SMEs and their market access on online platforms – are the DMA and DSA the solution?

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SMEs and their market access on online platforms – are the DMA and DSA the solution?

The role of the new proposals in safeguarding market access for SMEs on digital platforms

Lucia Matyášová lucia.matyasova@gmail.com

student number: 13913069

master track: LLM European Private Law supervisor: Prof. dr. C. (Chantal) Mak

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Table of Contents

Abstract ... 3

Introduction ... 4

Chapter 1 – The Platform Problem ... 6

Chapter 1.1 – The Definition of the Digital Platform ... 8

Chapter 1.2 – The SMEs ... 8

Chapter 2 – The Normative Framework... 9

Chapter 3 – The Current Regulatory Framework for Platforms ... 10

Chapter 3.1 – EU Antitrust Rules ... 10

Chapter 3.1.1 – Article 102 TFEU ... 11

Chapter 3.1.2 Article 101 TFEU ... 13

Chapter 3.2 – The Platform-to-Business Regulation ... 15

Chapter 3.3 – Separate National Initiatives ... 17

Chapter 4 – The New Proposals ... 19

Chapter 4.1 – The Digital Markets Act ... 19

Chapter 4.1.1 – The Objectives of the DMA ... 20

Chapter 4.1.2. – The Content of the DMA ... 20

Chapter 4.1.3 – Will the DMA Contribute to a Better Access to Market by SMEs? ... 22

Chapter 4.2 – The Digital Services Act ... 28

Chapter 4.2.1 – The Objectives of the DSA ... 29

Chapter 4.2.2 – The Content of the DSA ... 30

Chapter 4.2.3 – Will the DSA Contribute to a Better Access to Market by SMEs? ... 30

Conclusion ... 35

Bibliography ... 37

Primary Sources ... 37

Cases & Decisions ... 37

Textbooks ... 37

Academic Articles ... 38

European Commission Documents ... 39

Other ... 40

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Abstract

This paper analyses how the Digital Markets Act and the Digital Services Act will impact access to market by SMEs in online platform environments. This topic is relevant because in the last decade, online platforms have established themselves as gatekeepers to the digital market due to their strong market and bargaining powers. One of the main goals of the proposals is to regulate this situation.

Throughout this paper, a mixture of analytical and evaluative approaches is utilized to assess the DMA’s and DSA’s role in safeguarding market access for SMEs. The normative

framework for the thesis is the concept of “access justice” developed by Hans Micklitz. The current regulatory framework regarding digital platforms is described and evaluated and subsequently, the capability of the new proposals to address the shortcomings is analysed.

The conclusion reached in this paper is that, whereas both proposals contribute to enhancing access to market by SMEs on digital platforms, the Digital Services Act also contains provisions that are detrimental to access to market by SMEs. However, as the aim of the proposal is not solely to safeguard interests of SMEs, this does not render the proposal ineffective. The concept of “access justice” encompasses the interests of the whole European society, not only of SMEs.

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Introduction

Platforms offer major efficiencies to small and medium sized businesses in accessing global consumer markets. Online marketplaces, such as Amazon or eBay, allow almost anyone to start or maintain a business without the need to invest large sums into online infrastructure.

Search engines enable businesses to climb up the rankings and reach new customers, provided they use clever keywords. Social networks allow businesses to reach millions of potential customers through targeted advertising. For many SMEs, digital platforms have become the main interface for accessing markets and customers, as they provide the necessary virtual infrastructure for business to function in the platform economy.1

Online platforms provide benefits to SMEs by enabling them to reach a wider audience than they could have reached otherwise. Digital platforms also make expansion easier, because they gather audiences from all over the EU and beyond, they do not know borders and are rarely limited to one state. In the absence of platforms which act as intermediaries between business users and consumers, SMEs in particular would not have had equally effective opportunities to reach consumers.2 Even though the position of platforms and businesses is interdependent, digital platforms possess stronger bargaining power – they can influence the positions of listings within their interfaces, they can supply to and withhold information from SMEs as they see fit, they have the power to suspend or ban accounts, they can delete ads, listings or offers. These platforms have effectively become the gatekeepers to the European digital market.

Regulating platforms is notoriously difficult. Attempts to regulate the digital market are a bit like alien life: It’s probably possible, but no one’s actually seen it.3 Technology is evolving fast, so any new regulation needs to be flexible and adaptable. In 2020, the European Commission launched a pioneering initiative to regulate digital platforms, which consists of two parts – the Digital Markets Act and the Digital Services Act.

1 Commission, ‘Inception impact assessment – Fairness in platform-to-business relations’ Ref.

Ares(2017)5222469, p. 1.

2 Inge Graef, ‘Differentiated Treatment in Platform-to-Business Relations: EU Competition Law and Economic Dependence’ Yearbook of European Law (2019) p. 1.

3 Seb Joseph, ‘WTF is the Digital Markets Act?’ (6 April 2022) < https://digiday.com/marketing/wtf-is-the- digital-markets-act/ > accessed May 11 2022.

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In this paper, I am going to discuss to what extent do the Digital Markets Act (DMA) and the Digital Services Act (DSA) sufficiently safeguard access to market for SMEs in online platform environments within the normative framework of “access justice”. Even though the two new instruments are not aimed specifically at SMEs, as opposed to e.g., the Platform-to- Business Regulation4, I would nevertheless expect them to have a significant effect on SMEs, as these businesses are users of digital platforms and as stated above, many SMEs depend on platforms to run their businesses. Therefore, any attempt to regulate the platform environment will necessarily impact SMEs as well. This thesis will only consider SMEs as users of

platforms. The impact of the DSA and the DMA on SMEs that are themselves platforms lies outside of the scope of this thesis.

Methodology

I utilize a mixture of analytical and evaluative approaches throughout this thesis. An analytical approach is used to determine what are the current problems SMEs are facing on digital platforms, what is the current state of law and what provisions do the Digital Markets Act and the Digital Services Act contain. I use evaluative approach to identify the

shortcomings of the current legal instruments and approach and to evaluate the effects the two proposals are likely to have on the access to market by SMEs.

The normative benchmark used in this thesis to evaluate access to market is the “access justice” framework, as proposed by Hans Micklitz. The analysis is qualitative. No quantitative data is used for assessment as the normative framework is purely theoretical.

In Chapter 1, I introduce and analyse the problem that the gatekeeping platforms pose for SMEs. In Chapter 2, I introduce the normative framework for this thesis – the concept of

“access justice”. In Chapter 3, I describe the current regulatory framework regarding

platforms (EU competition law, the Platform-to-Business Regulation and national laws) and the ability of the current regulatory framework to react to novel challenges post by

gatekeeping platforms. In Chapter 4, the DMA and the DSA are introduced, and their content is described and analysed with reference to access to market by SMEs within the normative framework of “access justice”.

