The UK Competition Appeal Tribunal (CAT) recently handed down a judgment refusing to allow “the Facebook Claim”—among the more well-known UK competition-law class-action cases—to proceed to trial. While the case failed to receive the necessary certification, it may yet fight another day, provided that it undergoes, as the CAT put it, a “root and branch re-evaluation.”

Read the full piece here.

ICLE Academic Affiliate Adam Mossoff appeared as a guest on the Patently Strategic podcast to discuss the topic “Why Patents Exist.” The full episode is embedded below.

Abstract

Generative AI is set to become a critical technology for our modern economies. If we are currently experiencing a strong, dynamic competition between the underlying foundation models, legal institutions have an important role to play in ensuring that the spring of foundation models does not turn into a winter with an ecosystem frozen by a handful of players.

ICLE Director of Competition Policy Dirk Auer took part in a virtual panel hosted by the Digital Markets Research Hub about the UK’s Digital Markets, Competition and Consumers Bill and how it compares to the EU’s Digital Markets Act. Tom Smith of Geradin Partners and Liza Lovdahl Gormsen of the British Institute for International and Comparative Law. The full video is embedded below.

We write to express our concerns about two aspects of the proposed rule that would, as drafted, disrupt the careful balance Congress struck in crafting the Federal Trade Commission Act. If the FTC is to have the authority to impose civil penalties for ordinary misrepresentations, even for certain classes of transactions, only Congress can confer that power—and only by amending the Act.

Automatic renewals are nothing new, even if some consumers may find them surprising. How companies implement such “negative option” offerings may sometimes be unfair or deceptive. That’s why Congress enacted the Restore Online Shoppers’ Confidence Act.[1] A new rulemaking to consolidate existing rules on negative option marketing may well be appropriate. Unfortunately, “[t]he scope of the proposed Rule is not confined to negative option marketing,” as former Commissioner Christine Wilson warned in her dissent from the issuance of the proposed amendment: “It also covers any misrepresentation made about the underlying good or service sold with a negative option feature.”[2]

The proposed rule thus presents a great many companies with a difficult choice: abandon negative option marketing altogether, or risk incurring civil penalties not only for the negative option marketing itself, but also for “any material fact related to the underlying good or service.”[3] As former Commissioner Wilson noted, “even if the negative option terms are clearly described, informed consent is obtained, and cancellation is simple,”[4] the FTC could—for the first time—obtain civil penalties for claims involving product efficacy, national origin, how information about the consumer or the transaction is shared, used or secured, and much more.

Negative option marketing is not inherently fraudulent; it is “used lawfully and non- deceptively in a broad array of common transactions—newspaper subscriptions, video streaming services, delivery services, etc.”[5] Automatic renewal provides convenience to the consumer and some degree of predictability to businesses: they can assume that subscriptions will not lapse inadvertently, that consumers will not complain about disrupted service, etc. In a world without negative option marketing, businesses would have to bombard consumers with reminders to renew their subscriptions, much as European websites must bombard consumers with notices about cookies. Given these transaction costs, negative option marketing will likely remain widespread among legitimate businesses.

The proposed rule would fundamentally transform the Commission’s remedial powers; in effect, it would rewrite the FTC Act with respect to any product subject to negative option marketing. Congress has never empowered the FTC to impose civil penalties for ordinary misrepresentations—and for good reason. The original FTC Act gave the FTC exceptionally broad power over “unfair or deceptive acts and practices” (UDAP)[6] but authorized only injunctive relief. Only later did Congress authorize restitution and civil penalties, and only in narrow circumstances. Congress carefully “counterbalance[d]” the exceptionally “amorphous” standard of Section 5 with a “detailed framework” that ensures a defendant always has “fair notice” of what specific conduct counts as “unfair or deceptive”—before being ordered to pay money, whether in the form of restitution[7] or civil penalties.[8] Section 5(m)(1)(b) authorizes the FTC to ask federal courts to impose civil penalties for violations of FTC rules committed “with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule.”[9]

The FTC would invoke this provision in seeking civil penalties for misrepresentations not only about negative option marketing, but about “any material fact related to the underlying good or service.”[10] Under the proposed rule, it would be as if the FTC had taken a red pen to the Act and inserted an arrow pointing up from Section 5(m)(1)(b) (authorizing penalties for rules) to Section 5(b)’s “amorphous” standard of deception. If the FTC can do this with respect to products subject to negative option marketing, it can do so more broadly. Increasingly, it will seek civil penalties in first-time deception cases by codifying more and more kinds of misrepresentations in trade regulation rules.

