Gatekeepers, Directors and the Digital Markets Act

Gatekeepers, Directors and the Digital Markets Act: Corporate Law at a Crossroads

Introduction

Recent enforcement activity under the European Union’s Digital Markets Act (DMA) has intensified: the Commission has issued compliance notices to designated “gatekeepers” and opened investigations concerning interoperability, default settings and app distribution restrictions. These measures have immediate corporate governance implications for multinational technology firms whose business models rely on platform control and default positions. Directors now confront binding supranational obligations that can materially affect strategy, revenue and shareholder expectations. The legal importance is twofold: directors must reconcile statutory duties under domestic company law (notably s.172 of the UK Companies Act 2006) with the DMA’s behavioural prescriptions; and firms face structural remedies and significant fines that raise questions about directors’ decision‑making, fiduciary exposure and the adequacy of D&O insurance coverage. If certain facts about individual enforcement matters are absent from public reports, this analysis flags those as hypothetical.

Legal background

The Digital Markets Act (EU) 2022 establishes a regulatory regime for large online platforms deemed “gatekeepers”, imposing ex ante obligations to preserve contestability and fairness in digital markets. Non‑compliance can trigger periodic penalty payments and behavioural or structural remedies. At the same time, directors of private and public companies remain bound by domestic fiduciary duties — in the UK principally codified in the Companies Act 2006. Section 172 requires directors to act in a way they consider, in good faith, most likely to promote the success of the company for the benefit of its members, having regard to factors including long‑term consequences and compliance with the law. Classic corporate doctrines — separate legal personality (Salomon v A Salomon & Co Ltd [1897] AC 22), majority rule and the rule in Foss v Harbottle (1843) 2 Hare 461 — limit shareholder remedies and frame internal governance. Prest v Petrodel Resources Ltd [2013] UKSC 34 constrains veil piercing, reinforcing that directors’ duties are ordinarily enforced within the company structure rather than by external interference. Post‑Brexit, the DMA exercises regulatory reach over firms operating in the EU internal market, posing cross‑jurisdictional duty interactions for directors of UK and other non‑EU companies.

Critical analysis

The intersection of DMA enforcement and directors’ duties presents several legal tensions. First, there is a pragmatic duty conflict: compliance with DMA obligations (for example, enabling third‑party app stores or removing anti‑steering clauses) may reduce market leverage and near‑term revenues. Directors focused on shareholder value may therefore face pressure to resist costly compliance measures. Conversely, deliberate non‑compliance exposes firms to significant fines and injunctive remedies that threaten long‑term viability. Section 172 requires consideration of long‑term consequences and statutory compliance; this suggests that sensible boards should prioritise DMA compliance in their s.172 deliberations and ensure these decisions are recorded in minutes and supporting analyses.

Second, the remedies available under the DMA differ from traditional corporate law enforcement: regulators can impose forward‑looking behavioural remedies or structural changes, rather than merely awarding damages. This produces a regulatory risk that typical shareholder remedies (such as derivative claims) may be redundant or procedurally constrained by Foss v Harbottle and by courts’ reluctance to pierce the corporate veil (Prest). Shareholders may attempt derivative litigation to challenge board failures to address DMA risk, but courts will scrutinise such claims and often defer to regulatory avenues. Boards should therefore adopt proactive compliance programmes and document oversight to mitigate derivative exposure.

Third, jurisdictional complexity and post‑Brexit dynamics create practical uncertainty. UK‑incorporated companies operating in the EU remain within the DMA’s scope for relevant activities in the internal market. Directors must therefore integrate EU regulatory impact assessments into domestic decision‑making. Insurance markets complicate the picture: many D&O policies exclude fines and penalties, leaving directors exposed to personal financial risk for regulatory failures unless indemnities or cover for defence costs are negotiated. If a company-specific news item omitted whether a target firm is incorporated in the UK or subject to EU jurisdiction, that omission is treated here as hypothetical and highlighted as material for assessing directors’ duties.

Opinion and outlook

Boards should take a three‑pronged, precautionary approach. First, integrate DMA risk into formal governance: revise board papers and minutes to reflect s.172 analysis and regulatory compliance as central to promoting long‑term shareholder success. Clear documentation will be critical evidence in any subsequent derivative or regulatory challenge. Second, restructure internal processes so that product, commercial and legal teams embed EU regulatory expertise early in product lifecycles, minimising costly retrofitting or forced behavioural remedies. Third, revisit group structures and insurance: while restructuring to isolate EU‑facing assets may help manage exposure, directors must avoid schemes that attract insolvency‑related or anti‑avoidance scrutiny. Negotiate D&O policies to secure coverage for defence costs and, where feasible, for fines or regulatory settlements.

Regulatory enforcement under the DMA is likely to catalyse convergence between corporate governance and competition regulation. Courts and regulators may increasingly expect directors to be regulatory‑literate; derivative litigation could evolve to challenge systemic oversight failures. Legislatures may respond with statutory clarifications aligning directors’ duties with compliance expectations in major regulatory regimes. From a practice perspective, corporate counsel should prioritise scenario planning and board training on supranational regulatory frameworks.

Conclusion

Recent DMA enforcement underscores a shift in corporate governance: regulatory compliance is now integral to directors’ duty calculus. Directors must balance short‑term commercial interests against binding supranational obligations that affect shareholder value and corporate structure. Effective response requires documented decision‑making, embedded compliance expertise and careful risk allocation through insurance and structural planning. As DMA enforcement intensifies, corporate governance practice and litigation strategies will adapt to a landscape where regulators, rather than shareholders alone, shape platform behaviour.