11 May 2021

Apple hit with £1.5bn UK class action over alleged App Store overcharging

Hausfeld files claim, backed by litigation funder Vannin Capital, with Competition Appeal Tribunal

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Apple is facing a £1.5bn class action lawsuit after being accused of breaking UK competition law by overcharging nearly 20 million UK customers for App Store purchases. 

The opt out collective claim, which was filed in the Competition Appeal Tribunal (CAT) in London today, is being handled by specialist litigation firm Hausfeld on behalf of lead claimant and digital economy expert Rachael Kent. The case is backed by litigation funder Vanin Capital and the legal team also includes barristers Mark Hoskins QC, Jennifer MacLeod and Aaron Khan, of Brick Court, and Ronit Kreisberger QC, of Monckton Chambers.

The case’s launch comes just two months after Hausfeld filed a £480m claim with the CAT for consumer organisation Which? against Qualcomm alleging market abuse by the California chip maker leading to more expensive smartphones.

This time, Hausfeld is representing an estimated class of 19.6 million UK iPhone and iPad users, alleging that Apple has been shutting out competition by forcing App Store users to use its own payment processing system, which typically includes a 30% commission charge.

Apple has dismissed the claim as “meritless”.

The Hausfeld team is led by partner Lesley Hannah, who said: “Apple has created a captive market where people who own Apple devices are reliant on it for the provision of both apps and payment processing services for digital purchases. It has been exploiting that market for years, by charging excessive fees that in no way reflect the actual cost of providing those services and making sure no one else can compete. App purchasers have been paying the price and this action seeks fair redress for those purchasers.”

An Apple spokesperson said: “The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% of apps on the App Store are free and developers pay Apple nothing. For the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15%.”

Apple is currently facing a number of legal challenges, including an investigation into the App Store by the UK’s Competition and Market Authority, which was launched in March. Last week, a dispute between Epic Games, represented by Gibson Dunn, and Apple, represented by Cravath Swaine & Moore, over Apple’s App Store fees reached trial stage in California.

Despite being a fixture of US courts for many years, class actions have yet to become part of UK litigation culture in the same way, with the latest challenge against Apple standing as one of the few consumer collective action suits brought since they were formally introduced in the UK in 2015. 

Last December, the UK Supreme Court certified a class action against Mastercard, allowing a £14bn class action over the alleged over-charging of credit card fees to proceed. Hausfeld partner Antony Maton, who was an intervener on behalf of Which?, said the case gave the “green light for collective actions to be brought on a straightforward and easily understood basis”.

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