IEBL Master Conference: Digital Platforms, Competition and Digital Market Act

Aurelien Portuese March 18, 2021
March 18, 2021

Aurelien Portuese presented his analysis of the proposed Digital Markets Act (DMA) issued by the European Commission in December 2020. He focused his message on three main elements: i) the notion of "digital markets" as separate from other markets; ii) the notion of gatekeeper and its risks of threshold effects; iii) the obligations of the DMA. First, the regulation of digital markets, instead of offline markets, creates an arbitrary and discretionary distinction that had to be avoided, as advised several expert reports to the European Commission. Second, the notion of gatekeeper generates an asymmetrical regulation at the expense of expansion, growth, and scalability of the smaller digital platforms. The notion of gatekeeper will also have an entrenchment effect which is ironically purportedly tackled by the DMA. Thus, the DMA regulates digital gatekeepers by reinforcing, through several regulatory obligations, their market positions. This entrenchment effect is at play with the GDPR (General Data Protection Regulation); it will be much stronger with the DMA. Finally, the obligations are both over-detailed and under-detailed.

Aurelien Portuese argued that these obligations render well-generalized practices conducted by non-gatekeepers and/or by actors in offline markets as prohibited. These obligations assume that greater consumer choice is always desirable, something which is both unsubstantiated and contradicted by evidence. Also, these obligations generally create risks of free-riding as rivals may be entitled to access patented, highly strategic assets without having incurred the costs of creating these assets in the first place. Free ridership problems shall lower investments and deter innovation onto the digital ecosystems at the expense of consumers and innovation. 

Aurelien Portuese concluded that the DMA misses its stated objectives: it does not complete the Digital Single Markets as the greatest impediments to its completion - namely, national regulatory barriers and fragmentation of the internal market - are left unaddressed by the DMA. The DMA misses its stated objectives also of avoiding further fragmentation of the Digital Single Market - i.e., national regulations such as the German competition law amendments further fragment the Digital Single Market. 

Aurelien Portuese, however, considered that the DMA would achieve to lower innovation and consumers by a precautionary approach to innovation whereby the overall investments on the digital ecosystems will be lowered, and the transaction costs will be increased. Both innovation and consumers shall suffer, and the emergence of the thriving European digital powerhouse shall ultimately be delayed and hindered.