4 Regulation (EU) 2019/1150

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The terms “digital platform”, “online platform”, “platform” and “online intermediation service” are used interchangeably.

Table of abbreviations:

“DMA” Digital Markets Act

“DSA” Digital Services Act

“P2B Regulation” Regulation 2019/1150 on promoting fairness and transparency for business users of online intermediation services

“SME” Small and medium sized enterprise

“Commission” European Commission

“TFEU” Treaty on the Functioning of the European Union

Chapter 1 – The Platform Problem

This thesis is concerned with the problem of large tech firms, such as Facebook (now Meta), Google or Amazon, that through their policies or website functionality establish themselves as gatekeepers to the entry of SMEs to the digital market. The Commission asserts that there is widespread and compelling evidence that certain platforms have become vital gateways for businesses and end-users, and that platforms acting as gatekeepers can impose unfair conditions on businesses that depend on them, as well as engage in practices which could exclude potential competitors from the market.5 These concerns spurred Commission to action. In 2020, Regulation 2019/1150 on promoting fairness and transparency for business users of online intermediation services (the “P2B Regulation”) came into force. A proposal for a Regulation on Contestable and Fair Markets in the Digital Sector (the “DMA”) and a proposal for a Regulation on a Single Market for Digital Services (the “DSA”) are in the process of adoption. The primary topic of this thesis will be the DMA and the DSA (jointly

5 Commission, ‘Digital Markets Act – Impact Assessment support study. Executive Summary and Synthesis Report.’ 2020 p. 7.

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“the proposals”), but the P2B Regulation and marginally also national initiatives aimed at curbing the power of digital platforms will be discussed.

Back in 2015, the Commission noted that “the market power of some online platforms potentially raises concerns, particularly in relation to the most powerful platforms…”.6 In 2016, the Commission identified a number of concerns about unfair trading practices on online platforms. The most relevant ones for the purposes of this thesis are the following:7

1. Platforms imposing unfair terms in access to user bases and databases;

2. Platforms refusing market access or unilaterally modifying conditions for market access;

3. Platforms both facilitate market access and at the same time compete with suppliers, which could lead to unfair promotion of their own services;

Various source name further potentially unfair practices of platforms that impede access to market, namely:

1. Delisting of products or services based on not meeting minimum performance targets of the platform;8

2. Causing difficulty for SMEs to leave the platform by refusing to provide sales and customer data after termination;9

3. Having the right to terminate a contract with a SME without cause and with short notice;10

4. Lack of transparency regarding platform’s practices, notably concerning search, ranking and advertising placements;11

The DMA and the DSA could be the solution to the aforementioned problems.

6 Commission, ‘Communication from the Commission of 6 May 2015, A Digital Single Market Strategy for Europe’ COM (2015) 192, p. 9.

7 Commission, ‘Communication from the Commission of 25 May 2016, Online Platforms and the Digital Single Market: Opportunities and Challenges for Europe’ COM (2016) 288, p. 12.

8 Commission, ‘Business-to-business relations in the online platform environment: final report’ FWC ENTR/300/PP/2013/FC-WIFO, p. xii.

9 Commission, ‘Study on contractual relationships between online platforms and their professional users’ FWC JUST/2015/PR/01/0003/Lot1-02, p. 72.

10 Ibid., p. 74.

11 Commission, ‘Inception impact assessment – Fairness in platform-to-business relations’ Ref.

Ares(2017)5222469, p. 3.

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Chapter 1.1 – The Definition of the Digital Platform

Another key concept in this paper is the digital platform. The European definition of online platform is harder to track down that it might first seem. Only the draft DSA offers a

definition of online platform specifically - Article 2(h) of the DSA defines online platform as a “provider of a hosting service which, at the request of a recipient of the service, stores and disseminates to the public information, unless that activity is minor and purely ancillary feature of another service, and for objective and technical reasons cannot be used without that other service, and the integration of the feature into the other service is not a means to

circumvent the applicability of this Regulation”. The DMA in Article 2(2) uses the term “core platform service”, which includes online intermediation services, search engines, social networks and other types of platforms. Lastly, the P2B Regulation in Article 2(2) lays down the three requirements that a service needs to meet in order to qualify as a “online

intermediation service”. Interestingly, the P2B Regulation distinguishes between online intermediation services (which covers e-commerce marketplaces, app stores and social networks), and online search engines. The latter are only required to comply with some of the provisions laid down by the Regulation.12

This paper focuses on access to market by SMEs on online platforms in the most traditional sense – social networks, online marketplaces and search engines will be considered.

Therefore, it is enough to establish that the gatekeeper platforms certainly fall within the scope of each definition.

Chapter 1.2 – The SMEs

The term “SMEs” is in this thesis to be understood as “enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million”13. These enterprises account for 99% of all businesses within the EU.14

12 Konstantina Bania, ‘The P2B Regulation is not consigned to oblivion: ACM launches market study, reminding us that transparency in the platform economy is important’ The Platform Law Blog (3 November 2021) <

https://theplatformlaw.blog/2021/11/03/the-p2b-regulation-is-not-consigned-to-oblivion-acm-launches-market- study-reminding-us-that-transparency-in-the-platform-economy-is-important/> accessed May 11 2022.

13 Council Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium- sized enterprises [2003], Art. 2(1).

14 ‘SME Definition’ <https://ec.europa.eu/growth/smes/sme-definition_nl> accessed April 16 2022.

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Chapter 2 – The Normative Framework

The normative framework for this thesis is the concept of “access justice”, as developed by Hans-W Micklitz in his landmark book titled “The Politics of Justice in European Private Law”. This framework was chosen because it is specific and unique to European private law and describes the problem of realistic access to market by weaker parties.

