Unlockd Ltd & Ors v Google Ireland Ltd & Ors (Rev 1) [2018] EWHC 1363 (Ch)

Case No CP-2018-000012[2018] EWHC 1363 (Ch)IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESCOMPETITION LIST (Ch D)Venue 7 Rolls Buildings,, Fetter Lane, London, EC4A 1NLDate 25/05/2018
Before
MR. JUSTICE ROTH
Between
(1) UNLOCKD LIMITEDClaimants(2) UNLOCKD MEDIA TECHNOLOGY LIMITEDClaimant(3) UNLOCKD MEDIA OPERATIONS LIMITEDClaimant(1) GOOGLE IRELAND LIMITEDDefendants(2) GOOGLE COMMERCE LIMITEDDefendant(3) GOOGLE LLCDefendant
Rhodri Thompson QC, Nicholas Gibson and Alexandra Whelan (instructed by Euclid Law Ltd) for Claimants.Tim Ward QC (instructed by Slaughter and May) for Defendants.Hearing Hearing Dates: 9 May and 14 May 2018
Judgment

INTRODUCTION

[1]In these proceedings, the Claimants applied for permission to serve the Third Defendant (D3) out of the jurisdiction and D3 issued in effect a cross-application for an order that the Court should decline jurisdiction over it. Following the conclusion of the argument and receipt of further written submissions, because of the urgency of the matter which is now listed for a speedy trial, I informed the parties of my decision for reasons to follow. This judgement sets out my reasons.[2]The action comprises a claim for breach of UK and EU competition law. The First and Second Defendants (D1 and D2) have consented to the jurisdiction. D3’s original objection to jurisdiction became qualified in response to questions from the Court, and as a result is not a total objection but relates to the claim as it is presently framed. It is therefore necessary to describe in some detail the factual background and nature of the claim.

THE FACTUAL BACKGROUND

[3]The First Claimant (C1) is an Australian company and the parent company of the Unlockd group. The Second Claimant (C2) is an English company and one of its wholly owned subsidiaries. Subsequent to the conclusion of the hearing, the Claimants sought permission to add as a Third Claimant another English subsidiary of C1, Unlockd Media Operations Ltd (C3). C3 is the company in the Unlockd group which entered into the relevant contractual agreement with D1, as explained below. The application to add C3 was not opposed, and I accordingly granted permission to make the necessary amendments to add it as a party.[4]The Unlockd group has developed a software product for users of smartphones operating on the Android operating system (“OS”). C2 and other Unlockd group companies supply the product to developers or suppliers of applications (“apps”) for Android devices, for incorporation in their own app. Users of smartphones obtain access to the product by downloading an app incorporating the Unlockd technology. The effect of this feature is that once the phone is unlocked, it will immediately display an advertisement (“ad”), before accessing the content of any particular app. The phone user can opt into this service, and the incentive for the user to do so is that he or she thereby gets points that can be redeemed by way of rewards, such as credit towards phone usage or loyalty points.[5]In summary, no doubt with some oversimplification, it appears that the commercial distribution of Unlockd’s product is achieved through(a) entry into arrangements with suppliers or developers of an app so as to incorporate the product: Unlockd refers to such developers as its “partners”;(b) the supply from advertisers of ads for display through the medium of the product; and(c) users choosing to download an app that incorporates the product or opting into the product. Unlockd’s revenue is heavily dependent on the share of fees paid by advertisers in connection with the display of their ad. As I understand it, those fees are typically calculated on the basis of either the number of times the ad appears, or the number of times a user clicks on the ad, or a combination of the two.[6]D3 is a company incorporated in Delaware and based in California. It is the parent company of D1 and D2, which are both incorporated in Ireland. All the defendants are part of the well-known Google group, which I shall refer to compendiously as “Google”. Google owns the Android OS, which is a mobile OS which is available to smartphone manufacturers on an open-source basis and very widely used. Materially, Google also owns and operates two particular services: a) Google Play, also known as the “Play Store”. This encompasses an app store and digital media distribution service which is pre-installed on the large majority of Android devices. The owner of an Android phone can use the Play Store as the means to download chosen apps to his or her device, and there is little doubt that as it is pre-installed on many devices, it is very widely used. Accordingly, developers of apps particularly wish their app to be available through the Play Store. To do so, they sign a standard Developer Distribution Agreement which constitutes a contract with the relevant companies within Google, depending on where they have selected to distribute their app. b) Google “AdMob” service. This is an advertising service designed specifically for in-app advertising. Mr. Liu, the Global Head of Publisher Quality at D3, describes it as follows in his witness statement:
“Google AdMob… allows app developers to make space for ads available in their apps, which Google will match with advertisers from both Google’s own network of advertisers, called “AdWords” as well as other third party networks. AdMob is available for use by app developers who distribute apps on the two most widely-adopted mobile operating systems, Google’s Android and Apple’s iOS.”
