USA – CALIFORNIA Trends and Developments Contributed by: Ryan Sandrock, Shook, Hardy & Bacon LLP
even if not violating an antitrust statute. See Cel-Tech Commc’ns, Inc v LA Cellular Tel Co , 20 Cal 4th 163, 180, 187, 83 Cal Rptr 2d 548, 973 P 2d 527 (1999). The Apple court went into a detailed analysis of two different types of analyses of the “unfair” prong (a “tethering” test applicable to competitor claims and a “balancing” test applicable to consumer claims) before concluding that Apple’s conduct violated both tests. The court imposed an injunction regarding Apple’s anti-steering agreements, the spirit and scope of which are still in dispute at the time of writing. The court also delivered a complex conclusion regarding Epic’s claims and how antitrust law can promote com - petition: “This trial highlighted that ”big tech” encompasses many markets, including as relevant here, the sub - market for mobile gaming transactions. This lucrative, USD100 billion market has not been fully tapped and is ripe for economic exploitation. As a major player in the wider video gaming industry, Epic Games brought this lawsuit to challenge Apple’s control over access to a considerable portion of this submarket for mobile gaming transactions. Ultimately, Epic Games over - reached. As a consequence, the trial record was not as fulsome with respect to antitrust conduct in the relevant market as it could have been. Thus, and in summary, the Court does not find that Apple is an antitrust monopolist in the submarket for mobile gam - ing transactions. However, it does find that Apple’s conduct in enforcing anti-steering restrictions is anti- competitive.”Apple appealed, but the Ninth Circuit upheld the District Court’s UCL ruling. The Ninth Cir - cuit embraced the District Court’s finding that Apple’s “anti-steering provisions decrease consumer informa - tion, enabling supra-competitive profits and resulting in decreased innovation.” The appeals court also affirmed the lower court’s nation injunction against Apple. On the fundamental issue of the overlap between the UCL and antitrust laws, the court largely agreed with the district court. The court rejected Apple’s argu - ment that a Sherman Act failure automatically barred a UCL claim under a UCL “safe harbour” doctrine. The court recognised that there are certain areas in which
federal antitrust law categorically bars state claims based on the same conduct (ie, the antitrust “baseball exemption” bars UCL claims based on the same theo - ries). In every other area, however, the court found that outcomes under the antitrust laws and the UCL could diverge. The court went on to find that the particular Sherman Act principles cited by Apple did not require a different result on the UCL claim. The Significance of UCL Injunctive Relief For some time, the Apple v Epic result seemed mixed, and arguably largely in Apple’s favour. After all, the injunctive relief was just about one aspect of Apple’s conduct. However, the ongoing proceedings regard - ing Apple’s compliance with the injunctive relief sug - gest that even seemingly narrow injunctive relief can have significant real-world consequences (with Apple still arguing that the injunction has gone too far). Epic moved for civil contempt against Apple, and the court found Apple in contempt. Specifically, the District Court concluded that Apple still discouraged consumers from going outside the App Store. Apple’s conduct included imposing a 27% commission on purchases made through links, restricting the place - ment and design of purchase links, and warning about the dangers of external purchases. The District Court found that Apple wilfully violated the injunction “with the express intent to create new anti- competitive barriers which would, by design and in effect, maintain a valuable revenue stream; a revenue stream previously found to be anti-competitive”. The court enjoined Apple from imposing any commission or fee on purchases outside the App Store. The court also prevented Apple from restricting the style, lan - guage or placement of external purchase links. The case continues before the Ninth Circuit, and there will be more to come on the App Store. Other Ongoing “California” Antitrust Cases The Epic v Apple decision does not stand alone. There are many other significant ongoing antitrust cases in California. The most obvious is Epic v Google , in which Epic brought similar claims against Google regard - ing the Google Play Store. A jury heard this case and concluded that Google illegally monopolised markets for Android app distribution and Android in-app bill -
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