It was announced on the 30th October that the Court of Appeal would uphold the CMA's right to investigate 'mobile ecosystems'. This ruling overturns the Competition Appeal Tribunal's ('CAT's') findings that such a review would be unlawful — and opens up scope for future investigations into the anti-competitive behaviour of the largest technology platforms.
Background
The CMA published a report in 2021 which set out the organisation's stance towards large technology companies. [1] Noting the centrality of Apple and Google to the digital ecosystem, the CMA expressed worries that 'gatekeeper' platforms could be stifling digital markets and harming consumers (J, bb. 22–23). In particular, the control that Google and Apple have over their respective App Stores could restrict innovation in third-party applications, prioritise first-party concerns under the guise of privacy or security, and drive prices beyond a fair market rate (J, b. 26). Since these concerns fall well within the CMA's remit of intervening in markets when it has 'reasonable grounds for suspecting that any feature ... of a market ... prevents, restricts or distorts competition', further activity by the CMA appeared warranted (J, b. 2).
The CMA's continued pursuits of this topic faced impediments from the CAT. Apple challenged the CMA's right to intervene on procedural grounds. The CMA is only allowed to make a market investigation reference ('MIR') within twelve months of releasing its market study (J, b. 5) — and this time period had elapsed by the time the CMA had published its decision to conduct an MIR. Despite the CMA's complaints that they had been waiting for the soon-to-be formed Digital Markets Unit ('DMU') to investigate the matter further, the CAT allowed Apple's appeal — prohibiting the CMA from further action in this matter (J, b. 6).
The Appeal
But the CAT's rationale did not stand up to appeal. The argument that proved particularly effective in the Court of Appeal emphasised the fact that Apple made no objection to the notion that the CMA has '"Reasonable grounds for suspecting" that there is a competition concern' (J, b. 45). This point is significant because it relegates Apple's original complaint to the realm of mere procedure. The Court of Appeal instead placed a greater emphasis on the spirit of the CMA's remit – namely, to safeguard the public interests of consumers. This is the source of the Court's insistence that 'Apple has not complained that any of the conditions [required for the CMA's intervention] are breached nor suggested that there is any public law basis justifying complaint' (J, b. 50). The legal ramifications of the Court of Appeal's Judgement are that the CMA does, in fact, have sufficient grounds to conduct an MIR.
What Happens Next
More generally, the result of the CMA's appeal consolidates the initial concerns that the CMA raised in 2021; the Court of Appeal ratifies the notion that an investigation into these worries would be in the public interest. Armed with this renewed authority, the CMA may now be able to intervene in the demonstrable inequitable practices, especially self-preferencing and raising prices, that constitute business as usual for the largest technology platforms.
Please contact Tim Cowen if you have any questions regarding the above.
The material contained in this article is only for general review of the topics covered and does not constitute any legal advice. No legal or business decision should be based on its content.
Footnote
1. Competition and Markets Authority -v- Apple – Courts and Tribunals Judiciary, bullet 5. All subsequent references to the judgement by bullet in brackets.
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