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

Qualcomm fails to overturn predatory pricing abuse of dominance decision

 

 

 

The General Court has dismissed an appeal against the European Commission's decision to impose a fine of EUR 242,042,000 on Qualcomm for infringing Article 102 of the TFEU by engaging in predatory pricing.

In July 2019 the Commission found that Qualcomm abused a dominant position in the global market for UMTS baseband chipsets by supplying UMTS chipsets to Huawei and ZTE, at below cost prices, with the intention of eliminating Icera, who was then its main competitor.

Qualcomm alleged that the Commission erred in defining the relevant market, applied the incorrect legal standard, and that its theory of predation was illogical.

Qualcomm also raised various procedural irregularities and errors in the Commission’s reasoning.

The General Court rejected Qualcomm's arguments in their entirety.

However the General Court accepted Qualcomm’s plea concerning the calculation of the amount of the fine.  The Court found that the Commission departed, without justification, from the methodology laid down in its 2006 Fining Guidelines.  The General Court found that the Commission erred in calculating the basic amount of the fine by adding together the value of sales made by Qualcomm during the second half of 2009, in 2010, and in the first half of 2011, instead of by multiplying the value of sales made during the last calendar year by the number of years of participation in the infringement

The General Court recalculated the fine to be imposed on Qualcomm, setting it at EUR238,732,659.33 representing a reduction in the fine of approximately EUR 3.3 million.

The judgment is a victory for the Commission’s substantive analysis. The reduction in the fine indicates that there can be monetary benefits in contesting the level of the fine However, in this case, a question may be asked as to whether the reduction in the penalty was outweighed by the legal costs and involvement in a lengthy appeal, notwithstanding the points of legal principle at stake.  It remains to be seen whether Qualcomm will fight on to the Court of Justice.

Case T-671/19, Qualcomm v Commission EU:T:2024:626

European Court of Justice upholds Google Shopping Abuse Decision

 

European Court of Justice upholds Google Shopping Abuse Decision

The European Court of Justice has dismissed the appeal by Google LLC and Alphabet Inc (Google) against the General Court's judgment that largely rejected Google's appeal against a European Commission's decision that Goggle had abused its dominant position by giving preference to its own search engines and imposing a fine of EUR 2.4 billion.

The appeal relates to a decision in 2017.  The Commission found that Google had abused its dominant position on the market for online general search services in 13 countries in the EEA by favouring its own comparison shopping service over competing services.

The General Court rejected Google's arguments that its actions amounted to competition on the merits.

The ECJ held that the General Court did not err in its consideration of the Bronner criteria that apply in essential facilities cases and in concluding that this was not a case in which the Bronner criteria were applicable.

The ECJ also found that the General Court had not erred in finding that Google's practices deviated from competition on the merits.

Further, the ECJ found that the General Court had not erred in dismissing Google's arguments in relation to the application of the "as-efficient-competitor" test.

The original decision was a landmark development in the application of EU competition law, not only to Big Tech companies but also on the scope of Article 102 TFEU to deal with a dominant company favouring its own operations. Now, almost a decade later, the ECJ has provided useful guidance and clarified that the competition authority can “rely on a range of evidence, without being required systematically to use any single tool” to prove its case.

Case C-48/22) Google LLC and Alphabet, Inc v European Commission EU:C:2024:726

Court of Appeal reinstates CMA hydrocortisone fines

 

Court of Appeal reinstates CMA hydrocortisone fines

The Court of Appeal has upheld an appeal against a judgment by the Competition Appeal Tribunal (CAT) that overturned around £100 million in fines two drugs manufacturers, describing the CAT procedure as “inappropriate” and “unjust”.

In September 2023, the CAT upheld the CMA's findings that Auden/Actavis UK had reached agreements with AMCo/Advanz to delay the entry of their own 10mg hydrocortisone tablets, in breach of the Chapter I prohibition under the Competition Act 1998. However, the CAT raised concerns about due process, relating to the CMA's failure fully to cross-examine Advanz's witnesses. It, therefore, held a further hearing to consider this issue.

In March 2024, the CAT found that the CMA had breached due process, rendering the substantive findings on cartel infringements as set out in the September 2023 judgment unsafe.

The Court of Appeal allowed the CMA's appeal against this ruling, finding that the CAT had erred in assuming that the CMA’s case involved allegations of dishonesty or misconduct and that these matters were not properly put to witnesses.

