A Hausfeld-led collective action against Apple, repped by Gibson Dunn, has succeeded in the UK’s Competition Appeal Tribunal (CAT), meaning the tech giant could be liable for damages of up to £1.5bn.
The result marks the first case brought under the UK’s collective action regime to reach a successful conclusion at trial since it was introduced a decade ago by the Consumer Rights Act 2015.
The action was brought on behalf of some 36 million iPhone and iPad users by Dr Rachael Kent, a senior lecturer in digital economy and society education at King’s College London. It was backed by litigation funder Vannin Capital.
The tribunal ruled that Apple had abused its dominant position by “imposing exclusionary practices” and charging “excessive and unfair” fees on purchases of apps, app subscriptions and in-app purchases made by UK iPhone and iPad users, resulting in losses of around £1.5bn over a 10-year period.
In a nearly 400-page ruling handed down on Thursday (23 October), the tribunal found the 30% fees Apple charged on these purchases breached UK and EU competition laws.
“In our view, the restrictions cannot sensibly be justified as being necessary or proportionate to deliver the benefits which Apple puts forward as flowing from its objective of an integrated and centralised system,” the CAT said. “On the contrary, the competition which would exist absent the restrictions is in our view much more likely to deliver the benefits that consumers want, in the form and at the price point they want them.”
Apple said it would appeal the ruling, which it said “takes a flawed view of the thriving and competitive app economy”.
Kent was represented by Hausfeld partner Lesley Hannah, together with barristers Mark Hoskins KC and Matthew Kennedy from Brick Court Chambers and Tim Ward KC, Michael Armitage and Antonia Fitzpatrick from Monckton Chambers.
The ruling is a boost to the UK’s collective action regime as the Department of Business and Trade reviews responses to its call for evidence over the regime’s operation and impact, which closed earlier this month.
Kent hailed the result as a “landmark victory – not only for App Store users, but for anyone who has ever felt powerless against a global tech giant”.
She added: “This case proves that the UK’s collective action regime is working. It empowers ordinary people and small businesses to hold even the most powerful corporations to account. Today’s ruling sends a clear message: no company, however wealthy or powerful, is above the law.”
The victory for Kent comes as a parallel collective action against Google over fees on the Google Play Store is due to be heard early next year. The case is led by consumer advocate Liz Coll, also represented by Hausfeld and supported by Vannin.
Earlier this week, the Competition and Markets Authority designated Apple and Google as having strategic market status, which it said was not a finding of wrongdoing but enabled it “to consider proportionate, targeted interventions to ensure that mobile platforms are open to effective competition, and that consumers and businesses that rely on Google and Apple can have confidence that they are treated fairly”.
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