The definition Micklitz provides for the concept of access justice is the following: “Access justice materialises the theoretical chance of EU citizens to participate in the market so as to make it a realistic opportunity. Access justice lays down procedural requirements for proper enforcement of EU private law. Access justice provides for an institutional design that allows for the participation of EU citizens in civil society. Access justice distributes and redistributes opportunities”.15

Micklitz asserts that “access justice” is both descriptive and normative.16 It is normative in that it prescribes what is to be expected from the EU as a minimum standard.17 In its

normative understanding, “access justice” is bound to the completion of three requirements:

1. Breaking down barriers which limit participation and access – all market participants must have a fair and realistic chance to enter the market

2. Strengthening the position of workers and consumers to enforce their rights in a multi- governance legal order – rights are useless when they cannot be enforced

3. Establishing an institutional design which can cope with the move from societal protection laws to the laws on the labour and consumer market18

For the purposes of this thesis, the first requirement is the most relevant. In his work, Micklitz focuses predominantly on the position of workers, consumers and other weaker parties on the market. Micklitz further states that the “EU rules… should be understood as a means to guarantee the weaker party fair and non-discriminatory access to market and to society”.19 In the context of digital platforms, SMEs are the weaker party, as platforms can limit the realistic opportunity of SMEs to take part in the market. This can result in some enterprises being discriminated against based on their size, country of incorporation or types of products and services they offer, among other things. Moreover, platforms can give preferential treatment

15 Hans Micklitz, The Politics of Justice in European Private Law (Cambridge University Press 2018) 2.

16 Ibid., 24.

17 Ibid., 390.

18 Ibid.., 391.

19 Ibid., 326.

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to some parties based on the needs of the platform itself, for example if a platform desires to attract more users from a certain target group, it could advertise the enterprises that sell the type of product that is desired by that respective group.

Digital platforms also have the tendency to give preference to their own services or products, as can be well illustrated by the Google Shopping decision.20 In this decision, the European Commission issued a fine to Google for promoting its own comparison shopping service in the general search results. In 2021, the General Court upheld the fine imposed by the

Commission, confirming Google’s anti-competitive behaviour.21 In the aforementioned ways, platforms are able to limit the effective access to market by SMEs, which can be thus

characterised as the weaker party.

In this thesis, I look at access to market of SMEs in platform environments through the lens of the concept of “access justice”. In my deliberations, I consider both the scenario of platforms (and the people behind them) consciously limiting access to market by discriminating against certain enterprises, as well as platforms using algorithms that result in certain enterprises being discriminated against. The analysis will provide normative guidance on what the law could, in theory, contribute to access to justice for SMEs.

Chapter 3 – The Current Regulatory Framework for Platforms

In this Chapter, I will introduce the main features of the current regulatory framework that governs platforms and their relationship with SMEs that offer goods or services via their interfaces. I will also sketch out the ways in which the current framework falls short from offering sufficient protection to SMEs doing business via platform interfaces. The regulatory instruments discussed here will be the P2B Regulation, the antitrust provisions of EU law and separate national initiatives in France and Germany.

Chapter 3.1 – EU Antitrust Rules

The set of EU antitrust rules is comprised of rules on anti-competitive agreements (Article 101 TFEU) and the rules on abuse of dominance (Article 102 TFEU).

20 Google Search (Shopping) (Case AT.39740) [2017]

21 Case T-612/17 - Google and Alphabet v Commission (Google Shopping) [2021]

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EU antitrust law could be a suitable way of ensuring fair transactions between SMEs and platforms, because besides consumer welfare, the objectives of EU antitrust law are the establishment of the Internal Market and, arguably, the protection of competition as such.22 The aim of competition law is thus to ensure equal opportunities for companies, consumers and stakeholders so they can pursue their goals on the market as they see fit.23

The Commission itself considers the current EU antitrust rules insufficient to address problems caused by the gatekeeping behaviour of online platforms.24 The Commission considers that the current rules “cannot conceptually deal with market failures resulting from the behaviour of gatekeepers in the absence of some preconditions (the existence of an anticompetitive agreement in the case of Article 101 TFEU or of a dominant position in the case of Article 102 TFEU)”.25 Additionally, even if the existing rules might be able to address the problem, it would not be addressed in the most effective manner. Articles 101 and 102 TFEU are designed for an ex-post control, which may be too late to tackle the problem, especially in such dynamic environment as is the digital market.26 The Commission also puts forward that if market failure is not triggered by a specific conduct, but the structure of the market, then the current rules become ineffective.27 Additionally, if a practice does not have anti-competitive effect or object, then it does not fall within the scope of EU antitrust rules.28 For these reasons, the Commission finds the current EU antitrust rules deficient to deal with the problem of access to market by SMEs.

Chapter 3.1.1 – Article 102 TFEU

The most relevant provision of primary EU law that could be utilized to regulate the relationship between SMEs and platforms is Article 102 TFEU on the abuse of dominance.

This Article states that any abuse by one or more undertakings of a dominant position within

22 Johan W. van de Gronden and Catalin S. Rusu, Competition Law in the EU – Principles, substance, enforcement (Edward Elgar Publishing) 2021, p. 10-11.

23 Gronden and Rusu, p. 12.

24 Commission Staff Working Document, ‘Impact assessment report accompanying the DMA proposal, Part 1/2’

SWD(2020) 363, para. 118.

25 DMA impact assessment, para. 119.

26 DMA impact assessment, para. 119.

27 DMA impact assessment, para. 120.

28 DMA impact assessment, para. 121.

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the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Article 102 contains a non-exhaustive list of practices that may be abusive. The most relevant examples of practices for access to market by SMEs would be the imposition of unfair purchase or selling prices,29 and the application of dissimilar conditions to equivalent transactions with other trading parties30.

Article 102 TFEU has been used as a legal basis in proceedings against gatekeeping platforms in the past. For example, in 2021, the Dutch competition authority (ACM) decided that Apple abused its dominant position by requiring paid dating apps to make use of Apple’s payment system in their iOS apps in addition to requiring the dating apps to refrain from informing consumers about transaction options outside the app interface.31 Originally, the proceedings were started to investigate more categories of apps, but later were narrowed down only to include dating apps.32

Establishing dominance requires defining the relevant market, which is one of the most debated elements of the competition assessment of digital platforms.33 There is a choice between defining a single relevant market per interaction or separate relevant markets for every user group that is part of the interaction.34 There could either be one relevant market for both app developers and app users, or two separate markets for each of the parties. In its Google Android35 decision, the Commission partially resolved this problem by holding that in the case of Google Play Store, only Android app stores belonged to the relevant product market. It is very likely the same would have been concluded about Apple’s App Store.36 The restriction of the relevant market to the platform market (instead of a user-group market) makes finding of market power and thus establishing dominance more likely.37

29 Art. 102(a) TFEU

30 Art. 102(c) TFEU

31 Summary of decision on abuse of dominant position by Apple, Autoriteit Consument & Markt (ACM/19/035630) [2021].

32 Daniel Mandrescu, ‘The Apple App Store case in the Netherlands – a potential game changer’

<https://www.lexxion.eu/en/coreblogpost/the-apple-app-store-case-in-the-netherlands-a-potential-game- changer/> accessed 16 April 2022.

33 Friso Bostoen and Daniel Mandrescu, ‘Assessing abuse of dominance in the platform economy: a case study of app stores’ (2020), p. 8.

