The UK Competition Appeal Tribunal (CAT) has quashed the decision of the Competition and Markets Authority (CMA) on 22 November 2022 to launch a market investigation into mobile ecosystems, finding that the decision was ultra vires.
The CMA commenced a market study under the Enterprise Act 2002 on 15 June 2021 relating to the UK markets for the supply of mobile devices and operating systems, the distribution of mobile apps, and the supply of mobile browsers and browser engines. On 14 December 2021 the CMA gave public notice of a decision not to make a market investigation reference arising out of the market study.
In the CMA’s report dated 10 June 2021, Mobile ecosystems: Market study final report, the CMA stated that it had reconsidered the matter and was now proposing to make a market investigation reference under section 131 of the 2002 Act in relation to Apple Inc (together with related UK and EU business entities) and Alphabet Inc (i.e. Google). Following a public consultation, the CMA purported to make the market investigation reference on 22 November 2022.
Apple sought a review of that decision before the CAT pursuant to section 179 of the 2002 Act. Apple contended that the decision was ultra vires because it was made outside the statutory time-limits stipulated in sections 131B(4), 131B(5) and 131B(6) of the 2002 Act. Apple submitted that the CMA had no power to make the MIR against Apple in November 2022, and consequently the decision and the ensuing market investigation were invalid and of no effect.
The CAT allowed Apple’s application.
In its judgment, the CAT found, by virtue of sections 131B(1) and 131B(4) the 2002 Act the CMA was required to propose any market investigation reference arising out of the market study within 6 months of its commencement, and the reference itself had to be made within 12 months.
Parliament had imposed these strict time-limits, it was held, in order to limit the period during which businesses would be subject to burdensome investigations, to ensure efficient use of the CMA’s resources, and to avoid duplication and overlap.
The 12-month time-limit applied in this case because (1) the CMA had published a market study notice, and (2) the CMA was proposing to make a market investigation reference in relation to the subject-matter of the notice. Therefore the conditions set out in sections 131A and 131B(4) of the 2002 Act were met.
On the facts, the CMA had failed to comply with the 12-month time-limit for making a market investigation reference. It followed, the CAT held, that the CMA had no power to make a market investigation reference as at 22 November 2022 and the decision was ultra vires.
The full judgment is available here.
Sir James Eadie KC acted for the Competition and Markets Authority