AdMob thus operates as a platform connecting app developers seeking ads to be included as part of their app (for which they obtain revenue from the advertiser) and advertisers wishing to have their ads displayed in apps which are likely to be most appropriate or effective for their offering. It appears that an advertiser whose ad is placed through AdMob pays fees to Google, which then shares a portion of that fee with the developer of the app.[7]According to the Particulars of Claim, D1 is the company within Google responsible for the provision of AdMob services in the UK and D2 is the company similarly responsible for the distribution of apps through the Play Store in the UK. It appears that for distribution through the Play Store in the US, the relevant Google company (and counterparty to the Google Play Developer Distribution Agreement) is D3; and that for distribution through the Play Store in Australia, the relevant Google company (and counterparty) is Google Asia Pacific Ltd.[8]There are currently three apps in the Play Store which incorporate the Unlockd product that are active and monetising through AdMob: “Tesco Mobile Xtras,” distributed through Tesco Mobile Ltd in the UK, pursuant to a contractual arrangement entered into between Tesco Mobile and C2. This was first made available on the UK version of the Play Store in June 2016; “Boost Dealz,” distributed through Boost Mobile LLC (a subsidiary of Sprint Corp) in the US, pursuant to a contractual arrangement entered into by Unlockd Media Inc, a Delaware corporation within the Unlockd group. This was first made available on the US version of the Play Store in January 2016; “Unlockd Rewards,” also referred to as “flybuys”, which was distributed through Loyalty Pacific Pty Ltd in Australia, pursuant to a contractual relationship entered into with Unlockd Operations Pty Ltd, an Australian company within the Unlockd group. This was first made available on the Australian version of the Play Store in August 2017. From this it appears that there are different versions of the Play Store operated by Google in different parts of the world.[9]Further, the relevant company in the Unlockd group has a direct account with Google for the supply of ads and receipt of revenue through the AdMob service, as follows: a) for Tesco Mobile Xtras: C2; b) for Boost Dealz: Unlockd Media Inc; c) for flybuys: Unlockd AU Pty Ltd (although the revenue is apparently paid to C1).[10]It is important to note that although there are currently only three active apps using the Unlockd product, as set out above, the Claimants have signed memoranda of understanding with a significant number of commercial partners, both in the EU and elsewhere, with a view to entering into arrangements with them to introduce the Unlockd product in the future. In some cases, that envisaged expansion of the Unlockd business was to occur in the coming months. In particular, the Claimants have reached agreement with Carphone Warehouse in the UK for the roll-out of the Unlockd product.[11]This action arises because in March 2018, following exchanges that are not relevant to the issue now before the Court, Google informed C1 that it would suspend the supply of the AdMob service for the Unlockd product, and then also decided to remove apps containing the Unlockd product from the Play Store. The Claimants contend that this action would have a devastating effect on their business. The Particulars of Claim describe access to the Play Store and the AdMob network as “critical business inputs”.

