As tech giants consolidated their power, many have perceived existing competition law as doing too little, too late. The idea behind the Digital Markets Act (“DMA”)[1] was to reign in the tech giants’ power in digital markets with a regulatory ex ante approach. If companies provide certain core platform services, such as online search engines or operating systems, and meet the defined thresholds regarding turnover and user numbers, they are designated as gatekeepers by the European Commission. They must then comply with certain rules of conduct when providing these services. One of the ways in which the DMA intends to ensure compliance is through public enforcement, particularly non-compliance proceedings by the Commission. This article focuses on private enforcement as the second pillar of ensuring compliance with the new DMA obligations. Since the DMA contains only a few provisions on private enforcement, it is up to the Member States to implement the specifics. The article will highlight some important legal issues using the example of implementation in German law.
I. Background
The Commission designated the first six gatekeepers on September 6, 2023: Alphabet, Amazon, Apple, Bytedance, Meta and Microsoft.[2] 22 core platform services provided by these gatekeepers were listed in the decision.[3] The gatekeepers had until March 6, 2024, to implement the obligations arising from the DMA.[4]
Consequently, the DMA has been enforceable since March 7, 2024. The European Commission must have been well aware of the high expectations. It opened a series of non-compliance investigations on March 25, 2024, including against Alphabet for self-preferencing on Google Search and against Meta for its “pay or consent” model.[5] The Commission plans to conclude the proceedings within 12 months, as provided for in Art. 29 (2) DMA. However, there is the legitimate concern that the Commission may be overwhelmed with the volume of investigations and proceedings arising from future violations, especially with only 80 additional Commission staff members[6] assigned to enforce the DMA.[7] It should be clear that the Commission alone cannot ensure complete enforcement but must set priorities. Not least because of this, it is widely expected that private enforcement will step in.
II. Privately enforceable provisions of the DMA
Although initially controversial, it is now generally accepted that private enforcement of the DMA is possible.[8] In the final version of the Act, Art. 39 (1) DMA regulates the cooperation of national courts with the Commission in “proceedings for the application” of the DMA and clarifies in para. 5 that national courts shall not issue decisions contrary to a decision by the Commission. This de facto binding effect clearly indicates that the obligations under the DMA can be enforced under private law.[9] Additionally, collective redress is possible through Art. 42 DMA, which references representative actions in the event of infringements that affect the collective interests of consumers, to which Directive (EU) 2020/1828 is to apply.
It is widely agreed upon that the gatekeeper obligations under Art. 5 and 7 DMA are self-executing and thus privately enforceable. There has, however, been some debate over whether the obligations in Art. 6 DMA, “Obligations for gatekeepers susceptible of being further specified under Article 8”, may be enforced in private litigation. This conception is novel and has given rise to the consideration of whether the Commission must concretize these obligations of gatekeepers according to Article 8 (2) DMA before they can be privately enforced.[10]
However, there is good reason to interpret the DMA as permitting immediate private enforcement of Art. 6 obligations as well: As Art. 8 (2) DMA sets out, the Commission may adopt an act specifying the obligations under Art. 6 – but it does not have to. The Commission can adopt a non-compliance decision according to Art. 29 (1) DMA based on the finding that a gatekeeper does not comply with an Art. 6 obligation. It is not necessary that the Art. 6 obligation in question was further specified by the Commission beforehand.[11] It seems quite clear that the same applies to private enforcement.[12] The decisive factor for the question of the private enforceability of a provision of EU law generally is whether the law is directly applicable between private law subjects, granting them individual rights. According to the European Court of Justice’s (“ECJ”) long-standing jurisprudence on private enforceability, a provision of EU law is directly applicable between subjects of private law if the provision is sufficiently specific and unconditional.[13] A certain degree of legal uncertainty is no hinderance; the principle of effectiveness under European law demands private enforceability of directly applicable law.[14] Compared to Art. 101 and Art. 102 TFEU, which are without doubt directly enforceable, Art. 6 DMA is very specific. In addition, the interpretation can often be guided by case law on competition law, on which numerous DMA provisions are based.[15] Art. 6 (5) DMA, for instance, contains the prohibition of self-preferencing familiar from the Commission’s Google Shopping decision which was confirmed by the European General Court (“EGC”) and in the Opinion of Advocate General Kokott in the proceedings before the ECJ.[16]
The German legislature is leading the way with the implementation of private enforcement, including Art. 5 through 7 DMA indiscriminately in the group of provisions to which the Act against Restraints of Competition (“ARC”) rules are to apply.[17] The application of the tried and tested ARC provisions appears very convincing. It should also suit the German courts, which have gained extensive experience with these provisions in recent years, also in cases regarding digital markets.[18] Sections 87 and 89 ARC will also be applicable to DMA infringements, referring cases to the experienced cartel chambers.
