The Court of Appeal has upheld the CMA’s decision to launch a market investigation into mobile browsers and cloud gaming, overturning a previous ruling quashing the investigation
Today’s unanimous judgment overturns the Competition Appeal Tribunal’s (CAT) previous decision in March 2023 which upheld an appeal by Apple and suspended the Competition and Markets Authority’s (CMA) investigation pending the Court of Appeal’s judgment.
However, the CMA’s market investigation remains on hold pending the determination of any application for permission to appeal to the Supreme Court.
Sarah Cardell, Chief Executive of the CMA, said:
This ruling gives the CMA the backing it needs to protect consumers and promote competition in UK. As this judgment clearly states, the previous ruling by the CAT would have had ‘serious consequences’ for the CMA’s ability to investigate potential breaches of the law.
We launched this investigation over a year ago in order to make sure that UK consumers get the best services and apps on their mobile phones, and that UK developers can invest in innovative new apps. We stand ready to reopen it when the legal process is complete.
Background to the Case
On 22 November 2022, the CMA exercised its power under the Enterprise Act 2002 to make a market investigation reference in relation to the market for mobile browsers and cloud gaming.
The lawfulness of that decision was challenged by Apple by way of an appeal to the CAT, which was heard on 10 March 2023.
In a judgment handed down on 31 March 2023, the CAT found 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. As a result of this finding, the CAT ruled that the CMA’s market investigation reference should be quashed.
The Court of Appeal’s Judgment
The CMA appealed the CAT’s judgment and in a unanimous judgment by Lord Justice Green, Lord Justice Arnold, and the Chancellor of the High Court, it was found that the CAT had erred in its interpretation of the Enterprise Act 2002 and that such an interpretation, if uncorrected, would have “serious consequences” on the CMA’s ability to promote competition and protect consumers.
The Court of Appeal ruled that the CMA’s standalone power carries with it sufficient and important public law safeguards and that “there is no overarching principle that an undertaking is entitled to be investigated once and only once”.
On the Enterprise Act in general, the Court held that whilst the statute contained protections against undue investigatory burdens, “the principal purpose of the Act is to promote competition and protect consumers” and, in its view, the Tribunal “lost sight of this consideration”.
Note to Editors
The CMA’s markets function (enabling it to conduct market studies and market investigations) can be found in Part 4 of the Enterprise Act 2002.
The “standalone power” to make a market investigation reference is contained in section 131 of the Enterprise Act 2002 (“Power of the CMA to make references”).
Apple relied on sections 131A (“Decisions about references under section 131: consultation”) and 131B (“Market studies and the making of decisions to refer: time-limits”) of the Enterprise Act 2002 in support of its claim that the CMA acted unlawfully.
The full scope of the market investigation is “the supply of mobile browsers and browser engines, and the distribution of cloud gaming services through app stores on mobile devices in the UK”.
The market study preceding the investigation was titled “Mobile Ecosystems”.
The CMA’s decision to make a market investigation reference dated 22 November 2022.