- The Legal Context: Section 46 CCA
Following the 2017 Harper Reforms, Section 46 of the Competition and Consumer Act 2010 (Cth) was amended to include the “Effects Test.” This allowed the Federal Court to find a breach if the conduct had the purpose, effect, or likely effect of substantially lessening competition, regardless of whether the company intended to be anti-competitive.
- Market Definition and Power
Justice Beach’s 2,000-page judgment established critical market definitions:
- The iOS Market: Apple was found to have 100% market power in the market for “iOS App Distribution” and “iOS In-App Payment Processing.” The Court rejected the argument that Apple competes in a broader “Smartphone Market” when it comes to app-level economics.
- The Android Market: While Google argued Android is “open,” the Court found that through contracts (like the MADA) and incentive programs (Project Hug), Google maintained substantial market power in the Android App distribution space.
- The “Walled Garden” v. The Effects Test
The Court’s analysis of Apple’s conduct was particularly rigorous:
- Conduct: Restricting developers to a single payment gateway (IAP) and banning alternative app stores.
- The Finding: This conduct effectively “locked out” potential competitors who could provide cheaper payment processing or curated app discovery.
- The “Security” Defense: Apple and Google argued their restrictions were necessary for cybersecurity and user privacy. Justice Beach held that while these goals were legitimate, they could be achieved through less restrictive means that do not destroy competition.
- Rejected Claims and Nuance
It is important to note that Epic did not achieve a “total” victory:
- Rejected: Claims under Section 47 (Exclusive Dealing) and Section 45 (Anti-competitive agreements) were largely dismissed because the Court viewed the restrictions as unilateral conditions of access rather than bilateral agreements.
- Rejected: Claims of “Unconscionable Conduct” under the Australian Consumer Law were also dismissed, as the Court found the behavior was driven by profit-maximization rather than “moral obnoxiousness.”
- Remedies and Global Precedent
The Remedies Hearing (March 2026) is expected to be transformative. Potential court-ordered mandates include:
- Interoperability: Forcing Apple to allow “Sideloading” or third-party App Stores (similar to the EU’s Digital Markets Act).
- Anti-Steering Removal: Allowing developers to tell users about cheaper ways to pay outside the app.
- Damages: The class action component involves 15 million Australians, potentially leading to the largest consumer payout in Australian history.
Key Takeaway for Competition Law
The Epic decision confirms that in Australia, Substance prevails over Technical Security. Dominant platforms can no longer use “User Safety” as a blanket shield to protect 30% commission rates if those rates are maintained by blocking efficient competitors.
