The DMA may lead to breaches of a fundamental right

The DMA may lead to breaches of a fundamental right

Overlapping National and EU-wide antitrust frameworks could lead to a violation of the right against double jeopardy for companies, like Apple, targeted by the Digital Markets Act.

The European Commission recently issued a statement of objections to Apple, which argues that Apple’s practice of denying app developers (e.g. of digital wallets) access to Apple’s NFC chip hardware, constitutes an abuse of a dominant position under Article 102 of the Treaty on the Functioning of the European Union (TFEU) (Case AT.40452). An NFC chip is the piece of hardware which allows you to ‘tap’ your iPhone against a card reader to make payments. Access is necessary for digital wallet developers to develop their products on IOS.

However, the Commission will face difficult questions when reviewing this case. For example, in abuse of dominance proceedings under Article 102 TFEU the Commission must define which type of abuse is present. Is this case of ‘reserving access’ an example of refusal to supply access of the specific NFC hardware, or is it an example of unfair terms of use for a larger part of the hardware structure or the entire structure. The difference could have significant effects regarding what needs to be proven: in the former interpretation, the Commission must apply the Oscar Bronner criteria which are difficult to satisfy; in the other scenario they could use a simpler effects-based analysis (considering likely foreclosure of competitors). The question of which part of the product the specific abuse relates to is both inextricably rooted within, and equally as complex as the question of which type of abuse is present. Also, problems with defining the relevant product market may arise: is ‘mobile wallets on IOS devices’ a valid product market or should this extend to the whole digital wallets market?

The EU has already experienced difficulties when bringing antitrust cases against big tech companies. Therefore, it is preparing to adopt the Digital Markets Act (DMA), part of the Digital Services Package, attempting to curb technology companies’ potential to cause consumer harm. It comes early in the global push for regulation targeting ‘big tech’ (generally a combination of Amazon, Alphabet (Google), Meta (Facebook), Apple, and Microsoft). The DMA provides an alternative route to prosecute these abuses; for example, it avoids having to define the ‘relevant market’ or which category of abuse a practice falls under, and having to apply different respective tests to those categories. It instead provides a list of obligations which ‘gatekeepers’ must follow; for example, under Article 6 DMA the Commission may specify that gatekeepers must allow access to all hardware and software features of their service or product.

As far as the DMA makes the NFC case easier to prosecute, it should be welcomed. However, the DMA also creates a situation where the same behaviour might infringe multiple frameworks. Taking the example relating to NFC software, any obligation introduced pursuant to Article 6 DMA preventing refusal of access to the NFC hardware on iPhones may, in effect, be the same obligation contemplated in current proceedings against Apple for an abuse of a dominant position relating to their NFC practices (case AT.40452). This is problematic as it could lead to a violation of ne bis in idem (the right not to be tried or punished twice for the same offence) enshrined under Article 50 of the EU Charter of Fundamental Rights.

The decentralisation of EU competition law enforcement means that both the Commission and the national competition authorities of Member States (NCAs) have the competence to deal with EU competition law. This exposes the possibility of an NCA bringing enforcement proceedings against a company under the Article 102 framework and the Commission concurrently bringing enforcement proceedings under the DMA. This is possible because a gatekeeper (such as Apple) may also fall under the definition of a dominant undertaking in a relevant market for an Article 102 abuse of dominance.

Articles 38 and 39 DMA acknowledge this possibility and provide a mutual obligation for cooperation and information when either proceedings are initiated. However, the DMA still lacks any sort of priority of notion such as that included in Regulation 1/2003 Art. 11(6) which deals with the parallel competence of NCAs and the Commission to enforce Articles 101 and 102 TFEU.

This is not merely a theoretical potential for overlap; NCAs seem eager to prosecute large platforms for their anti-competitive practices. One example of this is the Dutch competition authority’s (ACM) recent 50 million euro fine against Apple for mandatory use of their in-app payments system on dating apps. It would be possible, as was the case until recently, for an NCA sanctioned company like Apple to delay rectifying the anticompetitive practice. During this time, the Commission could initiate enforcement proceedings for violation of the DMA. In an alternative scenario, the Commission proceedings under the DMA might have come first but failed to rectify the situation compared to the stricter national law (which is permitted under Regulation 1/2003). A further scenario could be that the NCA application of Article 102 might not provide a solution which fully satisfies the obligations of the DMA, in which case the Commission may want to bring further proceedings. In all these cases, the right under Article 50 of the Charter would be violated.

In relation to the NFC issue, the proceedings are already underway. If the Commission fails to find an abuse, bringing further enforcement proceedings under the DMA to force Apple to grant NFC chip access would likely violate ne bis in idem. Alternatively, if the Commission finds an abuse but the remedy under the DMA doesn’t satisfy the stricter national ‘abuse of dominance’ laws of a particular Member State, the NCA taking proceedings against Apple would likely violate ne bis in idem which puts the NCA in a difficult position.

Updating the antitrust framework with the DMA should help eradicate consumer harm by tackling cases like the NFC case more easily. However, all competition authorities within the EU must be wary of their future decisions under this new framework. There are many instances where multiple authorities will be eyeing certain behaviour. Germany’s Federal Cartel Office recently initiated an investigation into self-preferencing data-tracking practices of Apple, behaviour which could equally infringe the DMA.


Add a comment