COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on contestable and fair markets in the digital sector (Digital Markets Act)
Date: 2020-12-15
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: Internet, competition law, consumer protection, digital economy, digital single market, electronic commerce, goods and services, provision of services, unfair terms of contract

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.12.2020  SWD(2020) 364 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on contestable and fair markets in the digital sector (Digital Markets Act) {COM(2020) 842 final} - {SEC(2020) 437 final} - {SWD(2020) 363 final}  
 
 
Executive Summary Sheet  
Impact Assessment for a Digital Markets Act:  legislative initiative to ensure a competitive Single Market for 
digital services and in particular fair and contestable platform markets1.  

A. Need for action 
What is the problem and why is it a problem at EU level?  
In  digital  markets,  a  few  online  platforms  –  often  embedded  in  their  own  ecosystems  –  have  emerged  as  key 
structuring elements of today’s digital economy, intermediating the lion’s share of transactions between consumers 
and  businesses.  These  gatekeeper  platforms  have  a  major  impact  insofar  as  they  control  access  to  and  have 
gained an entrenched market position in digital markets.  

This emergence of gatekeeper platforms has been accompanied by three main problems: (i)  weak contestability 
of  and  competition  in  platform  markets;  (ii)  unfair  business  practices  vis-à-vis  business  users;  and  (iii) 
fragmented regulation and oversight of market players operating in these markets.  

These problems are driven by market failures that preclude self-correction. Digital market features can strengthen 
entry  barriers  to  gatekeeper  markets.  Business  relations  are  characterised  by  particularly  strong  levels  of 
dependence and imbalanced bargaining power. Furthermore, various national rules in the EU are emerging in 
partial response to the problems identified, resulting in fragmented regulation and oversight.  

By  undermining  competition  and  market  contestability,  the  problems  lead  to  inefficient  market  outcomes  in 
terms  of  higher  prices,  lower  quality,  as  well  as  less  choice  and  innovation  to  the  detriment  of  European 
consumers.  Addressing  these  problems  is  of  utmost  importance  in  view  of  the  size  of  the  digital  economy 
(estimated  at  between  4.5%  to  15.5%  of  global  GDP  in  2019)  and  the  important  role  of  platforms  in  digital 
markets. 

What should be achieved? 
Ensuring the proper functioning of the internal market by promoting effective competition in digital markets and 
in particular a fair and contestable online platform environment.  

What is the value added of action at the EU level (subsidiarity)?  
Member States are increasingly considering national measures to remedy the identified problems. This results in 
different  regulatory  requirements  across the  EU.  Such  fragmentation  puts at risk  the scaling-up  of  start-ups  and 
smaller businesses and their ability to compete in digital markets. 

B. Solutions 
What are the various options to achieve the objectives? Is there a preferred option or not?  
Four key parameters shape the choice of options: the scope design, the set of obligations related to unfair trading 
practices, the speed and flexibility of the architecture and the enforcement framework. 

Option  1  is  a  non-dynamic  instrument  of  self-executing  obligations  addressing  clearly  defined  unfair 
practices by gatekeepers in specific core platform services. This option is presented with two sub-options for the 
scope on the basis of solely quantitative thresholds. Sub-option 1 is based on a high threshold, while sub-option 
1.B is based on a lower threshold. 

Option  2  is  a  semi-flexible  instrument,  combining  a  set  of  self-executing  obligations  and  obligations  with 
regulatory  dialogue,  a  mechanism  for  updating  the  practices,  and  a  mechanism  for  identifying  emerging 
gatekeeper companies. This option is presented with two sub-options for the scope on the basis of quantitative 
thresholds  and  qualitative  designation.  Sub-option  2.A  is  based  on  a  high  threshold,  while  sub-option  2.B  is  
based on a lower threshold, both in combination with qualitative designation 

Option 3 is a fully flexible instrument providing for a dynamic updating mechanism allowing for inclusion of 
additional core platform services and additional obligations when such an inclusion is considered appropriate 
and justified following a market investigation. The scope of this option is based solely on qualitative thresholds. 

