Impact of the DMA on the Commercial Dealings by and with Platforms
The Digital Markets Act (DMA) was eventually approved by the Council of the European Union on 18 July 2022. Most of its provisions will be applicable six months after its entry into force1 (some provisions will enter into force earlier or on 25 June 2023).
The DMA aims at regulating the business activities of "gatekeepers", i.e., large platforms the services of which are essential for businesses and consumers, and for which the European legislator has expressed concerns that users could be in some dependency and some concerns regarding the competitive landscape.
Definition of gatekeepers
Three criteria must be met for a company to be characterized as a gatekeeper:
- To have a significant impact on the internal market; A company is deemed to meet this condition when it:
- Provides one or more core platform services in at least three Member States. Core platform services include online intermediation services, search engines, social networking services, video sharing platform services, virtual assistants, cloud services, online advertising services, etc.; and
- Has achieved, during the last three years, an annual turnover of more than EUR7.5 billion within the EU or has reached a stock market valuation of at least EUR75 billion during the last financial year.
- To provide an essential platform service that is an important access point for business users to reach end-users; A company is deemed to meet this condition when:
- Its core services have at least 45 million monthly active end-users within the EU; and
- 10,000 user companies per year established in the EU.
- To have an entrenched and durable position in its operations or to be likely to have such a position in a near future.
A company meeting the above thresholds must notify the European Commission within two months of the entry into force of the DMA. A company that does not meet the above thresholds may still be characterized as such by the European Commission following an investigation.
Obligations of gatekeepers in order to “restore balance in the Contractual Relationship with Users”
New obligations are imposed on gatekeepers in order to allegedly restore balance in their contractual relations with users (companies and consumers) and avoid any unfair behavior.
These obligations include in particular:
- Allowing business users to:
- Offer their products and services through other platforms or their own website and at different prices or terms and conditions;
- Promote their offers to end-users acquired through the platform and enter into contracts with these end-users, independently from the gatekeeper.
- Allowing end-users to:
- Remove any pre-installed software applications on the gatekeeper's service;
- Install third-party applications or use the software application by means other than the gatekeeper services.
In addition, the DMA prohibits the gatekeeper from establishing preferential treatment for their own products.
In the event of non-compliance with the obligations set forth in the DMA, in addition to certain specific penalties, the gatekeeper risks a fine of up to 10% of its total worldwide turnover and up to 20% in the event of a repeated offence. It may also be subject to penalty payments of up to 5% of its total daily worldwide turnover.
In case of repeated violations, the European Commission may impose any behavioral or structural remedies necessary to ensure compliance with the DMA (e.g., it may require the gatekeeper to give away a part of its business).
1 The text will enter into force twenty days after its publication date, which will happen once the text has been signed by the presidents of the European Parliament and the European Union Council.