The CAT should have dismissed the companies' appeals without requiring the CMA to cross-examine a witness on dishonesty or misconduct. It was inappropriate and unjust for the CAT to deliver a provisional judgment and adjourn for a further due process hearing

Allergan plc, Amidpharm UK Ltd, Amidpharm UK Ltd, Advanz Pharma Services (UK) Ltd, Advanz Pharma Corp Ltd, Cinven (Luxco 1) S.a.rl and others, Auden Mckenzie (Pharma) Limited and Accord-UK Limited v Competition and Markets Authority [2024] EWCA Civ 1023

Back to School – CMA Blog on School Uniform Policy and Competition Law

 

As the summer holidays draw to a close, and due to ongoing affordability concerns, the Competition and Markets Authority (CMA) has published a blog on whether school uniform policies might be at risk of breaching competition law.

This is not the first time that the UK competition authorities have been concerned about competition law and school uniform policy. Particular concerns have been raised about exclusive supply arrangements with uniform suppliers.

In 2015, the CMA wrote to schools and suppliers to remind them about their obligations under competition law.

The CMA is urging school leaders to consider whether their uniform policy is in the best interest of pupils and parents.  The CMA provides a number of suggestions: 

1.        Schools and their governing bodies and academy trusts should consider how to use competitive tender processes to get the best results when awarding contracts.

2.        If a contract has been awarded to a manufacturer for sale through third party retailers, care should be taken that there are no provisions that fix the minimum price that the uniform can be sold at, which could constitute resale price maintenance.

3.        Consideration could be given to how many items of uniform are branded or highly tailored to the school and whether this reduces the number of suppliers who will choose to invest in a stock uniform that can only be sold to a small pool of customers.

4.        Schools give consideration to extending the lifespan of uniform, for example by offering a pre-loved uniform shop.

https://competitionandmarkets.blog.gov.uk/2024/08/23/school-uniforms-is-your-policy-at-risk-of-breaking-the-law/

Reintroduction of Litigation Funding Agreements (Enforceability) Bill

 

Reintroduction of Litigation Funding Agreements (Enforceability) Bill

The Ministry of Justice has issued a statement in response to a written question regarding whether the government plans to reintroduce the Litigation Funding Agreements (Enforceability) Bill (the Bill) and other related issues.

The statement confirms that the government "will take a more comprehensive view of any legislation to address issues in the round" once the Civil Justice Council (CJC) concludes its report on third party civil litigation funding (anticipated in summer 2025).  

The Bill was originally introduced in the last Parliamentary session but was not completed before Parliament was prorogued on 24 May 2024.

 

If passed, the Bill would have reversed the impact of the Supreme Court's decision in R (PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28.

 

Answering the written question Lord Ponsonby noted that the CJC is considering such issues, plus others, in its review of third party civil litigation funding.

It is understood that the CJC hopes to report in summer 2025.

https://questions-statements.parliament.uk/written-questions/detail/2024-07-29/hl449

Judgment granting collective proceedings order in claim by Road Haulage Association

 

 

The Competition Appeal Tribunal (CAT) has given judgment in a claim brought by Road Haulage Association Limited (RHA) under section 47B of the Competition Act 1998, to commence a collective action to seek damages from various truck manufacturers. 

The claims follow on from the European Commission's 2016 and 2017 truck cartel decisions.

In June 2022 the CAT preferred the RHA’s opt-in application and rejected a proposed opt-out claim brought by UK Trucks Claim Limited (UKTC).  In July 2023 the Court of Appeal mainly dismissed an appeal against the CAT’s June 2022 judgment.  However, finding a potential conflict of interest between new and used trucks claimants the Court of Appeal remitted the case to the CAT for it to consider whether to grant the collective proceedings order (CPO) on the basis of revised arrangements, in particular relating to separate legal and expert representation.

The CAT first ruled that it was not necessary to make separate provision in the class definition for companies which had been dissolved but might be restored to the register.

The CAT ruled that it would be appropriate for claims for leases, other than the first lease of a new truck, to be included in the used truck sub-class. Those claims are, therefore, subject to a longer run-off period (until 31 January 2015).

The CAT also ruled that the funding arrangements are adequate.

The CAT also concluded that arrangements put in place to separate the claims in relation to new trucks and claims relating to used trucks were adequate. A new company, RHA Used Trucks Ltd (RUTL), has been established to act as the proposed sub-class representative for class members with claims for used trucks. This has appointed separate solicitors, counsel and expert.

The CAT, therefore, decided to authorise RUTL as a sub-class representative and to make a CPO in favour of RHA as the class representative.

Road Haulage Association Limited and RHA Used Trucks Limited v Traton SE and others [2024] CAT 51

Call for inputs on review of assimilated Technology Transfer Block Exemption

 

Call for inputs on review of assimilated Technology Transfer Block Exemption

 

The Competition and Markets Authority (CMA) is seeking views as part of its review of the assimilated Technology Transfer Block Exemption Regulation (Regulation 316/2014) (TTBER) and the accompanying European Commission guidelines on technology transfer agreements (the Guidelines).

The assimilated TTBER expires on 30 April 2026.