THE CLAIM

[12]The claim alleges a breach of both Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) along with Chapter I of the Competition Act 1998 (“CA”) and Article 102 TFEU along with Chapter II CA. As the substantive provisions of domestic and EU competition law are largely the same, for simplicity in the rest of this judgement I shall refer only to EU competition law. The Claimants do not suggest that they are entitled to any broader jurisdiction under UK competition law than under EU competition law.[13]Since the Claimants’ primary claim is for abuse of a dominant position in violation of Article 102/Chapter II, I shall address that first. As is well known, violation of Article 102 involves two elements: a) that the defendant has a dominant position on a relevant market; and b) abuse of that position.[14]Here, the Claimants assert that Google is dominant in several related product markets and this dominance is alleged to exist globally, in the EU and in the UK. However, it appears that for the purpose of the allegation of breach of Article 102, only dominance within the UK and/or the EU (or a substantial part of those geographical markets) is relied on, since the Claimants’ primary case is expressed as follows in para 13 of their Particulars Claim:
“(1) Google has abused and is continuing to abuse one or more dominant positions within the UK and/or the EU and/or part of the UK and/or a substantial part of the EU by threatening to terminate or suspend the supply to the Claimants of Google Play and AdMob services unless the Claimants alter the nature of their business to conform to the unilateral demands of Google; and (2) that abuse has actual and/or potential adverse effects on competition and actual and/or potential effects on trade within the UK and/or the EU.”
[15]The alleged abuse of those dominant positions is particularised under para 19 of the Particulars of Claim. In brief summary, it is alleged that Google is: a) threatening to exclude a dependant existing customer, contrary to Article 102(b); b) imposing unfair commercial terms, contrary to Article 102(a), by adopting and/or interpreting policies, in a manner which is not objectively justified, that determine how mobile-advertising develops in competition to its own online advertising business; c) applying dissimilar conditions to an equivalent transaction, contrary to Article 102(c). That is based in particular on an alleged derogation from Google’s policy on the display of ads afforded to the Play Store for ads displayed on the locked screen, while Google has refused to grant a similar derogation to Unlockd.[16]The Claimants’ claim for breach of Article 101 is pleaded at para 14 as follows:
“The Claimants’ alternative case is that the three Defendants, in as far as they comprise two or more individual undertakings, are party to an agreement or concerted practice to follow a common commercial strategy to [terminate or suspend the supply to the Claimants of Google Play and AdMob services], whose object or effect is appreciably to prevent, restrict or distort competition globally, in the EU and/or the UK, again with appreciable actual or potential effects on competition within the UK and/or the EU.”
[17]It is axiomatic that violation of EU competition law requires an effect on trade between Member States, and a violation of UK competition law requires an effect on trade within the UK. It is relevant to set out in full the way this is pleaded:
“20. Each of the aspects of Google’s conduct set out at paragraphs 13 to 19 above has or may have an actual or potential effect on trade or the pattern of trade between Member States of the EU and an appreciable effect on competition. The application and interpretation of Google’s policies are each conducted at the global level under the control of the Third Defendant, as implemented in respect of England and Wales and the rest of the UK by the First and Second Defendants. 21. Further or alternatively, each of the aspects of Google’s conduct set out at paragraph[s] 13 to 19 above has or may have an appreciable effect on trade within the UK, including England and Wales. 22. So far as direct harm to the Unlockd business in England and Wales is concerned, Google’s conduct (i) threatens to destroy one of the Claimants’ principal sources of revenue in so far as its Tesco Mobile partnership is dependent for its commercial viability on access to the Google Play app store and the AdMob service; and (ii) harms the Claimants’ ability to seek to develop its innovative business model with other potential partner organisations in England and Wales and the rest of the UK (including in particular Carphone Warehouse, and other leading UK businesses with which the Claimants have signed memoranda of understanding) in competition with Google on the on-line market for advertising. 23. Further, the damage to the First Claimant, resulting from its inability to raise additional investment from public or private sources while Google’s threats remain in place, also impacts the ability of Unlockd to develop its business in the UK, including in England and Wales, as well as other EU jurisdictions, in so far as the First Claimant is unable to provide intra-group funding to support such development.”
