Yale Centre for Economic Policy publish instructive paper on DMA enforcement

The Yale Centre for Economic Policy recently released an interesting document on the enforcement of the Digital Markets Acts (DMA), considering how best to monitor compliance and when and how the legislation should be used as an alternative or support to Article 102 TFEU. 

See the full discussion paper, titled ‘Enforcing the Digital Markets Act: Institutional Choices, Compliance, and Antitrust’, linked here.

On the subject of compliance, the report offers a number of sensible recommendations. Under the DMA, gatekeeper platforms are required to produce annual reports demonstrating compliance with the legislation, but the exact form these will take is yet to be determined. The paper’s authors advise that the Commission insist that these reports are as detailed as possible, containing verifiable technical detail and outlining behavioural changes the gatekeeper has made in line with the DMA. Thin or unverifiable reports should be treated as a signal of possible non-compliance and “substantially increase the likelihood of investigation”.   

Similarly, it is advised that the Commission insists that the concurrent non-confidential report published for the public does not omit anything besides truly confidential information. Thus, third parties will be able to effectively assist the Commission in monitoring gatekeeper compliance. 

On enforcement, the paper outlines its recommendations as to how the Commission can most effectively assign its limited resources. In short, where the abuse is clearly covered by the DMA, the DMA should apply. So, for instance, Apple’s restrictions against developers accessing the NFC chip built into all iPhones, is clearly prohibited by Article 6(7) of the Digital Markets Act, which requires access and interoperability to OS features. Enforcement of the DMA should be easier and swifter than under the general competition law.  

Whether the DMA will be a panacea is open to doubt. For example, Google’s compliance with the DMA would likely not undermine its ability to exclude rivals in the AdTech industry. This is not to say the DMA would have no effect. Article 5(2) prohibits gatekeepers from combining user data from multiple sources without securing consumer permissions, thus, limiting Google’s data advantage. Articles 5(9) and (10), meanwhile, impose a transparency obligation, whereby gatekeepers must provide information to advertisers and publishers on prices and fees, and Article 6(8) requires that gatekeepers share their attribution tools. 

However, whilst the DMA would marginally reduce Google’s data holdings, there are still numerous sharp tactics which Google could employ to ring fence its dominance. Google could, for example, advantage its own bids by reducing delays in bidding platforms (latency) through engineering. This is common practice in reducing delays between computer execution times for trades in financial exchanges and trading of financial products. Those with co located facilities benefit from faster trading. In the days of algorithmic computing each millisecond makes a major difference. The same is true of advertising exchanges. Google can co locate or place its demand side servers next to the machines carrying out the ad auction and use its own fibre networks to underpin them all for its own benefit. Without a non-discrimination provision that addresses these technical matters, Google’s anticompetitive conduct in advertising could coexist quite comfortably with DMA compliance. This conduct would therefore still need to be pursued under Article 102. 

Fortunately, in line with the European Court of Justice’s judgment in bpost SA v Autorite belge de la concurrence there is no barrier to a parallel application of the DMA and Article 102 TFEU.  We anticipate the Commission will be able to use both.