True, the FTC would still have to show that the company had “actual knowledge or knowledge fairly implied” that its representation about a product was deceptive.[11] But this is not the only part of the statutory framework that matters. What “counterbalances the FTCA’s amorphous ‘unfair or deceptive practices’ standard” is, as the Seventh Circuit made explicit, the combination of Section 5(m)(1)(b)’s knowledge requirement with Section 18(a)’s “requir[ement that] the Commission . . . . give defendants fair notice . . . through . . . rules that ‘define with specificity’ prohibited acts.”[12] Section 5 is the anthesis of “specific,”[13] so its prohibition on deception cannot form the basis for a rule whose violation can lead to civil penalties. The knowledge requirement alone cannot ensure that defendants have fair notice before being subjected to civil penalties, as the Constitution requires.[14]

We urge two changes. First, the proposed rule must focus only on negative option marketing. Specifically, the proposed misrepresentation rule (§ 425.3) should be revised as follows:

In connection with promoting or offering for sale any good or service with a Negative Option Feature, it is a violation of this Rule and an unfair or deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act (“FTC Act”) for any Negative Option Seller to misrepresent, expressly or by implication, any material fact related to the transaction, such as the Negative Option Feature, or any material fact related to the underlying good or service.

Yet a rule thus focused on negative option marketing would still be far too general to provide the specificity required by Section 18(a). The Commission has never issued a trade regulation rule as general and far-reaching as this one. Trade regulation rules promulgated under Magnuson-Moss illustrate the kind of specificity the FTC has previously provided. For example, the Business Opportunity Rule prohibits no fewer than 21 different kinds of misrepresentation regarding business opportunities. [15] This specificity is typical of trade regulation rules.[16] The Commission has usually been similarly specific even when it issues “guides” even though these, being only non-binding guidance and not triggering civil penalties, are not subject to Section 18(a)’s specificity requirement (violations of which cannot be the basis for obtaining civil penalties under Section 5(m)(1)(B)).[17]

Only in such guides has the Commission included language that is un-specific in a way that might resemble the proposed rule. Even here, we could find only two examples. Neither could have been issued as trade protection rules because both clearly lacked the specificity required by Section 18(a).[18]

We urge the Commission to follow the example of its past Magnuson-Moss rulemakings and focus on specific, concrete examples of acts or practices related to negative option marketing that may be deceptive. The proposed rule provides plausible examples of what these might be in its discussion of prevalence, including “lack of informed consumer consent, lack of clear and conspicuous disclosures, failure to honor cancellation requests and/or refusal to provide refunds to consumers who unknowingly enrolled in plans”; “failure to provide consumers with a simple cancellation method”; “deny[ing] consumers refunds and forc[ing] them to pay to return the unordered goods”; “require[ing] consumers to cancel using a different method than the one used to sign up for the program”; and “forc[ing] consumers to listen to multiple upsells before allowing cancellation.”[19] These examples are specific and concrete in much the same way as the practices prohibited by past trade regulation rules.

To craft a rule that will be both effective in protecting consumers and capable of withstanding judicial challenge, the Commission must hold a hearing to explore how the rule should, as Section 18(a) requires, “define with specificity acts or practices which are unfair or deceptive acts or practices.”[20] Congress provided for hearings precisely because the Magnuson-Moss Act requires specificity, and only a full discussion of concrete examples can lead to specific rules. As drafted, courts will invalidate the FTC’s negative option rule, which will benefit no one.

[1] 15 U.S.C. §§ 8401-8405.

[2] Dissenting Statement of Commissioner Christine S. Wilson on Notice of Proposed Rulemaking, Negative Option Rule at 2 (Mar. 23, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/commissioner-wilson-dissent-negative-option-rule.pdf.

[3] Negative Option Rule Proposed Rule, 88 Fed. Reg. 24716, 24734 (proposed Apr. 24, 2023) (to be codified at 16 C.F.R. 425), https://www.govinfo.gov/content/pkg/FR-2023-04-24/pdf/2023-07035.pdf.