[18]In the claim for damages, the Claimants make it clear that these are sought on the basis of loss to the global business of Unlockd. The Particulars of Claim state at para 25:
“The following are the best particulars that the Claimants can currently give of the likely heads of loss and damage, arising both in England and Wales and in other jurisdictions where the Claimants are currently active or would have been able to launch their businesses in the absence of the abusive conduct of the Defendants…”
[19]The Claimants’ further claim for an injunction is expressed as follows in the prayer to the Particulars of Claim: “An injunction preventing Google [sic] or the Defendants from acting or threatening to withdraw access to Google Play and/or AdMob services in respect of the Unlockd app, subject to the Claimants maintaining existing of commercial terms”.[20]The draft order annexed to the Particulars of Claim makes clear that this is sought on a global basis, i.e. to apply to Google’s conduct wherever it is carried out, and Mr. Thompson QC confirmed at the hearing that this was the intention. Although framed in negative terms, it is in effect a mandatory injunction requiring Google to continue to allow the Unlockd product access to Google’s Play Store and AdMob services all over the world.

JURISDICTION

[21]For the English Court to give permission to serve proceedings on a foreign defendant, where the regime of neither the recast Brussels I Regulation (Reg (EU) 1215/2012) nor the Lugano Convention applies, three requirements must be satisfied. They were restated in the judgment of the Privy Council in Altimo Holdings v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, delivered by Lord Collins, and conveniently summarised by the Court of Appeal in VTB Capital Plc v Nutritek International Corp [2012] EWCA Civ 808 at [99]-[100]: “[F]irst, the Claimant must satisfy the court that, in relation to the foreign defendant to be served with the proceedings, there is a serious issue to be tried on the merits of the claim, i.e. a substantial question of fact or law or both. This means that there has to be a real, as opposed to a fanciful, prospect of success on the claim. Secondly, the claimant must satisfy the court that there is a good arguable case that the claim against the foreign defendant falls within one or more classes of case for which leave to serve out of the jurisdiction may be given. These are now set out in paragraph 3.1 of Practice Direction 6B. “Good arguable case” in this context means that the claimant has a much better argument than the foreign defendant. Further, where a question of law arises in connection with a dispute about service out of the jurisdiction and that question of law goes to the existence of the jurisdiction (e.g. whether a claim falls within one of the classes set out in paragraph 3.1 of Practice Direction 6B), then the court will normally decide the question of law, as opposed to seeing whether there is a good arguable case on that issue of law. Thirdly, the claimant must satisfy the court that in all the circumstances England is clearly or distinctly the appropriate forum for the trial of the dispute and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction. This requirement is reflected in Rule 6.37(3) of the CPR, which provides that "The court will not give permission [to serve a claim form out of the jurisdiction on any of the grounds set out in paragraph 3.1 of Practice Direction 6B] unless satisfied that England and Wales is the proper place in which to bring the claim."[22]As Lord Collins also emphasised in Kyrgyz Mobil at [82], the test of a serious question to be tried is the same as the test for (resisting) summary judgment[23]I shall address the claims under Article 101 and 102 separately, dealing first with the Claimants’ primary claim under Article 102.

ARTICLE 102

[24]As indicated at the outset, D3 now accepts that if the claim against it were limited to suspension/removal of the Unlockd product from the Play Store and AdMob within the EU, it would not contest the jurisdiction of this court. I think that is entirely realistic. D1 and D2 were implementing in the EU policies effectively determined by D3, and it is clear from the evidence filed on their behalf that decisions regarding the application of those policies to the Unlockd product were taken, at the very least in part, by D3’s “Google Play Policy Team” led by the director of play operations employed by D3. It further appears from Mr Liu’s witness statement that a separate team at D3, the “Trust & Safety – Publisher Quality Team”, was also involved.[25]It is well-established that an undertaking does not avoid the application of EU competition law to its conduct or its entry into an agreement that is implemented in the EU, simply because the undertaking is located outside the EU. This is the ‘implementation test’ for jurisdiction adopted by the Court of Justice of the European Union (“CJEU”) in Cases 89/85 etc. Åhlström Osakeyhtiö v Commission (“Woodpulp I”), EU:C:1988:447. Were it otherwise, the participants in a cartel could avoid the reach of EU competition law by entering into a price-fixing agreement in a non-EU State, which was then implemented by their subsidiaries making sales independently to purchasers in the EU.