EU’s Digital Markets Act Receives Its Implementing Regulation and Comes Into Force May 2, 2023

Following a public consultation period, the European Commission has published the Regulation implementing its Digital Markets Act, with two major text changes from the original act. 

The Digital Markets Act[1] (DMA) sets out ex-ante regulation for large digital platforms considered to be dominant: so-called “gatekeepers.” Under Article 46 of the DMA, the European Commission (the Commission) has been empowered to adopt implementing acts laying down rules concerning certain procedural aspects of the DMA.

The Commission published on December 9, 2022 the draft Digital Markets Act Implementing Regulation (the Draft DMA Implementing Regulation) and its annexes for public consultation. After the public consultation ended on January 9, 2023, the Commission published the final reworked Digital Markets Act Implementing Regulation[2] (the DMA Implementing Regulation) on April 14, 2023.

The DMA Implementing Regulation entered into force on May 2, 2023, i.e., the day the DMA became applicable.[3]

DMA Implementing Regulation

As set out by Article 1 of the reworked text, the DMA Implementing Regulation encompasses

• the form, content, and other details of notifications and submissions for designation of gatekeepers (Art. 3, DMA); the reasoned requests as regards compliance with obligations for gatekeepers (Art. 8(3), DMA), suspension requests (Art. 9, DMA), and requests for exemption for grounds of public health and public security (Art. 10, DMA); the regulatory reports on implemented measures (Art. 11, DMA); the notifications and submissions pursuant to gatekeepers’ information obligation regarding concentrations (Art. 14, DMA); and auditing requirements (Art. 15, DMA);
• noncompliance proceedings (Art. 29, DMA);
• the exercise of the right to be heard and the terms of disclosure (Art. 34, DMA); and
• time limits.

Annex I of the DMA Implementing Regulation (Annex I) sets out the form for gatekeeper designation (FORM GD) while Annex II of the DMA Implementing Regulation (Annex II) sets out the format and lengths of documents to be submitted to the Commission.

Two major changes of the final text have been made, in accordance with the stakeholders’ requests during the consultation period, to (i) the provisions on the right to access to file and (ii) the notification of potential designation as a gatekeeper.

Key Provisions

Notifications

An undertaking providing core platform services may engage in pre-notification contacts with the Commission to ensure an effective notification procedure pursuant to Article 3(3) of the DMA (Recital 2 of the DMA Implementing Regulation). It is expected that the DMA’s pre-notification process will last approximately three months; it will be necessary to examine how the practice develops.

The DMA’s pre-notification process is similar to the pre-notification in the context of merger control procedures, which has proven to be efficient as it enables resolution of complex issues ahead of formal filing.

Under Article 2(1) of the DMA Implementing Regulation, notifications for the purposes of gatekeeper designation must contain the information set out in the FORM GD, which essentially entails (1) the notifying undertaking, (2) core platform services, and (3) quantitative thresholds.

Under Article 3(5) of the DMA, the platform provider can demonstrate, by way of so-called substantiated arguments, that, due to the circumstances in which the relevant core platform service operates, even though the provider meets the thresholds to be designated as a gatekeeper, it does not satisfy the requirements for such designation.

The DMA Implementing Regulation clarifies that the platform provider has to submit substantiated arguments to the Commission in an annex to its notification (Article 2(3) of the DMA Implementing Regulation). The notifications and submissions must be filed in one of the official languages of the European Union (Article 2(6) of the Draft DMA Implementing Regulation).

Providing Information

Importantly, the DMA Implementing Regulation provides for the possibility that gatekeepers may ask for waivers of the obligation to provide certain information requested (Article 2(8) of the DMA Implementing Regulation).

The effective date for notification and submission of information is the date on which the complete information is received by the Commission or, adding from the prior draft, the date on which the Commission informs the platform provider that the information requested is no longer necessary, thereby adding legal certainty to the text (Art. 3(1) of the DMA Implementing Regulation).

Article 4 of the DMA Implementing Regulation indicates that the documents submitted to the Commission should comply with the formats and page limits set out in Annex II. The new text adds that the Commission may request the undertaking to put the documents in order, thereby anticipating how to handle noncompliant notifications and leading to a more effective enforcement of the text, especially in its early days.

Proceedings

Article 5 of the DMA Implementing Regulation specifies the rules under which the Commission may decide to open proceedings. The date of the opening of proceedings cannot be later than the date when the Commission issues its preliminary findings under Article 29(3) of the DMA. The DMA Implementing Regulation sets out the requirement that the opening of proceedings must be made public by the Commission, meaning that at the latest time when the Commission issues its preliminary findings it must also open proceedings and publish the findings.

Pursuant to Article 34 of the DMA, platform providers are granted the right to be heard. Article 6 of the DMA Implementing Regulation sets out the requirements of such companies’ replies to preliminary findings.