Claims for removal and injunctive relief under the DMA can be based on Section 33 ARC. Overall, the hurdles are likely to be lower than for violations of competition law as the dominant market position does not have to be determined and – as will be detailed below – because the gatekeeper has the burden of proof and presentation for their compliance under Art. 8 (1) DMA. The gatekeeper position results from the Commission’s designation decision which is binding for the civil courts pursuant to Section 33b ARC. In addition, Art. 5 through 7 DMA are per se rules.[19] Consequently, the effects of a violation do not have to be examined. Additionally, a justification by the gatekeeper is not possible.[20] Based on recent experience with competition law proceedings, it can be expected that German courts will handle this well.
The situation for damages actions, which can be based on Section 33a ARC, is similar to that under competition law. If a non-compliance decision has already been adopted by the Commission, it is binding for the court. The focus of the legal dispute in any follow-on proceedings will shift to causal damages and damage quantification. As experience in competition law cases has shown, this is challenging enough. Without a non-compliance decision by the Commission, stand-alone proceedings are possible, but will likely remain the exception in private enforcement of the DMA, as has been the case under competition law.
The significance of damages actions based on the DMA remains to be seen. The DMA is intended to ensure that infringements are remedied quickly. In contrast to secretly practiced cartels, violations of DMA obligations should be easier to spot, and Art. 29 (2) DMA aims for the Commission to adopt its non-compliance decision within 12 months. In many cases, hopefully not too much damage will have occurred during this period. However, it may take some time before proceedings are initiated. Furthermore, the 12-month target must still pass the real-life test. It is therefore not unlikely that damages proceedings will come to play a role in private enforcement of the DMA.
III. Jurisdiction and applicable law
Many battles will certainly be fought over the issues of jurisdiction and applicable law. Regarding jurisdiction, the issue arises that the parent companies of the gatekeepers are not based in the EU. However, the Commission has included all legal entities directly or indirectly controlled by the gatekeeper in the designation decisions.[21] Pursuant to Art. 2 (27) DMA,[22] the concept of ‘undertaking’ as relevant legal entity is applicable here and should be understood as established in the ECJ’s case law for Art. 101 and 102 TFEU.[23] All companies belonging to the gatekeeper’s group are therefore suitable defendants in terms of passive legitimacy. For defendants based in the EU, jurisdiction is governed by the Brussels Ia Regulation.[24] An action in Germany is therefore at least possible at a registered German office of a subsidiary.[25] A group company based in the EU can then be included as additional defendant based on the place of jurisdiction of the parties to the dispute under Art. 8 (1) Brussels Ia Regulation.
Under Art. 7 (2) Brussels Ia Regulation, an action can be brought where the harmful event occurred (forum delicti), which can be either the place of the wrongful act or of tortious success, i.e., where the damage occurred. For cartel damages claims, there is a body of ECJ case law on determining the place of success. Because of its proximity to competition law, it seems likely that courts will apply this case law to DMA infringements.[26] In CDC Hydrogen Peroxide, the ECJ considered the injured party’s registered office as the place of success.[27] In its following judgments, flyLAL and Tibor-Trans, the ECJ ruled that the courts of the Member State where the market was affected and in which the damage occurred held jurisdiction.[28] In Volvo, the ECJ further specified that the place where the damage occurred is the place within the affected market where the cartelized goods were purchased – and if goods were bought in several places, jurisdiction would be established at the injured party’s domicile.[29] Since the purpose of the DMA is to protect “the internal market” as such,[30] the affected market could potentially always be EU-wide, rendering jurisdiction at the injured party’s domicile more likely.