While the TTBER may seem a relatively small matter when navigating compliance of licensing arrangements with competition law, for IPR licensors and licensees it has proven to be a useful instrument.  The review is important as it offers the scope for some divergence between the approaches under EU and UK law.

The assimilated TTBER automatically exempts certain types of technology transfer agreements from the Chapter I prohibition if they meet certain conditions (including market share thresholds, hard core restrictions and excluded restrictions).

The CMA will review whether the assimilated TTBER continues to meet its intended purpose and will take account of any specific features of the UK economy and interests of businesses and consumers.

The CMA is seeking views on whether technology transfer agreements covered by the assimilated TTBER continue to produce benefits outweighing their potential harmful effects on competition (and what these harmful effects are), including whether the TTBER contributes to promoting competition and economic benefits in the UK.

The Guidelines set out general principles for the assessment of technology transfer agreements and provide guidance on the application of the TTBER. Experience of the various incarnations of the TTBER over the years suggests that the 200+ Guidelines can tend to be of more practical utility than the TTBER itself.

The CMA invites responses by 6 September 2024.

https://connect.cma.gov.uk/technology-transfer-block-exemption-regulation

Judgment on payout of costs as part of damages in Mclaren collective settlement

The Competition Appeal Tribunal has given judgment on an application by Mark McLaren Class Representative Limited (the CR) for an order that the costs and part of the damages paid to it by one settling defendant be used to cover part of the CR’s costs, fees and disbursements in connection with the proceedings.

The order relates to sums paid by the Twelfth Defendant (Compania Sudamericana de Vapores SA) pursuant to a settlement agreement in the Mark McLaren Class Representative Limited v MOL (Europe Africa) Ltd and others collective proceedings.

The approved settlement figure is £1.5 million, comprising 1) the damages sum of £1.12 million; 2) the costs of the application for approval of the settlement, of £100,000; 3) the Twelfth Defendant's share of the CR’s costs in the proceedings, of £280,000 (proceedings costs sum).

The CAT considered it does have jurisdiction, under Rule 53(2)(n) of the CAT Rules 2015, to make the order sought. However, it decided it would not be appropriate to assess what sums should be paid to funders before the outcome of the proceedings is known. The CAT found that payment of the “relatively small” sums at stake would do little to lessen the funder’s “exposure and duration risk.”

The CAT, therefore, did not permit the use of any part of the damages sum at this stage. It stated it was, however, prepared to apply an additional £71,000 from the proceedings costs sum to be dealt with in the same way as the £100,000 application costs sum to cover the CR’s costs of the Collective Settlement Approval Order application.

While in this case the CR may not use a settlement agreed with one defendant towards costs in ongoing litigation, the CAT has left open a possibility for future cases.

 

Mark McLaren Class Representative Limited v MOL (Europe Africa) Ltd and others [2024] CAT 47 (Related Costs Application)

CMA publishes issues statement in household pets market investigation

 

 

The Competition and Markets Authority (CMA) has published its issues statement in its market investigation into the supply of veterinary services for household pets in the UK.

The CMA made the market investigation reference on 23 May 2024.

The CMA has identified the following initial high-level theories of harm:

1.       concerns about lack of effective engagement by pet owners in the choice of the best veterinary practice

2.       concentrated local markets

3.       incentives of large integrated groups to act in ways that reduce choice and weaken competition

4.       overpayment by pet owners for medicines or prescriptions

5.       an outdated regulatory framework.

The CMA has also identified some potential remedies that may help to address these issues if one or more adverse effects on competition are identified in the investigation. These could include:

1.       information transparency remedies such as mandating what information should be provided to customers, as well as how and when this should be provided

2.       price remedies such as imposing maxima for prescription fees, or maximum prices or mark-ups for other services

3.       market opening remedies aimed to lower barriers to entry or otherwise to promote competition in the provision of certain elements of veterinary services. Remedies in this category could include targeted structural remedies.

The CMA invites comments on the issues identified by 30 July 2024.

https://www.gov.uk/government/news/cma-takes-next-procedural-step-in-vet-services-investigation

CAT rules that claims against MasterCard arising before June 1997 are time-barred

The Competition Appeal Tribunal (CAT) has ruled that Walter Merricks’ collective competition law damages claims against MasterCard are time-barred in respect of any loss suffered before 20 June 1997.

In January 2023, the CAT granted Merricks permission to argue that limitation periods should be postponed under both English and Scots law to allow for the inclusion of claims that had already been time-barred when the Competition Act took effect in 2003.

The CAT rejected the Class Representative's (CR) arguments that the operation of the primary six-year limitation period was suspended pursuant to either section 32(1)(b) or section 32(2) of the Limitation Act m1980. The CAT found no deliberate concealment of relevant facts nor any deliberate breach of duty for the purposes of these provisions. 