34 Bostoen and Mandrescu, p. 8.

35 Google Android (Case AT.40099) [2018]

36 Bostoen and Mandrescu, p. 9.

37 Bostoen and Mandrescu, p. 10.

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In the Google Android decision and the Apple decision, both the Commission and the ACM successfully invoked Article 102 TFEU, and the conduct of the platforms was held to be anti- competitive and therefore illegal. However, in the case of the ACM Apple decision, it took the agency 2.5 years from launching an investigation until it handed down a decision that obliged Apple to alter its practices. In the meantime, many SMEs could have lost the opportunity to enter the market, had to leave the market or lost revenues because of the given practice. Ex- post rules are likely too slow and cumbersome to provide effective relief in dynamic digital markets. They might not even be very effective. As of February 2022, Apple still has not become compliant and the unfair trading practice (albeit a slightly different one38) still exists.

Until February 22nd, 2022, Apple paid 20 million EUR in penalty payments.39

Chapter 3.1.2 Article 101 TFEU

Article 101 TFEU prohibits agreements or concerted practices between undertakings that have as their object or effect restriction of competition and may affect the trade between Member States. The emergence of digital markets led to challenges regarding to the application of Article 101 TFEU.

The issue of algorithms in connection to tacit collusion under Article 101 TFEU has attracted a lot of academic debate. For this reason, the use of algorithms will be discussed here as an example of how Article 101 TFEU could be used to address access to market by undertakings and what are the pitfalls of this approach.

The strategic use of price-setting algorithms by digital market players, individually or reciprocally, could be characterised as a “concerted practice” within the meaning of Article 101(1) TFEU40 and thus limit access to market by SMEs because of the ability of established market players who have access to such algorithms (such as platforms) to quickly react to

38 Apple had revised its conditions, but mandated a creation of a brand new app if the developers wanted to use an alternative payment method to Apple’s. App developers were not able to adjust the apps that were already functioning. ACM considered this condition unreasonable.

39 Murco Mijnlieff, ‘ACM: Developing a new app is an unnecessary and unreasonable condition that Apple imposes on dating-app providers’ (14.2.2022) <https://www.acm.nl/en/publications/acm-developing-new-app- unnecessary-and-unreasonable-condition-apple-imposes-dating-app-providers> accessed 16 April 2022.

40 Burton Ong, ‘The Applicability of Art. 101 TFEU to Horizontal Algorithmic Pricing Practices: two Conceptual Frontiers’ (2021), p. 190.

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changing market conditions and adjust their pricing accordingly. Article 101 TFEU applies only if there is a “concerted practice” between two or more undertakings. The problem with algorithms is whether, for example, the decisions taken by the AI during algorithmic price- setting can be attributed to their owners.41 The relevant factor here is the degree of control exercised over the AI by its owner. The greater degree of autonomy exercised by AI-powered pricing algorithms, the more uncertain it is that the anti-competitive consequences that result from their use could be attributable to the designers or owners of these algorithms.42 This makes the assessment under Article 101 TFEU complicated, which suggests that the Article 101 TFEU mechanism may not be well suited for determining if pricing strategies defined by algorithms are anticompetitive.

An important element of Article 101 TFEU is the exemption of vertical agreements from assessment under the Article. Currently, the Vertical Block Exemption Regulation (VBER)43 and the accompanying Guidelines on Vertical Restraints44 are in the process of revision, as they are due to expire in May 2022.

Some of the provisions of the VBER and the relevant case law could pose an obstacle to the access to market by SMEs. Article 4 VBER lays down conditions under which a vertical agreement is not exempt from competition review under Article 101 TFEU. In 2017, the CJEU handed down the Coty judgment45 that stated that EU law allowed suppliers of luxury goods to prohibit their authorized retailers from selling the goods on third-party platforms. In this case, the supplier (Coty) modified the conditions of the selective distribution agreement in a way that effectively precluded the retailer from selling the products supplied by Coty on online marketplaces. The Court held that, in the light of Articles 4(b) and (c) VBER, the prohibition of selling luxury goods on online marketplaces placed on the members of a selective distribution system does not constitute a restriction of customers or a restriction of passive sales to end users, so it is exempt from competition review under Article 101(1) TFEU.46 This step could place significant restraints on the access to market by SMEs, as many of these companies utilize online platforms and marketplaces to sell products – retailers

41 Ong, p. 195.

42 Ong, p. 196.

43 Regulation (EU) No 330/2010

44 Guidelines on Vertical Restraints 2010/C 130/01.

45 Case C-230/16 – Coty Germany GmbH v Parfümerie Akzente GmbH [2017]

46 Coty, para. 69.

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could end up “locked out” from accessing a large portion of their customer base. However, Coty is a fact-specific judgment – the CJEU justifies this prohibition on the ground of the need for protection of the image of luxury goods. The luxury image is preserved by the goods being sold separately from other, standard goods.47 Therefore, the Coty judgment is limited to the realm of luxury goods and selective distribution systems, so its impact on the access to market by smaller retailers may not be as significant. What needs to be noted here is that the CJEU in Coty utilized Article 101 to limit access to market by SMEs, instead of enhancing it.

Chapter 3.2 – The Platform-to-Business Regulation

The Platform-to-Business (“P2B”) Regulation48 came into force in July 2020, being the first- ever worldwide piece of legislation that addresses the challenges of business relations within the online platform economy.49 This happened while most heads were turned the other way – towards the new DSA proposal. The P2B Regulation sets out basic transparency safeguards that apply to the whole industry, not only the gatekeeper platforms.50 However, the

Regulation leaves outside its scope online payment services, online advertising tools and online advertising exchanges.51

The Commission set out the objectives of the initiative as: ensuring a fair, transparent and predictable treatment of business users by online platforms; setting effective and agile redress for businesses, adaptable to evolving market; and preserving a predictable and innovation- friendly legal environment for online platforms within the EU.52

The most relevant provisions for access to market by businesses are Articles 4, 5, 7 and 10.

Article 4 lays down the requirement for the online intermediation service to provide the business user with a statement of reasons for restriction or suspension of their activities on the platform,53 and gives the business user the opportunity to clarify the facts and circumstances

47 Coty, para. 27.

48 Regulation (EU) 2019/1150

49 Vlad Dan Roman, ‘P2B Regulation – Where Does it Fit in the EU Antitrust Constellation?’ (2021), p. 14

50 Konstantina Bania, ‘The P2B Regulation is not consigned to oblivion: ACM launches marekt study, reminfing us that transparency in the platform economy is important’ (2021) <https://theplatformlaw.blog/2021/11/03/the- p2b-regulation-is-not-consigned-to-oblivion-acm-launches-market-study-reminding-us-that-transparency-in-the- platform-economy-is-important/> accessed 16 April 2022.