[4] Wilson, supra note 2.

[5] Wilson, supra note 2, at 3.

[6] As the FTC recognized in its 1980 Unfairness Policy Statement, Section 5 “was deliberately framed in general terms since Congress recognized the impossibility of drafting a complete list of unfair trade practices that would not quickly become outdated or leave loopholes for easy evasion.” In re International Harvester Co., 104 F.T.C. 949, 1073 (1984).

[7] FTC v. Credit Bureau Ctr., LLC, 937 F.3d 764, 774 (7th Cir. 2019).

[8] 15 U.S.C. § 45(l) (violation of a final order); 15 U.S.C. § 45(m)(1)(B). “Where the Commission has determined in a litigated administrative adjudicatory proceeding that a practice is unfair or deceptive and has issued a final cease and desist order, the Commission may obtain civil penalties from non-respondents who thereafter violate the standards articulated by the Commission. To accomplish this, the Commission must show that the violator had ‘actual knowledge that such act or practice is unfair or deceptive and is unlawful’ under Section 5(a)(1) of the FTC Act.” A Brief Overview of the Federal Trade Commission’s Investigative, Law Enforcement, and Rulemaking Authority, FTC (May 2021), https://www.ftc.gov/about-ftc/mission/enforcement-authority.

[9] 15 U.S.C. § 45(m)(1)(A).

[10] Negative Option Rule Proposed Rule, 88 Fed. Reg. 24716, 24734 (proposed Apr. 24, 2023) (to be codified at 16 C.F.R. 425), https://www.govinfo.gov/content/pkg/FR-2023-04-24/pdf/2023-07035.pdf.

[11] 15 U.S.C. § 45(m)(1)(A).

[12] 937 F.3d at 774, quoting 15 U.S.C. § 57a(a)(1)(B) (“the Commission may prescribe. . . rules which define with specificity acts or practices which are unfair or deceptive acts or practices. . .”).

[13] The FTC commonly bars companies from engaging in further unfair or deceptive acts and practices in orders issued after a violation of the Act, then imposes civil penalties when companies engage in such acts or practices. But unlike Section 18(B), Section 5(b) does not require “specificity” in such issuing orders, nor does Section 5(l) require specificity or even knowledge before the FTC may obtain civil penalties in enforcing such orders.

[14] Although “elementary notions of fairness” always “dictate a person receive fair notice” of what conduct to avoid, the “strict[er] constitutional safeguards” around “judgments without notice” are “implicated by civil penalties.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 & n.22 (1996); see also FCC v. Fox Television Stations, Inc., 567 U.S. 239, 253 (2012) (“A fundamental principle in our legal system is that laws which regulate persons or entities must give fair notice of conduct that is forbidden or required… This requirement of clarity in regulation is essential to the protections provided by the Due Process Clause of the Fifth Amendment.”).

[15] 16 C.F.R. § 437.6.

[16] E.g., Unfair Credit Practices, 16 C.F.R. § 444.2 (1984); Misrepresentations, 16 C.F.R. § 453.3 (1994); General Duties of a Used Car Dealer, 16 C.F.R. § 455.1 (2016); Separation of Examination and Dispensing, 16 C.F.R. §456.2 (1992); Labeling and Advertising of Home Insulation, 16 C.F.R. § 460 (1979).

[17] The Guides for the Jewelry, Precious Metals, and Pewter Industries prohibit “misrepresent[ing] that an industry product contains silver, or to misrepresent an industry product as having a silver content, plating, electroplating, or coating,” and provides five specific examples, including “Use of the words ‘solid silver,’ ‘Sterling Silver,’ ‘Sterling,’ or the abbreviation ‘Ster.’ to mark, de-scribe, or otherwise represent all or part of an industry product unless it is at least 925/1,000ths pure silver.” 16 C.F.R. § 23.5. The FTC’s Guides for Private Vocational and Distance Education Schools declare it deceptive for an “Industry Member to misrepresent, directly or indirectly, expressly or by implication, in advertising, promotional materials, recruitment sessions, or in any other manner, the size, location, services, facilities, curriculum, books and materials, or equipment of its school or the number or educational qualifications of its faculty and other personnel,” and provides no fewer than eleven concrete examples, including misrepresenting “the qualifications, credentials, experience, or educational background of its instructors, sales representatives, or other employees.” 16 C.F.R. §§ 254.4(a), (a)(1).