[26]Accordingly, if the conduct implemented by D1 and D2 within the EU may arguably give rise to an abuse of dominance, the same assessment applies to D3. I therefore consider that as regards the suspension of the Unlockd product from the Play Store as used in the EU, and the suspension from AdMob of any app in the EU that incorporates the Unlockd product, the Claimants raise a serious question to be tried as against D3 along with D1 and D2. Although at present this applies only to the Tesco Mobile app in the UK, the conduct clearly applies also to other potential commercial partners of Unlockd within the EU. It follows also that the Claimants come within several of the ‘gateways’ for jurisdiction in para 3.1 of PD 6B to CPR Part 6. It is unnecessary to consider these further here since, as stated above, to this extent D3 no longer contests jurisdiction. I should add for completeness that I am satisfied that England is clearly the appropriate forum for this claim such that I should exercise my discretion to permit service out.[27]However, D3 contends firmly that there is no serious question to be tried as to an alleged infringement of EU competition law as regards such suspensions or refusal to supply carried out in other parts of the world. That is relevant, in particular, as regards Boost in the US and flybuys in Australia.[28]As I understood the written and oral submissions for the Claimants, they put their argument three ways. First, they contend that under the relevant test for the territorial application of EU competition law, since the conduct complained of concerns a single, global policy and a single decision of Google concerning the Unlockd product, which admittedly had an immediate and substantial effect in the EU, EU competition law reaches that conduct wherever it was implemented. Secondly, they submit that since the suspension as applied to the Boost app in the US and to the flybuys app in Australia has serious financial consequences for the Unlockd group which would reduce intra-group funding, this weakens the ability of C2 to compete in the UK (and of the Unlockd group generally to expand in Europe) and so falls within the scope of EU competition law. Thirdly, Mr Thompson argued that since this was a question of personal jurisdiction over D3, once that jurisdiction was established (on the basis of conduct implemented in the UK), that permitted the claim to proceed as regards conduct implemented all over the world since the objections raised go only to the scope of the remedy that may ultimately be granted if the Claimants succeed at trial. Serious issue to be tried: the scope of EU competition law[29]The question of the extraterritorial scope of EU competition law, although for long a contentious subject, has now been conclusively determined by the judgment of the Grand Chamber of CJEU in Case C-413/14P Intel Corp v Commission (“Intel”), EU:C:2017:632. The CJEU upheld the approach to jurisdiction of the General Court in that case, thereby establishing that as an alternative to the implementation test set out in Woodpulp I, jurisdiction could be founded on the so-called ‘qualified effects test’: the application of EU competition law is justified when “it is foreseeable that the conduct in question will have an immediate and substantial effect in the EU” (para 49). There are accordingly three criteria to be satisfied: foreseeable, immediate and substantial effect. See also the judgment of the General Court in Intel, Case T-286/06, EU:T:2014:547, at para 258.[30]The qualified effects test has now been further considered by the Court of Appeal in Iiyama (UK) Ltd v Samsung Electronics Ltd, Iiyama Benelux BV v Samsung SDI Co Ltd (“Iiyama”) [2018] EWCA Civ 220. That concerned two damages actions in which the claimants were all companies within the iiyama group. The defendants were companies (or their subsidiaries) that had been found to be participants in worldwide price-fixing cartels concerning liquid crystal displays (“LCDs”) and cathode ray tubes (“CRTs”). The two cartels had been established through agreements made wholly outside the EU. Under the basic supply chain in the LCD claim (which accounted for at least 90% of the value of the claim) the LCDs were manufactured in Asia and supplied to entities in Asia which incorporated them into television and computer monitors (“transformed products”) in Asia. Those transformed products were then sold in Asia to a Japanese company in the iiyama group, which in turn sold them on to the claimants, who were iiyama subsidiaries in Europe. The supply chain was similar for CRTs. The issue before the English courts concerned service out of the jurisdiction and applications by the defendants for reverse summary judgment (i.e. effectively the same test). In both actions, applying in particular the qualified effects test on the basis of Intel¸ the Court of Appeal held that there was a serious question to be tried as to whether the inflated prices paid by the claimants as a result of the cartels constituted a foreseeable, immediate and substantial effect in the EU so as to bring the claim within the territorial scope of Article 101.