51 Art. 1(3) Regulation (EU) 2019/1150

52 Commission Staff Working Document, ‘Impact assessment of the P2B Regulation’ SWD(2018) 138, p. 33.

53 Art. 4(1) Regulation (EU) 2019/1150

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in the framework of the internal complaint-handling process.54 Article 5 requires the intermediation service or the search engine to disclose the main parameters determining ranking and the reasons for the relative importance of those parameters.55 However, the algorithms behind the rankings do not have to be disclosed.56 Additionally, online intermediation services providers should disclose the conditions and terms of any

differentiated treatment they give to themselves or to companies under their control.57 Lastly, Article 10 requires platforms to offer grounds for the restriction of the ability of business users to offer the same goods or services through other means than the respective platform.58

The P2B Regulation does not restrict online intermediation service providers’ conduct. The protection offered by the Regulation mostly remains limited to transparency obligations imposed on platform operators.59 The Regulation filled in some gaps that could not be addressed through EU antitrust law – such as that Article 102 TFEU could only be applied to platform’s conduct if this platform fulfilled the condition of dominant position on the market.

However, there are still major gaps left in the protection of the access to market by SMEs – the digital platforms are free to engage in unfair commercial practices if they are transparent about it.

According to the Commission, the P2B Regulation does not address issues deriving from the concentration of economic power and unfair business practices of a limited number of very large gatekeeper platforms.60

In line with Article 18 of the P2B Regulation, the Commission should periodically evaluate this Regulation and monitor its effects.61 In February 2022 the EU Observatory on the online platform economy published a concept note on Contribution to Evaluation of P2B Regulation.

This concept note states that the application period of this Regulation is limited and therefore

54 Art. 4(3) Regulation (EU) 2019/1150

55 Art. 5(1) Regulation (EU) 2019/1150

56 Art. 5(6) Regulation (EU) 2019/1150

57 Art. 7(1) Regulation (EU) 2019/1150

58 Art. 10(1) Regulation (EU) 2019/1150

59 Caroline Cauffman, ‘New EU rules on business-to-consumer and platform-to-business relationships’ (2019), p. 479.

60 DMA impact assessment, para. 125.

61 Observatory on the Online Platform Economy, Work Stream 8, ‘Contribution to Evaluation of P2B Regulation Concept note’ (2022) < https://platformobservatory.eu/research/ > accessed 16 April 2022.

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does not allow for a complete evaluation of the effectiveness of the rules.62 No report under Article 18 of the Regulation is thus yet available.

Chapter 3.3 – Separate National Initiatives

Several European Member States have “jumped the gun” and introduced new national legislation that is aimed at regulating online platforms. France introduced a new bill that requires platform to moderate content – the bill is aimed specifically to fight against hate speech online.63 Poland introduced its “anti-censorship bill”, which is interestingly aimed at protecting content from removal.64 Germany has become the first country in the world to adopt rules to combat the increasing market power of online platforms, ahead of the proposed DMA, after having already adopted a law aimed at combating hate speech online, the

Network Enforcement Act (NetzDG). Germany does not deny the possibility of leaving its own framework in place even after the DMA comes into force, if the provisions in the DMA do not go far enough.65 As the initiative of Germany has the largest potential impact on access to market by SMEs on digital platforms, only this initiative will be further discussed in this section.

In January 2021, the German parliament gave a green light to the Tenth Amendment to the German Competition Act (“Gesetz gegen Wettbewerbsbeschränkungen”). This amendment includes changes aimed at protecting the competitiveness of undertakings in digital markets.

The main innovation is a new tool enshrined in §19a of the Competition Act, which gives new powers to the German competition authority (“Bundeskartellamt”) when dealing with large digital platforms.66

62 Observatory on the Online Platform Economy, Concept note.

63 Laura Kayali and Mark Scott, ‘Brussels eclipsed as EU countries roll out their own tech rules’ Politico (18 January 2021) <https://www.politico.eu/article/eu-dsa-tech-rules-france-national-regulation/> accessed April 16 2022.

64 ‘The online regulation series - Poland’ Tech against terrorism

<https://www.techagainstterrorism.org/2021/11/16/the-online-regulation-series-poland/ > accessed April 16 2022.

65 Simon van Dorpe, ‘Germany shows EU the way in curbing BigTech’ Politico

(13 January 2021) <https://www.politico.eu/article/germany-shows-eu-the-way-in-curbing-big-tech/ > accessed April 16 2022.

66 Jens-Uwe Franck and Martin Peitz, ‘Digital Platforms and the New 19a Tool in the German Competition Act’

(2021), p. 513.

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On first sight, the new §19a seems to enhance access to market by SMEs on digital platforms.

The section lists practices that the Bundeskartellamt can prohibit. The most relevant practices for access to market are self-preferencing by vertically integrated firms; hindering supply or sales activities of other firms; using collected data to raise market entry barriers or requiring user’s permission for such use; and hindering competition by denying or impeding

interoperability or portability of data; demanding disproportionate compensation from business customers.67 To fall within the scope of §19a, a firm must be of “paramount significance for competition across markets”68. The following sentence in that section lists criteria that should be taken into account when determining if a firm is of paramount significance.

In order to apply §19a, the Bundeskartellamt is required to perform a detailed case-by-case analysis, including the evaluation of market position and the scrutinised conduct of the undertaking.69 This method of assessment is comparable to the assessment under Articles 101 and 102 TFEU. As was stated in Chapter 3.1, a detailed competition analysis as required by EU antitrust rules might not be the most effective way of addressing gatekeeping powers of digital platforms, as the assessment is time- and resource intensive. However, the

Bundeskartellamt did quite cleverly reverse the burden of proof regarding the anticompetitive nature of certain practices by firms that fall within the scope of §19a. The German legislators also unprecedently shortened the legal review in connection with §19a to only one instance, to the German Federal Court of Justice.70 These steps were done in order to re-balance the information asymmetry and presumably also to conserve its resources.71 Even though the list of potentially prohibited practices seems promising, it remains to be seen how the

Bundeskartellamt applies the criteria in practice, as the amendment only dates back to 2021 and so far, the Bundeskartellamt did not hand down any decision based on the amendment.

Another danger stemming from the introduction of separate national initiatives to curb the power of tech giants is the fragmentation of rules governing digital markets. Even after the DMA is adopted, Member States will remain free to adopt stricter gatekeeping regulation in

67 Ibid., p. 513.

68 §19a(1), Gesetz gegen Wettbewerbungsbeschränkungen (Germany).