The CAT’s findings on the application of the EU principle of effectiveness are instructive.  The CAT ruled that “the EU principle of effectiveness does not impose a hard-edged rule that for such proceedings the limitation period cannot (sic) being to run until the ‘average class member’ can reasonably be expected to discover the relevant facts necessary to bring those proceedings or be aware that they have suffered harm as a result of the alleged infringement” (para 109).

Rather, “[s]ince the class representative is the person bringing the proceedings, we consider that for the purpose of the EU principle of effectiveness, the knowledge requirement should apply to the class representative. We have already observed that, here, the CR was very far from being in the position of the average class member or average consumer: para 61 above. The burden is on the CR to displace the operation of the primary limitation period and we did not hear any evidence as to what the CR knew or could reasonably have discovered” (para 110).

It follows that the CAT will be slow to displace the normal limitation rules by the EU principle of effectiveness.  The relevant knowledge is that of the CR and not the “average class member”. 

 

Case 1266/7/7/16 Walter Hugh Merricks CBE v MasterCard Incorporated and Others

Ruling on relief from sanctions in Rachel Kent collective action

 

The Competition Appeal Tribunal (CAT) has ruled on relief from sanctions in the collective proceedings brought by Dr Rachael Kent (the Class Representative (CR)), under section 47B of the Competition Act 1998.

The proceedings allege that Apple has abused a dominant position, in breach of Article 102 of the TFEU and the Chapter II prohibition of the Competition Act.

The alleged infringements involve requiring iOS App developers to distribute iOS Apps exclusively via the Apple App Store.  It is further alleged that Apple device users are charged excessive and unfair prices represented by a commission charged by Apple on all purchases over Apple payment system.

In August 2023, the CAT ordered that the parties serve signed statements of witnesses of fact by 26 January 2024. The CR sought relief from the sanction set out in CAT Rule 55(2), to submit a witness statement of Christian Owens, dated 13 May 2024.

Although the failure to provide witness statements in accordance with the timetable directed by the CAT is a serious matter, the CAT concluded that the failure in this case was not of material significance and at the lower end of seriousness for the type of breach. It was found that Mr Owens gave evidence on 11 April 2024 in proceedings in an Australian court against Apple entities and the CR only became aware of that evidence shortly thereafter.

Dr Rachael Kent v Apple Inc and Apple Distribution International Ltd [2024] CAT 40, ruling on relief from sanctions

Judgment granting application by Ad Tech to bring collective proceedings against Google for abuse of dominance

 

The Competition Appeal Tribunal (CAT) has given judgment on the application for a collective proceedings order (CPO) brought by Ad Tech Collective Action LLP (the PCR) under section 47B of the Competition Act 1998, against Alphabet Inc, Google LLC, Google Ireland Limited and Google UK Limited.

The action concerns an opt-out claim concerning Google's alleged conduct in relation to sale of digital display advertising.

The application combines two standalone claims originally brought separately by Mr Claudio Pollack and Mr Charles Arthur for damages caused by alleged breaches by Google of Article 102 of the TFEU and the Chapter II prohibition of the Competition Act 1998.

Google argued that the claim form was insufficiently pleaded so as to preclude certification at this stage because the Pro-Sys v Microsoft test was not satisfied.  The CAT rejected those arguments.   

The CAT held that limitation issues should be dealt with as part of the main trial, rather than as questions of strike out. The CAT further held that the points raised by Google as to a potential conflict of interest within the proposed class would be more effectively dealt with during the course of proceedings. The CAT also resisted a claim that the PCR should change the arrangements for its legal representation.

Ad Tech Collective Action LLP v Alphabet Inc and others [2024] CAT 38

Litigation Funding Agreements (Enforceability) Bill will see “no further progress”

 

 

On 22 May Prime Minister Rishi Sunak announced that a general election would take place on 4 July 2024. As a result, much pending legislation did not survive the pre-election wash-up before parliament was prorogued on 24 May.

The Litigation Funding Agreements (Enforceability) Bill did not reach completion on 24 May and the parliament website states that: "The 2023-24 session of Parliament has prorogued and this bill will make no further progress."

If passed, the bill would have reversed the impact of the ruling in R (PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28. By a 4 to 1 majority, the Supreme Court upheld an appeal by DAF challenging the litigation funding agreements (LFAs) in two separate follow-on collective claims against members of the EU trucks cartel.  The judgment renders those arrangements unenforceable until certain conditions are met.  The case concerns the definition of a damages-based agreement (DBA), derived from one legislative context - the Compensation Act 2006 (the CA 2006) - and its use in a different legislative context (section 58AA of the Courts and Legal Services Act 1990 (CLSA 1990)).  Section 58AA(1) and (2) CLSA 1990 provide that a DBA will be unenforceable unless certain conditions are met. The Damages Based Agreements Regulations 2013 (the DBA Regulations 2013) set out further requirements which must be satisfied if a DBA is to be enforceable. It is accepted that the LFAs in this appeal would not satisfy these conditions.  The relevant part of the definition of DBA in this appeal, pursuant to section 58AA(3), is whether the LFAs involve the provision of “claims management services".  The Court held that claims management services are capable of covering LFAs when “read according to their natural meaning”.  As a result, the claimants’ funding arrangements fell under the scope of the DBA Regulations 2013 since damages-based funders provide “client management services” and would be paid based on how much the tribunal awarded as damages.

