Insights Mobile browsers and cloud gaming: UK Court of Appeal upholds decision to issue market investigation reference

The UK Competition and Markets Authority (“CMA”) has powers to conduct in-depth market studies and, subject to the CMA’s discretion, to issue market investigation references (“MIR”) when it has reasonable grounds for suspecting that a feature or combination of features of a market or markets in the UK prevents, restricts or distorts competition, and a market investigation reference appears to be an appropriate response. The market investigation is conducted by a panel of specialist members of the CMA. If the market investigation finds an adverse effect on competition, the CMA can impose remedies on the businesses concerned.

In June 2021, the CMA issued a mobile ecosystems market study notice. In December 2021, the CMA announced that no MIR would be made pursuant to the market study. The results of the market study were published in June 2022.  Following a period of consultation, on 22 November 2022, the CMA decided to make an MIR into the supply of mobile browsers and the distribution of cloud gaming services through app stores on mobile devices. For the reasons set out in the market study report, the CMA took the view that the markets for the supply of mobile browsers and cloud gaming in the UK were not working well, resulting in significant detriment for consumers.

Various Apple companies brought a case to the Competition Appeal Tribunal (“CAT”) arguing that the CMA had no jurisdiction to make an MIR in this case. Apple’s case was based on the interpretation of the legislation, the Enterprise Act 2022, which gives the CMA powers to initiate market studies and MIRs. Two regimes are available to issue an MIR, a standalone route that is not dependant on the CMA having previously conducted a market study, and another route following the issue of a market study notice that permits an MIR to be issued “in relation to the matter specified” in the notice within a fixed period. The CMA’s explanation (published in a separate interim market study report at the time) of why it decided not to exercise its powers to initiate an MIR earlier (following the market study initiated in June 2021) was not because of a lack of reasonable grounds for suspecting a restriction or distortion of competition but because the Government’s proposed Digital Markets, Competition and Consumer Bill, when enacted, would give the CMA better powers to address the perceived competition concerns in the market in question. However, when it became clear that the bill was subject to further delay, the CMA decided to make an MIR under the standalone procedure.

Apple contended that, having started with a market study, it was now out of time to make an MIR. The CAT agreed with Apple. The CMA appealed and, on 30 November 2023, the Court of Appeal reversed the decision allowing the MIR to proceed. The Court of Appeal found that there was nothing in the legislation preventing the CMA from exercising the standalone MIR power notwithstanding its decision not to do so pursuant to the earlier market investigation.

For more information, click here and here.