December 5, 2024

Oledammegard

Types of civil law

Some Light Holiday Reading: Draft Procedural Guidance on the EU’s Digital Market Act Open for Consultation

On December 9, 2022, the European Commission (EC) published its draft Digital Markets Act (DMA) Implementing Regulation, which will be open for public comment until January 6, 2023. The package is designed to give guidance on the practical aspects of gatekeeper designation and sets out the information required from gatekeepers and their procedural rights. The designation process draws heavily from the EU’s merger control framework and envisages a similar pre-notification phase (including mirroring the EC’s “Form CO” for merger notifications with a “Form GD” for gatekeeper designations). Further guidance on substantive aspects is expected at a later stage.

Key Takeaways

While a relatively light document, there is still a lot for potential gatekeepers and their counsel to mull over by that open fire during the holidays:

  • Form GD. Like the EC’s merger form, it requires detailed information on the company (including all data necessary to assess the quantitative thresholds). Gatekeepers must describe each of their core platform services (CPS) and provide any “plausible alternative delineation[s]” of their CPSs.[1]
  • Even if the quantitative thresholds are met, gatekeepers can try to rebut the gatekeeper presumption with “sufficiently substantiated” arguments. These must be submitted as an annex to the Form GD.
  • Page Limits. In a first for the EC, gatekeepers will be subject to a page limit of 50 pages for each separate CPS notification, and 25 pages for an exemption application.[2] Exceptions may be granted where it is “objectively impossible” to address the issues at stake within the page limit.[3] It is unclear whether additional annexes are permitted (other than for user number calculations), which limits the ability of gatekeepers to present their arguments. This will likely raise questions of the page limits’ legality.
  • When Does the Clock Start? While the DMA imposes deadlines on the EC, under the draft regulation the EC will not accept a notification until it deems the file “complete.” This implies that, like a Form CO process in merger control, the gatekeeper may be subject to rounds of information requests between submission of an initial draft and officially getting on file. Any deadlines under the DMA will only start once the filing is complete.[4]
  • Extension Requests. Gatekeepers can request an extension of the DMA time-limits.[5] Requests must be “reasoned” and “sufficiently substantiated.” Without further guidance, this gives the EC significant discretion.
  • Procedural Rights. The EC’s apparent intent to speed up the process may come at the expense of gatekeepers’ right to be heard. The imposition of stringent page limits on companies, absence of an oral hearing, and no role for the EC’s hearing officer all raise due process concerns, especially where the EC begins CPS designation for a service a gatekeeper did not believe required notification.[6] The EC does not clarify procedural questions such as its market investigation powers (g., for identifying gatekeepers that may not meet the quantitative thresholds).

Next Steps

Once the public consultation closes on January 6, 2023, the EC will publish the feedback online. The final version of the implementing regulation is due within Q1 2023. As a reminder, the DMA will become applicable on May 2, 2023. Within two months from that date (July 3, 2023), gatekeepers will need to notify the EC (using the form GD) if they already meet the quantitative thresholds. The EC will then have 45 working days to adopt a designation decision (by September 6, 2023), starting a six-month compliance countdown (by March 2024). For more information on the DMA’s obligations and their application to digital platforms, please see our previous Wilson Sonsini Alert.

For more information, please contact Jindrich Kloub, Beau Buffier, Cédric Burton, or any member of the firm’s antitrust or privacy and cybersecurity practices.

Deirdre Carroll and Laurine Signoret contributed to the preparation of this Wilson Sonsini Alert.

 

[1] Draft Form GD, Section 2.1.

[2] A CPS meeting the quantitative thresholds under Art. 3(2) of the DMA can benefit from an exemption under Article 3(5) of the DMA.

[3] Draft Implementing Regulation, Article 4.

[4] Implementing Regulation, Article 3(1).

[5] DMA Implementing Regulation, Article 10(2).

[6] Draft implementing Regulation, Chapter IV.