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The Digital Markets Act – the new regime for big tech

The European Parliament and the European Council have reached a provisional agreement on the proposed Digital Markets Act (“DMA”) which is stipulated to come into force from 2023 onwards.

The DMA is targeted towards large tech firms coined as “gatekeepers” and is focused on creating the digital sector more competitive and fairer amongst both consumers and other businesses. Antitrust chief Margrethe Vestager stated, “This regulation, together with strong competition law enforcement, will bring fairer conditions to consumers and businesses for many digital services across the EU.”

What constitutes a gatekeeper under the DMA?

Both the European Parliament and the European Council have agreed that in order for a tech firm to be classed as gatekeeper, it needs to pass several requirements:

  • A firm needs to have had an annual turnover of €7.5 Billion within the European Union in the past three years or, have a market valuation of at least €75 billion.
  • It needs to have a least 45 million monthly end users and at least 10,000 business users established within the European Union.
  • The firm requires at least one core platform (Such as marketplaces, search engines, social networking) across at least three Member States.

Notably, Small and Medium Sized Enterprises are exempted from being classed as a gatekeeper apart for exceptional scenarios, in line with proportionality.

Who enforces the DMA?

The European Commission shall be the sole enforcer for the DMA whilst an advisory committee will be established to facilitate this endeavour.

On a national level, Member States shall be able to vest power within national antitrust authorities to communicate with the European Commission.

What fines and penalties may be imposed on gatekeepers under the DMA?

The maximum fine for an infraction in 10% of the firm’s total worldwide turnover. In the case of recidivism, the fine of 20% of the firm’s total worldwide turnover may be imposed. If an infraction occurs more than 3 times in 8 years, the European Commission can open an investigation and impose both structural and behavioural remedies.

This article was written by Dr Ian Gauci and Legal Trainee J.J. Galea.

For more information on digital services, information society and related areas please contact Dr Ian Gauci.

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.