[31]The Claimants here contended that their claim against D3 is analogous to the position in Iiyama, on the basis that the action by D3 was a single, global policy decision, having foreseeable, substantial and immediate effect down the line of Google’s arrangements for the supply of its services; or indeed that the present case is even stronger, in that the communications from Google did not draw any distinction between the position in the UK/EU and non UK/EU jurisdictions. However, in my view the position is entirely different. It must be remembered that both the actions in Iiyama were follow-on claims, since the Commission had adopted infringement decisions determining that the two cartel arrangements infringed Article 101. As the Court of Appeal observed, those decisions are binding on the English courts pursuant to Article 16 of Regulation (EC) No 1/2003: judgment at [5]. Therefore, in substance the question for the English court was whether claims for damages by indirect purchasers in the EU, where the intermediate purchase was made in Asia, came within Article 101. It is hardly surprising that the Court of Appeal found that it was well arguable that they did. As the judgment states, at [100]:
“What matters is that the cartel was always intended to have worldwide effect, including in the EU, and it must have been contemplated that the supply chains whereby cartelised goods ended up being purchased within the EU might include intra-group transactions. The important point is that purchases are ultimately made, at an inflated cartel price, within the territory of the EU. The existence of such purchases, on any substantial scale, must therefore have an effect on the operation of the internal market.”
[32]There is nothing in the judgment of the Court of Appeal to suggest that if iiyama’s putative Australian subsidiary had purchased finished products incorporating LCDs or CRTs in Australia, or its American subsidiary had done so in the US, those companies could bring a claim for damages in the English courts for infringement of Article 101, or indeed that damages based on such non-EU purchases could have been claimed by iiyama’s parent company. To the contrary, such a position would in my view be inconsistent with the basis of reasoning emphasised by the Court in the passage I have quoted.[33]This is in line with the underlying Commission decisions. In the LCD decision, COMP/39.309 Liquid Crystal Displays [2012] 4 CMLR 15, the Commission stressed that the cartelists made direct sales of LCDs and of transformed products to customers in the EU/EEA, and further that there were indirect sales to such customers by way of transformed products made by third parties (recitals 235-238). Dismissing the argument raised that to penalise the cartelists for agreements made wholly outside the EU would offend against international comity, the Commission stated (at recital 241):
“… both the establishment of jurisdiction and the determination of the fine are based on the implementation and effects of the infringement within the EEA.”
The CRT decision, OMP AT.39437 TV and computer monitor tubes [2015] 4 CMLR 10,found jurisdiction on an analogous basis, relying on direct sales of both CRTs and transformed products by cartel participants to customers in the EU/EEA and indirect sales through transformed products made by third parties (recitals 594-599 and 1020). Neither decision had regard to sales made outside the EU/EEA, although these were both world-wide cartels.[34]The Claimants also sought to derive support from Intel, which has a closer resemblance to the present case since it was a decision under what is now Article 102 whereas Iiyama concerned Article 101. Intel Corp Inc (“Intel”) is a US-based company that develops and produces central processing units (“CPUs”) used in computers. The Commission found that Intel had infringed Article 102 through abuse of its dominant position on the worldwide market for x86 CPUs. The abuse comprised two kinds of conduct vis-à-vis Intel’s trading partners: first, the grant of rebates to a number of major computer equipment manufacturers in return for purchasing all (or virtually all) their x86 CPUs from Intel; and secondly, making payments to such manufacturers so that they would delay, restrict or cancel marketing of certain products equipped with CPUs made by Intel’s major competitor, Advanced Micro Devices Inc (“AMD”).[35]Intel at first argued that all its impugned arrangements were with entities outside the EU and so beyond the jurisdiction of the Commission to apply Article 102; but by the stage of its appeal to the CJEU, Intel limited this contention to its conduct as regards the Chinese manufacturer, Lenovo. Intel submitted that since Lenovo’s manufacturing facility was in China and it did not purchase any CPUs from Intel in the EU, Intel’s conduct towards Lenovo fell outside the jurisdiction of Article 102 and the Commission. After confirming the qualified effects test, as explained above, the CJEU proceeded to uphold the application of that test by the General Court in finding that Article 102 applied to the facts of the case. It is appropriate to set out the relevant passages from the judgment:
