Digital Markets Act

To promote fair competition in digital markets, Regulation (EU) 2022/1925 of the European Parliament and of the Council on contestable and fair markets in the digital sector, or the Digital Markets Act (DMA), entered into force in the European Union (EU) on 1 November 2022.

The DMA is a unique EU-wide legal instrument aimed at ensuring a level playing field for undertakings operating in the digital environment and sets clear rules of conduct for the largest digital platforms, known as gatekeepers under the DMA. Compared to smaller companies, gatekeepers have a significant ability to influence competition in the digital market, including through practices that harm users of gatekeeper services, who can be both commercial users and consumers.

Importantly, the DMA only complements but does not affect the application of competition rules, thus not altering the power of the Competition Council to sanction gatekeepers, e.g., for the abuse of a dominant position.

On 2 May 2023, the procedure to designate the first gatekeepers was launched. Under the procedure, undertakings that meet gatekeeper designation criteria shall notify the European Commission (EC) within two months, which within 45 working days, assesses whether the undertaking should be granted gatekeeper status. Following the EC decision to designate a gatekeeper, the undertaking has six months to start complying with the gatekeeper’s obligations and prohibitions under the DMA.

Which platforms are considered gatekeepers?

On 5 September 2023, the EC adopted a number of decisions identifying the first companies to be granted gatekeeper status, namely: Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft. It is mandatory for these companies to comply with the requirements of the DMA for their core services from 6 March 2024.

Decisions on the granting of gatekeeper status are taken by the EC. Undertakings that have a significant impact on the EU internal market, which provide a core service as defined by the DMA, acting as an important gateway between commercial and end-users, are designated as gatekeepers. Similarly, in order to make a decision on gatekeeper status, the EC must find that the undertaking’s influence is entrenched and durable.

To justify the above criteria, the EC uses quantitative indicators which, if met, lead to an undertaking being designated as a gatekeeper:

• the undertaking has an annual turnover in the EU of at least EUR 7.5 billion or a value of at least EUR 75 billion over the last three years;
• the digital platform has at least 45 million monthly end-users and 10,000 commercial business users;
• it controls one or more core platform services in at least three EU Member States.

Where the EC finds that an undertaking provides a core platform service and has a significant, entrenched and durable impact on the internal market but does not meet the quantitative criteria of turnover, value or number of users set by the DMA, the EC may apply qualitative analysis to designate the undertaking as a gatekeeper. In this case, the EC’s market investigation assesses, for example, the undertaking’s financial performance, number of users, user habits, user attraction, business model, corporate structure and other indicators that help determine whether the undertaking is likely to have an entrenched and durable presence in the EU market.

Under the DMA, the following services are considered core platform services:

• online intermediation services,
• search engines,
• operating systems,
• online social networks,
• video-sharing platform services,
• messaging,
• cloud computing,
• virtual assistants,
• web browsers,
• online advertising, including advertising intermediation services.

EC-designated gatekeepers and their core services within the scope of the DMA

The EC will continue to monitor the basis for the designation of gatekeeper status and, if necessary, will decide on the granting of gatekeeper status to new undertakings that meet the prerequisites for gateway designation set out in the DMA. The DMA also provides for the right of the EC to update both the list of core platform services and the obligations specific to the gatekeepers, thus ensuring the flexibility of activities of the EC.

Requirements for gatekeepers

In order to achieve the objectives of the DMA, undertakings that have been granted gatekeeper status are obliged both to take active steps to comply with the DMA and to refrain from taking certain actions. The responsibilities assigned to each gatekeeper are tailored to their business model and platform.

Who will ensure that the requirements of the DMA are met? 

To ensure a harmonised approach to the application of the DMA in the internal market, the European Commission will act as the sole competent authority for the application of the Regulation, in addition to the courts. To ensure the EC’s support functions, a High Level Group and an Advisory Committee, which also includes the Competition Council, have been established.

The EC has been given broad investigative powers to investigate, monitor and enforce compliance with the DMA rules. For example, it can request information from any undertaking or association of undertakings, access data and algorithms, carry out inspections, hold hearings and carry out market studies.

Role of the Competition Council of Latvia

Under the DMA, the competition authorities of the Member States (in Latvia – the Competition Council of Latvia), as well as other competent authorities of the Member States, are primarily obliged to provide support to the EC. For the Competition Council, this may mean at least the following:

• to actively support the EC in carrying out any necessary checks on the territory of Latvia, e.g., inspections or other information-gathering measures, including requests for information, on-site visits or inviting market participants for discussions to establish whether there is a breach of the DMA;
• at the request of the EC, to support any market surveillance carried out by the EC within the framework of the DMA, as well as carry out the monitoring of obligations imposed on gatekeepers;
• to investigate complaints received alleging non-compliance with the obligations under the DMA and, where appropriate, to forward them to the EC for consideration;
• the Competition Council has delegated two representatives to the Advisory Committee who are involved in drafting implementing acts, assessing the status of the gatekeeper and advising the EC on other issues related to the scope of the DMA.

In addition, where the Competition Council considers that there may be non-compliance with Articles 5, 6 or 7 of the DMA in the territory of Latvia or that it affects consumers or commercial users in the territory of Latvia, the Competition Council may, on its own initiative, initiate and conduct an investigation in relation to such possible breach of the DMA. Nevertheless, the Competition Council does not have the power to sanction gatekeepers for infringements of the DMA, but it may refer the results of its investigations to the European Commission, which may use them to make a decision on penalties or other appropriate decisions.

Penalty for infringement

The EC is the only competent authority that can impose penalties on gatekeepers for a breach of the DMA:

• fines of up to 10% of the undertaking’s total annual worldwide turnover, or up to 20% for repeated infringements;
• periodic penalty payments of up to 5% of average daily turnover;
• remedies – in the event of systematic breaches, the gatekeepers may be subject to all the necessary behavioural and structural remedies to ensure the effective implementation of the DMA.

Useful materials:

Digital Markets Act: Commission designates six gatekeepers

The Digital Markets Act: ensuring fair and open digital markets

Regulation (EU) 2022/1925 of the European Parliament and of the Council on contestable and fair markets in the digital sector

Digital Markets Act