Comments to the Italian Competition Authority on the Draft Regulation on the Enforcement of DMA

Contents

Entry. 1

The draft regulation extends the powers of the AGCM 2

Risk of parallel enforcement and No bis in idem. 2

Fragmentation of the Digital Single Market 3

Recommendations 3

Application. 3

The European Union (EU) Digital Markets Act (DMA) empowers the European Commission (Commission) to enforce competition rules against gatekeepers and calls for cooperation with national competition authorities (NCAs) within the European Competition Network (ECN).(1) Pursuant to Article 38(7) of the DMA, on 3 June 2024, the Italian Competition Authority (AGCM) issued a Draft Harmonisation Regulation (Draft Regulation) which provides guidance on how the AGCM sees its role in relation to the enforcement of the DMA.(2)

The Information Technology and Innovation Foundation (ITIF), a world-leading think tank on science and technology, appreciates the opportunity to comment on the draft Italian regulation on the forms of cooperation and collaboration envisaged for the implementation of the DMA, and in particular to discuss how Italy must ensure that the AGCM does not inadvertently fragment the enforcement of the DMA in a way that overburdens gatekeepers and creates conflicts of competences between the Commission and the NSAs. The ITIF Comments are organized in five short sections.

First, the draft regulation grants the AGCM procedural powers that may exceed those provided for the NCA under the DMA. Second, the draft regulation appears to allow the AGCM to initiate an antitrust investigation under Italian competition law to deal with the DMA-related proceedings, which raises a number of fundamental legal concerns, such as not in idem or double jeopardy. Third, in light of the above, the general silence of the draft Regulation on several issues relating to coordination and cooperation with the Commission raises the spectre of increased regulatory fragmentation and risks creating significant uncertainty for businesses in the Digital Single Market, and opens the door to conflicts of competences between the Commission and the NCAs. Fourth, the ITIF recommends that the AGCM considers issuing a revised draft Regulation that addresses these issues in a manner that is clearly consistent with the Commission’s role as sole enforcer of the DMA. The following is a brief conclusion.

The draft regulation gives the AGCM the power to, among other things, conduct investigations, summon hearings and initiate requests for information – as well as to apply appropriate sanctions under national law.(3) Therefore, the draft regulation appears to grant the AGCM procedural powers under Italian competition law (Law 287/1990), which are not expressly provided for in the DMA.(4) Indeed, Articles 18.3 and 18.4 of the Italian Market and Competition Law (Law 214/2023) are limited to the investigative powers under the national Competition Law 287/1990 and do not appear to expressly cover other powers that the draft regulation would grant to the AGCM.(5)

For this reason, the draft regulation suggests that the AGCM may be able to engage in DMA-related investigative activities beyond those of the Commission, which increases the likelihood that gatekeepers will face high compliance costs at national level in addition to those incurred by the Commission. If this were replicated across the EU, such extensive investigative powers among NCAs would result in an extremely burdensome process for gatekeepers and high administrative costs – both of which will ultimately be passed on to European consumers, for example through reduced investment and innovation.

The draft regulation also suggests that the AGCM may investigate infringements of the DMA under Article 14 of Law 287/1990. This raises the possibility that the AGCM will not only enforce Italian competition law to address gatekeeper conduct not covered by the DMA, such as cartel restrictions, but will also enforce Italian competition law to address conduct within the scope of the DMA. In other words, just as there is complementarity with regard to enforcement at the Commission level, so too Italian competition law and the DMA could be used jointly against the same gatekeeper conduct.(6)

Such a parallel system, where both the Commission enforces the DMA and the NCAs enforce national rules in relation to the same conduct, appears to be contrary to the principle that the Commission is the “sole enforcer” of the DMA.(7) In fact, double enforcement creates a serious risk of violating the fundamental legal principle of not in idemimposing contradictory remedies and excessive deterrence that chills pro-competitive behaviour. It is therefore crucial that the Commission prioritises DMA enforcement as the sole authority dealing with competition problems related to DMA conduct.

In light of the additional powers granted to the AGCM and the potential for overlapping enforcement by the Commission and the NCA to control exclusionary behaviour by gatekeepers, the draft regulation calls for a thorough discussion on how the AGCM will work with the Commission on coordination and cooperation. However, the draft regulation appears to be silent in several important areas on the details of how this will be done. For example, issues such as the sharing of information between the Commission and the AGCM, the Commission’s powers to intervene and other issues related to cooperation appear not to be addressed.

For this reason, the draft Regulation encourages a DMA enforcement environment mired in regulatory fragmentation, which in turn creates enormous uncertainty and lack of transparency for enforcers and other businesses. Such regulatory fragmentation may also fuel tensions between the Commission and the NCA, which may create wider and potentially more serious problems hampering effective competition enforcement. Moreover, given the problems that have already materialised in relation to the Commission’s DMA enforcement in chilling innovation and effectively picking winners and losers, increased regulatory fragmentation will only exacerbate this damage.

ITIF recommends that the AGCM considers the draft regulation and considers amendments in accordance with the following principles:

▪ Maintaining AGCM authority under DMA: The AGCM should limit its DMA powers to the procedural powers set out for the NCA in the DMA. This will alleviate the problems associated with imposing burdensome compliance costs on gatekeepers as a result of excessive, if not duplicative, investigations by the NCA.

▪ Avoid a parallel law enforcement system: Eliminating the possibility of parallel enforcement of the same conduct by the Commission under the DMA and by NCAs under national competition laws will avoid sensitive issues related to the principle of ne bis in idem, excessive deterrence and conflicting remedies.

▪ Prevent regulatory fragmentation: Instead of giving priority to the powers of the AGCM, the draft regulation should focus on cooperation and coordination with the Commission and other national competition authorities, which appears to be relatively little addressed in the draft regulation.

The DMA is a unique product of EU legislation, raising several unprecedented issues from both a compliance and enforcement perspective. While it aims to create harmonisation across the EU, there are uncertainties regarding the interaction between the Commission and the NCAs. Therefore, through a robust Implementing Regulation, the AGCM has a unique opportunity to shape a healthy enforcement landscape for DMAs in the EU. By prioritising cooperation with the Commission, the AGCM can help avoid further fragmentation of the Digital Single Market and ensure a more effective enforcement regime. Without strong coordination, a DMA enforcement regime involving both the Commission and the NCAs risks unduly discouraging innovation, as well as creating unhelpful conflicts of competences between the Commission and the NCAs.

Thank you for considering my candidacy.