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The Digital Markets Act

The Digital Markets Act (DMA) aims to prevent gatekeepers from imposing unfair conditions on companies and end users by ensuring the openness of important digital services. The DMA became applicable on 2 May 2023.
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The Digital Markets Act (DMA) aims to prevent gatekeepers from imposing unfair conditions on companies and end users by ensuring the openness of important digital services. The DMA became applicable on 2 May 2023.

Currently, there are over 10,000 digital services companies operating in the European Union and 90% are either small or medium-sized enterprises. Before the DMA entered into force, each of the 27 Member States had unique regulations. The financial burden of compliance restricted the ability of many of these organisations to operate effectively. Common rules across the single market have been designed to foster innovation, growth, and competitiveness.

Cross-border digital trade in the single market is expected to increase by up to 2%, according to the EU. The DMA is expected to trigger a consumer surplus of around €13 billion and economic growth of between €12 billion and €23 billion.

Small and micro-enterprises are exempted from the most costly obligations of the act and there is a year-long exemption from these obligations, after they have scaled up past the thresholds that qualify them as a “small company”.

The DMA not only offers benefits to smaller players but has the power to punish gatekeeping organisations who do not comply with the rules. In the event of infringements of the act, the European Commission can impose fines of up to 10% of a company’s total worldwide annual turnover — and up to 20% in the case of repeated breaches — and periodic penalties of up to 5% of a company's average total daily turnover.

In case of systematic infringements of the DMA obligations by gatekeepers, additional remedies may be imposed after a market investigation. The remedies will be proportionate to the offence committed and, as a last resort, non-financial remedies can be imposed including the divestiture of a business or parts of a business.

These fines are designed to improve the way large platforms operate, as a recent survey found 88% of businesses and business users encountered unfair trading conditions on large platforms.

How should organisations respond to the Digital Markets Act?

Organisations will need to assess the impact of the DMA on their business and business model, identifying where changes are needed and where further attention needs to be paid to current processes.

Trusted advisers can help organisations understand how the DMA can be applied within their existing framework by:

  1. Assessing how “gatekeepers’” existing operations comply with the DMA requirements and identifying areas where they may fall short of the regulations.
  2. Developing tailored compliance strategies for each organisation. This may involve outlining specific steps they need to take to align with the DMA, such as restructuring their digital ecosystem, updating data practices, or implementing new transparency measures.
  3. Updating the latest guidelines, interpretations, and enforcement practices related to the act. Guiding organisations through compliance requirements, clarifying any ambiguities, and offering practical advice.
  4. Conducting training sessions for their employees to raise awareness about the DMA and its impact on their roles. Educating them on compliance measures, data protection practices, and the ethical use of customer data.
  5. Ensuring they remain compliant with the DMA over time. Regularly assessing the organisation’s progress, identifying any gaps or emerging issues, and providing recommendations for continuous improvement.

A comprehensive plan that covers all the new and upcoming legislation covered by the EU’s digital strategy can create opportunities as well as mitigate risk. Read more about the impact of the Digital Services Act. 

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