“50 It must be pointed out, as the General Court did in [268] and [280] of the judgement under appeal, that it is necessary to examine the conduct of the undertaking or undertakings in question, viewed as a whole, in order to determine whether the Commission has the necessary jurisdiction to apply, in each case, EU competition law. … 52 …, since in [255] of the judgement under appeal, the General Court found, in essence, that Intel’s conduct vis-à-vis Lenovo formed part of an overall strategy intended to ensure that no Lenovo notebook equipped with an AMD CPU would be available on the market, including the EEA, the General Court did not err in considering, in [277] of the judgement under appeal, that Intel’s conduct was capable of producing an immediate effect in the EEA. … 54 Lastly, Intel submits that the General Court wrongly considered that the agreements concluded with Lenovo concerning CPUs for delivery in China could have a substantial effect on the EEA market even though the effects of those agreements were negligible. 55 It suffices, in that respect, to note that the General Court held that Intel’s conduct vis-à-vis Lenovo formed part of an overall strategy aimed at foreclosing AMD’s access to the most important sales channels, which, moreover, Intel does not dispute in its appeal. 56 Accordingly, in view of the considerations set out in [50] above, the General Court did not err in law in holding that, faced with a strategy such as that adopted by Intel, it was appropriate to take into consideration the conduct of the undertaking viewed as whole in order to assess the substantial nature of its effects on the market of the EU and of the EEA. 57 As the Commission emphasises, to do otherwise would lead to an artificial fragmentation of comprehensive anti-competitive conduct, capable of affecting the market structure within the EEA, into a collection of separate forms of conduct which might escape the EU’s jurisdiction.”
[36]Mr Thompson argued that in the present case, it was similarly necessary to examine the conduct of D3 as a whole. As stated in the Claimants’ supplementary written submissions:
“Google, is in effect, seeking to achieve a single outcome on the basis of a single, global enforcement policy, coordinated and directed by D3, with impacts on a number of jurisdictions, including direct threats to [the Claimants’] actual and potential business in the EU/UK.”
And the Claimants emphasised that the final communications from Google informing the Claimants of the suspension of the apps incorporating the Unlockd product from both AdMob and the Play Store covered the UK, Australian and US apps together, and were sent by a Mr Emmanuel Monnoyeur of D1.[37]However, in Intel, the dominant company’s rebate and incentive payments to Lenovo had the effect of deterring Lenovo from incorporating AMD’s CPUs in its computers, and thus of preventing the launch of such a computer in the EU as much as anywhere else in the world. The present case is not one where Unlockd in Australia is producing or developing a product for which production or development Google is denying a necessary input. Here, the Unlockd group has an independent product, developed without any input from Google, which various companies in the Unlockd group had started, successively, to supply in a number of different markets: currently, the US, the UK and Australia. In each of those markets, the relevant Unlockd company is being denied access by Google to its services which (it is assumed for present purposes) are necessary for a successful supply. The fact that this is the result of a single policy and decision of D3 cannot, in my judgment, mean that Google’s conduct in denying access to its services in the US or in Australia has an effect on trade within the EU so as to constitute an infringement of Article 102.[38]The proposition advanced by the Claimants can be tested by asking what would have been the position if Google had announced that pursuant to its governing policies the Unlockd product would be refused access to the Play Store and AdMob after the product had been launched on the Boost Dealz app in the US in January 2016, at a time when it was not supplied in the UK at all. I regard it as inconceivable that this decision by Google could at that point have constituted an infringement of Article 102. When Unlockd subsequently sought to introduce its product within the EU, then the decision by Google might have founded a complaint under Article 102, but that would be in respect of the refusal of access as regards the apps in the EU; it would not thereby transform Google’s conduct vis-à-vis Boost Dealz in the US into a violation of Article 102.