[18] Under the Guides for Private Vocational and Distance Education Schools, “[i]t is deceptive for an Industry Member to misrepresent, directly or indirectly, expressly or by implication, the nature of the school, its Accreditation, programs of instruction, methods of teaching, or any other material fact through the use of any trade or business name, label, insignia, or designation, or in any other manner.” 16 C.F.R. § 254.2(a). Clearly, the highlighted language would not provide the specificity required by Section 18(a). At least that guide was narrow in its application, covering only members of a small industry, whereas the rule proposed here would cover countless companies across the economy. The Commission’s Endorsement Guide says “[a]dvertisers are subject to liability for false or unsubstantiated statements made through endorsements…”16 C.F.R. §255.1(d). As a guide rather than a trade regulation rule, this provision does not declare all such statements unlawful; rather, it says that they may be, depending on the specific circumstances of the case.

[19] Negative Option Rule Proposed Rule, 88 Fed. Reg. 24716, 24720-21 (proposed Apr. 24, 2023) (to be codified at 16 C.F.R. 425), https://www.govinfo.gov/content/pkg/FR-2023-04-24/pdf/2023-07035.pdf.

[20] 15 U.S.C. § 57a(a)(1)(B).

 

Many of us are accustomed to “surge pricing” when requesting Ubers during rush hour or booking last-minute flights over Christmas. But these types of dynamic or algorithmic pricing strategies are now creeping into daily life — such as in restaurants, gyms and even grocery stores. A recent Wall Street Journal article reported on a customer’s anger when his local bowling alley charged him three times the normal rate using a demand-based, algorithmic pricing strategy.

Read the full piece here.

Abstract

The complexity of the European Union’s Digital Markets Act (DMA) raises various difficult interpretative questions. Chief among them is whether the EU law is effective in achieving its purpose of harmonizing the national laws of EU member states. The issue is not just of academic concern; if the DMA falls short in this regard, it could be viewed as having been founded on flawed legal grounds, potentially rendering it null and void. In this context, we examine recent actions by the German Federal Cartel Office (Bundeskartellamt; FCO) regarding large technology-sector firms that the DMA would regulate as “gatekeepers.” This issue brief outlines two competing legal interpretations of potential relevance. One option is that the FCO’s actions may contravene EU law. Alternatively, the recent German actions could indicate that the DMA fails in its purpose as a harmonizing measure, thereby casting doubts on the law’s validity.

I. The DMA Must Be a Harmonizing Measure

Every law enacted by the EU legislature must have a legal basis in the EU treaties. Without an appropriate treaty basis, the law would be invalid. The DMA’s drafters chose Article 114 of the Treaty on the Functioning of the European Union (TFEU) as its legal basis. Notably, unlike Article 352 TFEU, Article 114 does not require unanimity among EU member states for a law to be enacted. Because the provision has a lower threshold of member-state consent, it is more limited in its scope.

Article 114 TFEU allows adoption of “the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.” In other words, it empowers the creation of harmonizing measures: EU laws that address diverging rules among the member states that “are such as to obstruct the fundamental freedoms and thus have a direct effect on the functioning of the internal market or to cause significant distortions of competition.”[1] Given that the DMA was adopted with Article 114 as its legal basis, it must satisfy those requirements. If it does not, then it risks invalidation by the EU Court of Justice.

