The parallel production of the draft Digital Markets Act (“DMA”) and the draft Digital Services Act (“DSA”), which are presented as a legislative package to regulate digital platforms, raises questions of consistency. In fact, they are based on two different regulatory approaches and sometimes do not use the same definitions to describe the same operators.
The novel construction of the draft DMA, somewhere between sector-based regulation and competition law, raises questions as to its legitimacy and effectiveness.
As they stand, the provisions appear in many respects to be at odds with the construction of European Union law, and could therefore create a precedent that undermines the principle of legal security.
While they are presented on the basis of the single market, namely as the harmonisation of legislation to avoid compartmentalisation, the provisions appear to address a different problem, that of competition law, namely the conduct of private companies.
In this respect, they constitute a reversal of perspective in terms of competition law. The regulators do not start with a market failure, and then propose a remedy to resolve that failure. They presuppose that the power of the actor concerned – primarily defined by its size – constitutes a market failure in itself. Thus, the provisions introduce a system of presumption of harm to the functioning of the markets.
Somewhat vague criteria to describe the digital platforms concerned (“gatekeepers”) are deduced from general remedies; this undermines equality before the law.
Furthermore, the provisions introduce review mechanisms which leave considerable room for interpretation and consequently give operators little legal stability.
The provisions also raise questions as to the separation of powers at the European Union institutions level, and as to the possible confusion of roles which may arise in the legal process when one and the same body, in this case the European Commission, defines the rules, investigates their potential breach, determines the sanction and, finally, adjusts that sanction.
Also, the provisions scarcely mention coordination with national competition authorities, a network approach, or issues relating to the overlapping or coverage of the various European provisions encompassing digital services.
The scope of the procedural guarantees also appears to be particularly narrow. This not only raises questions as to the respect for the right of businesses to defend themselves, but also as to the principles of respect for property rights and the protection of investments, which appear to be weakened.
From an economic point of view, understanding the business models requires greater precision than that which appears to be offered by these provisions as they stand. Many of the envisaged remedies will result in a substantial alteration of the business models of the digital platforms concerned.
Finally, since the core regulation in the draft DMA is based on thresholds and an ex ante approach, it carries with it a number of risks in terms of the dynamics of European start-ups, which should be anticipated.