Regarding the court’s right to cognizance for all damages, courts may look to the ECJ’s judgment in CDC Hydrogen Peroxide. The ECJ declared an exception from its ‘mosaic’ approach under which the court of the place of success may only rule on the damages that occurred in that state. It ruled that in cartel damages actions, the court at the injured party’s registered office has jurisdiction “for the whole of the loss”.[31] There are good reasons for this to apply in cross-border cases under the DMA, especially, since damages from behavior such as self-preferencing may be more challenging to localize than from the purchase of cartelized goods. Nevertheless, uncertainties remain.
If the parent company is based outside the EU, German international civil procedure law (“ICPR”) applies. Under German ICPR, an action can be brought at the injured party’s domicile as the tortious place of success[32] and the right of cognizance would extend to the total damage as German law does not recognize the ECJ’s ‘mosaic’ approach.
The applicable law in cross-border cases is determined by the Rome II Regulation.[33] Art. 6 (3) Rome II Regulation presupposes conduct restricting competition, which is likely to be fulfilled with DMA infringements.[34] The purpose of the DMA is to contribute to the functioning of the internal market by ensuring “contestable and fair markets in the digital sector”.[35] According to Art. 6 (3) lit. a) Rome II Regulation, the applicable law is the law of the country where the market is, or is likely to be, affected. Pursuant to lit. b), when the market is affected in several countries, a person suing for damages in the court of the domicile of the defendant may choose to base their claim on the law of the court seised (lex fori).
IV. Burden of proof
The burden of proof for a violation of the DMA can be decisive for the outcome of private actions.
According to Art. 8 (1) DMA, a gatekeeper must ensure “and demonstrate” compliance. This appears to reverse the burden of proof and presentation at least in public enforcement settings.[36] This leaves the important question whether Art. 8 (1) DMA also applies in private actions. There are strong arguments in favor.[37] For one, the wording is not limited to Commission proceedings.[38] Secondly, the interpretation must be in line with the principle of effectiveness. When applying national rules on private enforcement, courts must ensure that the exercise of the rights conferred by Union law is not made excessively difficult.[39] It can well be argued that laying the full burden of proof for the infringement on the injured party would do just that. Finally, the other sentences of Art. 8 (1) DMA indisputably apply to private parties. Of course, the issue is highly controversial. It is also argued that in private enforcement actions no facilitation of the burden of proof applies, or that gatekeepers only have a secondary burden of proof. At least where internal processes of the gatekeeper are concerned, it is unlikely that courts would not at least assume a secondary burden of proof for the gatekeeper.[40]
Finally, for damages proceedings, injured parties may resort to the disclosure provision of Section 33g ARC. So far, this provision has been of rather marginal importance. It remains to be seen whether it will become more relevant following a recent clarification by the Federal Court of Justice (“FCJ”) that the hurdles to justify the claim are not very high.[41]
V. A potential factual presumption of damages
Unlike under Section 33a (2) ARC for violations of competition law, there is no statutory presumption of harm for DMA violations. However, in cartel damages cases outside the temporal scope of the ARC presumption, courts found a way of dealing with the empirical fact that certain infringement scenarios have a particularly high probability of causing damages: They established a factual (rebuttable) presumption of harm. According to the FCJ, this takes account of the principle of effectiveness.[42] In cases relating to the DMA, courts will likely look closely at the factual presumption established by the FCJ. This presumption is less than prima facie evidence of harm; the claimant does not meet the threshold of proving harm simply by proving the factual basis for the presumption. However, it establishes a strong indication for harm based on experience. Notably, the requirements the FCJ has set in cartel damage cases are not particularly high. The FCJ also recently extended the factual presumption of harm to a mere exchange of information[43] and a vertical price maintenance dispute.[44]
As the DMA covers particularly harmful conduct, claimants may even argue that a factual presumption of harm for all violations of obligations under the DMA should apply. While it is doubtful whether courts would accept a presumption in such general terms, it is very likely that they will analyze the underlying scenarios and adopt factual presumptions at least for certain DMA violations. Self-preferential treatment, familiar from Art. 102 TFEU proceedings, seems to be a likely candidate. Claimants will still have to prove the damages they sustained. This will be complex, but as experience with cartel damages actions has shown, achievable with the help of economic experts. Additionally, Section 287 of the German Civil Procedure Code (“CPC”), which allows the judge to estimate the amount of damages, is available.[45]
VI. Interim injunctions
The purpose of the DMA is to quickly remedy infringements, which interim legal protection is predestined for. Recent experience in German courts with interim relief in competition law, especially in digital markets, suggests interim legal protection is likely to be obtained by claimants. At the same time, there are certain hurdles that make interim legal protection less likely to succeed.