The bill provided, with retrospective effect, that LFAs were not DBAs and thus they did not have to comply with the DBA Regulations 2013. This was achieved primarily by amending the definition of a DBA in section 58AA of the Courts and Legal Services Act 1990 to provide that an agreement, to the extent that it is an LFA, is not a DBA.

Some funding agreements needed to be revised to reflect the Supreme Court’s recent ruling but certain of the more prominent funders in the industry have reacted to say the judgment will not stem their appetite to fund a claim with merit.  With the demise of the Litigation Funding Agreements (Enforceability) Bill, appeals against certain CAT decisions finding that LFAs are not DBAs now take on a renewed significance. We will have to wait and see whether similar legislation is introduced in the next parliament.

 

CMA market investigation into veterinary services for household pets

 

The Competition and Markets Authority has launched a market investigation into the supply of veterinary services for household pets in the UK. The investigation will extend to the supply of prescribed veterinary medicines for those pets.

The CMA has identified features that may make it difficult for consumers to make well-informed choices, including information asymmetry, vulnerability at the point of purchase, and lack of transparency about pricing, ownership of the vet practice and treatment options.

The CMA finds that a majority of vets practices are owned by large corporate groups where their business models may lead to limited consumer choice.

The CMA also considers that consumers may be over-paying for medicines and that there are weaknesses in the relevant regulatory frameworks.

Between October and December 2024, the CMA plans to publish working papers which will set out its initial thinking.

The CMA must publish its final report by 22 November 2025.

https://www.gov.uk/government/news/cma-presses-ahead-with-full-investigation-into-vets-market

CAT approves collective settlement in rail ticket overcharging claim

 

 

The Competition Appeal Tribunal (CAT) has granted an application by Mr Justin Gutmann (the Class Representative) and Stagecoach South Western Trains Limited (SSWT) for a collective settlement approval order (CSAO).

The collective action concerns a claim that First MTR South Western Trains Limited and SSWT had abused their dominant positions by failing to make their "boundary fares" sufficiently available, resulting in rail passengers being overcharged for certain journeys.

The PCR and SSWT agreed to settle in relation to the claims brought against SSWT but claims against First MTR South Western Trains Limited are continuing.

Under the settlement, SSWT will make available up to £25 million to pay class members who make claims. The settlement also contains provision for the payment of the costs of the Class Representative (and its funders).

Under section 49(5) of the Competition Act 1998, the CAT may only make a CSAO if it is satisfied that the terms of the settlement are just and reasonable. This involves being satisfied that, whilst the settlement may not be perfect, the settlement is fair and reasonable. There may be a range of settlements that are fair and reasonable and not necessarily the ideal settlement that the CAT would otherwise be seeking to achieve.

The CAT has concluded that, in the circumstances of this case, and where it does not consider that the merits are strongly in the Class Representative’s favour, the settlement is just and reasonable.

Justin Gutmann v First MTR South Western Trains Limited and Stagecoach South Western Trains Limited [2024] CAT 32

CMA adopts changes to guidance on duty to refer mergers for in-depth investigation

 

CMA adopts changes to guidance on duty to refer mergers for in-depth investigation

 

The Competition and Markets Authority (CMA) has adopted revised guidance on the exceptions to the duty to refer mergers for in-depth Phase 2 investigations.

The revisions concern the exception for markets of insufficient importance (de minimis) to justify a reference.

The key changes are that:

1.        There is now a single, increased threshold for the application of the de minimis exception. The CMA will generally consider the market(s) concerned to be of sufficient importance to justify a reference (such that the exception will not be applied) where the aggregate annual value in the UK of the market(s) concerned is more than £30 million.

2.        The application of the de minimis exception is no longer contingent on there being no clear-cut undertakings in lieu of a reference available.

The new guidance is largely unchanged from the draft version on which the CMA consulted in November 2023.

The new guidance will apply to all new merger cases from 25 April 2024. This includes all cases where a Phase 1 investigation has not formally been launched on 25 April 2024.

https://assets.publishing.service.gov.uk/media/662a432d55e1582b6ca7e5e7/Exceptions_to_the_duty_to_refer_-_guidance.pdf

CMA@10

 

CMA@10

I was pleased to attend today’s 10-year anniversary event a decade on from the creation of the Competition and Markets Authority.