II. The DMA’s Potential Ineffectiveness in Harmonization

As Alfonso Lamadrid de Pablo & Nieves Bayo?n Ferna?ndez have persuasively argued, an interpretation of the DMA that rendered it ineffective as a harmonization measure would, in turn, threaten the law’s validity,[2] a concern that has also been noted by Jasper Van den Boom.[3] In a similar vein, Giuseppe Colangelo has argued that the European legal framework could become more fragmented because of overlaps between, and the potential dual application of, the DMA and competition law.[4] Further, Marco Cappai & Colangelo have warned that such overlaps raise the risks of double or even triple jeopardy for defendants in competition cases.[5]

As Lamadrid & Ferna?ndez argued, the initial threshold question is whether there are, or are likely to arise, sufficient significant divergences among national laws to justify invoking Article 114 TFEU. Provided that they exist, the follow-up question is whether the DMA addresses those divergences effectively. According to Lamadrid & Ferna?ndez, if courts interpret the DMA rules meant to ensure harmonisation narrowly—namely, Article 1(5)-(7)—there is a risk that they will fail to pre-empt the very fragmentation that the law is supposed to address.[6]

The Impact Assessment for the DMA proposal gave several examples of diverging national laws, including Section 19a of the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschra?nkungen; GWB).[7] Most recently amended in 2021, the GWB is intended to apply to businesses with “paramount cross-market significance”—a designation defined differently than the DMA’s “gatekeepers” but which likely would be applied to essentially the same set of companies. Colangelo cited the amended GWB—describing it as a kind of “Germanexit”—in arguing that the potential for overlapping enforcement of the DMA and national competition rules is exacerbated where member states strengthen their antitrust-enforcement tools with platform-specific provisions.[8]

On one hand, Article 1(5) states that member states “shall not impose further obligations on gatekeepers by way of laws, regulations or administrative measures for the purpose of ensuring contestable and fair markets.” But on the other hand, it qualifies this mandate by excluding prohibition measures that are “outside the scope of this Regulation,” so long as gatekeepers are not targeted explicitly for being gatekeepers. Lamadrid & Ferna?ndez suggest that the effect of this qualification may be to “exempt, permit, and leave unchanged all of the rules identified in the Commission’s Impact Assessment as sources of existing or likely regulatory fragmentation.”[9]

Article 1(6) states that the DMA is without prejudice to the application of EU competition law (Articles 101-102 TFEU); national rules analogous to EU competition law (letter (a)); rules on merger control (letter (c)); and also “national competition rules prohibiting other forms of unilateral conduct insofar as they are applied to undertakings other than gatekeepers or amount to the imposition of further obligations on gatekeepers” (letter (b)). Lamadrid & Ferna?ndez note:

Under this provision, Member States would remain free to enact new rules overlapping with those in the DMA, or even establish ‘additional obligations’, provided that these are enacted as part of their national competition rules and do not only target gatekeepers as defined in the DMA.[10]

Without questioning that a narrow interpretation is possible, Van den Boom argued that there should be a way to interpret the DMA’s pre-emptive provisions more broadly to ensure effective harmonization.[11] Van den Boom concludes that national laws like the German Section 19a GWB may need to be revised in the light of a broader, harmonization-preserving interpretation of the DMA.[12]

III. FCO Objections to Google’s Data Processing Across Services

In December 2022, the FCO issued a statement of objections regarding Google’s processing of user data across services, which noted that, under Google’s current terms, data from many services can be combined to construct user profiles for advertising and other purposes.[13] The data is collected and processed across such platforms as Google Search, YouTube, Google Maps, and even third-party sites, as well as Google’s background services, with the company periodically drawing data from Android devices.

The FCO tentatively concluded that these terms did not offer users adequate choice regarding the extensive cross-service data processing, deeming the current options insufficiently transparent and overly broad. In announcing that they would require Google to modify the choices available to users, the FCO relied on Section 19a GWB, the same provision that the DMA Impact Assessment offered as an example of the kind of legal fragmentation that the DMA was meant to address. Moreover, and crucially, the object of the FCO’s investigation—combining user data across services—is covered by the DMA in its Article 5(2). This suggests that the FCO’s may actions are prohibited by the DMA (in Articles 1(5)-(6)).

In addressing concerns that their actions were pre-empted by the DMA, the FCO claimed that they were applying domestic competition law, which would suggest that Article 1(5) DMA does not apply. The FCO also noted that no “core platform services” have been designated under the DMA, and thus we do not yet technically have any “gatekeepers” for the purposes of the DMA’s pre-emption rules. Finally, the FCO asserts that the domestic legal basis (Section 19a GWB) of their investigation “partially exceeds the future requirements of the DMA” and, moreover, that “the Bundeskartellamt is in close contact with the European Commission.”[14]

IV. The FCO Versus the DMA

By its own admission, the FCO is pursuing Google for conduct to which the European Commission is likely to apply the DMA. The FCO thus appears to be trying to beat the Commission to the chase and impose its own regulatory vision before the Commission has time to act.

