Having already announced that it would certify collective proceedings brought by Dr Rachael Kent against Apple in relation to alleged abuses of dominance in the distribution of iPhone and iPad apps through the ‘App Store’ (see news 6 May), the Competition Appeal Tribunal has now handed down its judgment in relation to Dr Kent’s application for a collective proceedings order (CPO) setting out its detailed reasons for concluding that Dr Kent’s application was well-founded.

The judgment also dismisses Apple’s application to strike out Dr Kent’s claim that App Store Commissions paid by consumers who buy apps and digital content on iPhones and iPads are excessive and unfair. The CAT found that Dr Kent has reasonable grounds for making the claim and she had properly addressed the various elements of the legal test for excessive pricing.

The effect of the judgment is that all of the abuse of dominance claims advanced by Dr Kent have been permitted to proceed to trial on a collective basis.

Ronit Kreisberger QC and Michael Armitage act for the authorised class representative, Dr Rachael Kent, instructed by Hausfeld LLP.

In its ruling in Camelot UK Lotteries Ltd and ors v The Gambling Commission [2022] EWHC 1664 (TCC), the High Court has lifted the automatic suspension which prevented the Gambling Commission from awarding the Fourth National Lottery Licence.

The suspension arose from challenges to the competition to operate the Fourth Licence, which was won earlier this year by Allwyn Entertainment Ltd. Claims have been brought by Camelot, the incumbent licensee, and various companies of the IGT group, some of which were listed as key sub-contractors in Camelot’s application. The High Court (O’Farrell J) allowed the Gambling Commission’s application to lift the suspension, meaning that the handover from Camelot to Allwyn can now begin. The Camelot and IGT claims will continue, but will be for damages only. The Fourth Licence will begin in 2024 and last for a decade.

The High Court has not yet considered the question of permission to appeal.

Ligia Osepciu acts for Camelot.

Philip Moser QC and Ewan West act for the IGT claimants.

Anneli Howard QC and Will Perry act for the Gambling Commission.

The judgment has been covered by City AM, The Financial Times, The Guardian, The Telegraph and The Times.

Daniel Beard Q.C. and Jack Williams are instructed by Intel in T-236/22 Intel v Commission before the General Court of the European Union. The action seeks the payment of default interest arising from the General Court’s annulment, in Case T-286/09 RENV, of the entire €1.06 billion fine wrongly imposed on Intel (which it provisionally paid in 2009). Daniel and Jack also represented Intel in those ground-breaking remittal proceedings: see here. Whilst the Commission has since repaid the principal sum owed as a result of the annulment, it has failed to provide default interest, which Intel now seeks.

Anneli Howard QC, Stefan Kuppen and Will Perry are acting for Justin Guttman in proposed opt-out proceedings against Apple on behalf of at least 25 million iPhone customers.

They are instructed by Charles Lyndon, whose press release is available here.

For news coverage, see BBC News, The Times, The Guardian, Evening Standard, Sky News, Mail Online, the Independent and Bloomberg.

The Administrative Court has granted permission to apply for judicial review in a fresh challenge to the ‘Immigration Exemption’ under the Data Protection Act 2018 (“DPA 2018”).

The Court of Appeal found in R (Open Rights Group & The3Million) v SSHD & SSDCMS [2021] EWCA Civ 800 that an earlier version of the Immigration Exemption under the Data Protection Act 2018 was incompatible with retained EU law. The Government subsequently enacted the Data Protection Act 2018 (Amendment of Schedule 2 Exemptions) Regulations 2022 (SI 2022/76), amended the DPA 2018 in light of the Court of Appeal’s decision.

The Claimants argue that the amended Immigration Exemption remains unlawful in that it does not meet the requirement of being a ‘legislative measure’ necessary for compliance with Article 23 of the UK GDPR; and/or does not comply with the mandatory requirements listed in Article 23 of the UK GDPR and, as a consequence, omits necessary substantive and procedural safeguards.

Nikolaus Grubeck is acting for the Claimants, instructed by Leigh Day.

The Competition Appeal Tribunal yesterday handed down judgment on Meta’s wide-ranging challenge to the decision of the Competition and Markets Authority (“CMA”) that its completed acquisition of GIPHY resulted in a substantial lessening of competition (“SLC”) in the UK and that Meta must therefore divest itself of GIPHY.

The Tribunal rejected all of the substantive grounds of Meta’s application for judicial review; and all but one of Meta’s procedural challenges (relating to redactions for confidentiality). The parties have been invited to make submissions on whether the Decision needs to be remitted in case Meta wishes to make any further representations on the redacted material.

The judgment provides important guidance on the application of the CMA’s new merger assessment guidelines, but also contains at least four points of relevance beyond the merger context.

