4 May 2022 Apple Faces Hefty EU Fine Over Mobile Payments Technology

Apple Faces Hefty EU Fine Over Mobile Payments Technology ​

What do you need to know this week?

EU regulators allege that Apple has breached competition law by abusing its dominant position in mobile payments to restrict rivals’ access to contactless or near-field communication (NFC) technology.

According to the European Commission, Apple’s anti-competitive practices dated as far back as 2015 when Apple Pay was first launched. Apple Pay is used on hundreds of millions of iPhone users and this most recent charge is the latest in several EU antitrust investigations launched against the tech giant.

Why is this important for your interviews?

Apple is no stranger to antitrust challenges from Brussels. In fact, this challenge comes after last year’s EU challenge which accused Apple of distorting competition in the music streaming industry. Last year’s challenge followed on from Spotify’s complaint (made more than two years ago) that the fees Apple charges for taking payments through the App Store made it disproportionately difficult for rivals to compete for music subscribers.

These charges come after Brussels approved two new pieces of legislation, the Digital Markets Act (DMA) and Digital Services Act (DSA), aimed at curbing the power of Big Tech. In particular, the DMA sets out new rules on how large online platforms must compete in the EU’s market. For example, it could force Google to give users the choice to use other email providers when installing a new smartphone or Apple to open up its App Store to other rivals. The DMA is designed to widen the regulator’s arsenal by granting them broader investigatory powers and a wider range of penalties - ranging from fines of up to 10 percent of the global turnover for infringements and the ability to force repeat offenders to break up their business. However, the DMA is still at least two years away from finalisation and will probably only apply to Apple at the beginning of 2024.

How is this topic relevant to law firms?

With an ever-changing regulatory landscape, this will not be the end of the Big Tech vs EU saga. Antitrust regulatory probes and litigation will be large projects which may take months or years and often involves several law firms’ being called to defend the litigation or enforcement proceedings.

Within litigation, there are two types of proceedings. Civil proceedings, such as the current investigation carried out against Apple, which involves a regulatory authority investigating the company for evidence of anti-competitive behaviour, which if found, will usually result in fines and/or orders to bring their business practices in line with competition law. By contrast, criminal proceedings involve cartels and price-fixing, which carry hefty criminal penalties.

Besides being involved in antitrust litigation or investigation, law firms also take on non-dispute focussed advisory roles. For instance, antitrust lawyers are often involved in general business advice - for example, whether client’s current future co-marketing or distribution practices are in line with competition law. In addition, another big-ticket area of antitrust work involves merger control. In any large M&A transaction, law firms must make sure that the proposed M&A does not breach competition rules which regulate disproportionate increases in market share and monopolistic conduct which will result in the likely elimination of competitors.