The Google investigation is part of the FCO’s broader agenda for large tech firms. The agency has already used Section 19a GWB to designate Alphabet, Amazon, Apple, and Meta as having “paramount significance for competition across markets,” while an investigation to similarly designate Microsoft is pending.[15] Some, if not all, of those companies are likely to also be deemed “gatekeepers” by the European Commission under the DMA.

More importantly, at least some ongoing Section 19a investigations relate to matters covered by the DMA. For example, the FCO’s investigation of Apple’s app-tracking transparency framework focuses on so-called “self-preferencing,” a practice that the Commission could determine the DMA covers.[16] The FCO commenced that investigation after final agreement on the DMA in March 2022. Similarly, the FCO’s ongoing investigation of Meta similarly concerns the processing of user data across services, which is clearly covered by the DMA, provided that the relevant Meta services will be designated under the DMA as gatekeepers.[17]

If the Commission designates Google and its services under the DMA, the company would be subject to Article 5(2) DMA, which would require that Google obtain user consent to:

(a) process, for the purpose of providing online advertising services, personal data of end users using services of third parties that make use of core platform services of the gatekeeper;

(b) combine personal data from the relevant core platform service with personal data from any further core platform services or from any other services provided by the gatekeeper or with personal data from third-party services;

(c) cross-use personal data from the relevant core platform service in other services provided separately by the gatekeeper, including other core platform services, and vice versa; and

(d) sign in end users to other services of the gatekeeper in order to combine personal data.

The key notions of “specific choice” and “consent” in Article 5 DMA pose difficult technical and legal questions. Exactly how Google would implement such cross-service processing of data in compliance with the DMA will be a matter for discussion between Google and the European Commission.

Different authorities are likely to reach different conclusions as to how to approach such problems. But given that the DMA is based on Article 114 TFEU and thus intended as a harmonization measure, its chief purpose must be to prevent fragmentation of regulatory approaches to issues clearly covered by the DMA. This is true irrespective of whether a national authority purports to rely on national competition rules or on other national law.

The FCO noted that Section 19a GWB “partially exceeds” the DMA’s requirements, which is a curious choice of phrase. It would appear to admit that the national law overlaps with the DMA. To the extent that such an overlap exists, application of the law to designated gatekeepers is pre-empted by Articles 1(5)-(6) DMA. Even if the FCO could show that some requirements they intend to impose on Google “exceed” what the Commission would do under the DMA, this would not render that FCO’s actions outside the scope of DMA’s pre-emptive provisions.

The FCO’s stated intent is to impose its own interpretation of what constitutes “sufficient choice” as to whether and to what extent “users agree to cross-service data processing.” Based on these assertions, it is difficult to see how the FCO’s action would either be “outside the scope” of the DMA (Article 1(5) DMA) or constitute a “further obligation” (Article 1(6) DMA). If the DMA is to be an effective harmonizing measure, then the mere fact that a national authority has an idiosyncratic interpretation of user choice and consent in the context of cross-service data processing cannot be sufficient for its actions to constitute a “further obligation.”

Any other reading of the DMA would serve to nullify Articles 1(5)-(6). Whenever any national authority disagrees with how the Commission enforces the DMA, they could simply adopt national measures that “exceed” the DMA in that they differ from the Commission’s approach. Given the scope of Article 5(2) DMA, interpreting Articles 1(5)-(6) not to preclude the FCO’s actions would jeopardize the DMA’s validity as a harmonising measure under Article 114 TFEU.

As the FCO itself has noted, the Commission has not yet designated any “gatekeepers” or their “core platform services.” The FCO has, however, conceded that its actions against Google concern services that are “likely” to be designated and therefore covered by the DMA. To preserve the DMA’s validity, actions like the FCO’s against services that are within the DMA’s scope must be pre-empted. With services that are not yet—but are likely to be—designated, actions by a national authority that will be illegal once the services are designated should also be considered illegal while a designation is imminent. This reading follows both from the DMA’s function as a harmonizing measure under Article 114 TFEU and from the principle of sincere cooperation (Article 4 TEU).