For an interim injunction, the claimant must substantiate the urgency of obtaining legal protection.[46] According to case law, a claimant must act within 4 weeks to 2 months in order not to refute the urgency – very short considering the complex issues involved. If they also want to issue a warning to the gatekeeper during this time to facilitate an amicable solution, it becomes even more difficult. Furthermore, the threshold to justify urgency has been high in competition law cases; it will be no different under the DMA. A presumption of urgency, such as under Section 12 of the Unfair Competition Act, would have been desirable to claimants.[47]
Additionally, there is considerable risk for claimants in cases where a preliminary injunction can only be issued with effect for the entire market, effectively prohibiting a part of the defendant’s business model.[48] First, the court may, at its discretion, make the ordering or enforcement of an interim injunction dependent on a security deposit.[49] Here, courts must observe the principle of effectiveness to ensure that interim legal protection is not de facto made impossible by demanding an excessively high provision of security. Second, in the event of a subsequent revocation of an interim injunction, the defendant may claim compensation for damages sustained by the enforcement.[50] According to the wording of the provision, this obligation is without restrictions or court discretion. It is evident that this may have a prohibitive effect on private enforcement. Until the legislature has taken action to amend the strict wording of the provision, which would be desirable, a restrictive interpretation is required considering the principle of effectiveness. This is backed by the ECJ’s recent Mylan judgment. In this case from the pharmaceutical sector, an interim injunction prohibiting the distribution of a generic product was later revoked. The ECJ ruled that the court must be able to take into account all circ*mstances of the individual case when determining the amount of damages.[51] In light of the principle of effectiveness, this must apply all the more to DMA cases.
VII. Conclusion
Opinions on the significance of private enforcement of the DMA differ widely; some expect a huge wave of litigation, others a storm in a teacup. The coming months will show who is right.
Several aspects of the implementation outlined above make successful private enforcement in German courts quite likely. The cartel chambers already have significant experience with Section 33 and 33a ARC, the legal basis for claims arising from the DMA. The burden of proof regarding compliance with their obligations likely rests with the gatekeepers and although there is no legal presumption for damages, courts will presumably look to factual presumptions established in cartel damages cases and apply these at least for certain DMA violations. Therefore, the prospect of damages actions based on the DMA should not be dismissed too easily. Finally, despite some hurdles in cases that effect the whole market, interim injunctions may prove a promising avenue to seek legal protection against DMA violations in most cases.
*Dr. Ann-Christin Richter is Deputy Managing Partner in Berlin and Hamburg and Rebecca Apell is an Associate in Berlin
Footnotes
[1] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act).
[2] The gatekeeper designation is spelled out in Art. 3 (4) and (8) DMA. Art. 3 (9) specifies that the Commission shall list the relevant core platform services in the designation decision.
[3] European Commission, press release: Digital Markets Act: Commission designates six gatekeepers, September 6, 2023.
[4] Art. 3 (10) of the DMA specifies that a gatekeeper shall comply with the obligations laid down in Articles 5, 6 and 7 within 6 months after a core platform service has been listed in the designation decision pursuant to Art. 3 (9).
