05 October 2022

Bruegel's Carugati: How the European Union can best apply the Digital Markets Act

Big tech will soon have to comply with a new competition tool – the European Union’s Digital Markets Act (DMA). This law, which will apply from spring 2023, imposes an ex-ante list of dos and don’ts on an estimated 13 ‘gatekeepers’, or online companies that both business and private users find it hard to avoid. The aim is to ensure greater competition in some digital markets. The DMA will complement antitrust laws, under which an ex-post approach is taken to tackling competition concerns (after a firm’s anti-competition practice has taken place). This antitrust approach is too slow and case-specific to deal with anti-competitive behaviour in the digital sector. The DMA implies that firms must prevent anti-competitive practices from occurring in the first place.

The coexistence of the DMA and antitrust law creates an opportunity but also potential complications. The opportunity is that the DMA and antitrust laws will support each other. The DMA should reduce the need for future antitrust enforcement cases and will help fine-tune antitrust remedies that were unsuccessful in restoring competition. Antitrust laws will help the EU competition authority and DMA enforcer, the European Commission, to identify new problematic practices that will fall under the DMA.

But the risk is that the coexistence creates inefficiency and inconsistency. Inefficiency could arise from the Commission's limited resources. For now, it has only 22 people dealing with digital antitrust issues, including nine exclusively for the DMA. The Commission must allocate its workforce efficiently so it is not overwhelmed by enforcing both laws simultaneously. Inconsistency could arise from the differences between the DMA and antitrust laws in terms of remedies. The DMA imposes general remedies, whereas antitrust laws impose case-specific remedies in case of an infringement. Thus, DMA remedies might be insufficient compared to some antitrust remedies. The European Commission must seek to best exploit the opportunities arising from the coexistence of antitrust enforcement and the DMA.

Digital antitrust cases against potential gatekeepers

The Commission and competition authorities in the 27 EU countries are already very active against the estimated 13 potential gatekeepers, initiating at least 51 antitrust cases so far. Most have been opened in the last three years, a period that coincides with market inquiries in Australia, Europe, Germany, the United Kingdom and the United States, which found competition issues in some digital markets.

Figure 1 shows that the European Commission has pursued the most cases, with 15 past and ongoing cases. This is unsurprising. The digital giants often follow the same practices globally, making the Commission the de-facto EU authority to deal with competition issues because they often concern all EU countries. Nevertheless, EU countries apply antitrust laws in their own jurisdictions and have opened overall more than twice the number of Commission cases. Germany (11 cases), Italy (9) and France (8) are the most active national competition authorities. Figure 2 shows the cases opened by year and their status.

Of the 51 cases, 29 will be ongoing before a competition authority or a court when the DMA enters into force in November 2022 (the DMA will then apply six months later). Figure 3 shows that of 29 ongoing cases, 18 concern alleged antitrust violations (when a firm abuses its dominant position in the market). The other cases are: five cases under the German DMA-like competition law section 19a (a law requiring some digital firms to comply with a list of banned behaviours); five alleged cartel cases (when a firm coordinates its behaviour with at least one other firm); and one case involving both cartel allegations and abuse of economic dependence (when a firm abuses a situation in which its business partners are dependent on it). Thus, most ongoing cases (23) fall into policy areas covered by the DMA, which is silent on cartels and abuse of economic dependence...

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