First, the Tribunal held that the CMA had properly directed itself as to the relevant test when assessing the impact of the merger on dynamic competition. In the course of upholding the CMA’s assessment, the Tribunal enumerated, on a non-exhaustive basis, various factors that the CMA should consider whether considering whether there has been a substantive lessening of dynamic competition. On examination, the Tribunal considered that the evidence and thinking set out in the Decision easily passed this framework.

The Tribunal’s framework constitutes important guidance, given that dynamic competition is a relatively new concept introduced in the CMA’s updated (2021) merger assessment guidelines, and will be central to the assessment of many digital mergers. However, the Tribunal’s comments could also be of potential relevance outside of the merger context, to the extent that the concept of dynamic competition is relied on in Competition Act cases or market studies. Relevant factors included the time frame, in respect of which the Tribunal commented that it doubted there could be an impairment of dynamic competition that would not have manifested itself within five years. The Tribunal also commented that, in future merger cases involving dynamic competition, as well as assessing the potential harm of permitting an acquisition, the CMA should carry out a cross-check to assess the potential adverse effects of prohibiting the merger, for example due to a potential chilling effect on innovation (given that the prospect of exit through acquisition can incentivise, as well as disincentivise, innovation by entrepreneurs). It also held that, while it considered the CMA to have jurisdiction, in mergers with an international dimension the CMA should consider whether intervention was consistent with the demands of comity.

Second, the Tribunal held that CMA groups on merger references are entitled to delegate tasks, including the drafting of text for decisions and provisional findings, to CMA staff, so long as the group remains the ultimate decision-maker, on so-called ‘Carltona’ principles which govern the extent to which ministers of state can delegate tasks to their civil servants.

Third, the Tribunal held that the CMA had erred in redacting material that was commercially sensitive to a third party from the Decision and its Provisional Findings, thereby depriving Meta of the ability to make submissions based on that material. In this connection, the Tribunal stated that “the addressees of a decision and any other persons affected by a decision are entitled to understand exactly the basis on which the decision is made, and the decision-maker must stand by and defend the decision it has made, and not some variant that leaves bits out”.

Fourth, under the common law, where a reviewable error of law has been found, the Simplex test provides that the court should refuse a remedy only if the decision would inevitably have been the same if the public law wrong had not occurred. In 2015, the Government, concerned at the number of decisions that were having to be retaken as a result of procedural irregularities, amended s.31(2A) of the Senior Courts Act 1981 to provide that the “High Court must refuse to grant relief on an application for judicial review … if it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred” (emphasis added).

Where it finds a reviewable error of law in an application for review under s.120(4) of the Enterprise Act 2002, when determining whether to refuse a remedy should the Tribunal apply the common law Simplex test, or the less demanding test under s.31(2A)? The Tribunal held that it should apply the Simplex test, in part on the basis that the s.31(2A) test only applied to the High Court in England and Wales, whereas the Tribunal was a tribunal of the whole of the UK.

The judgment is available here.

Josh Holmes QC represented the CMA, Julian Gregory represented the Application Developers Alliance (one of the interveners) and Alison Berridge represented Snap Inc.

CMA v Flynn Pharma Ltd and Pfizer Inc

Pfizer and Flynn were found by the CMA to have excessively priced a pharmaceutical drug contrary to section 18 Competition Act 1998. The CAT allowed the companies’ appeal in part, confirming the CMA’s finding of dominance but allowing the appeal on abuse. The CAT remitted the issue of excessive pricing to the CMA for reconsideration (this direction being upheld by the Court of Appeal on appeal by the CMA).

The CAT also awarded the successful companies’ approximately two thirds of their costs on an issues basis. The CAT considered that “costs follow the event” was an appropriate starting point but that some discount should be given for the CMA having succeeded on the issue of dominance.

The Court of Appeal set aside the CAT’s costs ruling. This was because the Court of Appeal considered that the CAT had disregarded a general legal principle based on a line of cases beginning with Bradford MDC v Booth [2000] 164 JP 485 and ending with BT v Ofcom [2018] EWCA Civ 2542 that, where there is no default position expressed in the wording of the power to award costs, the starting point should be that no costs order should be made against a public body such as the CMA provided that it had acted reasonably.

The Supreme Court allowed the companies’ appeal and reinstated the CAT’s costs Order. Lady Rose gave the unanimous judgment The reasons were as follows.

First, there is no generally applicable principle that all public bodies should enjoy a protected costs position when they are unsuccessful. The Booth line of cases supports a principle that examines whether there is a “chilling effect” on the authority acting in the public interest if an adverse costs order were made [97]. This chilling effect cannot be presumed but depends on the nature of the public body, the nature of the decision and the frequency with which such decisions are made [98]. In the present case the way the CMA is funded dispelled any notion of a chilling effect. This is because the CMA can set-off any adverse costs orders against the income it receives from penalties imposed on companies for breaching the competition rules [123]. Further, there were good policy reasons for applying a cost follows the event principle as it was apt to discipline public authorities, here the CMA, from adopting unfounded decisions [131].

