Private enforcement of the Digital Markets Act: Germany as a frontrunner?

Introduction

The Digital Markets Act (DMA)¹  is an ex ante instrument intended to make digital markets “contestable and fair”. On 2 May 2023, the DMA will start to apply, and the obligations under Article 5, 6 and 7 will start to apply from March 2024.²

While the European Commission and European Parliament have both made it clear that they expect that the DMA is likely to be enforced, at least in part, through private enforcement actions by affected business- and end-users, there is no harmonising instrument for such claims (like the Damages Directive).³ As a result, private enforcement of the DMA will be regulated by the law of the Member State in which the action is brought. Germany is the first Member State to propose specific rules for DMA-based private enforcement. This note provides an overview of (i) the provisions of the DMA addressing private enforcement, (ii) the German proposal and (iii) takeaways for stakeholders. 

Private enforcement provisions of the DMA

The DMA itself makes limited provision for private enforcement, despite calls for clear provisions facilitating private enforcement.⁴ Private enforcement contemplated includes actions for damages and for injunctive relief. Recital 42 of the DMA refers to the role of national courts in safeguarding the right of business- and end-users to raise concerns about possible infringements of the DMA by gatekeepers.⁵ In addition, Art. 39 in conjunction with Recital 92, establishes mechanisms for cooperation between national courts and the Commission when national courts enforce the DMA. The Commission has emphasized that actions before national courts are appropriate, as the DMA is a regulation “containing precise obligations and prohibitions for the gatekeepers…”⁶ It remains to be seen whether the Commission introduces a DMA-specific tool similar to the Damages Directive in the future.

German plans for DMA-based private enforcement: Single party and representative (collective) actions

Draft 11th amendment of the GWB

On 20 September 2022, the Federal Ministry for Economic Affairs and Climate Action (BMWK) published the draft 11th amendment of the German Competition Act (GWB),⁷  making proposals for private enforcement of the DMA and to harmonization of those provisions with those for competition law: 

• Claims for injunction and rectification, liability for damages (§ 33(1) GWB-draft): This provision, regulating claims for injunction and rectification relating to infringements of Art. 101 and 102 of the Treaty on the Function of the European Union (TFEU) (and actions for damages under § 33a GWB), would be amended to include infringements of Art. 5, 6 and 7 of the DMA. Business- and end-users making claims under the DMA would do so under the civil law toolkit already available for infringements of competition law. While claimants could also benefit from § 33a(3) GWB, enabling courts to quantify the harm in actions for damages, the provision that sets out a rebuttable presumption that harm occurred (§ 33a(2) GWB) could not be used for DMA-based claims as it only applies to (horizontal) cartels.
• Binding effect of decisions (§ 33(b) GWB-draft): Decisions by the Commission or EU Courts will be binding in damages proceedings before German courts for infringements of the DMA. However, whether this provides significant relief for claimants in practice remains to be seen, since the Commission’s decisions under the DMA may provide far less detail to establish a claim than Commission decisions under antitrust laws.
• Disclosure (§ 33(g) GWB-draft): Actions for damages for infringements of the DMA would benefit from the disclosure rules in § 33(g) GWB-draft. Both claimants and gatekeepers could require the other party to disclose relevant information necessary to claim or to defend claims for damages.
• Statute of limitation (§ 33(h)(6) GWB-draft): Claims for injunctions, rectification and damages based on infringements of the DMA must be made within five (based on knowledge) or ten (irrespective of knowledge) years of the date on which the infringement ceased.
• Concentration of first instance jurisdiction (§§ 87, 89 GWB-draft): States in Germany concentrated private enforcement proceedings at one Regional Court (Landgericht) per state for more effective proceedings (e.g., the Regional Court of Hannover reviews actions for damages based on competition law in the state of Lower Saxony). The same concentration would apply to DMA-based private enforcement.

Originally, it was expected that the German Federal Government would vote on the draft amendment in late 2022. However, for political reasons (mainly relating to provisions allowing the Federal Cartel Office (BKartA) to break-up companies as ultima ratio), it is now unclear whether the draft will be introduced to the parliamentary process this year.⁸

Representative (collective) actions

Irrespective of whether the Draft 11th amendment of the GWB is adopted, representative (or collective) actions relating to DMA infringements would likely become important in Germany. The German Federal Government is currently discussing its draft implementation of the Representatives Actions Directive,⁹ with the Federal Ministry of Justice publishing its draft bill (“Verbandsklagenrichtlinienumsetzungsgesetz” VRUG) on 16 February 2023, with a view to it entering into force on 25 June 2023.¹⁰

The Representatives Actions Directive explicitly carves out claims based on competition law, while the DMA explicitly requires that Member States include the DMA in the scope of national laws transposing the Representatives Actions Directive (see Recital 104 and Art. 42 of the DMA). Qualified entities (such as consumer protection associations) could initiate actions for injunctions and (collective) damages against gatekeepers as long as they can demonstrate that they are representing at least 50 end-users. 

Collective actions by business users outside the scope of the Representatives Actions Directive are possible, if they relate to infringements of the P2B Regulation (Regulation 2019/1150) or the Unfair Commercial Practices Directive (Directive 2005/29). This potential provides an avenue for certain infringements of the DMA, such as Art. 6(5) (self-preferencing). Under the Draft 11th GWB amendment, “associations promoting commercial or independent professional interests” could initiate representative actions to enjoin conduct infringing the DMA (but not actions for compensation).

Takeaway

While the DMA itself makes limited provision for private enforcement, it is expected to develop as an important pillar of DMA enforcement (alongside activity by the Commission). The draft 11th GWB amendment demonstrates the German Government’s eagerness to facilitate individual private enforcement by business- and end-users (even if the timing of adoption is unclear). Further, collective actions under the transposed Representatives Actions Directive are expected to be widely used by end-users in Germany. As a result, Germany is expected to be an attractive forum for DMA-based private enforcement – given that the generous case-law under the Brussels I Recast Regulation (Regulation 1215/2012) can be seen as facilitating forum shopping.

Due to the “self-executing” nature of gatekeeper obligations under Art. 5 DMA, it is likely that private enforcement actions may be brought on a stand-alone basis, i.e., without a prior Commission non-compliance decision under Art. 29 of the DMA. In such cases, the Art. 39 cooperation mechanisms (e.g., the Commission submitting written and oral observations in proceedings before national courts) between national courts and the Commission will be important. Given the need to avoid fragmentation, it is likely that the Commission would use these mechanisms more often than it has done in competition law proceedings before national courts. 

Finally, it is expected that national courts will make use of the preliminary ruling mechanism under Art. 267 TFEU to seek guidance from the European Court of Justice regarding the DMA.