69 Franck and Peitz, p. 526.

70 Thomas Schürrle and Andrea Pomana, ‘Overhaul of the German Competition Act Brings Groundbreaking Changes, Namely for Digital Actors’ (16 February 2021), p. 4.

71 Franck and Peitz, p. 527.

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order to pursue “other legitimate interests”72. Such fragmentation could restrict the expansion of newer homegrown digital business across the Internal Market, which sometimes do not have the resources and experience to adapt to varying sets of rules across the Internal Market.

This could once again amount to a restriction of access to market by SMEs.

Chapter 4 – The New Proposals

Now I am going to turn to the discussion of the new legislative proposals that aim to create a level playing field for EU businesses by regulating big tech and to protect fundamental rights of EU citizens.73 The Digital Services Act (“DSA”) and the Digital Markets Act (“DMA”) together form the Digital Services Act package, that was initially proposed by the

Commission in 2020.

On March 24th 2022, a provisional agreement between the European Council and the

European Parliament was reached regarding the DMA; and on April 23rd 2022, regarding the DSA.74 The provisional agreement is still subject to the approval of both the Council and the Parliament.

Chapter 4.1 – The Digital Markets Act

The Digital Markets Act aims to ban certain practices of large online platforms (the

“gatekeepers”) and enable the Commission to carry out market investigations and impose sanctions for non-compliance.

According to the Commission, an EU-wide regulatory instrument under Article 114 TFEU is an appropriate course of action, because the services provided by gatekeeper platforms are intrinsically of cross-border nature, and there is a risk of further regulatory fragmentation.75

72 Article 1(5), 2nd sentence, DMA proposal.

73 ‘Digital services package’ < https://www.consilium.europa.eu/en/policies/digital-services-package/ > accessed May 10 2022.

74 Council of the EU, ‘Digital Services Act: Council and European Parliament provisional agreement for making the internet a safer space for European citizens’ (23 April 2022)

<https://www.consilium.europa.eu/en/press/press-releases/2022/04/23/digital-services-act-council-and-european- parliament-reach-deal-on-a-safer-online-space/ > accessed May 10 2022.

75 Commission Staff Working Document, ‘Impact assessment report accompanying the DMA proposal, Part 1/2’

SWD(2020) 363, para. 100.

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The Commission further asserts that as regards unfair business practices, if there is no EU- wide measure, business users would need to understand a range of diverse rules and pursue actions in multiple Member States, which is likely to lead to fragmentation of the Single Market, create barriers to expansion and increase compliance costs.76 For these reasons, the Commission believes that an intervention is necessary.

Chapter 4.1.1 – The Objectives of the DMA

The general objective of the DMA is ensuring the proper functioning of the internal market by promoting effective competition in digital markets, in particular a fair and contestable online platform environment.77

The specific objectives of the proposal are:

- To address market failures to ensure contestable and competitive digital markets for increased innovation and consumer choice78

- To address gatekeepers’ unfair conduct79

- To enhance coherence and legal certainty to preserve the internal market80

All three objectives, if fulfilled, should in theory significantly enhance access to market by SMEs in on online platforms. The DMA promises to restore competition in digital markets, stop the unfair business conduct of the gatekeepers and make the rules regarding online platforms markets coherent and uniform. In the following sections, I will look at the actual provisions of the DMA and evaluate if the norms are likely to lead to a better access to market by SMEs on online platforms. The theoretical framework of “access justice” will be used as a benchmark.

Chapter 4.1.2. – The Content of the DMA

76 DMA impact assessment Part 1, para. 105.

77 DMA impact assessment Part 1, para. 108.

78 DMA impact assessment Part 1, para. 109.

79 DMA impact assessment Part 1, para. 110.

80 DMA impact assessment Part 1, para. 111.

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On May 12th, 2022, the compromise text of the DMA based on an agreement between the Parliament, the Council and the Commission was published. This analysis will therefore be based on that version of the proposal.

The scope of the DMA is limited to gatekeepers. According to Article 2(1) of the compromise proposal, a gatekeeper means an undertaking providing core platform services, designated pursuant to Article 3 of the DMA. The term “core platform service” encompasses online intermediation services, online search engines, online social networking services, video- sharing platform services, number-independent interpersonal communication services, operating systems, web browsers, virtual assistants, cloud computing services and online advertising services.81 Article 3 of the proposal lays down conditions that a platform needs to fulfil in order to be presumed to be a gatekeeper. An undertaking to which the core platform service belongs will be presumed to be a gatekeeper if it has an annual Union turnover of EUR 7.5 billion in each of the last three financial years82 and provides a core platform service in at least 3 Member States; has more than 45 million monthly active end users located in the EU and more than 10 000 yearly active business users established in the EU, while both of these conditions should be met in each of the last three financial years. The Commission may, under certain conditions, consider undertakings that meet the turnover threshold but do not meet the active user thresholds as gatekeepers.83

The new obligations the DMA is going to impose on gatekeepers are primarily contained in Articles 5 and 6 of the proposal. Article 5 of the DMA is the so called “blacklist” and these obligations are specified and detailed. Article 6 of the DMA contains practices that need to be further specified by the Commission.84 These obligations will be further analysed in the following section.

Article 12 of the DMA proposal also requires gatekeepers to inform the Commission about any intended concentration in the sense of Article 3 of the Merger Regulation85, regardless of whether it is notifiable under that Regulation; Article 16 of the proposal gives the

81 Article 2(2), DMA proposal.

82 This condition is also satisfied if an undertaking whose average market capitalisation or the equivalent fair market value of the undertaking amounted to at least EUR 65 billion in the last financial year.

83 Article 3(6) of the DMA proposal.

84 Centre on Regulation in Europe, Assessment Paper ‘The European proposal for a digital markets act – A first assessment’ (2021), p. 16.

85 Regulation (EC) No 139/2004

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Commission the power to adopt decision that impose behavioural or structural remedies which are proportionate to the infringement committed and necessary to ensure compliance in the case of systematic non-compliance.

All in all, the proposal seems to introduce quite stringent rules addressing the power imbalances between business users and the platforms.

Chapter 4.1.3 – Will the DMA Contribute to a Better Access to Market by SMEs?

The DMA could contribute to access to market by SMEs by introducing new obligations for gatekeeping platforms, providing better and more efficient ways of enforcement of these obligations and enhancing legal certainty by harmonizing the rules governing platforms in the EU. The DMA focuses on the prevention of market failures, the occurrence of which was the incentive that spurred the legislator to take action. The concept of “access justice” underlies all of EU law, because at its beginning, the EU was an economic union, and sufficient access to market is indispensable for the correct functioning of the Single Market. Therefore, the potential of the DMA to enhance the possibility of SMEs to access the digital market will be measured against the yardstick of Micklitz’s “access justice”, which materializes the chance of EU citizens to participate in the market into realistic opportunity.