[5] European Commission, press release: Commission opens non-compliance investigations against Alphabet, Apple and Meta under the Digital Markets Act, March 25, 2024.
[6] See for this number European Commission, Proposal for a Regulation of the European Parliament and the Council on contestable and fair markets in the digital sector (Digital Markets Act), COM(2020) 842 final, 11.
[7] See also Galle/Dressel, EuZW 2024, 107; Podzun, Private enforcement and the Digital Markets Act, Verfassungblog, September 1, 2021.
[8] See Galle/Dressel, EuZW 2024, 107 with further references; Haus/Steinseifer, ZWeR 2023, 105, 118.
[9] See Richter/Gömann, NZKart 2023, 208, 209 et seq; Galle/Dressel, EuZW 2024, 107; Komninos, Private Enforcement of the DMA Rules before the National Courts, April 5, 2024, 2.
[10] See for further references on the discussion Richter/Gömann, NZKart 2023, 209, 210 footnote 36.
[11] Art. 8 (4) DMA; see Becker, ZEuP 2023, 403, 420.
[12] See also Komninos, Private Enforcement of the DMA Rules before the National Courts, April 5, 2024, 5 et seq.
[13] The ECJ established the principle of horizontal direct effect in the Van Gend & Loos judgment: “These rights arise […] also by reason of obligations which the Treaty imposes in a clearly defined way upon individuals […].” ECJ, Decision of February 5, 1963, 26/62, summary, para. 3 – Van Gend & Loos.
[14] Richter/Gömann, NZKart 2023, 209, 210; Karbaum/Schulz, NZKart 2022, 107, 111.
[15] Becker, ZEuP 2023, 403, 421; Haus/Steinseifer, ZWeR 2023, 105, 119.
[16] European Commission, Decision of June 27, 2017, Case AT.39740 – Google Search (Shopping); EGC, Judgment of November 10, 2021, T‑612/17 – Google Shopping; Advocate General Kokott, Opinion of January 11, 2024, C-48/22 – Google Shopping.
[17] The 11th amendment to the ARC entered into force in November 2023; see also Komninos, Private Enforcement of the DMA Rules before the National Courts, April 5, 2024, 7 et seq.
[18] See, for example, recently Higher Regional Court of Hamburg, Judgment of August 31, 2023, 15 U 18/23 Kart – Digitale Mautvignetten; Berlin Court of Appeal, Decision of February 11, 2022, U 4/21 Kart, – Tipping-Gefahr; District Court of München I, Judgment of February 10, 2021, 37 O 15721/20 – Netdoktor v. Bundesgesundheitsministerium and Judgment of February 10, 2021, 37 O 15720/20 – Netdoktor v. Google.
[19] See Galle/Dressel, EuZW 2024, 107, 109.
[20] See Galle/Dressel, EuZW 2024, 107, 109.
[22] "‘[U]ndertaking’ means an entity engaged in an economic activity, regardless of its legal status and the way in which it is financed, including all linked enterprises or connected undertakings that form a group through the direct or indirect control of an enterprise or undertaking by another.”
[23] See recently ECJ, Judgment of October 6, 2021, paras. 38 et seq. – Sumal.
[24] The Brussels Ia Regulation is an EU Regulation which contains a jurisdictional regime for the courts in EU member states to determine whether they have jurisdiction in a case brought before them.
[25] Pursuant to Art. 4, 63 (1) Brussels Ia Regulation, see also Galle/Dressel, EuZW 2024, 107, 112.
[26] See Komninos, Private Enforcement of the DMA Rules before the National Courts, April 5, 2024, 11.
[27] ECJ, Judgment of May 21, 2015, C-352/13, paras. 51 et seq.– CDC Hydrogen Peroxide.
[28] ECJ, Judgment of July 29, 2019, C-451/18, para. 33 – Tibor-Trans; ECJ, Judgment of July 5, 2018, C-27/17, para. 40 – flyLAL-Lithuanian Airlines.
