Sunday, January 22, 2023

Apple apparently argues 'shall' means 'must' in appeal of UK antitrust authority CMA's decision to investigate mobile browsers and cloud gaming based on allegedly elapsed deadlines

On Friday the UK Competition Appeal Tribunal (CAT) published a summary of application (PDF) of Apple's January 18, 2023 appeal of the November 22, 2022 decision of the UK Competition & Markets Authority (CMA) to make a market investigation reference (MIR) into the markets for mobile browsers (particularly browser engines) and for the distribution of cloud gaming services. The court also announced that the initial case management conference would be held on Tuesday, January 24.

Apple's appeal on procedural grounds is not unreasonable, and I say so even though I

For as much as I'd like to see the CMA fend off this challenge to its MIR decision, this appeal could go either way.

The court summarizes Apple's sole ground of review ("... the MIR Decision [...] is ultra vires") as arguing that none of the following statutory requirements have been met:

"Apple contends that in circumstances where the CMA has published a Market Study Notice ('MSN'), sections 131A and 131B of the Act require that (i) any proposal for a market investigation reference must be made, and consultation on that proposal must begin, within six months of the date of the publication of the MSN; (ii) the CMA is required to issue its final report on the market study within 12 months of the MSN; (iii) the final report must state any decision to make a market investigation reference pursuant to section 131 of the Act, the reasons for that decision, and such information as considered necessary to facilitate an understanding of that decision; and (iv) where a market study report contains a decision to make a market investigation reference, the reference must be made at the same time as the publication of the final report." (emphases added)

In the quoted passage, I highlighted the words that indicate hard and fast deadlines.

If that statutory interpretation is right, then it has to be applied to the following facts summarized by the court:


  • launched a mobile ecosystem market study on June 15, 2021,

  • gave notice of a decision not to make a market investigation reference on December 14, 2021 (and on the same day published an Interim Report that mentioned the decision not to investigate further),

  • on June 10, 2022 published a Final Report, "taking account of representations made to it after the [Interim report] and after the CMA itself having conducted further analysis" and launching a public consultation as to a potential MIR, and

  • made the MIR decision on November 22, 2022.

So let's compare the deadlines based on Apple's interpretation to the actual dates of the procedural events:

to Apple
Market study noticeN/AJune 15, 2021
Final report on market studyJune 14, 2022June 10, 2022
Market investigation referenceJune 14, 2022November 22, 2022

The dispute about whether the deadline for the final report on the market study was met turns on what one believes to be indispensable elements of that report. In the court's summary, Apple argues that the final report must state any MIR decision, the reasons for that decision, and further information that facilitates an understanding of the decision. Here, the final report came first, and the MIR came later.

The statute (Sec. 131B of the Enterprise Act 2002) consistently uses the term "shall" with respect to what the CMA is supposed to do ("shall ... within", "shall ... contain").

So what shall we make of that? Has Apple "shall"-shocked the CMA or is its whole argument an empty shell?

The Bar and Bench website says:

"Shall is one of the most corrupted and litigated words in the language of the law. Over 100 pages in the encyclopaedia of Words & Phrases are devoted to a summary of more than 1,300 precedents from common law jurisdictions interpreting shall! This misuse or abuse of shall extends to legislation and private legal documents in equal abundance."

Apple is not the first party to litigate over the meaning of "shall" nor will it be the last.

Cornell Law School's Legal Information Institute first describes "shall" as a pretty strict term in the United States:

"Shall is an imperative command, usually indicating that certain actions are mandatory, and not permissive. This contrasts with the word “may,” which is generally used to indicate a permissive provision, ordinarily implying some degree of discretion."

But it points to precedent from Illinois according to which it really depends on the context:

"[W]hen used in a statute, the term ‘shall’ does not have a fixed or inflexible meaning and may be given a permissive or directory interpretation depending on the legislative intent. If a statutory provision using the term ‘shall’ merely directs a manner of conduct to guide officials or is designed to secure order, system, and dispatch in proceedings, it is generally 'directory'."

The law firm of Allen & Overy reported on a Court of Appeal (for England & Wales) decision acccording to which "shall" is merely an expression of the parties' intention at the time of contracting.

Another British law firm, Ashurst (which represents UEFA in the European Superleague Company EU antitrust case, successfully so far), published a highly instructive overview of how UK market studies and market investigations work, and appears to give the statute a similar interpretation as Apple's counsel from Gibson Dunn does:

"Unless the CMA has issued a market study notice, it is not bound by statutory time limits nor does it have any of the compulsory information gathering powers when conducting work under its general review functions."

Put differently, if a market study notice was issued (such as in this case), the CMA would be bound by statutory time limits according to Ashurst.

That is a defendant-friendly interpretation that presupposes a legislative intent of giving the targets of a market study legal certainty after hard and fast deadlines.

It's "legit" for Apple to ask the Competition Appeal Tribunal to rule on this question of statutory interpretation, and clarification would indeed be helpful. That said, the iOS browser engine monopoly must be broken and all cloud gaming providers should be free to offer their services to iPhone and iPad users without having to submit each game to Apple's arbitrary app review and being subjected to an excessive app tax.

A market investigation lowers the hurdle for the CMA: it doesn't have to prove wrongdoing, just adverse effects on competition (abbreviated as AEC, which in other antitrust jurisdictions, however, stands for "as efficient competitor") and has greater powers to impose remedies. Otherwise a conventional antitrust investigation of Apple's conduct would be required, and Apple would have to be shown to have abused a dominant position in the relevant market. Apple would like to deprive the CMA of its more powerful tool, and essentially argues that the CMA has deprived itself of that tool by failing to abide by the applicable statute.