1   This  initiative  combines  two  initiatives  and  two  public  consultations  for  (i)  Digital  Services  Act  package:  ex  ante  regulatory 

instrument of very large online platforms acting as gatekeepers; and (ii) the New Competition Tool. 

1 

 
 
                                                           
The preferred policy option is Option 2 as it provides for timely intervention for the most egregious practices and 
more  gradual  approach  for  measures  needing  further  tailoring  and  specification.  It  further  allows  tackling  new 
unfair practices and market failures related to gatekeepers that are expected to have an entrenched position in the 
near future, thus enabling to address market failures in the dynamically changing digital environment. 

What are different stakeholders' views? Who supports which option?  
There  is  general  support  for  ex  ante  rules  for  digital  gatekeepers,  with  a  majority  of  stakeholders  calling  for  a 
combination of quantitative and qualitative criteria to identify gatekeepers. 

C. Impacts of the preferred option 
What are the benefits of the preferred option?                                     
The preferred option will increase the contestability of digital markets and help businesses overcome the barriers 
stemming  from  market  failures  or  from  gatekeepers’  unfair  business  practices.  It  will  add  a  tailored  regulatory 
solution where a gap currently exists. This will foster the emergence of alternative platforms, which could deliver 
quality innovative products and services at affordable prices. The associated benefit of the preferred option would 
be a change in consumer surplus estimated at EUR 13 billion per year. A substantial decrease in internal market 
fragmentation is also expected, thus freeing the growth potential of the Digital Single Market.  

What are the costs of the preferred option (if any, otherwise of main ones)?                                    
The main cost relates to compliance costs for gatekeepers as a result of the new rules envisaged. Businesses other 
than gatekeeper platforms may incur certain administrative costs when complying with information requests under 
the  preferred  option. These  latter  costs  are,  however,  unlikely  to  represent  an  increase  from  current  compliance 
costs incurred by businesses. 

What are the impacts on SMEs and competitiveness?  
SMEs  do  not  qualify  as  a  gatekeepers  and  would  not  be  targeted  by  the  list  of  obligations.  Instead,  new  rules 
levelling  the  playing  field  would  allow  SMEs  (including  business  users  competing  with  gatekeepers)  to  grow 
throughout the internal market as a result of the removal of important barriers to entry and expansion. It could be 
expected that the measures envisaged would also result in more competition among platforms for business users. 
This is expected to lead to higher quality services at more competitive prices, coupled with a higher productivity. 
Business  users  would  also  have  more  confidence  in  selling  online,  as  they  would  be  protected  from  unfair 
practices.  

Will there be significant impacts on national budgets and administrations?  
A more comprehensive enforcement toolkit will allow businesses to compete on their merits. This will result in 
economic growth, which in turn translates into higher tax revenues for national administrations. The burden to the 
Commission of implementing this initiative  is low (mainly redeployment of existing job positions) compared to 
the benefits for the economy. National authorities would have to bear some minor administrative costs. 

Will there be other significant impacts?  
An  improvement  of  market  competition  in  the  digital  sector  would  result  in  higher  productivity,  which  would 
translate  into  higher  economic  growth.  The  promotion  of  higher  competitiveness  of  digital  markets  is  also  of 
particular importance in increasing trade and investment flows.  

Proportionality?  
The preferred option would be proportionate in view of the size (harmful impact of unfair practices) and the nature 
(fast  changing  digital  sector)  of  the  problem  identified.  It  would  achieve  the  overall  objective  of  a  better 
functioning internal market as well as the specific objectives in a targeted manner by imposing a limited burden on 
a defined set of undertakings operating in digital markets. 

D. Follow up 
When will the policy be reviewed?  
The  Commission  will review  the  measures  taken  to address  problems  issues  identified in  relation  to  gatekeeper 
platforms three (3) years after the start of the application of the new rules. 

2