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Publication
Keeping your dawn raid guidance current
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Global | Publication | March 2021
On 15 December 2020, the European Commission published two regulation proposals as part of the digital services act package: the digital services act (DSA) and the digital markets act (DMA).
The DSA and DMA are designed to create a safer digital space in which the fundamental rights of all users of digital services are protected and establish a level playing field to foster innovation and competitiveness in the European market and globally.
The DSA is expected to affect all digital service providers (including social media, online marketplaces, online platforms, etc.) while the DMA will only apply to large companies that are identified as gatekeepers; i.e. those which control at least one “core platform service” (such as search engines, social networking services, certain messaging services, operating systems and online intermediation services) and meet several cumulative criteria including having a large, lasting user base in multiple countries in the EU.
These proposals complement recent EU legislation, such as Regulation (EU) 2019/1150 (Platform to Business Regulation) and Directives that were adopted as part of the New Deal for Consumers (Directive 2019/2161 (the Omnibus Directive) and Directive 2020/1828 (Collective Redress Directive).
The DSA applies to the provision of intermediary services (i.e. the providers of mere conduit, caching or hosting services as defined in the DSA), irrespective of their location, as long as their service recipients have their place of establishment or residence in the European Union.
Exemptions from liability are available where the intermediary confines itself to providing the services neutrally, by a merely technical and automatic processing of the information, and where the cumulative conditions set forth in the DSA proposal are met. Providers of intermediary services shall not be deemed ineligible for the exemptions from liability solely because they carry out voluntary activities aiming at detecting, identifying and removing, or disabling of access to, illegal content. There is, however, no general obligation to monitor the information which providers of intermediary services transmit or store, nor to actively seek facts or circumstances indicating illegal activity.
Intermediary service providers will be subject to a number of obligations, varying depending on their type and size:
All intermediaries shall:
Providers of hosting services (including online platforms) must implement notice-and-action mechanisms to allow third parties to notify the presence of alleged illegal content. In the event of removal or disabling of such alleged illegal content provided by a user, a “statement of reasons” would have to be provided to the concerned user.
Online platforms shall:
Very large platforms which provide services to at least 45 million users in the EU (representing 10 per cent of the population) shall:
Each Member State shall designate a Digital Services Coordinator (DSC) who will have investigation (e.g. performing on-site inspections and asking for explanations from legal representatives) and enforcement powers (e.g. ordering the cessation of actions constituting infringements or imposing fines) at national level.
A European Board for Digital Services (EBDS) will be established to, among others, support the coordination of joint investigations and issue opinions and recommendations to the DSCs.
The Commission will have specific powers, either at its own initiative or in coordination with the EBDS and DSCs, with regards to very large online platforms.
Sanctions for non-compliance with the provisions of the DSA include fines of up to 6 per cent of the annual income or turnover of a provider of intermediary services.
The DMA only applies to so-called “gatekeepers”, i.e. providers of core platform services (such as search engines, social networking services, video-sharing platform services, online intermediation services) which meet the following cumulative criteria:
Providers of core platform services meeting these three criteria must notify the European Commission within three months after those thresholds are satisfied. Based on a market investigation, the European Commission can also designate platforms as gatekeepers even if the above-mentioned presumptions do not apply.
Obligations of gatekeepers include:
Gatekeepers shall inform the European Commission about intended acquisitions of any other digital services before closing their transactions, irrespective of whether the merger control thresholds for EU or national filings are met.
The European Commission may, among other penalties, impose fines of up to 10 per cent of the gatekeeper's worldwide annual turnover.
Publication
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
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