The three countries had already taken a firm position on the proposal when it was first announced by the European Commission in December 2020. France was particularly concerned about the flexibility and scope of the DMA, while Germany wanted a greater margin of maneuver to member states to curb domination. position of the tech giants.
These concerns have now taken the form of a joint letter to the Commission. The letter is signed by “Friends of an Effective Digital Markets Law” and calls for strengthening DMA in three areas: Member State involvement, flexibility and reach, and merger control.
Involvement of Member States
In the letter, all three countries criticized the subordinate role of governments and national agencies within the DMA. In the current proposal, Member States play only a marginal role, with most of the enforcement or market investigative powers being vested in the Commission.
The joint statement calls on national governments to have more say in market investigations. While they can request inquiries into the appointment of controllers under the current proposal, they also wish to be included in the process of updating the list of substantive provisions of the Regulation.
France, Germany and the Netherlands are also calling for more leeway for national laws to attack goalkeepers. In the current proposal, national governments are expressly prohibited from taking national legislative measures.
“A number of constellations may have national peculiarities,” the signatories wrote, arguing that member states should remain able to define and enforce national rules in the field of competition law.
In addition, national authorities should play a greater role in the application of DMA because “the importance of digital markets […] is too high to rely on only one pillar of the application. “
Flexibility, scope and control of mergers
The signatories also lamented that the DMA does not sufficiently take into account the role of digital ecosystems. While the proposal allows for the appointment of controllers on the basis of qualitative and quantitative criteria, it does not allow targeting platforms that operate in different markets and offer an ecosystem of services.
The cross-market importance criterion is already one of the pillars of the revised law against restrictions of competition in Germany. The amended law was passed in January and German policymakers hailed it as a model for DMA.
In addition, the document called for more flexibility and faster procedures, suggesting a tailored intervention scheme to tackle “rapid patterns of guardian behavior”.
The Franco-German-Dutch initiative also criticized what they called lax merger control rules and the lack of measures to tackle the problem of hostile takeovers. The proposal only obliges supervisors to notify the Commission of proposed mergers, but does not have the power to block them. Therefore, the signatories called for the inclusion of a substantive test that could focus on predatory acquisitions.
The issue of hostile takeovers is particularly problematic in the digital sector, as a recent report by the EU Economic Experts Panel showed. Between 2000 and 2020, the tech giants GAFAM acquired around 1,000 companies.
Reaction to the European Parliament
Green MEP Rasmus Andersen said the European Greens welcomed the call for tighter merger control rules, but rejected the argument for stronger member state involvement.
We “share the analysis that acquisitions of large digital companies need to be regulated more strictly,” said the MEP, but “we have little sympathy for the dispute over competences between Member States and the European Commission”.
The rules need to be enforced at European level because “national authorities are not strong enough to resist big digital companies,” Andersen said.
The DMA is currently being debated by the Member States at the Competitiveness Council. Discussions will last until Friday.
[Edited by Josie Le Blond]