The event charted the contributions and challenges of the CMA over the last 10 years and as it continues to evolve. The CMA's stated mission is to make markets work well in the interests of consumers, businesses and the economy.  Its ambition is to be consistently one of the leading competition and consumer agencies in the world.

Kevin Hollinrake MP, the UK Minister for Enterprise, Markets and Small Business said that the Digital Markets, Competition and Consumers Bill will “radically change the balance of power” between big corporations and smaller businesses. He remarked that: “We’re now about to enter a pivotal moment. A seismic shift. A competition revolution.”  Sarah Cardell, Chief Executive of the CMA, described the current times as a “watershed moment” as far as digital issues are concerned.

So what lies ahead for the next ten years?  Cardell hoped that by then every business and consumer will be able to say that “the CMA has done something for me”.  It’s an interesting thought.  It resembles remarks from EU Commissioner Vestager that even though the years roll by and we may get a few grey hairs, some of the fundamental principles of competition law are enduring: “In antitrust, what is at stake is, in some ways, as old as Adam and Eve because it is about greed, to get more”. 

With the challenges of Big Tech, climate change, asymmetric economic shocks and the UK having some of the lowest investment levels in business across the G7, it is tempting to think that competition law can solve most things.  Of course it cannot do that and it cannot do it alone.  Competition law and competition authorities do need to stay relevant and responsive and keep the consumer interest in focus.  Not as an abstract economic concept but consumers as human beings, with real lives and bills to pay.

The Competition and Markets Authority’s CMA@10 event ended today.

CMA produces update to paper on foundational AI models

 

The Competition and Markets Authority (CMA) has updated its September 2023 report in its review of competition and consumer issues in relation to artificial intelligence (AI) foundation models.

In March 2023 the government asked regulators, including the CMA, to think about how innovation in and deployment of AI can be supported.

The CMA sets out its final principles for guiding the market to positive outcomes in terms of access, diversity, choice, fair dealing, transparency and accountability.

The CMA also identifies risks that firms that control critical inputs for developing foundation models may restrict access to them to shield themselves from competition.

The CMA is also intensifying its use of merger control to examine whether AI collaborative arrangements between major players fall within the current rules.  For example, speaking at the ABA Antitrust meeting in Washington the CMA has noted that Google, Apple, Microsoft, Meta, Amazon and Nvidia are involved in an “interconnected web” of over 90 AI partnerships and investments.  The CMA will also consider such arrangements under its new powers anticipated in the Digital Markets, Competition and Consumers Bill.

The CMA will provide a further update in autumn 2024.

 

https://www.gov.uk/government/news/cma-outlines-growing-concerns-in-markets-for-ai-foundation-models

CMA letter to nail technicians about compliance with competition law

 

The Competition and Markets Authority (CMA) has issued an open letter to nail technicians to remind them and their trade associations of their obligations under competition law.

 The CMA has unsurprisingly emphasised that businesses must set their prices independently of their competitors. The CMA has further underscored that businesses should not discuss or coordinate their actions on the timing and amount of future prices increases (whether directly or through a trade body).

The CMA’s guidance comes on the back of media reporting where the CMA notes that it understands that “a campaign has been launched encouraging nail technicians to raise their prices today. In that context, we want to remind all businesses in this sector of their obligations to comply with competition law.” 

The CMA’s guidance is part of its online collection of competition law guidance.  The initiative is a further reminder of the CMA’s education outreach on competition compliance directed at small businesses, many of whom are sole traders.

https://www.gov.uk/government/publications/open-letter-to-nail-technicians-about-compliance-with-competition-law

High Court calls time on refusal to supply claim against Swatch

 

The High Court has rejected an attempt by watch parts wholesaler Cousins to resurrect a claim against Swatch for abuse of dominance in a refusal to supply claim.  The Court ruled that the action would relitigate prior Swiss actions dismissing the claim.

Mr Justice Michael Green ruled that the Lugano Convention applied to the previous Swiss Court rulings.

The case dates back to supply chain events from 2015.  The Berne Commercial Court ruled in 2021 that Swatch’s refusal to supply was part of a rationalisation of its supply chain and was objectively justified and there was no need to consider the effect on UK competition.  The Federal Supreme Court subsequently upheld that decision in 2022.

The case involves consideration of application of the Lugano Convention.   The Convention still applies in this case because the action was commenced before the UK exited the Convention upon its withdrawal from the EU.  However a court can disapply the rules if a jurisdiction has manifestly different public policy objectives.   The Convention also prevents a UK court from re-examining the ruling of the court of another Convention jurisdiction on the merits.

It was argued on behalf of Cousins that the claimant was denied a right to be heard before the Swiss Courts which did not hear vast amounts of evidence relating to the UK.

