The European Digital Markets Act: A Revolution Grounded on Traditions

Abstract

The last three years have seen a legislative acceleration in tech regulation in Europe and in December 2020, the European Commission tabled a very significant Digital Markets Act (DMA) proposal to increase market contestability and fairness in the digital economy. This paper aims to decipher those policy choices, and show that they are often in line with EU regulatory tradition. At the same time, we will propose improvements to better reap the benefits (or minimize the downsides) of those policy choices. The main points made in the paper are the following. First, the proposed DMA is a lost child of competition law and sits in a difficult epistemological position. On the one hand, it does not rest on a set of reasonably well articulated policy goals from which concrete implementation measures can be deducted, as is the case with most sector-specific regulation. On the other hand, it does not either benefit from experience and practice in individual cases, as is the case with most competition law instruments. Second, the proposed DMA aims to support sustaining innovation by the users of Core Platform Services, innovation by frontal competitors wanting to displace the existing gatekeepers with existing digital services and disruptive innovation by newcomers wanting to displace gatekeepers with new digital services. Given the deep uncertainty of innovation, it is a wise policy choice to keep all innovation paths open. Third, it is also appropriate to favour behavioural remedies over structural remedies in the proposed DMA. Yet the proposal could have looked beyond the traditional remedial catalogue of competition law and embraced two types of remedies more typical of regulation: interoperability and interconnection (to a greater extent than in the proposal) as well as governance remedies inspired by standardization policy. Four, the proposed DMA relies on rigid rules which are easier to administrate than flexible standards. This choice is understandable since the DMA will have to be enforced against the largest firms worldwide. However, the DMA will also be applied in sectors which are evolving very quickly. Hence rules alone will not suffice and will need to be complemented by standards in order to increase regulatory resilience. And finally, the proposal is pathbreaking in providing for centralised enforcement at EU level. Here as well, this is a sensible option, as the regulated gatekeepers are few and hold a global reach. However, the Commission could usefully involve national authorities (in charge of competition law or regulation) to support its actions, when those authorities have a comparative advantage such as complaint handling or compliance monitoring.