the DMA. As to the details, it could take as an orientation for instance section 228 subsection (2) of the Telecommunications Act and/or sections 81 et seqq. of the Competition Act (also in conjunction with sections 9 and 130 of the Act on Regulatory Offences), and where appropriate also sections 95a and 95b of the Energy Industry Act and sections 202a et seqq. of the Criminal Code."
It's worth noting that under German law, patent infringement can also give rise to criminal liability, though all the patent cases I've seen were civil lawsuits. Just the possibility--even if only a remote one--of misconduct having consequences under criminal law can serve as a strong deterrent.
With or without that proposal getting traction, German I would expect the EU's largest member state to also become the most important jurisdiction for DMA enforcement through private litigation (just like most European patent infringement actions are brought in Germany). Among German courts, Munich may again play a key role. I warmly recommend filing cases with the Munich I Regional Court, where Presiding Judge Tobias Pichlmaier of the antitrust-specialized 37th Civil Chamber (the division to which I would expect DMA complaints to be assigned) has demonstrated in his years on the bench of the court's patent-specialized division his analytical skills in a technological context. He's not going to be gaslighted by the Apples and Googles of the world with "security" and other pretexts. It means nothing with a view to DMA enforcement that Judge Pichlmaier often took antitrust-minimalist positions on the enforcement of standard-essential patents, a complicated topic at the intersection of patent and antitrust law that is not representative of other areas of competition law. Just this year his understanding of EU law was validated by a European Court of Justice ruling that agreed with his take on preliminary patent injunctions.
I will follow the implementation and enforcement of the DMA with great interest. The Commission and the EU's legislative institutions have done an amazing job on that piece of legislation. But a lot of hard work is still ahead of the Commission--and the courts of law.
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