Green J rejected the claims as “somewhat outlandish”.  He observed that Switzerland is a signatory of the European Convention on Human Rights and it is not obvious that the Swiss judgments are contrary to UK public policy.

The case is a sobre reminder of what Green J described as “a great risk of straying into the forbidden arena” of re-examining the merits of prior rulings and where the impugned judgments were found to reference evidence relating to the UK.

Cousins Material House v Swatch [2024] EWHC 710

Amendments to Digital Markets, Competition and Consumer Bill to prevent acquisitions by foreign powers

 

Amendments to Digital Markets, Competition and Consumer Bill to prevent acquisitions by foreign powers

 

Amendments to the Digital Markets, Competition and Consumer Bill have been tabled, to amend the Enterprise Act 2002 to introduce a new regime for mergers involving newspaper enterprises and foreign powers.

Under the amendments, the Secretary of State must give the Competition and Markets Authority (CMA) a “foreign state intervention notice” if the Secretary of State has reasonable grounds for suspecting that it is or may be the case that a "foreign state newspaper merger situation" has been or will be created.

A foreign state newspaper merger situation will arise where as a result of two or more enterprises ceasing to be distinct, a foreign power is able to control or influence the policy of the person carrying on the newspaper enterprise, or is able to control or influence that policy to a greater extent. The turnover test is reduced to £2 million for such mergers.

The CMA must then report on whether such a merger situation has been or will be created. If it reports that this is the case, then the Secretary of State must make an order containing such provision as the Secretary of State considers reasonable and practicable for the purposes of reversing or preventing the creation of the identified foreign state newspaper merger situation.

 

The DMCC Bill is due to have its third reading in the House of Lords on 26 March 2024.

https://bills.parliament.uk/publications/54855/documents/4610

CMA consults on market investigation into veterinary services for household pets

 

CMA consults on market investigation into veterinary services for household pets

The CMA is proposing to undertake a market investigation into the supply of veterinary services for household pets, including the supply of prescribed veterinary medicines.

This follows the CMA’s September 2023 consultation into the veterinary services market for household pets.  The consultation received an unprecedented level of responses tp its consultation.

The CMA found concerns that consumers may not be given enough information to enable them to choose the best veterinary practice or treatment.

The CMA has found that over 80% of veterinary practices have no pricing information on their websites, even for routine consultations or vaccines.

The CMA has found that while the Royal College of Veterinary Surgeons operates a voluntary standards scheme, around 30% of the market has not committed to this.

The CMA invites comments by 11 April 2024.

https://www.gov.uk/government/consultations/consultation-on-the-proposal-to-make-a-market-investigation-reference-into-veterinary-services-for-household-pets-in-the-uk

Ruling on permission to appeal approval of funding arrangements in collective proceedings against Mastercard and Visa

 

The Competition Appeal Tribunal (CAT) has granted an application by Mastercard and Visa for permission to appeal the CAT's judgment approving the funding arrangements for the applications for collective proceedings orders (CPOs) brought by Commercial and Interregional Card Claims I Limited (CICC I) and Commercial and Interregional Card Claims II Limited (CICC II), under section 47B of the Competition Act 1998.

The proposed class representatives (PCRs) have revised their CPO applications and funding arrangements in light of the Supreme Court's judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28 (PACCAR).  Following PACCAR, the funding arrangements for large collective claims have been somewhat uncertain.

On 17 January 2024, the CAT rejected all of Mastercard and Visa’s arguments against the enforceability of the PCRs’ funding arrangements. The judgment emphasised a focus on the substance of funding arrangements as opposed to a blanket assertion of unenforceability regardless of funding arrangements or structure. This approach helps to reinforce the collective actions regime by allowing litigation funding – an essential component – to continue, without which, large claims against competition infringers would be impossible. The CAT accepted that the continuing uncertainty about these issues of funding enforceability arising in this and other cases before the CAT is unlikely to be resolved without determination of the issues by the Court of Appeal.

The CAT granted the applications for permission to appeal stating that it may be of assistance to the Court of Appeal to have a slightly different fact pattern to consider when resolving the points on appeal.

The ruling is timely following the panel discussion I participated in on 28 February 2024 at TL4’s Financial Services conference.

Commercial and Interregional Cards Claims I Limited v Mastercard Inc and others, Commercial and Interregional Cards Claims II Limited v Mastercard Inc and others, Commercial and Interregional Cards Claims I Limited v Visa Inc and Commercial and Interregional Cards Claims II Limited v Visa Inc [2024] CAT 16

Breach of Public Contracts Regulations not “sufficiently serious” to warrant damages under Francovich test

 

The Court of Appeal has held that a breach of the Public Contracts Regulations 2015 (SI 2015/102) that results in the wrong bidder being awarded a contract will not automatically constitute a "sufficiently serious" breach to warrant damages in accordance with Francovich v Italy (C-C/90) [1991] ECR 1-5357.

