Room for improvement: Proposals to strengthen draft European digital regulation

Since publication in December 2020, the European Commission’s proposed new rules for digital gatekeepers (the Digital Markets Act, or “DMA”) have been hotly debated in the EU Parliament (for our analysis of the proposals, see here).  A new report from Professor Annabelle Gawer of the University of Surrey - commissioned by the EU Parliament - is the latest voice to weigh in on the debate. 

The report “welcomes” the proposed new legislation in light of a “need to strengthen the current law enforcement and regulation of the platform economy”.   But it also makes a number of recommendations for strengthening these proposals.  These include:

• Individually tailored Codes of Conduct for gatekeeper platforms:  The report supports the DMA’s proposal for a set of enforceable ex ante rules to regulate gatekeeper conduct.  But it suggests an important modification, namely that these rules should be individually tailored (rather than the single set of obligations proposed by the DMA).  This aligns with the likely direction of travel in the UK (see the UK Digital Taskforce’s report) and picks up on concerns about the suitability of a  ‘one size fits all’ approach to platforms’ different business models.  
• Heightened merger control for gatekeeper platforms:  The DMA requires gatekeeper platforms to notify the Commission of proposed acquisitions.  The report finds that this notification obligation does not go far enough.  Instead, it indicates that the Commission should assess whether a merger is likely to be, on balance, beneficial or harmful, taking into account privacy risks, impact on innovation, and potential to create or strengthen data advantages. 
• Increased scope for national intervention:  The DMA does not provide for direct enforcement at national level.  The report takes the view that national regimes (like Germany, which has already introduced its own digital legislation) should be given more scope to intervene in country-specific issues. 
• Enforcement mechanisms: The report supports the establishment of a new Platform Compliance Unit in DG-Connect, to monitor compliance with the new rules and introduce pro-competitive interventions where necessary.  This recommendation is, again, aligned with proposals in the UK.   

This report can be expected to stoke debate in Parliament.  In particular, the report’s support for individualised Codes of Conduct and a Platform Compliance Unit with pro-competitive intervention powers may mean that the next draft of DMA moves closer to the proposals under consideration in the UK.