DMA : EU lawmakers want to impose minimum 4% fine on ‘gatekeepers’

With regards to which authorities should apply the new law, France was in favour of extending the prerogatives to local ones, while other countries, led by Ireland argued in favour of keeping the status quo and applying the country of origin principle. Currently, the service providers are subject to the juridiction of their country of establishment. [Koshiro K/Shutterstock]

Digital giants could be fined at least 4% of their annual turnover for failing to comply with the Digital Markets Act (DMA) if the opinion of MEPs in the Economic and Monetary Affairs Committee are heeded. EURACTIV France reports.

“We are really trying to set up a traffic light system,” the text’s rapporteur, Renew MEP Stéphanie Yon-Courtin, said on Tuesday (26 October) ahead of the vote on the long-awaited DMA.

The DMA was proposed by the European Commission in December of last year to regulate digital markets and to provide a clear framework to prevent digital giants, the so-called “gatekeepers”, from anti-competitive practices.

“With size comes power, and with power comes responsibility,” Yon-Courtin said.

Like other committees in the EU Parliament, the MEPs sitting on the ECON committee have revised the Commission’s proposal after several months of negotiations.

The MEPs agreed to set a minimum fine threshold of 4% in case of non-compliance while raising the maximum threshold to 20%, compared to the 10% proposed by the Commission.

To the list of “essential service platforms” offered by ‘gatekeepers’, the lawmakers also added web browsers and voice assistants, which will have to comply with the same obligations as social networks or search engines.

They also proposed a whistleblower system that would allow companies and users to report anti-competitive behaviour to the European Commission or national competition authorities. They advocated closer cooperation between national authorities and the EU executive, but “the Commission will remain in charge”, Yon-Courtin said.

Ireland draws a red line on country of origin principle in DSA

Following a French initiative against the country of origin principle, Ireland is leading a counter-offensive of ten countries that consider the move would disrupt the digital single market.

‘Predatory’ acquisitions

The EU Parliament’s committee also introduced additional obligations on gatekeepers to prevent so-called ‘predatory’ acquisitions. This is when a large company buys a smaller one to eliminate it because it may be competition in the future.

While the Commission’s proposal already required companies to notify Brussels before buying a rival firm, the lawmakers suggested that this notification be accompanied by an independent study that would certify that “the proposed merger will not impede competition or innovation”.

“An opinion to the European data protection committee on the relevance of the data set to the proposed merger would also be required,” Yon-Courtin said, adding that “the crux of this is not about money, but about data”.

EU countries reject strict deadline for DSA, DMA

A majority of EU countries have succeeded in rejecting the commitment to a tight timeline for an agreement on two key pieces of digital legislation that would have served well the French government ahead of the presidential elections there in April next year.

No fixed deadline

While an inter-institutional agreement was initially planned for spring 2022, when France takes over the EU Council’s rotating presidency, the conclusions of the last European Council summit replaced the mention of a deadline to reach “an ambitious agreement as soon as possible”.

When asked by EURACTIV France about this, Yon-Courtin said she was “hopeful” that the deadline would be met “because everyone wants to go very fast”.

However, the Renew MEP was less optimistic about the Digital Services Act (DSA), the other part of the Commission’s proposed digital package. The DSA aims to tackle content regulation but is more controversial. “The more we push the DMA, the more we will want to push the DSA,” she added.

The draft text will have to go through the Internal Market and Consumer Protection Committee (IMCO), which has substantive competence in the European Parliament.

Shortly after the results of the vote – 55 votes in favour, three against and two abstentions – were announced, IMCO’s rapporteurs for the DMA and DSA said that they were postponing the vote. It was initially scheduled for 8 November but will now be delayed due to the appearance of Facebook whistleblower Frances Haugen who will give her testimony to lawmakers.

This kind of postponement suggests that it will be challenging to have a plenary discussion of the texts by December to begin talks between the Council, Commission, and Parliament in January.

[Edited by Alice Taylor]

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