Second, the CAT’s existing case law on costs was consistent with the Booth line of cases [136]. The principle of costs following event which was supported by Rule 104 of the Tribunal Rules did not mean that costs follow the event was the end point. The CAT had adopted a sophisticated, flexible and multifaceted approach to costs awards which struck a balance between fairness to the parties and ensuring the effectiveness of the competition regime [152].

The judgment is available here.

Mark Brealey QC acted for the Appellants (Pfizer Inc and Pfizer Ltd) Instructed by Clifford Chance LLP
Rob Williams QC acted for the Respondent (Competition and Markets Authority) Instructed by Competition and Markets Authority
Josh Holmes QC acted for the 2nd Intervener (Office of Communications (Ofcom) Instructed by OFCOM

Case History

Substantive issue on excessive pricing
CMA Decision “Phenytoin” 7 December 2016
CAT [2018] CAT 11 and CAT 12 (remittal)
Court of Appeal [2020] EWCA Civ 339

Costs principle
CAT [2019] CAT 9
Court of Appeal [2020] EWCA Civ 617
Supreme Court [2022] UKSC 14

In its ruling in Le Patourel v BT [2022] CAT 21, the Competition Appeal Tribunal considered the transfer of collective proceedings to a different panel following certification.

Paragraph 6.7 of the CAT’s Guide to Proceedings 2015 envisages that the certifying ‘Case Management Tribunal’ will transfer proceedings to a differently constituted ‘Trial Tribunal’ and will therefore “bow out … to be recalled if, and only if, there is a collective settlement to be approved.” The CAT, however, considered that “in this case, and perhaps in others, there is, in our view, a much simpler solution. This is that the current Tribunal will case manage the claim through to trial and conduct the trial itself. The only issue is if a collective settlement is proposed. But at that stage, the President of the CAT can be requested to, and can appoint, a separate Tribunal panel to consider the settlement.” It held that “the Guide itself cannot rule out the proposed alternative solution”, there was nothing in the CAT Rules to prevent it, and “there are good reasons connected with the overriding objective for taking this course.”

The Tribunal proceeded to make directions to trial, which is expected to take place in early 2024.

The ruling is available here.

Ronit Kreisberger QC, Nikolaus Grubeck, and Jack Williams act for the class representative, Justin Le Patourel, instructed by Mishcon de Reya.

Melanie Hall QC led Brendan McGurk and David Gregory for HMRC, in Biffa and others v HMRC, a test-case for the UK landfill sector concerning whether landfill tax was payable on ‘fluff’ layers within landfill sites.

The challenge is one of the biggest tax repayment claims of the last 5 years concerning an issue on which Melanie Hall has been advising HMRC for almost nine years.

Biffa and other landfill site operators claimed that the waste in the so-called “fluff layer” – present at the top, sides and bottom of all UK landfill cells – was not disposed of as waste but “used” in the engineering of the cells. The claimed consequence was that landfill tax was not payable on that waste. Over £3 billion of tax was at stake.

On 22 April 2021, the Court of Appeal upheld HMRC’s appeal on all grounds of appeal against the Upper Tribunal’s decision. In so doing, the Court of Appeal clarified the law on “use” for the whole sector. By its decision judgment the Supreme Court refused the application for the permission to appeal on the basis that the application had failed to show any arguable point of law. The Court of Appeal’s judgment is therefore the last word on this issue, providing greater clarity on the meaning of its judgment in WRG.

The Monckton team was instructed throughout this long-running case by Richard Shaw, Senior Lawyer in the Customs, Excise and Environmental Taxes Litigation Team.

The Competition Appeal Tribunal has certified opt-out collective proceedings brought by UK consumer charity Which? against US-based wireless telecoms company Qualcomm Incorporated. Which? alleges that Qualcomm’s breaches of competition law inflated the royalties paid by smartphone manufacturers for Qualcomm’s technology, leading to higher prices for consumers. Further details of the claims can be found here.

In a unanimous judgment, the Tribunal held that the claims meet the criteria for certification and should be allowed to proceed. Which? will now represent a class of approximately 29 million UK consumers who have purchased qualifying Apple or Samsung smartphones since October 2015.

Which? is represented by Jon Turner QC, Anneli Howard QC, Michael Armitage and Ciar McAndrew. The counsel team is instructed by Nicola Boyle, and Lucy Rigby of Hausfeld & Co. LLP.

Alexandra Littlewood acted for Qualcomm, instructed by Quinn Emanuel.