CAT certifies Dr Kent's opt-out collective claim against Apple on the spot
Last week, in a first for the UK collective proceedings regime, Hausfeld client Dr Rachael Kent’s claim against Apple concerning fees levied by Apple in its App Store was certified on the spot. The Tribunal reserved judgment on Apple’s strike out / reverse summary judgment application in respect of the excessive pricing aspects of Dr Kent’s claim. Judgment on that application is expected in June 2022.
Dr Kent alleges that Apple has abused its dominant position, in breach of the Chapter II prohibition in section 18 of the UK Competition Act 1998 and Article 102 TFEU by engaging in exclusionary and exploitative abuses in relation to purchases of apps and so-called ‘in-app purchases’ on Apple mobile devices (such as, iPhones and iPads) and the associated payment processing market. In particular, Apple has foreclosed all competition from actual or potential rivals in the distribution of apps and in-app purchases, and in the provision of the payment processing services used to make such purchases on Apple mobile devices. Apple exploits its monopoly by demanding a commission of, typically, 30% on all such purchases. Dr Kent alleges that the commission is an excessive and / or unfair price and, by charging it, Apple is acting in breach of EU and UK competition laws.
Dr Kent’s allegations centre around certain commercial practices implemented by Apple that are also the focus of investigations by several competition authorities around the world. For example, the Dutch Authority for Consumers and Markets recently concluded an investigation finding that Apple enjoys a dominant position in similar relevant markets, and abuses that dominant position by imposing unreasonable contractual conditions on certain developers in respect of payment processing services for app and in-app purchases.
Having been certified at the CPO hearing, Dr Kent now represents a UK class comprising approximately 19.6 million Apple mobile device users who have suffered aggregate losses of between £621 million and £1.7 billion.
In the runup to the hearing, Apple’s opposition to Dr Kent’s application was confined to the excessive pricing claim, which Apple claimed had no real prospect of success at trial and applied to strike it out and / or obtain reverse summary judgment (the summary dismissal application). Apple submitted that, in coming to the preliminary conclusion that the 30% commission was higher than might be expected in normal competitive conditions, the preliminary economic report filed in support of Dr Kent’s CPO application failed to take account of the broader ‘value’ Apple provides to Apple mobile device users and the costs associated with other elements of Apple’s business.
Dr Kent defended the summary dismissal application on the basis that her excessive pricing claim passes the strike-out / summary judgment threshold, and Apple’s objections to it are:
- based on a misconstruction of the legal principles applicable to allegations of excessive pricing set out in the Court of Appeal’s judgment in Flynn Pharma and
- are premature, and depend on questions of fact and evidence that can only properly be resolved following a full investigation at trial.
As part of her submissions, counsel for Dr Kent, Ronit Kreisberger QC, drew the Tribunal’s attention to various regulatory and judicial investigations and decisions from around the world, including the statements of the UK Competition Markets Authority in its recent mobile ecosystem interim report that Apple is “likely to be charging above a competitive rate of commission to app developers, which will ultimately mean users paying higher prices for subscriptions and in-app purchases”.
At the end of the hearing, the Competition Appeal Tribunal certified Dr Kent as the class representative allowing the case to proceed to trial. The Tribunal reserved judgment on Apple’s summary dismissal application and said that it would aim to hand down its judgment in June 2022.