Surprising impulses across the Rhine with the Change in applied competition law to the digital sector. Germany could be the first country in the world to include clauses in its legal instruments that prescribe prevention rules for digital players. Actors selected on the basis of vague criteria depending on their importance and their influence on competition in the markets. We can therefore think of GAFAM, which is often referred to as Big Tech in the US and whose monopolies and anti-competitive practices are well established. You have been enough in recent European cartel investigations, but also through the American “Big Awakening”, which today denounces mergers, takeovers and other maneuvers that undermine fairness in the markets.
This German change is primarily intended to make competition in the state’s digital space more equitable. In view of the originality and transversality of digital platforms in our daily lives, a phenomenon exacerbated by the Covid 19 crisis, this text is particularly relevant. Even more so when we know that Europe’s latest proposal, the Digital Market Act (DMA), addresses the same problems and provides different answers for the time being.
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“The change [allemand, ndlr] therefore contains a moderate modernization of the surveillance of unfair competition in order to better record and effectively end the abuse of market power, especially through digital platforms. “says the draft law, which has yet to be approved by the Bundesrat, the legislative body of the German federal states. The Federal Cartel Office is expected to begin listing companies subject to these new measures in the coming months. You could apply from March.
“The German approach is, in a way, reinforced competition law”explains Magali Eben, Professor of Competition Law at the University of Glasgow and a Doctor of Law. The text gives the national authorities the power to determine the existence of a “gatekeeper” or not, whom the Germans define by a “Growing company with strategic position in several markets”. For this purpose, certain criteria are taken into account, e.g. B. the integration into several markets or the financial solidity.
From there, certain measures apply to these companies. Among other things, the pre-installation of applications on the terminals of a dominant company is prohibited, which puts other applications at a disadvantage. In addition, an online commerce platform that meets the gatekeeper criterion is no longer authorized to carry out self-references. It is a practice that is for large platforms to give preference to the products they make themselves. The most egregious example is Amazon putting its own products first, as documented by the Wall Street Journal.
These dominant companies in the technology sector will be prohibited from denying the interoperability of their products or making it difficult for users to transfer their data from one service to another. For example, WhatsApp today does not allow forwarding a message to another messaging app. A new messaging system to be brought to market would therefore be hampered by the simple fact that it no longer has any users and for that very reason would prevent users from using it. For data transfer, this principle is actually referred to as “data portability” and is anchored in the GDPR. In practice, however, this is often avoided by companies, which is why it must be reinforced in a national text such as the German one.
If all of this sounds very familiar, it is because exactly a month ago the European Commission published a text that provides for identical measures but different methods. The Digital Market Act (DMA), presented with its Binomial Digital Services Act (DSA), is rooted in the broad context of European digital strategy. Europe, which wants to dictate its rules and enforce its sovereignty in many areas (from cybersecurity to artificial intelligence, including the central bank’s digital currency), has presented the DMA, a text that is as complex as it is ambitious. The latter aims to restore a level playing field in the digital field with regard to competition. Far from preventing the success of big tech, the idea is simply to ensure access to companies that want to enter a market that would be wrongly rejected.
The difference in approach between the German text and the European project is remarkable. When Cristina Caffarra and Fiona Scott Morton brought it up in one items For Vox EU, the obligations listed in the DMA seem to be more of a compilation of all previous cartel cases. DMA isn’t a really effective tool for capturing cases in the shadows or out of scope, even if it wants to take care of it. The provisions are highly empirical, and while the criteria that define a gatekeeper are not just quantitative, they are explained rather vaguely. While there is an alternative way to qualify companies as dominant via a “market survey”, it could take some time to get started and actually operate.
The German approach is more “case by case” and offers a functional and adaptable framework. “These are very broad regulations, rules, and they can be interpreted on a case-by-case basis. It is very flexible, the Bundeskartellamt will be able to take into account the specific facts of the individual case in order to decide whether the measures contained in the new Clause 19a, which amends the text, should be imposed or not. “ Magali declares to Eben Digital century. As evidence of this flexibility, Germany allows the platforms two main claims to contest the application of a measure. In addition, an accelerated appeal procedure: In order to avoid court proceedings lasting for years, a platform can appeal directly to the Federal Court of Justice and is no longer heard by the Düsseldorf Higher Regional Court.
A legitimate question now arises as to the legitimacy of this German text, since Europe itself is currently in the process of developing its own legislation on this subject. As a regulation to harmonize the rules, the DMA does not allow collages or supplements and wants to be inclusive. That dictates it “Member States shall not impose any other legal, regulatory or administrative measure on the custodian bank in order to ensure competitive and fair markets.”. With the adoption of the DMA, the new German amendment will therefore come into conflict. An advisor to the ICC, an association that fights for innovation and open and fair competition, said the new German law risked thwarting attempts by the European Union to harmonize the rules of the digital economy in DMA. The association called on the member states to continue their work to develop a uniform, objective and effective framework and not to fragment the laws of the European internal market.
In the meantime, the German change could allow some trends to flow into the future DMA as the country is a pioneer in competition law in the digital field. “I believe that Germany is not doing this to persuade Europe to push ahead with its law on the digital market, but to force it to create a little more flexibility and a case-by-case approach. Case”Magali Eben continues. With this text, Germany shows the way for Europe to regulate important digital platforms and offers an alternative approach. By the time the European regulations are adopted, it will be able to gain experience and sharpen its legislative apparatus for competition within the digital ecosystem. An experience that could play a role in the DMA discussions and negotiations that will take place in Parliament and the Council, which they have not yet approved.
It is therefore a kind of pressure, but above all an impetus for Europe, which knows that it still has to improve its measures within the DMA. “The risk of being the first to do something is that you won’t do it perfectly. Now you need someone to do that for others to follow. This was the case with the GDPR, and that is exactly what Europe is now trying to do with DMA and DSA. She won’t do it perfectly, maybe she won’t do it at all. There will be criticism from all countries, we will point out the shortcomings, but we need that in order to come to a better solution at some point. “concludes Magali Eben.