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Archive for February 23rd, 2021

NEW PAPER | The Draft Digital Markets Act: a legal and institutional analysis

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I have just uploaded on ssrn (see here), a paper devoted to the Draft Digital Markets Act. I thought it was the most effective way to share my thoughts on it (including with my students) and to start a conversation about regulatory reform. Needless to say, your comments would be most welcome.

The first goal of the paper is to provide an overview of the Draft DMA and to compare it with EU competition law. A cursory overview of the proposal shows that it is different in several respects from Articles 101 and 102 TFEU. The case-by-case, context-specific evaluation that is characteristic of EU competition law would be replaced by a regime setting out a number of obligations imposed on firms categorised as gatekeepers. The Draft DMA places gatekeepers in a position that is comparable to that in which undertakings are following a finding of infringement under EU competition law.

I thought it would also be a good idea to compare the Draft DMA and the EU telecoms regime, if only because the latter is less well-known. I note in the paper that they are more different than they seem. The EU telecoms regime was conceived as a temporary instrument that would create the conditions in which electronic communications markets would be subject to competition law alone. What is more, it is expressly biased against intervention: national authorities would have to show that intervention would be necessary to promote effective competition in a market that is structurally unsuited for it.

The Draft DMA, by contrast, is not conceived as a temporary tool. It is not biased, either, against intervention. The most crucial difference between the two regimes, in any event, is the allocation of the burden of intervention. In the EU telecoms regime, it is for authorities to show that intervention is necessary and proportionate; the Draft DMA, on the other hand, places the burden upon the firm, which has to define the way in which it intends to comply with the obligations set out in Article 5 and (in particular) 6.

Several consequences follow from these choices. First, the Commission would enjoy substantial leeway to define the scope of the regime and the obligations to which firms are subject. The Draft DMA is based on the premise that the legal concepts used in it are autonomous from those developed in competition law over the years. As a result, it is not immediately obvious to see how administrative action would be effectively constrained and, if so, where the constraints would originate. Suffice it to take a look at the definition of gatekeeper under Article 3(1) of the proposed regime.

The final question relates to judicial review. In principle, there should be little doubt that the categorisation of a firm as a gatekeeper or the definition of the proactive obligations set out in Article 6 would be subject to scrutiny by the EU courts. This said, the design of the Draft DMA raises three fascinating issues. In the first place, the proposed legislation appears to be crafted in a way that disincentivises litigation, thereby suggesting that challenges would be less frequent than under EU competition law or the EU telecoms regime. In the second place, one could argue that meaningful constraints to administrative action follow from the right to effective judicial review. An additional (no less fascinating) issue is whether, as a matter of law, the objectives of fairness and contestability can be defined independently of primary law (and the system of undistorted competition that is a part thereof).

There is much to discuss about this major landmark and, as I said above, your input would be much appreciated. Hopefully we will find ways to share ideas about this and other major developments.

Written by Pablo Ibanez Colomo

23 February 2021 at 7:26 pm

Posted in Uncategorized