HomeInsightsEuropean Parliament Committee adopts position on Digital Markets Act proposal

Contact

+44 (0)20 7612 9612
info@wiggin.co.uk

The Internal Market and Consumer Protection Committee has adopted its position on the Digital Markets Act (DMA) proposal, which provides for new rules for digital companies with “gatekeeper” status.

The proposed Regulation will apply to large companies providing “core platform services”, which are perceived as most prone to unfair practices, if they meet the criteria for “gatekeepers”. These include online intermediation services, social networks, search engines, operating systems, online advertising services, cloud computing, and video-sharing services. The Committee has now also added in web browsers, virtual assistants and connected TV into the scope of the DMA.

The Committee also tweaked the thresholds for a company to fall under the scope of the DMA to €8 billion in annual turnover in the European Economic Area (EEA) and a market capitalisation of €80 billion.

To qualify as a “gatekeeper”, companies would also need to provide a core platform service in at least three EU countries and have at least 45 million monthly end users, as well as more than 10,000 business users (the Committee added in an annex clarifying how these indicators should be measured). These thresholds do not prevent the Commission from designating other companies as gatekeepers if they meet certain conditions.

Under the new Regulation, “gatekeepers” will have to refrain from imposing unfair conditions on businesses and consumers. The Committee also included additional requirements on the use of data for targeted or micro-targeted advertising and the interoperability of services, e.g., number-independent interpersonal communication services and social network services. The text of the Regulation now states that a “gatekeeper” shall, “for its own commercial purposes, and the placement of third-party advertising in its own services, refrain from combining personal data for the purpose of delivering targeted or micro-targeted advertising”, except if there is a “clear, explicit, renewed, informed consent”, in line with the GDPR. In particular, the personal data of minors shall not be processed for commercial purposes, such as direct marketing, profiling and behaviourally targeted advertising.

The Committee agreed to empower the Commission to impose “structural or behavioural remedies” where “gatekeepers” have engaged in systematic non-compliance. The approved text foreshadows the option for the Commission to restrict “gatekeepers” from making acquisitions in certain areas in order to remedy or prevent further damage to the internal market. “Gatekeepers” would also be obliged to inform the Commission of any intended acquisition.

The Committee also proposed the creation of a “European High-Level Group of Digital Regulators” to facilitate cooperation and coordination between the Commission and Member States when it comes to enforcement. The Committee clarified the role of national competition authorities, while keeping the enforcement of the DMA in the hands of the Commission.

The Committee also said that the DMA should ensure adequate arrangements to enable whistle blowers to alert competent authorities to actual or potential infringements of the Regulation and to protect them from retaliation.

If a “gatekeeper” does not comply with the rules, the Commission can impose fines of “not less than 4% and not exceeding 20%” of its total worldwide turnover in the preceding financial year.

The DMA is due to be voted on in plenary in December 2021. The approved text will then become Parliament’s mandate for negotiations with EU governments, which are intended to commence under the French presidency of the Council in the first semester of 2022. The Digital Services Act, which aims to regulate online platforms, dealing with, among other issues, illegal content and algorithms, will be voted on by the Committee at a future meeting. To read the EU Parliament’s press release in full, click here.