Digital Markets Act

Regulation on contestable and fair markets in the digital sector (Digital Markets Act) 

On 15 December 2020, the European Commission submitted a proposal for a new regulation on the digital market. Its objective is to create uniform legal framework to prevent unfair trading practices that companies and consumers encounter when using the services of the largest platform companies operating as so-called gatekeepers in the single market of the EU. Ensuring the competitiveness and fairness of digital services in the single market can promote innovation, high-quality digital products and services, reasonable and competitive prices and users’ freedom of choice.

Platform companies within the scope of the digital market regulation 

The prohibitions and obligations laid down in the regulation would apply only to the largest companies that provide ‘core platform services’, as defined in the regulation, in the EU and that have specifically been designated as gatekeepers under the regulation. Core platform services include, for example, search engines, operating systems, social networking services and various online intermediation services. Companies providing core platform services could be designated as gatekeepers if they 1) have a significant impact on the internal market, 2) offer a core platform service that serves as an important gateway for business users to reach end users, and 3) enjoy or are expected to enjoy an entrenched and durable position in the market. 

The proposed regulation defines specific thresholds, based on which companies would be presumed to be gatekeepers. However, companies may seek to rebut such presumptions.

Obligations of a gatekeeper

The Digital Markets Act would impose certain obligations and prohibitions on gatekeepers, which they would have to comply with in their daily activities to ensure a fair and open digital market, for example:

  • Gatekeepers must allow users to uninstall any preinstalled software applications.
  • Gatekeepers must allow the installation and effective use of third party software applications or software application stores in the gatekeeper’s own operating system.
  • Gatekeepers must provide effective portability of data generated through the activity of an end user.  
  • Gatekeepers must refrain from combining personal data sourced from core platform services with personal data from any other services offered by the gatekeeper or with personal data from third-party services unless the person whose personal data is concerned consents to it. 
  • Gatekeepers must refrain from treating more favourably their own ranking services and products compared to similar third-party services or products. 

Enforcement and sanctions for violating the regulation 

The European Commission would be responsible for enforcing the regulation. The regulation would authorise the Commission to conduct market investigations to supervise compliance with the obligations and to ensure the regulation remains up-to-date. The Commission would also have the power to request information, conduct inspections and interview any natural or legal person which consents to being interviewed. If a gatekeeper has systematically infringed the obligations laid down in the regulation and maintained, strengthened or expanded its position as a gatekeeper, behavioural or structural remedies may be imposed on it after a market investigation. They must be proportionate to the infringement committed and necessary to ensure compliance with the obligations laid down in the regulation. A fine, which may not exceed 10% of the company’s total worldwide turnover, could also be imposed on a gatekeeper. In certain situations, the Commission could also impose a periodic penalty payment that does not exceed 5% of the company’s average daily turnover for the previous financial year. A periodic penalty payment could also be imposed on a company other than a gatekeeper. 

Negotiations

The Council preparatory body on Competitiveness and Growth and the European Parliament’s Committee on Internal Market and Consumer Protection are currently discussing the proposed regulation. Once the Council and the European Parliament have established their positions, they will start tripartite negotiations with the Commission to reach an agreement on the initial text of the regulation. After the tripartite negotiations, each body must approve the text of the regulation.

Finland supports the objectives of the proposal and considers it justified, as it is not possible to address effectively the problems faced by businesses and consumers by means of the current regulation. However, the obligations on gatekeepers must be justified, proportionate and clear. Unnecessary administrative burden is to be avoided. More information on the proposed regulation and Finland’s positions is available in the links below.

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Inquiries: Hannele Timonen ja Iiro Ihanamäki