Back to the (recent) past? The evolution of the EU's Digital Markets Act

The European Commission’s publication of its Digital Markets Act proposal to introduce new black and white rules for so-called digital “gatekeepers” made a big splash at the end of last year. The act would transform the operation of the largest digital platforms operating in the EU as well as setting a regulatory precedent beyond its borders.

Publication of the act was, though, just the first step in its legislative journey. A lively debate on its final form has now started. A recent report on the implications of digital platforms commissioned by the European Parliament as well as the (initial) views of stakeholders in the legislative process – including the Internal Market committee responsible for shepherding the Act through the European Parliament – shed light on the key issues under debate.

Three already jump out:

Greater regulatory flexibility: First, there are significant calls to move away from the Commission’s black and white rules towards a more tailored and flexible set of powers for the Commission. This would afford the Commission greater discretion on when and how to apply the powers under the act. The calls bring to mind features of the Commission’s proposals in Summer 2020 envisaging a market investigation tool to enable targeted intervention in digital markets. 

Stronger merger control rules: Second, there are calls for significantly broader merger control powers for transactions involving gatekeepers. In particular, the report commissioned by the European Parliament contended that the act did not go far enough in requiring gatekeepers to “inform” the Commission of all mergers; calling for sweeping new powers to enable the Commission to intervene more broadly to address issues such as "data monopolies" and "privacy" as well as relaxing the burden of proof for such transactions.

Concurrent powers for national regulators: Third, there have been a number of calls, including from national regulators themselves, for concurrent powers so that national regulators are entitled to enforce the rules, or similar rules, at a national level. A suggestion which raises the prospect of greater intervention rates if national regulators seek to “share the load” between themselves and the Commission.

In short, while there are undoubtedly twists to come, the Digital Markets Act is increasingly looking likely to give the Commission greater discretion and powers than originally envisaged as well as conferring significant parallel powers on national competition regulators.