Commission closure of investigation into Apple's rules for developers of e-book/audiobook apps

 

Commission closure of investigation into Apple's rules for developers of e-book/audiobook apps

On 22 November the European Commission announced that it had closed its investigation into allegedly anti-competitive behaviour by Apple over some of the terms it applies to competing e-book/audiobook app developers for use of its App Store in the EEA.

The step follows the withdrawal of the complaint filed against Apple by an e-book and audiobook distributor. Meanwhile the Commission states that it will continue to monitor business practices in the European tech sector, including those of Apple.

The evolution of the concept of abuse of dominance and the interaction between the Commission’s enforcement priorities and practice as well as the Court’s jurisprudence towards a more economics-based approach has a particular significance in digital markets. This is not least because of the enactment of ex ante regulation in digital markets. An important illustration of this trend is the Digital Markets Act (‘DMA’)  which introduces regulation of certain large digital platforms (‘digital gatekeepers’).

The DMA applies regardless of the existence of any effects of commercial practices on competition, competitors or consumers. However, it is widely accepted that the rules in the DMA are based on antitrust proceedings.  Furthermore, the Commission may enforce Article 102 in digital markets  and national authorities continue to enforce Article 102 but have no corresponding powers to enforce the DMA.

This context raises the prospect of differences in treatment between equivalent practices under Article 102 and under the DMA when adopted by gatekeepers (or in relation to non-gatekeeper digital platforms). This bifurcation of enforcement tools is likely to be a feature of the decisional practice and jurisprudence under Article 102 and the DMA in the coming years and which is perhaps inevitable given the legal framework established by these rules.

https://ec.europa.eu/commission/presscorner/detail/en/mex_24_6024

CMA reports interim concerns and potential solutions in infant formula market study

 

The Competition and Markets Authority (CMA) has published its provisional report on its market study into infant formula and follow-on formula in the UK. The CMA invites comments on its interim report by 29 November 2024.

The study concerns infant and follow-on formula as defined by European Commission Regulation 2016/127, and formulas labelled as foods for special medical purposes that can be sold without prescription under Regulation 2016/128.

The CMA found that the market has a highly concentrated structure.  It identified  concerns relating to the unintended consequences of regulations designed to support public health goals, a lack of timely, clear and impartial information for parents about formula, and companies' responses to regulations around marketing.

The CMA raised concerns about how this impacts pricing, and limited competition on formula prices at the retail level.

The CMA has explored potential solutions. Recommendations cover the provision of clear, accurate and impartial information, including on the nutritional sufficiency of infant formula products, in both healthcare and retail contexts.

The CMA recommends strengthening labelling and advertising rules to moderate the role of brand awareness in decision-making in the market.

The CMA’s provisional findings echo concerns raised by customers.  The provisional findings bring together multiple tools from competition law oriented remedies to consumer protection measures around promotions at the retail level.

The deadline for the CMA to publish its final report is 19 February 2025.

https://www.gov.uk/government/news/infant-formula-cma-sets-out-concerns-and-potential-solutions

CAT rules in favour of self-represented claimant in RPM case

 

The Competition Appeal Tribunal (CAT) has ruled in a claim by Up & Running (UK) Limited against Deckers UK Ltd (Deckers), a retailer of specialist running shoes. The case appears to be the first time a self-represented claimant has been successful in the CAT.  It is only one of few claims that have undergone the fast-track procedure.

The CAT found that the Deckers selective distribution system did not meet the criteria for establishing that a selective distribution agreement has a legitimate goal and falls outside Article 101(1) of the TFEU (being relevant at the time the relevant practices occurred).  The CAT found that the system lacked transparency, it employed some quantitative criteria and was applied in a discriminatory manner.

The CAT held that a supply agreement that allowed Deckers to prevent Up and Running from creating a secondary website to sell shoes at a discount, was a ‘by object’ infringement of UK/EU competition rules because it pursued “no plausible material objective” other than to restrict competition.

The CAT found that the agreement contained hardcore restrictions so that the EU Vertical Block Exemption did not apply.

The CAT concluded that Up & Running has suffered loss as a result of the infringements of the Chapter I prohibition (the amount of which will be determined separately).

However, the CAT declined to make an injunction requiring Deckers to supply the relevant product to Up & Running.

The ruling can be understood in light of its very specific facts.  Nevertheless, it is likely to cause a number of retailers and their lawyers to pause for thought on whether their distribution systems and supply practices are compatible with competition law.

Up & Running (UK) Limited v Deckers UK Limited [2024] CAT 61

Court of Justice dismisses European Commission’s appeal against General Court’s judgment in Intel abuse of dominance decision

 

Court of Justice dismisses European Commission’s appeal against General Court’s judgment in Intel abuse of dominance decision

The Court of Justice of the EU has dismissed an appeal by the European Commission against the General Court’s judgment finding errors in the Commission’s 2009 decision that Intel had infringed Article 102 TFEU by imposing exclusivity rebates and other restrictions.

The judgment brings to an end a long and tortuous history of procedural challenges.  The General Court upheld the Commission’s findings in its first judgment on the case in 2014.  However, the Court of Justice annulled that finding in 2017 and sent the matter back to the General Court to examine all of Intel’s arguments about the application of the ‘as efficient competitor’ (AEC) test.