Chapter 4.1.3.1 – Obligations Introduced by the DMA

The most significant new obligations that could lead to a better access to market by SMEs are:

- the obligation to allow business users to offer the same products or services through third party intermediation services (other platforms) at prices or conditions that are different from those offered through the gatekeeper platform;86

- the obligation to refrain from treating products or services offered by the platform itself more favourably than similar products or services offered by third parties, and apply fair and non-discriminatory conditions to the ranking;87

- the obligation of gatekeepers to ensure data access, portability and interoperability of software and applications for business users.88

86 Article 5(3), DMA proposal.

87 Article 6(5), DMA proposal.

88 Article 5(7), Article 6(7) and Article 6(4) DMA proposal.

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Article 5(3) DMA prohibits gatekeepers from banning business users to offer products or services on other platforms under different condition than on the platform itself. This clause is modelled after the Amazon e-books decision89. In that case, the Commission was investigating Amazon for the abuse of dominant position under Article 102 TFEU. The Commission

alleged that Amazon was in breach of Article 102 TFEU because of its use of price and non- price parity clauses in contracts with its e-book suppliers. These clauses required the suppliers to offer Amazon the same wholesale prices, business models, features, functionalities, and usage rules as they offered elsewhere.90 Amazon also required its suppliers to notify it of more favourable or alternative terms and conditions it offered elsewhere. The Commission did not conduct a full investigation because Amazon committed not to enforce or rely on existing parity clauses and not to introduce these clauses in agreements with new suppliers.91 It took two years from the initial opening of formal investigation until the publishing of the

commitment decision. As the case ended in a commitment decision, the Commission did not decide whether there in fact was a breach of Article 102 TFEU. Therefore, by introducing the obligation not to prevent businesses to offer the same products or services to other third-party intermediation services under different monetary or non-monetary conditions different from those offered through the gatekeeper platform, Article 5(3) DMA should contribute to access to market by SMEs, as the practice will be banned ex-ante and there will be no need to wait for an intervention by the Commission through the antitrust process.

Article 6(5) prohibits gatekeepers from giving preferential treatment to their own products or services. This provision is again modelled after an antitrust case – the Google Shopping92 decision of the CJEU. In this decision, the CJEU upheld an EUR 2.42 billion fine imposed by the Commission on Google for the abuse of its dominant position through self-preferencing of its own comparison shopping service in general Google searches. For SMEs operating on online platforms, self-preferencing of platform’s own products or services is undesirable, as the further down the ranking a listing of a third-party business is pushed, the less exposure to potential customers it gets, which is a practical obstacle to the access to market.

89 E-Book MFNS and related matters (Amazon) (Case AT.40153) [2017]

90 Commission, ‘Summary of Commission Decision of 4 May 2017 – E-Book MFNS’ (2017/C 264/06), para. 9.

91 E-book MFNs and related matters (Amazon) (Case AT.40153) [2017], para. 159.

92 Google Search (Shopping) (Case AT.39740) [2017]

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Data and interoperability rights are also essential for effective access to market by SMEs on online platforms. Article 6(5) DMA obliges gatekeepers to provide business users free of charge with effective, high quality, continuous and real-time access and use of both

aggregated and non-aggregated data that is generated in the context of the use of the platform services by the business user and by end users engaging with products or services offered by the business user. Arguably, access to data that could have been previously private to the platform would enable the business user to reach a wider customer or new customer demographics by adapting its business strategy based on the acquired data. A specific

obligation of gatekeepers contained in Article 5(7) DMA is to refrain from requiring business users to use, offer or interoperate with an identification service of the gatekeeper.

Article 6(10) obliges the gatekeeper to ensure portability of data generated through the business activity of a business user. This provision is essentially an extension of the right to data portability enshrined in Article 20 of the General Data Protection Regulation93 (GDPR).

The right to data portability is indispensable if a business user wants to either expand to other online platforms, move their entire activity to a different intermediation service, establish their own website to offer the products or services, or to expand or move their activities to offline markets. According to OECD, ex-ante regulation of data access, portability and interoperability may be a preferable approach to competition enforcement, as it is faster and more preventative.94 However, there has been some critique regarding the non-specificity of data sharing obligations within the DMA. For example, some data, such as ride details in the context of passenger travel services relate to both the driver and the passenger. In the GDPR, Article 20(4) expressly provides that the right to data portability shall not adversely affect the rights of others if there is more than one individual included within a set of personal data. The DMA’s provisions involving the processing of personal data should not be looked at in isolation and only from the perspective of the gatekeeper.95 There is no similar provision to Article 20(4) GDPR in the DMA, and as the DMA requires gatekeepers to provide data upfront and not upon request, the risk of adverse effect on the rights of others is even higher than in the case of the GDPR.96 Perhaps it would be beneficial to add a provision similar to

93 Regulation (EU) 2016/679

94 OECD, ‘Data portability, interoperability and digital platform competition, OECD Competition Committee Discussion Paper’ (2021), p. 44.

95 CIPL, ‘Bridging the DMA and the GDPR – Comments by the Centre for Information Policy Leadership on the Data Protection Implications of the Draft Digital Markets Act’ (2021), p. 3.

96 Ibid., p. 10.

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Article 20(4) GDPR to the DMA as well, so the rights of all data subjects are sufficiently protected.

What could be seen from the analysis of the three categories of new obligations placed on gatekeepers by the DMA is that the obligations are not completely new. Instead, they are based on existing antitrust cases, or their principles are borrowed from the GDPR. According to the Centre on Regulation in Europe (Cerre), this makes the DMA backward-looking and may lead to an extensive use of the flexibility clause (Article 12 DMA) to include new obligations in quickly evolving sectors.97 In my opinion, while the DMA is not extremely innovative in terms of introducing new obligations, it provides ex-ante regulation of practices that could only have been evaluated ex post previously, which results in improvements to legal certainty and easier enforcement. This in turn would contribute to better “realistic opportunity” to access the market, as described by Micklitz in his work on the concept of access justice.

All in all, there will be significant benefits for access to market by SMEs when the DMA is implemented. The SMEs will be assured of the ability to offer their services or product on multiple platforms under different conditions or for different prices, if they wish. They could also rest assured that gatekeepers will not engage in self-preferencing of their own products or services. And last but not least, SMEs will be able to take their business elsewhere or expand to different platforms, which will be enabled through their access to business related data and the right to portability of this data.

