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Digital developments in focus
| 1 minute read

Court of Appeal finds in favour of CMA cloud market investigation

The Court of Appeal has today ruled unanimously that the Competition and Markets Authority (CMA) was justified in launching a market investigation into mobile browsers and cloud gaming in November 2022. Apple had challenged the CMA's decision on the basis that it fell outside the statutory time limits prescribed by the Enterprise Act 2002 - an argument with which the Competition Appeal Tribunal (CAT) had agreed. 

CMA decision to launch market investigation

In June 2021, the CMA issued a market study notice relating to mobile ecosystems. When publishing its interim report on the market study in December 2021, the CMA decided not to make a market investigation reference, stating its expectation that the Government would shortly introduce new legislation which would confer on the CMA new powers to investigate digital markets and to tackle any issues identified in the market study. It nevertheless reserved the right to revisit its concerns if there were delays to the legislation and, if appropriate, to make a market investigation reference. Given delays to the anticipated legislation, when the CMA published its final market study report in June 2022, it consulted on making a market investigation reference, and went on to launch a market investigation in November 2022. 

CAT judgment 

The CAT considered that, in so doing, the CMA had breached the relevant statutory deadlines set out in the Enterprise Act 2002, by consulting on its proposal to make a market investigation reference when publishing its final market study report (12 months after the market study notice), rather than when publishing its interim market study report (six months after the market study notice). It considered that, having decided not to make a reference during the market study, the CMA could not then start over and decide to make a standalone market investigation reference into the same matter.

Court of Appeal judgment

The Court of Appeal has held unanimously that such an interpretation of the Enterprise Act 2002 “could have serious consequences”. It pointed out that there is nothing in the wording of the Enterprise Act 2002 to support such an interpretation. Further, such an interpretation would deprive the CMA of jurisdiction, even some time later, to investigate concerns about an undertaking's behaviour even where such concerns are justified. The Court was therefore clear that the CMA's market investigation reference was lawful. The market investigation nevertheless remains on hold pending the determination of any application for permission to appeal to the Supreme Court.