Delays have consequences: CAT quashes CMA investigation into cloud gaming and mobile apps

April 6, 2023

The proposed Digital Markets, Competition and Consumer Bill recently is rumoured to be published very soon, following much delay. However, the delay appears to have had consequences for the CMA and its investigation of mobile browsers and cloud gaming services.

The CMA had been carrying out a market investigation in respect of the supply of mobile browsers and browser engines, and the distribution of cloud gaming services through app stores on mobile devices in the UK. Originally it had intended to use its new powers under the new Bill, but as the Bill has not yet been introduced to parliament, it then changed its mind and decided to use its existing powers instead. However, Apple claimed that the CMA was out of time.

Last Friday, the Competitional Appeal Tribunal quashed the decision of the CMA to make a market investigation reference into:

the supply of mobile browsers and mobile browser engines in the UK and;

the distribution of cloud gaming services through app stores on mobile devices in the UK.

On 15 June 2021, the CMA published a market study notice entitled Market Ecosystems under section 130A EA 2002. On 14 December 2021, the CMA issued a decision entitled Mobile Ecosystems: Notice of decision not to make a market reference under section 131 of the Enterprise Act 2002. On the same date, the CMA issued an interim report in relation to the market study. On 10 June 2022 the CMA published a final report, explaining the CMA’s decision to consult on a market investigation reference into the supply of mobile browsers and mobile browser engines and the distribution of cloud gaming services through app stores on mobile devices. The contested decision was then taken on 22 November 2022.

In summary, Apple contended that the November decision was ultra vires because it was outside the statutory time-limits stipulated in the Enterprise Act 2002. The Tribunal unanimously allowed Apple’s challenge.

The Tribunal found that the time limits in section 131A Enterprise Act 2002 did apply to the Decision, as the CMA has published a market study notice, and was proposing to make a reference under section 131 Enterprise Act 2002 in relation to the matter specified in the market study notice. The time limits in section 131 B Enterprise Act 2002 therefore applied. The CMA failed to comply with these deadlines. The deadline for a notice of a proposed market investigation reference was 15 December 2021, whereas the CMA published its proposal on 10 June 2022, and the deadline for the period of consultation to begin was 15 December 2021, whereas the CMA commenced its consultation on 10 June 2022. This means the Decision lacked the statutory pre-requisites for a valid decision, was ultra vires, and had to be quashed.

The decision is significant for the CMA’s market investigation. Time limits are needed to that regulatory authorities get on with getting a job done, but it shows there are downsides too. Apple neither disputed that the CMA had grounds to make a reference, nor that it had exercised its discretion wrongly in making the reference. However. the Enterprise Act’s provisions required the CMA to make its reference decision within six months of its original market study notice. When the CMA changed its mind, more than six months had passed and so it had run out of time.

Of course, this would not have happened if the UK government had not dithered so much about the long-promised Bill. No doubt this is mainly due to the merry-go-round of government (prime) ministers we’ve experienced in recent years, but it has not helped the CMA.

The CMA has expressed its disappointment with the decision and is considering an appeal. It said:

“We are disappointed with today’s judgment. We made this market investigation reference to make sure that UK consumers get a better choice of mobile internet services and that UK developers can invest in innovative new apps. Our concerns, and the reasons why we launched our market investigation, were not challenged by Apple. Today’s judgment has found that there are material constraints on the CMA’s general ability to refer markets for in-depth investigations. This risks substantially undermining the CMA’s ability to efficiently and effectively investigate and intervene in markets where competition is not working well.”