Becket McGrath / April 19,2023
On 22 November 2022, the UK Competition and Markets Authority (CMA) decided to refer the supply of mobile browsers and mobile browser engines and the distribution of cloud gaming services through app stores on mobile devices for an in-depth ‘phase 2’ market investigation. The market investigation regime enables the CMA to investigate competition issues that affect an entire sector of the economy and provides it with extensive powers to remedy concerns that are found to exist.
Since the launch of the market investigation, the CMA inquiry team has published a 17-page issues statement and initiated wide-ranging research into consumer behaviour with respect to mobile browser use and the experience of web developers regarding browsers and browser engines. It has also sent out a large number of requests for information to industry participants. According to the CMA’s administrative timetable, it was due to publish working papers at any time and was in the process of scheduling hearings and site visits. In other words, by the start of this year, the investigation was in full swing, as it needed to be to meet the CMA’s case timetable for publishing its provisional findings in September or October this year, in time for its final report to be published before the statutory deadline of 21 May 2024.
On 18 January, Apple responded to the reference by applying to the Competition Appeal Tribunal (CAT) for a review of the CMA’s decision to launch the market investigation, claiming that it had not complied with the statutory timetable and was hence unlawful. Unfortunately for the CMA, in its judgment of 31 March, in Apple Inc. & Others v Competition and Markets Authority, the CAT agreed with Apple, rendering both the reference decision and the entire investigation on which it was based null and void. The resulting detonation of the market investigation clearly creates a major headache for the CMA. Given that the statutory framework within which the CMA operates generally gives the authority broad discretion on the exercise of its functions, it is interesting to examine the specific legal and factual context that led to this surprising outcome.
In the words of the CMA’s press release accompanying its decision to launch a full market investigation, the reference was justified by concerns arising from Apple and Google’s “effective duopoly on mobile ecosystems” that allowed them to “exercise a stranglehold over operating systems, app stores and web browsers on mobile devices”. According to the CMA, its proposal to make a reference had been supported by browser vendors, web developers and cloud gaming services providers, who claimed that the status quo was “harming their businesses, holding back innovation, and adding unnecessary costs”. The CMA was concerned that Apple and Google’s domination of the mobile browser market and Apple’s restriction of cloud gaming through its App Store “limit choice and may make it more difficult to bring innovative new apps to the hands of UK consumers”. A market investigation was thus justified to investigate the impact of the restrictions Apple and Google imposed on businesses and users, to assess Apple and Google’s claimed justifications for these restrictions and, if required, to remedy any adverse effects on competition.
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