[29] ECJ, Judgment of July 15, 2021, C-30/20, paras. 39, 42 and 43 – Volvo. The ECJ has not yet ruled on the scenario of an injured party having made purchases in Member State A while having its seat in Member State B, where Member State B is outside the affected market. See for this scenario Advocate General Emiliou, Opinion of February 8, 2024, C-425/22, para. 55 – MOL, in which the Advocate General argued against jurisdiction at the seat of the parent company of an economic union, where the parent company brought an action for damages for the harm caused solely to its subsidiaries elsewhere.
[30] See Art. 1 (1) DMA.
[31] ECJ, Judgment of May 21, 2015, C-352/13, para. 54 – CDC Hydrogen Peroxide.
[32] Pursuant to Section 32 CPC.
[33] The Rome II Regulation is an EU Regulation which governs the conflict of laws and choice of law in civil and commercial matters regarding the law applicable to non-contractual obligations.
[34] Another possibility would be to determine the applicable law according to the general rule for non-contractual obligations arising out of a tort/delict based on Art. 4 (1) Rome II Regulation, see Komninos, Private Enforcement of the DMA Rules before the National Courts, April 5, 2024, 11.
[35] See Art. 1 (4) DMA and the detailed description in Recitals 3 through 7, which includes reference to Art. 101 and 102 TFEU; see also Galle/Dressel, EuZW 2024, 107, 112.
[36] See for details Bueren/Zober, NZKart 2023, 642, 646 et seq; Seeliger, in: Podszun, Digital Markets Act, 1st Ed. 2023, Art. 8 para. 13.
[37] See also Haus/Steinseifer, ZWeR 2023, 105, 120; Richter/Gömann, NZKart 2023, 208, 212; Lahme/Ruster, in: Podszun, Digital Market Act, 1st Ed. 2023, Art. 39 para. 29.
[38] See Galle/Dressel, EuZW 2024, 107, 113.
[39] Settled case law since ECJ, Judgment of September 20, 2001, C-453/99, para. 29 – Courage und Crehan; recently ECJ, Judgment of October 6, 2021, C-882/19, paras. 33 et seq. – Sumal.
[40] For instance, regarding the combination of data, Art. 5 para. 2, or self-preferential indexing, Art. 6 (5) DMA, see also Galle/Dressel, EuZW 2024, 107, 113; Becker, ZEuP 2023, 403, 427.
[41] FCJ, Judgment of April 4, 2023, KZR 20/21 – Vertriebskooperation im SPNV; see for details the discussion of the judgment in Richter, WuW 2023, 547.
[42] FCJ, Decision of September 12, 2023, KZR 39/21, para. 48 – Matratzenpreisbrecher.
[43] FCJ, Judgment of November 29, 2022, KZR 42/20, para. 55 – Schlecker.
[44] The FCJ extended the presumption to the question whether a price maintenance agreement was the reason why a manufacturer did not supply a price-aggressive outsider after the agreement was concluded, see FCJ, Decision of September 12, 2023, KZR 39/21, para. 48 – Matratzenpreisbrecher.
[45] Section 33a (3) ARC, which is applicable for DMA violations as well, expressly refers to Section 287 CPC.
[46] Section 935 CPC states: “Interim injunctions in relation to the subject matter of the dispute are permissible if there are concerns that a change in the existing situation could frustrate or significantly impede the realization of a party’s right.”
[47] For disclosure claims based on Section 33g ARC pursued in interim proceedings, Section 89b (5) sentence 2 ARC provides that urgency is not required. This does not suffice, however, as it does not extend to the claims for removal and injunction.
[48] See in detail Richter, WuW 2024, 27.
[49] Pursuant to Sections 936, 921 sentence 2 CPC.
[50] Pursuant to Section 945 CPC which states that “If the order [...] of an interim injunction proves to be unjustified from the outset or if the ordered measure is revoked […], the party who obtained the injunction is obliged to compensate the opposing party for the damage it suffers as a result of the enforcement of the injunction [...].”
[51] ECJ, Judgment of January 11, 2024, C-473/22, paras. 50 and 51 – Mylan.
