07.08.2020

Upcoming extensive regulatory framework – Will Europe serve as a worldwide legal lighthouse in the digital era?

Hintergrund

The European Commission seems to be taking its plans to promote Europe as a worldwide legal lighthouse in the digital economy seriously. Recently, the public consultation phase on the White Paper on Artificial Intelligence ended. New powers for the European Commission in the field of competition law are proposed (New Competition Tool “NCT”) and with the Digital Services Act, for which a first draft law is expected by the end of 2020, new regulations for the digital economy in the European Union are already being discussed. Those are just a few of a series of different legislative measure during the last years which form part of the European Digital Strategy of the European Commission (including aspects of data protection, copyright law, consumer law protection, and competition law aspects). Furthermore, there are already plans for new initiatives up to the year 2030 (e.g. 5G corridors for connected and automated mobility and EU governments interoperability strategy).

In addition, on a national level, developments of the European Member States can be observed. For instance, the German legislator is working on the amendment to the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen “GWB”) which provides for comprehensive rules for the digital economy with focus on the role of platforms as intermediaries and "gatekeepers" in the digital and non-digital area.

New legal framework for platform-to-business relations (P2B-Regulation)

Already in July last year, Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediary services ("platform-to-business” regulation (“P2B-Regulation”)) came into force, which aims to strengthen business users in relation to online intermediaries and search engines. Now, since 12 July 2020, the new rules of the P2B-Regulation apply for providers of online intermediation services (online platforms and search engines) in the European Union.

The platform-to-business regulation intends to safeguard transparent and fair competition between business users of online intermediation services, or online search engines and corporate website users with regard to entries and listings in online search engines.

Among other measures, the general terms and conditions of online intermediation services will for example have to state the main parameters that influence how businesses are ranked on their platforms and the relative importance of those main parameters as opposed to other parameters that influence inclusion and placement in the rankings. The Commission has announced to publish official guidelines in the upcoming weeks.

In addition, the online intermediation services have to provide an effective internal complaint-handling system to enable their users to enforce compliance with those rules.

Digital Services Act

The Digital Services Act (DSA) is expected to be a game changer for all digital services, such as app stores, media-sharing platforms and marketplaces. The key pillars of the DSA will be the unification of the internal market, the creation of a control regime, and to safeguard fair competition. In view of the fact that the eCommerce Directive has already been enacted in 2000, the DSA is expected to deal with new phenomena with regard to ‘gatekeepers of digital platforms’, such as Google or Apple, and benefiting service providers seeking access, such as app developers and content providers.

Core guidelines are the standardisation of the digital single market to facilitate access for service providers, extended liability and security regulations for platforms (especially uniform rules for the subsequent removal of illegal content, greater transparency and an improved complaint management), content regulations (responsibility of platforms for content that constitute a violation of copyright and product liability law; hate speech and terrorism) and much more.

The DSA is complemented by competition law (in particular so-called "ex-ante" regulations) and it is planned that supervisory authorities can order platforms to open up their services for competitors (obligation for interoperability).

New Competition Tool

In addition and in part accompanying the DSA, the European Commission has announced plans to publish a new draft law for a “New Competition Tool” (“NCT”) at the end of the year. The NCT will provide the legal basis to address structural competition problems that cannot be tackled effectively under the current EU competition law framework.

The current public consultation to this plans already raised a lot of concerns. The European Commission proposes four policy options to deal with these issues on a dominance-based and/or market structure-based approach. The NCT will provide the European Commission with the power to identify structural competition problems and act against market players with behavioural and structural remedies, without a prior infringement of competition law.

German development – Amendment to the Act against Restraints of Competition

Early this year, the Federal Ministry of Economics and Energy published the draft of an amendment to the Act against Restraints of Competition.

This amendment will implement the legal obligation under the European ECN+ Directive and aims to further strengthen antitrust authorities for competition issues of the digital era.

Key element is the modernisation of rules on abusive market conduct. In particular through new and far-reaching proposed rules addressed to "companies of superior cross-market importance for competition", but also through substantial changes in the existing rules for dominant companies (i.e. the introduction of the concept of "intermediary power”, as a criteria for identifying a dominant position in order to better understand the role of platforms as intermediaries in multilateral markets and the revision of the so-called "essential facilities doctrine", in particular in order to improve access to "gatekeepers" in the digital area).

It is expected that the Act will come into force towards the end of 2020 or early 2021.

Outlook

The envisaged new (European and German) provisions are still under debate. Critical voices have been raised, as to the proportionality and legality of certain rights that shall be granted to the authorities.

If enacted, it can be expected that the envisaged new provisions will leave an immense impact on the digital economy and its market participants. Companies should at an early stage assess to which extent their business model or conduct should be adapted to the new legal developments.

 

Autor/in
Dr. Sebastian Felix Janka, LL.M. (Stellenbosch)

Dr. Sebastian Felix Janka, LL.M. (Stellenbosch)
Partner
München
sebastian.janka@luther-lawfirm.com
+49 89 23714 10915

Roland Schiller

Roland Schiller
Associate
München
roland.schiller@luther-lawfirm.com
+49 89 23714 20967