In mid-February, the European Parliament, the European Commission, and the European Council are scheduled to continue the trilogue on the Digital Markets Act (DMA), a proposal aiming to curtail the anti-competitive behaviour of big digital market players and create a level-playing field for everybody.
The Digital Markets Act (hereinafter the DMA)1 was released in December 2020 as a Regulation Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector.
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The European Commission justifies the proposal by the need to avoid regulatory fragmentation in a single market, to create a safer digital space, and to establish a level playing field for businesses having in mind that some large online platforms act as “gatekeepers” in digital markets. Together with the Digital Services Act, the Digital Markets Act is considered to be one of the centerpieces of the European digital strategy.
In cooperation with other European think-tanks, the Lithuanian Free Market Institute has analysed the proposal and hereby presents a study “Digital Market Act: Competition, Private Property, Innovation and the Interests of the Users” This paper suggests that, notwithstanding its intentions, the DMA is not likely to create a level-playing field and may actually hurt end-users and SMEs, and ultimately hamper this dynamic and innovative market.
Research finds that the DMA is based on vague concepts and a dubious impact assessment with wishfully projected positive outcomes and underestimated negative consequences. It is a source of concerne that the proposal largely overlooks the fundamental democratic principles and values of private property rights and the presumption of innocence.
The DMA impact assessment report offers no evidence-based analysis of the anti-competitive behavior (“gatekeeping”) of large companies in the digital market and envisages the application of sanctions based on preconceived criteria rather than proven violations. This represents a serious shift in competition policy.
In the DMA, the digital sector is treated separately from other economic sectors, which is at odds with the consumer perspective. The DMA is an attempt to construct an artificial competition and an artificial market whereby the consumers are left in the background, without their central role.
The study argues that the DMA may achieve the opposite effects to the expected objectives. It is likely to increase the regulatory burden, create artificial entry barriers instead of dismantling them, reduce incentives to innovate and disrupt, and slow down technological development and economic growth.
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