Apple vs the CMA

Neutral Citation Number: [2023] EWCA Civ 1445
Case number: CA-2023-000930

The Competition and Markets Authority (CMA) has won a Court of Appeal case overturning a March 2023 Competition Appeal Tribunal (CAT) decision, which suspended an investigation launched by the CMA against Apple.

In its decision, the CAT concluded that the CMA did not have the power to make a market investigation reference if it had previously decided not to do so during a market study into the same matter. You can read my blog about the previous CAT’s decision here.

However, the Court of Appeal found that the CAT erred in interpreting the Enterprise Act 2002 (EA 2022) and allowed the appeal.

The issue in a nutshell

The central issue arising upon this appeal concerns the circumstances in which the Competition and Markets Authority (“CMA”) has jurisdiction to make a market investigation reference (“MIR”), having, in the past, concluded that it would not conduct such an investigation.

The Court of Appeal’s analysis

a)  Statutory construction

Apple argued that the expression “in relation to the matter specified in the notice” curbed the exercise of section 131(1) standalone power and linked the CMA’s ability to make a Market Investigation Reference (“MIR”) as a result of a Market Study Notice (“MSN”).

However, in the view of the Court of Appeal, these words should be read as an evaluative exercise to be performed by the CMA, a MIR, and the duties triggered by it. However, it does not mean that Market Investigation References are strictly limited to the exercise of a Market Study.

On a second argument, the Court of Appeal concluded that if Parliament had intended to use that phrase as an additional restriction or constraint upon the exercise of the standalone power in section 131(1), it would have said so.

Thirdly, the Court of Appeal addressed the supposed Parliamentary intent. It argued that when applying a purposive construction to the EA 2002, whilst the protection of investigated undertakings from undue investigatory burdens is a relevant consideration, the principal purpose of the Act is to promote competition and protect consumers. Where, as here, there is no challenge to the conclusion of the CMA that it had reasonable grounds for suspecting a competition problem, then some level of burdensome regulatory intervention is an inevitability for the undertakings concerned.

b)  Public law constraints

The CMA raised concerns about (i) the relevance of possible alternative remedies and (ii) the emergence of new evidence from third parties.

b.1) The relevance of the existence of possible alternative remedies. The CMA contended that because the matter was of broader public importance and might have future ramifications for the CMA, it was within the statutory purpose behind the EA 2002 for the CMA to take account of such matters. The Court of Appeal agreed on this point, although it did not go further than this, and said it was “an argument for another day”.

b.2) The emergence of new evidence from third parties. The Court concluded that the fact that following a consultation, a significant volume of adverse material is submitted by consultees must be a matter that is relevant to the exercise of the power.

Considering these arguments, the Court of Appeal ordered the CAT’s decision to be set aside.

Final remarks

The decision of the Court of Appeal is exciting because it prioritises public law concerns.

For most of the introductory section of this decision, the Court of Appeal explains the logic behind the CMA’s decision not to make a market investigation reference. It clarifies that the CMA was expecting the entry of new legislation into force and powers to enforce competition law. However, this reasoning is, in fact, entirely irrelevant where the claim’s central issue is a point of law: whether the CMA had the power to make an MIR or not.

In the following section of its decision, the Court of Appeal then explained why the interpretation of the CAT could have severe consequences against consumers’ welfare and concluded that the net effect of the CAT’s judgment is that there would be minimal scope, if any, for the CMA to initiate any further investigation into the conduct of Apple or Google, “howsoever deep or justifiable the CMA’s concerns about their conduct”. Again, these affirmations are farfetched, especially when the CAT took the time to consider the circumstances under which new investigations could arise.

In the end, the Court of Appeal decided to allow the appeal and set aside the order of the CAT to end the CMA’s investigation. It is to be noted that Lord Justice Arnold expressed his hesitation and acknowledged that “if section 131A applies, then the time limits specified in

section 131B apply.” Under this logic, it is evident that the CMA’s decision was ultra vires. Nonetheless, Lord Justice Arnold was persuaded that, for the reasons given in the body of the decision, that is, by applying a purposive interpretation of the law, the appeal should be allowed.

Despite this turn of events, the CMA’s market investigation remains on hold pending the determination of any application for permission to appeal to the Supreme Court of the UK.

Will Apple seek permission to appeal one last time?