The application of the Digital Markets Law will be much more effective if the national competition authorities of the EU are involved in it. Currently these authorities lack incentives to do so, but there are ways to enhance their role.
The European Union Digital Markets Law (DMA), which entered into force on November 1 and will apply from May 2023, aims to control some of the anti-competitive practices of large technology companies. . The European Commission is the only one in charge of enforcing it, but it is not yet prepared to apply it. Currently, the Commission has limited human resources and a budget that does not correspond to that available for the 13 estimated “gatekeepers”, or other online platforms with significant impact covered by the DMA. The risk is that, at best, the implementation of the WFD will be too slow and case-specific, provoking the same criticisms that have been leveled at the antitrust enforcement, which inspired the WFD. In the worst case, the application of the WFD will be ineffective.
One solution could be for the Commission to turn to EU countries to help enforce the WFD, and indeed the rule provides for this. However, the national competition authorities (NCAs) of the EU countries currently lack of incentives to participate. If they were to contribute to the enforcement effort, they would be doing the work of the Commission by devoting staff and time without receiving any direct recognition or benefit. The ANCs have already managed and completed several antitrust cases in the digital sector. Therefore, the Commission should build on their experience by offering them incentives to help implement the WFD.
The role of national competition authorities
National competition authorities and some EU governments, including France, the Netherlands and Germany, called during the legislative process for NCAs to be given the power to enforce the WFD. But in the final text of the law, approved by the European Parliament and the Council of the EU, the NCAs were only given the role of assisting the Commission in the application of the WFD.
Thus, EU countries can collect complaints, support the Commission in market investigations and carry out market investigations in cases of possible non-compliance. In other words, the NCAs will do the work and share the results with the Commission, which will accept or reject them. In a time of resource constraints, they may prefer to allocate resources to research where they can have a direct impact.
The WFD does allow NCAs to apply European or national antitrust laws against gatekeepers in cases related to cartels (when at least two companies cooperate illegally), abuse of a dominant position and unilateral conduct (for example, when a company abuses an economically dependent business partner). ANCs may also adopt rules with public interest objectives other than those of the WFD, such as in relation to the ability to challenge or equity of rights and obligations.
In practice, it is likely that NCAs will continue to apply competition laws against gatekeepers. Some EU countries already have an impressive track record of antitrust cases against the 13 would-be gatekeepers, being the NCAs of Germany, Italy and France. the most active.
In addition, some NCAs have invested heavily in human resources. Competition authorities in France, Germany, Luxembourg and Portugal have created dedicated digital economy units made up of economists, lawyers and data scientists tasked with overseeing digital cases.
They have also invested in research and training. In recent years, they have spent considerable time understanding how the digital economy works: for example, the 2016 German and French report on competition law and data. They have also carried out market research (for example, the 2018 French market research on the online advertising) and have published position papers (for example, the 2020 Nordic memorandum on the digital platforms).
Some countries, like Germany, Austria and Italy, have also adopted specific rules to deal with the problems of the digital economy. Specifically, Germany imposes requirements similar to those imposed by European law on companies likely to be considered guardians of access by the WFD (until now, the German standard applies to Google, Goal Y Amazonwhile Manzana still under evaluation).
In short, the digital economy is the priority of several NCAs, and there is no doubt that they will continue to act.
Since the NCAs lack incentives to help the Commission to directly apply the regulation, the question is then how to direct them to help the Commission and how the Commission can take advantage of their experience. The Commission should encourage NCAs by making them explicitly participate in the application of the regulation. This can be done in two ways.
Firstly, the NCAs should be able to carry out joint investigations with the Commission. The WFD allows EU countries to investigate and share information with the Commission, including confidential information, only for the purposes of law enforcement cooperation. The Commission could involve the ANCs from the beginning of the investigations, publicly acknowledging the support they provide. You will thus benefit from the experience of the NCAs, while they will enhance your international reputation and increase your knowledge.
Second, EU countries can open antitrust cases with a view to adding new services and practices to the scope of the WFD. This would help the Commission to identify new services and behaviors that raise competition concerns and should be covered by the WFD. To do this, the Commission must carry out a market investigation, which must be based, inter alia, on evidence found in the context of antitrust cases. Therefore, when ANCs open antitrust cases in the digital sector, they could directly influence the future evolution of ADM. The Commission will save human resources and time, while the NCAs will improve their law enforcement practices and build their international reputation.
The WFD requires the Commission and the NCAs to coordinate their enforcement actions within the framework of the European Competition Network (REC), a forum through which NCAs collaborate to guarantee a coherent application of European legislation on the matter. However, the practical modalities of this cooperation have not yet been defined.
Although cooperation is essential, there is a risk that some decisions will be inconsistent. This situation will probably arise when applying the WFD and national rules similar to the WFD, especially the German requirements, which are very similar to the WFD in substance and intent. Therefore, it is likely that some of the upcoming antitrust cases will be WFD cases where European or national antitrust law is applied together with the WFD. For example, an access gatekeeper might be subject to specific rules under European or national laws, and general rules under the WFD. The WFD does not allow the Commission to block national investigations, which could lead to inconsistencies and inefficient allocation of human resources. Cases could double, as has happened with antitrust investigations into the transparency of Apple’s app tracking in France, Poland Y Germany, over allegations that the US company favors its own services over rivals by imposing unfair privacy conditions on developers.
The WFD requires the European Commission to adopt an implementing act setting out the details of the practical cooperation arrangements between the Commission and national authorities, including NCAs within the REC. This enforcement act should give the Commission supervisory powers to ensure that EU countries apply the WFD and EU and national antitrust laws consistently. EU countries are already required to cooperate and coordinate with the Commission in their enforcement of DMA antitrust cases. To ensure greater coherence and efficient allocation of resources, the Commission should also establish a mechanism that delegates, at the request of Member States or on its own initiative, the enforcement of some cases included in the WFD to NCAs under the European or national legislation. The national competition authorities involved should demonstrate that they have the necessary experience and human resources to handle these cases. In addition, to ensure a certain level of centralization to address inconsistencies, the Commission should direct the enforcement practice of NCAs through guidance on how to execute WFD-like cases consistently with the WFD.
Article originally published in English in the Web from Bruegel.