The claimant brought a claim against NHSE.  The High Court found that there was a manifest error by NHSE which, if it had not been made, would have resulted in the claimant winning the tender.  NHSE committed a single, inadvertent breach in an otherwise careful procurement exercise, which caused the wrong result.

In the absence of bad faith of the decision-maker, their "excusability" and state of mind were important factors in considering the "sufficiently serious" test.  The Court of Appeal ruled that a manifest error could be excusable, depending on the facts.

The judgment will be welcome to contracting authorities.  It settles and dismisses any assumption that a breach of procurement regulations resulting in an incorrect contract award will automatically be sufficiently serious to warrant an award of damages.  Aggrieved tenderers will find that the bar for raising a claim for damages is significantly raised.

This is the second case where a party has sought to argue that a particular type of breach or result automatically means that the "sufficiently serious" test is made out. The claimant and appellant attempted to do this (unsuccessfully) in Ocean Outdoor Ltd v Hammersmith and Fulham London Borough Council [2019] EWCA Civ 1642.

Braceurself Ltd v NHS England [2024] EWCA Civ 39

CMA market study into infant formula

 

The CMA has announced a market study into infant formula and follow-on formula in the UK.

The CMA intends to use the market study to consider how the supply of formula has, or may have, adverse effects on consumers, and how it might work better.

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

The market study follows work that the CMA has conducted on the rising costs of living where its November 2023 report found that consumers are not always well-equipped to make informed choices for infant formula.  Danon had a 71% share in the UK infant formula market in 2023 and the penetration of own-label alternatives was found to be weak..

The CMA also proposes to consider the market for growing up and toddler milks marketed for children over 1 year old.

The deadline for responses is 13 March 2024.

The CMA must announce within six months if it is intending to make a market investigation reference and must publish its final report on the market study within 12 months. The CMA has indicated it intends to publish its final report in September 2024.

 

https://www.gov.uk/government/news/cma-to-scrutinise-infant-formula-market-through-a-market-study

CAT rules on carriage dispute in collective proceedings against Amazon

 

CAT rules on carriage dispute in collective proceedings against Amazon

The Competition Appeal Tribunal (CAT) has determined the "carriage issue" in two applications to commence collective proceedings, under section 47B of the Competition Act 1998, against Amazon.

 The first application was brought by Ms Julie Hunter and the second by Mr Robert Hammond (each as the proposed class representatives).

The proposed proceedings would both combine standalone claims for damages caused by alleged breaches by Amazon of Article 102 of the TFEU (prior to 31 December 2020) and the Chapter II prohibition of the Competition Act 1998.

Each sets of proceedings allege abuse of a dominant position by Amazon in the market for intermediation services on online marketplaces through the operation of its "Fulfilled by Amazon" and "BuyBox" features.

The CAT ruled that it would not be able to certify both sets of proceedings due to the overlaps between them.  It decided which set of proceedings should be allowed to continue to a certification hearing as a separate provisional issue.

 The CAT concluded that Mr Hammond was most suitable to act as the proposed class representative. It considered that the methodology submitted by Mr Hammond's expert was preferable as it more closely aligned the counterfactual to the alleged abuse.

However, this may not be the final resolution of the matter.  The CAT decided that Ms Hunter's application should be stayed, rather than dismissed. It could still proceed to a certification hearing on the event that Mr Hammond's application for certification were to fail or, if granted, be revoked.  It may even be that the two class representatives might join forces in the future to allow claims to be brought by as wide a body of claimants as possible.

The CAT made no ruling on which class definition was more appropriate, finding that it is not an issue to be determined in a carriage dispute.

Julie Hunter v Amazon.com, Inc and others and Robert Hammond v Amazon.com, Inc and others [2024] CAT 8

Need a pay rise? CMA publishes report on market power in labour markets

 Need a pay rise? CMA publishes report on market power in labour markets

The Competition and Markets Authority (CMA) has published its first report prepared by its Microeconomics Unit, on competition and market power in UK labour markets.
The report examines employer market power and concentration in the labour market. It considers the ability of a firm to pay its workers less than the value of their contribution to the value of the firm’s output.

The CMA finds that market concentration in the labour market has remained roughly constant over the last 20 years. On average, wages are 10% lower in the most concentrated markets, compared to the least.
The report also examines the increase in hybrid and flexible working and the increasing importance of the gig economy.

The report raises a number of unanswered questions which will no doubt inform analysis by policy makers:

·        What lies behind the geographical differences in labour market concentration?
·        How do mergers and acquisitions affect labour market concentration and wages in the UK?
·        What would the impact of changing labour market policies (for example, on non-compete agreements, pay setting and the minimum wage) be for worker mobility and wages?

Competition and market power in UK labour markets - GOV.UK (www.gov.uk)