The General Court then annulled the Commission's decision in so far as it found that Intel's rebates infringed Article 102, as well as the fine of EUR1.06 billion imposed on Intel.  This was due to the errors that it found in the Commission’s approach to the AEC test.

The Court of Justice found that the General Court had not erred in its assessment of the ability of the rebates to foreclose competition or in the application of the standard of proof applied in assessing the AEC test.  The Court of Justice held that it was not for the General Court to ascertain whether the operative part of the Commission's decision could be justified on the basis of reasoning that did not contain the errors found, where that reasoning is not set out coherently in that decision.

The decision brings to an end another high-profile defeat for the Commission in relation to the appeal of an exclusionary abuse of dominance case. The General Court has also annulled a EUR997 million abuse of dominance penalty against Qualcomm and quashed an EUR1.49 billion fine against Google. A key enforcement challenge for the Commission will be managing such complex and evidence-based abuse cases within a reasonable timeframe according to the correct test and standard of proof.

Case C‑240/22 P, European Commission v Intel Corporation Inc., ECLI:EU:C:2024:915

CMA decides that Amazon/ Anthropic does not qualify for investigation

 

The Competition and Markets Authority (CMA) has published its decision that the partnership between Amazon.com, Inc and Anthropic does not qualify for investigation under the merger provisions of the Enterprise Act 2002.

 The partnership involves a US$4 billion investment by Amazon in Anthropic, which is convertible into non-voting equity in certain circumstances. The tie-up also involves a long-term non-exclusive licensing of Anthropic's Foundation Models (FM) to Amazon for use in Amazon services.

Amazon argued that it has not acquired material influence over Anthropic as a result of the partnership.

The CMA noted that agreements to provide infrastructure to an FM developer as well as distribution agreements between an FM developer and a cloud service provider may result in an acquisition of material influence.  This may arise where conditions are such that the agreement creates a relationship of dependency such that it enables the partner to influence materially the commercial policy of the FM developer.

The CMA also considered that the other categories of agreements and rights set out in the description of the Amazon/Anthropic partnership, including consultation and advice rights in relation to significant Anthropic business issues, are, in principle, capable of contributing to a finding of material influence.

However, the CMA did not need to reach a conclusion on material influence as Anthropic's UK turnover does not exceed £70 million in the UK, nor do the parties together account for a 25% or more share of supply of any description of goods or services in the UK.

https://assets.publishing.service.gov.uk/media/6710ba44e84ae1fd8592f52c/Full_text_decision.pdf

CMA accepts undertakings Barratt/ Redrow merger

 

CMA accepts undertakings Barratt/ Redrow merger

The Competition and Markets Authority (CMA) has accepted undertakings in lieu of referring the completed acquisition by Barratt Developments plc of Redrow plc for a Phase 2 merger investigation.

In its Phase 1 investigation, the CMA found that the merger gives rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the supply of new-build private residential housing. The effects were confined to one local area centred around the Barratt development at Tilstock Road, Whitchurch.

The CMA consulted on commitments relating to Redrow's entire overlapping area in the Kingsbourne, Nantwich site that has planning consent for the development of 324 houses.

Under the final undertakings, the parties have appointed an independent third-party agent, Savills, to manage the sale of the remaining unsold houses and houses where the sale has not been legally completed.

The undertakings require a monitoring trustee and an independent professional quantity surveyor (approved by the CMA) will be appointed.

https://assets.publishing.service.gov.uk/media/66ffc0a130536cb927482c3b/Full_text_decision__undertakings_accepted_.pdf

General Court annuls Google AdSense abuse decision

 

The General Court has ruled in an appeal by Google and its parent company Alphabet against the European Commission's decision to fine Google EUR1.49 billion for abusing its market dominance in the online search advertising intermediation market.

In 2019 the Commission found that Google had infringed Article 102 TFEU by imposing restrictive clauses in contracts with third-party websites that prevented Google's competitors from placing their search adverts (ads) on these websites.

The General Court found that the Commission had not established that the clauses could have produced a foreclosure effect in 2016, in the absence of data about their market coverage in that year.

The General Court also found that the Commission had erred in its assessment of the duration of the clauses, in particular by failing to take into consideration all the relevant circumstances of the publishers subject to the clauses.

The General Cout found that these errors undermined all the Commission's findings in relation to the foreclosure effect of the clauses and its conclusion that they constitute a single and continuous infringement of Article 102. As a result the Commission's decision must be annulled in its entirety.

The General Court’s judgment is in marked contrast to the Commission’s victory before the Court of Justice this month which upheld its Google Shopping decision.  However, the latter case can be considered to be somewhat more significant for the Commission than AdSense  in upholding the legal basis for self-preferencing as an abuse of dominance independently of the essential facilities line of case law. 

The practical significance of the AdSense decision may be more diminished as it is understood that Google has not used the relevant clauses since 2016.  However, today’s judgment may not be the end of the Commission’s interest in contractual clauses which may have foreclosure effects in online advertising markets.  In particular, the Commission now has the Digital Markets Act at its disposal to tackle potentially foreclosing practices on the part of digital gatekeepers and without the need to prove effects.

Case T‑334/19, Google LLC and Alphabet Inc v European Commission ECLI:EU:T:2024:634