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ACM rejects Apple’s objections against order subject to periodic penalty payments

The Netherlands Authority for Consumers and Markets (ACM) has rejected the objections filed by Apple against the order subject to periodic penalty payments that ACM had previously imposed on the company. In August 2021, ACM imposed this order on Apple for abusing its dominant position by imposing unreasonable conditions on dating-app providers that use Apple’s App Store. As Apple had failed to end this infringement within the time frame that it had been given, Apple was required to pay a total amount of 50 million euros in penalty payments. ACM declared unfounded the objections that Apple had filed against that decision. This has been announced to Apple in ACM’s decision of July 13, 2023.

What is this case about?

In 2019, ACM launched an investigation into whether Apple abused the dominant position it had attained with its App Store. ACM did so because a market study had uncovered indications suggesting possible market problems as a result of the conditions that Apple imposes on users of the App Store. If app providers wish to offer paid apps for digital services (such as dating apps), they need to comply with other conditions than do app providers for physical products (think of online clothing retailers). As per the conditions for using the App Store, digital app-service providers are required, among other things, to use Apple’s payment system (the IAP condition), and they cannot refer to other payment methods outside the App Store (the anti-steering condition).

According to ACM, these two elements as well as a third element of the App Store conditions are unreasonable vis-à-vis dating-app providers. Under European and Dutch competition rules, a business with a dominant position, such as Apple, cannot impose unreasonable conditions. Abuse of a dominant position drives up the price, reduces the quality of products and services, and stifles innovation.

What has happened since?

Apple filed an objection against the decision imposing the order subject to periodic penalty payments with the provisional-relief judge. In its ruling of 24 December 2021, the court rejected Apple’s request to stay the decision with regard to the two abovementioned unreasonable elements of the App Store conditions: the IAP condition and the anti-steering condition. As Apple had failed to adjust these conditions on time, it had to pay ACM penalty payments. Apple has since adjusted the relevant parts of its conditions, and has thus met ACM’s demands. However, the court did stay the part of the decision regarding a third element of the App Store conditions. ACM was not allowed to publish about that part either.

On July 13, 2023, ACM declared unfounded all of Apple’s objections. ACM remains of the opinion that all three elements of the conditions are unreasonable. This is explained in the summary of the decision, which ACM has published today.

What are the next steps?

Apple has already stopped applying the IAP condition and the anti-steering condition, and, as such, has ended this part of the infringement. However, this is not yet the case for the third element of the conditions to which the decision imposing the order subject to periodic penalty payments pertains. In line with the provisional-relief judge’s ruling, ACM will, at the moment, not publish anything regarding that part of the decision since a new procedure for a preliminary injunction would lead to unnecessary delays. Apple has already filed an appeal against the decision on objection of July 13, 2023. If the judge in the proceedings on the merits rules in ACM’s favor, ACM will enforce and publish the stayed part of the decision.

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