Warsaw, 25th May 2021
Report by the Union of Entrepreneurs and Employers:
The Digital Markets Act is to provide equal opportunities, but it may diminish the quality of services for European businesses and consumers
The regulation on contestable and fair markets in the digital sector, known as the Digital Markets Act, tries to address some of the challenges of digitisation and to ensure fair conditions for online competition. The Union of Entrepreneurs and Employers supports all initiatives aimed at improving the competitiveness and functioning of digital markets. We are, however, concerned that the DMA may in practice lead to a deterioration in the quality of digital services for European businesses and consumers, as well as to a slowdown in technological development.
The Union of Entrepreneurs and Employers has repeatedly called for the improvement of the regulatory environment for business. We believe that the way to achieve a high level of competitiveness of our economy is to create an attractive legal-and-institutional framework for companies to function in. We stand by this position also on a per-industry basis and call for no disproportionate burdens to be placed on the digital sector.
Presently, new digital regulations seem to be proposed before enough time to allow for a thorough assessment of the effects of the previous ones has elapsed. This way, not only does the regulatory burden on entrepreneurs increase significantly, thus generating costs and hindering business operations for small European entities in particular, but also legal certainty is reduced discouraging companies from risk-taking, innovation, and investments.
According to Jakub Bińkowski, Director of the Law and Legislation Department at the Union of Entrepreneurs and Employers: “The effects of the introduction of the DMA could be severe for European businesses as well as consumers who make use of digital services. For example, while the ban on the use of business user data is intended to prevent unfair competition, its unintended practical consequences may negatively impact European SMEs, a quarter of which do not have a website. As a result of the ban, the possibilities to use geolocation will become limited, and thus local companies without a website will lose their visibility and potential customers.”
Discussing the effects of the introduction of the DMA, it is impossible to ignore the economic consequences of the pandemic. “In the opinion of the Union of Entrepreneurs and Employers, all necessary measures should be taken to ensure that overregulation does not stifle the growth of the digital sector and does not put the post-crisis recovery in harm’s way. As the ECIPE study shows, Europe as a consequence of introducing the changes proposed in the DMA risk to lose approx. EUR 85 billion of GDP and EUR 101 billion of consumer welfare – that is the equivalent of all the benefits that the EU economy has gained thus far thanks to bilateral free trade agreements,” adds Kamila Sotomska, the Union’s Deputy Director of the Law and Legislation Department.
The dynamic development of digital tools along with free-market competition foster social usefulness of the Internet and consumer welfare. Taking this into account, any attempts at regulatory interventions should be made after prior evaluation of existing regulations. Moreover, the newly designed rules cannot disregard the diversity and variety of the forms of doing business in the digital world. Regulations for the digital market should be designed with caution so that, contrary to the original assumptions, the consumers and service recipients themselves do not lose out on their introduction.