Gutmann v Apple Inc & Ors

Factual and Procedural Background

This opinion concerns an application by the Proposed Defendants ("Company A") for permission to appeal a decision of the Competition Appeal Tribunal ("the CAT") concerning collective proceedings certified by the CAT pursuant to section 47B of the Competition Act 1998. The proceedings were brought on an opt-out basis by the Proposed Class Representative ("Plaintiff") on behalf of consumers and businesses who owned certain variants of Company A's smartphones ("Affected Devices"). The claim alleges abuse of a dominant market position by Company A in relation to performance management features ("PMF") introduced to address "unexpected power offs" ("UPOs") in these devices.

The UPOs occurred when the device shut down to protect itself due to peak power demands exceeding battery capacity, a problem exacerbated by battery aging and environmental factors. Company A became aware of these issues in late 2016 but allegedly concealed them and introduced the PMF via software updates starting January 2017, which throttled device performance without disclosing this impact to users.

Company A publicly addressed the issue in December 2017, denying intentional slowing and announcing a discounted battery replacement program. The Competition and Markets Authority ("CMA") investigated Company A's transparency regarding these matters, leading to undertakings by Company A in 2019.

The Plaintiff, who has never owned an Affected Device but has experience as a class representative in prior collective proceedings, issued the claim form in June 2022. The original claim alleged defective batteries and abuse of dominance through concealment and implementation of the PMF. The CAT initially declined certification but ordered disclosure, after which the Plaintiff withdrew the defective battery allegation but maintained claims regarding substandard performance and lack of transparency.

Following further hearings, the CAT refused to strike out the claim or grant reverse summary judgment, finding a reasonable prospect that the Plaintiff could establish abuse based on lack of transparency and its commercial impact. The CAT also authorised the Plaintiff as class representative despite objections from Company A. The CAT emphasized the need for active case management and ordered further disclosure and refinement of the claim.

Legal Issues Presented

1. Whether the CAT erred in refusing to strike out the Plaintiff's primary case that the Affected Devices were substandard and breached warranty or statutory rights.
2. Whether the CAT was correct to allow an alternative claim that lack of transparency about the PMF would have led to consumer pressure forcing Company A to provide compensation, even absent a legal breach.
3. Whether the CAT erred in refusing to strike out claims relating to periods after Company A's December 2017 announcement.
4. Whether the CAT erred in authorising the Plaintiff as class representative despite his lack of personal experience with the Affected Devices and alleged lack of a real connection with class members.

Arguments of the Parties

Company A's Arguments

• The Plaintiff's primary case of substandard devices lacks credible factual or technical basis and should be struck out.
• There is no evidence or prospect of evidence supporting the alternative claim that transparency would have caused Company A to compensate consumers.
• The claim should be struck out for events after the December 2017 announcement, as no material facts were omitted from that public disclosure.
• The Plaintiff is unsuitable as class representative due to never owning an Affected Device, abandoning parts of the claim, and being a professional litigant without a genuine interest or connection to the class.

Plaintiff's Arguments

• The claim does not depend on proving that devices breached warranty or statutory rights but on the loss of opportunity caused by Company A's lack of transparency.
• If Company A had been transparent, consumer dissatisfaction would have pressured it to offer compensation, regardless of legal entitlement.
• There remains a reasonable prospect of proving abuse and causation at trial, particularly given incomplete disclosure to date.
• The Plaintiff's lack of personal ownership does not preclude him from adequately representing the class, as the key issues concern collective consumer response and Company A's conduct.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Mark McLaren v MOL [2022] EWCA Civ 1701	Need for proactive case management in large-scale collective proceedings.	The CAT's discretion in managing the case was given significant latitude, supporting its approach to case management and disclosure.
Visa and Mastercard v CICC [2024] EWCA Civ 218	Deference to CAT's case management decisions in collective proceedings.	Reinforced the Court's approach to upholding the CAT's management decisions and evidential assessments.
Easyair v Opal Telecom [2009] EWHC 339 (Ch)	Consideration of information inequality and evidence availability in early stages of collective proceedings.	Supported the view that further evidence might become available by trial, justifying the CAT's refusal to strike out claims prematurely.
O'Higgins v Barclays Bank plc [2023] EWCA Civ 876	Jurisdiction to appeal decisions relating to class representative authorisation under section 49(1A) of the Act.	Indicated broad interpretation of appeal jurisdiction, but the Court refused permission on the merits in this case.
Mastercard v Merricks [2020] UKSC 51	Decisions affecting how claims are run constitute decisions "as to damages".	Supported the view that certification decisions can be appealed under section 49(1A).
Pergan Hilfsstoffe für industrielle Prozesse GmbH v European Commission ECLI:EU:T:2007:306	Protection of provisional regulatory findings under EU competition law.	The Court expressed doubts about applying this absolute protection by analogy to UK consumer protection provisional findings.

Court's Reasoning and Analysis

The Court focused on whether Company A had a realistic prospect of success on appeal against the CAT's certification decision and related case management rulings. It emphasized the CAT's broad discretion and proactive role in managing collective proceedings efficiently, particularly given information asymmetries and the potential for further evidence to emerge through disclosure.

Regarding Ground 1, the Court found that the CAT erred in not striking out the Plaintiff's primary case concerning substandard devices because no primary facts or technical standards were pleaded or supported by evidence. However, since the Plaintiff had abandoned this allegation, the Court allowed a period for amendment before granting permission to appeal on this ground.

On Ground 2, the Court upheld the CAT's decision to allow the alternative claim based on lack of transparency leading to commercial pressure for compensation, reasoning that the CAT was entitled to expect further evidence from disclosure and to manage the case accordingly.

For Ground 3, the Court agreed with the CAT that it was premature to dismiss claims relating to the post-December 2017 period without full evidence on dissemination and consumer understanding of Company A's announcement.

On Ground 4, the Court found no merit in the challenge to the Plaintiff's suitability as class representative, emphasizing the discretionary nature of this determination and that personal ownership of the product was not required. The Court rejected concerns about the Plaintiff being a professional litigant or lacking a real connection with the class.

The Court also addressed confidentiality issues concerning the CMA's Consultation Letter, noting the need for further consideration of transparency and open justice in future proceedings.

Holding and Implications

The Court made the following rulings:

• Permission to appeal on Ground 1 is deferred for 21 days to allow the Plaintiff to propose amendments to the claim form to clarify and conform the pleadings with the actual case being advanced. If no satisfactory amendment is made, permission to appeal will be granted on this ground.
• Permission to appeal is refused on Grounds 2, 3, and 4.

The direct effect is that the collective proceedings will continue before the CAT with the current certification intact, subject to any amendments to the pleadings by the Plaintiff. The decision does not set new precedent but confirms the CAT's broad discretion in case management, the permissibility of non-members serving as class representatives, and the importance of allowing claims to develop with disclosure in complex collective actions.