Information Disclosure

Article 7(1) of the DMA Implementing Regulation specifies that business secrets or confidential information in the documents collected by the Commission will not be disclosed. However, Article 7(2) of the DMA Implementing Regulation specifies that natural or legal persons providing information to the Commission as a reply to a request for information or as part of an interview or a statement must be informed by the Commission that access to such information may be granted. As opposed to the first draft, the same applies to any document spontaneously submitted to the Commission.

Importantly, the DMA Implementing Regulation has added a new Article 7(6) that was not in the Draft DMA Implementing Regulation, which grants the Commission the right to disclose certain information considered confidential by the gatekeeper if (1) the information does not constitute a business secret/confidential information or (2) there is an overriding interest in the disclosure of such confidential information.

The gatekeeper has the opportunity to object to the disclosure within one week, in which case the Commission “may” adopt a reasoned decision specifying the date after which the information will be disclosed. This text remains unclear at this stage as it is not well understood whether the Commission has the mere possibility or the obligation to adopt a reasoned decision. In any case, the possibility for the person concerned to submit objections is welcome.

Access to Preliminary Findings

Based on the public consultation, the Commission heavily redrafted Article 8 of the DMA Implementing Regulation to reflect stakeholder input regarding access to file by the addressee of preliminary findings. As opposed to the prior draft, access to file is not subject to the necessity of the undertaking’s exercise of its right to be heard. Furthermore, the undertaking no longer needs to substantiate why the access to file is necessary to exercise its right to be heard.  

Article 8(1) of the DMA Implementing Regulation sets out that, upon request, the Commission must grant access to file to the platform service provider to which the Commission has addressed its preliminary findings. However, the Commission cannot grant access to file before the notification of the preliminary findings.

Based on the final text, the Commission must grant access to all documents mentioned in the preliminary findings as opposed to the narrower scope of the text of the Draft DMA Implementing Regulation (“non-confidential version of at least all documents mentioned in the preliminary findings as well as a list of all documents in the Commission’s file”; Art. 8(2) of the Draft DMA Implementing Regulation). Nevertheless, these documents might be subject to redaction pursuant to the business secrets of the originators of such documents (e.g., complainants) (Art. 8(2) of the DMA Implementing Regulation).

Access to Documents on File

The Commission, with certain exceptions, will provide access to all documents on its file, without any redactions, under terms of disclosure set out in a decision by the Commission (Art. 8(3) of the DMA Implementing Regulation). Exceptions may occur if the disclosure of information would not be proportionate (i.e., the party that submitted the document would suffer from disclosure and this would outweigh the importance of disclosure for the exercise of the right to be heard per Article 8(4) of the DMA Implementing Regulation).

Such full access provided to all documents will be granted only to a limited number of external legal and economic counsel and external technical experts engaged by the addressee. These external legal and economic counsel and external technical experts shall not be in an employment relationship with the addressee or in a situation comparable to employment.

The content of the documents provided to these external persons cannot be disclosed to any natural or legal persons not bound by the terms of disclosure and cannot be used for any other purpose than the purposes of the relevant proceedings (Art. 8(3) of the DMA Implementing Regulation).

Chapters V and VI of the DMA Implementing Regulation set out technical specifications on time limits and transmission of documents.

Annex I

In the first draft, Annex I set out the FORM GD relating to the DMA Article 3(3) notification for the purposes of gatekeeper designation. Section 1 of Annex I requires information about the notifying undertaking, similar to what is traditionally provided in a Form CO filed with the Commission for notifications of concentrations.

The revised version now includes a description of the organizational structure and subsidiary-parent relations between a gatekeeper’s core platform services. This remedies the risk of fragmenting enforcement according to the different subsidiaries providing core platform services in larger parent companies.

Section 2 of Annex I requires information about core platform services and Sections 3 and 4 of Annex I require information relating to the relevant thresholds set by the DMA.

Annex II

Annex II sets out the format and lengths of documents to be submitted to the Commission. It was raised in the public consultation that the 25-page limit for rebutting the quantitative thresholds presumption appeared to be restrictive as regards the description of a platform’s function and its technical aspects, even though rebuttal arguments can be addressed to the Commission in the pre-notification phase. The Commission took this comment into account and raised the page limit from 25 to 30 pages for substantiated arguments.

Conclusion

The Commission has incorporated a significant part of the comments given in the public consultation into the final version of the DMA Implementing Regulation. However, going against a significant portion of the public comments, the Commission has decided against organizing for the possibility to request an oral hearing of the platform provider before the Commission in the DMA Implementing Regulation.

Overall, the DMA Implementing Regulation reflects the Commission’s efforts to prioritize a rapid and efficient procedure over the fullest respect of the platform provider’s rights of the defense.

Next Steps

Both the DMA Implementing Regulation and the DMA entered into force on May 2, 2023. The deadline for platform providers to notify the Commission that they meet the requirements for gatekeeper designation is July 3, 2023. The Commission’s deadline for designation decisions is set for September 6, 2023, and the obligations will start to apply effectively around March 2024.