The DMA sets out ex-ante obligations and prohibitions for large online platforms designated as ‘gatekeepers’ aiming to make digital markets fairer and more contestable. Designation constitutes an important step in the process under the DMA; it entails onerous obligations for designated platforms and may lead to the imposition of hefty fines and other measures of quasi-criminal character. Designation is based on meeting the quantitative thresholds laid down in Article 3(2) DMA, which serve as a rebuttable presumption for the qualitative thresholds stipulated in Article 3(1) DMA.
Prospective gatekeepers can, according to Article 3(5) DMA, rebut this presumption by presenting ‘sufficiently substantiated arguments’ to demonstrate that, exceptionally, although they meet the quantitative thresholds, they do not satisfy the requirements of paragraph 1.
Given that gatekeepers’ designation subjects them to a strict regulatory regime, a notable failure to respect the right to be heard becomes apparent.
A curtailed right to be heard in the designation process
Article 3 DMA does not require the Commission to provide a preliminary finding to potential gatekeepers, which would allow them to submit observations according to Article 34(1) DMA and Article 6 of the DMA Implementing Regulation. Instead, they can only submit their views on the evidence they present in the notification to the Commission. Recital 23 DMA limits the scope of the arguments that can be brought forward, as they should pertain to the quantitative criteria of Article 3(2) DMA, while justifications on economic grounds or the undertaking’s efficiency gains are irrelevant. This already circumscribed possibility of companies contesting their designation is further restricted by the stringent page limitation prescribed by the Implementing Regulation.[1]
An oxymoron arises: against companies’ narrow scope of exercising their right to be heard, the Commission is not limited to the evidence provided by prospective gatekeepers and can rely on additional factors – including qualitative ones – for their designation. Companies are, therefore, precluded from effectively understanding the methodology of calculating the thresholds, the evidence that the Commission’s decision will be based on, and from providing their views. If we consider the Commission’s discretion to rely on ‘information available’ to it for the designation of gatekeepers in case of failure to notify or incomplete notification,[2] the above issue is further exacerbated.
An uneasy weighting with the rights of defence
The inability to provide views on the Commission’s assessment seems incompatible with companies’ right to good administration, which includes the right to be heard as provided in Article 41(2)(a) CFR. The article provides that every person has the right to be heard ‘before any individual measure which would affect him or her adversely is taken’. It requires that the addressees of decisions, which significantly affect their interests, are placed in a position where they may effectively make known their views on the evidence those decisions are based on.[3] As previously mentioned, a designation decision could adversely affect gatekeepers since it entails strict prohibitions and may lead to the imposition of severe fines and coercive remedies.
Given the potential of quasi-criminal sanctions, it is hard to justify why the DMA lacks the procedural safeguards present in competition procedure. The regulatory character of the DMA does not automatically entail a lessening of due process requirements. Indeed, procedural guarantees depend on criteria, such as the severity of the consequences at issue and the institutional framework, rather than on the regulatory or competition law nature of a given legal regime.[4] Indeed, the CJEU’s case law has consistently recognised that the right to be heard in decisions with individual character is a general principle of law, also applicable in economic regulation.[5]
Concluding remarks
While the objective of procedural efficiency is laudable, given the rapidly evolving nature of digital markets, compromising companies’ right to be heard at the kick-off stage of the process is unjustified. Neither the limited scope and the procedural set-up of submitting views on the DMA’s thresholds nor the pre-notification contacts envisaged in Recital 2 of the Implementing Regulation seem to adequately satisfy due process requirements and, more precisely, companies’ right to be informed about the evidence which the Commission’s designation decisions will be based on, to comment and be heard.
ByteDance has challenged its gatekeeper designation, asserting a violation of the right to be heard on the basis of the Commission’s assessment of the evidence adduced for its designation. While the Court’s judgement is expected to provide guidance on the weigh-in of the right to be heard in the context of the DMA designation process, it is essential to underline that leaning disproportionately in favour of procedural efficiency at the expense of the rights of defence is a dangerous balancing exercise in a context of a regulatory framework akin to competition procedure.
[1] According to Annex II of the Implementing Regulation, the maximum number of pages for the notification of each core platform service shall not exceed 50 pages and 30 pages for the substantiated arguments under Article 3(5) DMA.
[2] Article 3(3) subparagraph 2 DMA.
[3] See, inter alia, Judgment of of 14 June 2016, Marchiani v Parliament, C-566/14, EU:C:2016:437, paragraph 51 and Judgments of 12 February 1992, Netherlands and Others v Commission, C-48/90 and C-66/90, EU:C:1992:63, paragraphs 44 and 45.
[4] Alfonso Lamadrid, ‘Procedural Fairness and the DMA: Some Comments on the Draft Implementing Regulation’ Chillin’Competition (December 22, 2022), https://chillingcompetition.com/2022/12/22/procedural-fairness-and-the-dma-some-comments-on-the-draft-implementing-regulation/.
[5] Judgment of 24 October 1996, Commission v Lisrestal, C-32/95 P, EU:C:1996:402.
Co(E)mpetition Procedure 