Chapter 4.1.3.2 – Enforcement

As the obligations imposed on gatekeepers in the DMA are mostly not new, in this section I am going to discuss whether the introduction of the DMA will likely lead to more effective and reliable enforcement compared to under the current regulatory framework. The DMA is without prejudice to the application of Articles 101 and 102 TFEU98, which means that proceedings under EU antitrust rules and the DMA could complement each other. As was described in Chapter 3.1.1, bringing a claim under Article 102 TFEU can be problematic, as it

97 Centre on Regulation in Europe, Assessment Paper ‘The European proposal for a digital markets act – A first assessment’ (2021), p. 21.

98 Article 1(6), DMA proposal.

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requires the establishment of a dominant position of an undertaking and a demarcation of the relevant markets, which is a cumbersome process. The ex-ante regulation in the DMA could offer a faster and more reliable way of enforcing the rules.

The Commission is the sole agent in charge of the application of the DMA99 and its public law enforcement. No national authorities are responsible for the enforcement of provisions contained in the DMA. The Commission has the power to request information from the gatekeepers, carry out on-site inspections, adopt interim measures, make legally binding voluntary measures that the gatekeepers may offer and adopt non-compliance decisions.100

In the DMA proposal, the Commission chose a hybrid system, where Article 5 contains detailed banned practices and Article 6 less detailed practices that need to be further specified.

More specified rules have the advantage of being more predictable and can be more easily enforced. There are opinions claiming that highly specified rules are ill suited for dynamic markets, such as the digital market101. The drawbacks of detailed rules are that they are less adaptable to market evolution, they run a risk of being subject to heavy lobbying during the political adoption and they fail to bring overall logic and rationale to the regulatory

intervention.102 There is some critique that the hybrid model chosen by the Commission is too inflexible, and more flexibility should be introduced.103 In my opinion, this critique is

somewhat unfounded – the purpose of the DMA is to bring legal certainty to the field and make enforcement speedy and accessible, which is easier for the enforcer if the rules are detailed and specific. SMEs are likely to benefit from rules that are more certain but less flexible, as it is important from a business perspective for SMEs to know what they have to comply with and what they are entitled to on digital platforms. If this is so, then SMEs that do not have experienced legal teams could do business more easily, knowing that they are likely compliant with the rules.

99 DMA impact assessment Part 1, para. 192.

100 DMA impact assessment Part 1, para. 193.

101 Centre on Regulation in Europe, Assessment Paper ‘The European proposal for a digital markets act – A first assessment’ (2021), p. 21.

102 Centre on Regulation in Europe, Assessment Paper ‘The European proposal for a digital markets act – A first assessment’ (2021), p. 21.

103 Ibid.

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As EU Regulations are directly applicable under Article 288 TFEU, claimants can also utilize private enforcement and seek redress un private law, either through a claim for damages or for an injunction.104

In my opinion, the DMA could be enforced in a straightforward and effective manner when it is adopted. An effective enforcement mechanism is necessary for the rules contained in the Regulation to have the intended dissuasive effect. The nature of the obligations contained in Articles 5 and 6 DMA combined with effective enforcement should have the effect of improving access to market by SMEs.

Chapter 4.1.3.3 – Legal Certainty

The impact assessment of the DMA acknowledges that there is an increased regulatory fragmentation of the online platform space in the EU.105 Regulatory fragmentation is generally undesirable within the Single Market, as it increases compliance costs, creates barriers to entry or expansion for businesses (SMEs especially, since they usually have less resources) and leads to legal uncertainty for businesses. The Commission claims that

preventing this fragmentation would expand cross border trade by EUR 92.8 billion annually by 2025.106

Despite the risks, several Member States have already introduced national legislation regulating platforms’ gatekeeping behaviour or are in the process of introducing such legislation (see Chapter 3.3).

In my opinion, the effect the DMA will have on regulatory fragmentation in the EU is overstated by the Commission. The figure of EUR 92.8 billion was calculated assuming that all cross-border e-commerce trade generated through online platforms will cease if Member States introduce individual legislation.107 This is a very extreme scenario, as especially the tech giants running gatekeeping platforms have sufficient resources to overcome the obstacle

104 Centre on Regulation in Europe, Issue Paper ‘Enforcement and institutional arrangements’ (2021), p. 16.

105 DMA impact assessment Part 1, para. 52.

106 Commission Staff Working Document, ‘Impact assessment report accompanying the DMA proposal, Part 2/2’ SWD(2020) 363, p. 59.

107 David J. Teece and Henry J. Kahwaty, ‘Is the proposed Digital Markets Act the Cure for Europe’s Platform Ills? Evidence from the European Commission’s Impact Assessment’ (12 April 2021), p. 32.

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of regulatory fragmentation. The impact assessment also does not take into account in the calculation the impact the DMA itself will have on e-commerce.108

Additionally, there is no guarantee that when the DMA comes into force, national legislation regulating the conduct of gatekeeping platforms will be phased out. The DMA does not explicitly harmonize the conduct of gatekeeping platforms. Article 1(5) of the proposed DMA states that in order to avoid the fragmentation of the internal market, Member States shall not impose further obligations on gatekeepers by way of laws, regulations or administrative measures… However, the Article goes on to state that nothing in this Regulation precludes Member States from imposing obligations on undertakings, including undertakings providing core platform services, for matters falling outside the scope of this Regulation, provided that those obligations are compatible with Union law and do not result from the fact that the relevant undertakings have the status of a gatekeeper… For example, the German regime under the new §19a of the German Competition Act could be in the grey zone between competition rules and regulation. Despite this, the EU and Germany are said to have come to an understanding that the rules do not conflict with Article 1(5) of the DMA.109 This

development suggest that the rule contained in Article 1(5) DMA is broad in scope and presumably would not prevent regulatory fragmentation, at least not in the extent the

Commission seems to expect in the impact assessment of the DMA. The problems posed by this fragmentation to SMEs and their access to market on online platforms would therefore not be eliminated.

Chapter 4.2 – The Digital Services Act

In the Digital Services Act, the intervention focuses on deepening the single market for digital services and establishing clear responsibilities for online platforms.110 The DSA contains due diligence obligations for platforms that will contribute to the protection of users’ fundamental rights online. The DSA differs from the DMA in that it contains additional obligations

applicable only to very large online platforms (“VLOPs”). The definition of a VLOP in the DSA is essentially the same as the definition of a gatekeeper in the DMA, except that in the

108 Ibid.

109 Simon van Dorpe, ‘Germany shows EU the way in curbing BigTech’ Politico

(13 January 2021) <https://www.politico.eu/article/germany-shows-eu-the-way-in-curbing-big-tech/ > accessed April 16 2022.

110 DMA impact assessment Part 1, para. 2.

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