Pre-emption does not have to render Section 19a GWB and similar national rules a dead letter. As Gunnar Wolf & Niklas Brüggemann argue, there is space for “complementarity” between the DMA and national law.[18] If, however, the DMA is to remain an effective harmonizing measure, the scope for national action in areas regulated by the DMA must be narrow. It does not appear that the FCO’s proposed action is “complementary” to the DMA. Rather, it is a brazen attempt to circumvent the DMA’s harmonizing function.

V. Conclusion

The FCO and other national authorities may be less concerned than the European Commission with preserving the DMA’s validity. In fact, the FCO’s actions suggest that they are chafing against the restraints imposed by the DMA and would prefer to act as if the restraints do not apply. It would be surprising if the Commission did not respond with a more assertive approach to such prima facie breaches of EU law by national authorities. The stakes are high. If the Commission tacitly accepts an interpretation of the DMA that gives national authorities free rein for these kinds of enforcement actions, then it will cease to be a harmonizing measure and, as such, would be invalid.

[1] Case C-58/08 Vodafone, O2 et al. v Secretary of State, EU:C:2010:321 ¶ 32.

[2] Alfonso Lamadrid De Pablo & Nieves Bayón Fernández, Why the Proposed DMA Might Be Illegal Under Article 114 TFEU, and How to Fix It, 12 J. Eur. Compet. Law Pract. 576 (2021).

[3] Jasper Van den Boom, What Does the Digital Markets Act Harmonize?–Exploring Interactions Between the DMA and National Competition Laws, 19 Eur. Competition J. 57, 69 (2023).

[4] Giuseppe Colangelo, The European Digital Markets Act and Antitrust Enforcement: A Liaison Dangereuse, Eur. Law Rev. 597 (2022).

[5] Marco Cappai & Giuseppe Colangelo, Applying Ne Bis in Idem in the Aftermath of BPost and Nordzucker: The Case of EU Competition Policy in Digital Markets, 60 Common Mark. Law Rev. (2023).

[6] De Pablo & Fernández, supra note 2.

[7] European Commission, Commission Staff Working Document 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), Part 2, 112-113 (2020), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020SC0363.

[8] Colangelo, supra note 4.

[9] Id, 580.

[10] Id.

[11] Van den Boom, supra note 3.

[12] Id, 84.

[13] Bundeskartellamt, Statement of Objections Issued Against Google’s Data Processing Terms, (2023), https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2023/11_01_2023_Google_Data_Processing_Terms.html.

[14] Id.

[15] Bundeskartellamt, Proceedings against large digital companies – on the basis of Sec. 19a GWB – as of May 2023, (2023), https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Downloads/List_proceedings_digital_companies.pdf. Note that Amazon and Apple are disputing their designation under Section 19a and according to the FCO the court proceedings are not yet finalized.

[16] Bundeskartellamt, Bundeskartellamt reviews Apple’s tracking rules for third-party apps, (2022), https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2022/14_06_2022_Apple.html. As noted in the previous footnote, Apple is disputing their designation under Section 19a.

[17] Bundeskartellamt, Meta (Facebook) responds to the Bundeskartellamt’s concerns – VR headsets can now be used without a Facebook account, (2022), https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2022/23_11_2022_Facebook_Oculus.html.

[18] Gunnar Wolf & Niklas Brüggemann, Agenda 2025: the Digital Markets Act and Section 19a GWB, D’Kart (2022), https://www.d-kart.de/en/blog/2022/07/19/agenda-2025-der-digital-markets-act-und-§19a-gwb.

Abstract

The question “what is equality?”, applied to the distribution of resources across races, suggests the following answer: when there appears to be no need for a policy that focuses on improving the welfare of one race relative to another. There is another way to approach the same question: equality is when traditionally-recognized paths to advancement do not give preference to or disadvantage an individual because of his race. Notice the difference here is between end-state and process-based notions of equality, a distinction Nozick emphasized in his examination of justice in distribution. Nozick rejected end-state theories of justice in distribution. I side with Nozick’s approach and argue that the only morally justifiable and administratively feasible approach to determining equality in the distribution of resources across races is through a process-based definition. I explore the implications of this argument for Grutter v. Bollinger.