[39]The prohibition decision of the European Commission in Case AT.39740 Google Search (Shopping) [2018] 4 CMLR 12, adopted since the Intel judgment, serves to illustrate the point. This was an Article 102 case concerning Google’s practice of giving prominence on the results page of the Google general search engine to Google’s own comparison shopping website through its “Product Universal”. Google launched Product Universal in the US in October 2007, in the UK and Germany in January 2008, in France in October 2010, and in Italy, the Netherlands and Spain in May 2011: see recitals 26-30. Although Google was found to be dominant in the market for general search services in all those markets referred to above since 2008 (recital 271), and Product Universal was a standard form product developed centrally by Google, the Commission found that Google’s infringement of Article 102 only started in each national market within the EU from the moment that Google launched its Product Universal there: see recital 686. Moreover, the remedy imposed to bring the infringement to an end applied to users of Google “in the thirteen EEA countries in which the [offending conduct] takes place”: recital 700(b). There was no question of the Commission requiring Google to cease this practice as applied to users in countries outside the EEA.[40]Moreover, it must be emphasised that the present claim is a private action seeking damages and an injunction. As such, it is a claim in tort for breach of statutory duty: Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 at 141, and see Iiyama at [46]. Damages (actual or apprehended) are accordingly a necessary element of the cause of action. Although in Intel the conduct condemned encompassed the single strategy of Intel applied to manufacturers in Asia that had a global impact, there is nothing in the Intel judgment to support the notion that purchasers in Australia of computers incorporating the x86 CPU, who could contend that the price they paid was higher by reason of Intel’s strategy restricting competition at the level of manufacture, could claim damages in national courts of the EU based on Article 102. Such a claim would be wholly misconceived.[41]I should add that I did not find the Adidas case, which was also relied on by the Claimants, of material assistance: Adidas-Salomon AG v Draper [2006] EWHC 1318 (Ch). That concerned a claim under EU competition law for interim relief against the member organisations of the “Grand Slam Committee”, responsible for organising and promoting the four “Grand Slam” tennis tournaments, regarding their decision to limit the display of the Adidas “three stripes” motif on clothing worn by players. One issue was whether EU competition law could apply as regards the US and Australian Open tournaments, and thus whether the court could grant an injunction as regards the US Open which was imminent. The Court directed a speedy trial which would take place before the Australian Open, so interim relief was not an issue as regards that tournament. However, in Adidas the evidence showed that competition between different brands of tennis clothing in the consumer market was heavily based on media coverage of the brands worn by leading players (who were sponsored by the manufacturers accordingly). The court therefore found that the worldwide coverage of the US and Australian Opens meant that application of the clothing restriction in those tournaments was likely to have a direct and substantial effect on retail sales in the EU, and in England in particular: judgment at [83]-[84].[42]I turn to the Claimants’ alternative argument based on the weakening of the Unlockd group through the decline in revenue from the US and Australia, which in turn meant that funding for the business in the UK and elsewhere in Europe was diminished, leaving C2 a weaker competitor. This is the contention put forward in para 23 of the Particulars of Claim: see para 17 above. I can accept that as a matter of fact and causation, this is well arguable. I am prepared to accept that, arguably, it was foreseeable. But, in my judgment, such a consequence is very far removed from the immediate effect required under the qualified effects test. If an English group (X), which was dominant on the worldwide market, engaged in commercial practices in Australia which would amount to an abuse under the substantive test applied for the purpose of Article 102 but did not involve any supplies ending up directly or indirectly in the EU, I do not see how that could found a claim by an Australian company (Y) or its English subsidiary against X in the English court for breach of EU competition law, simply because the adverse effect in Australia on Y’s income reduced its ability to fund the activities of its English subsidiary in Europe. In that scenario, there would of course be no problem about personal jurisdiction over X. No doubt if Y went out of business altogether there might be a significant effect on competition in the EU since Y’s English subsidiary would be eliminated, but that does not make the effect any more immediate.[43]Thus in Google Search (Shopping), some of the competitor comparison shopping services were active in several national markets (recital 684 and see Graphs 1-8) and it is clear that Google’s impugned conduct could harm them as trading entities in various EEA jurisdictions: see recitals 594-595 and fn 713. The Commission had regard to this as very relevant for the assessment under Article 102. But it did not even consider the effect on those competitor groups in non-EEA markets, although Google’s conduct was not restricted to the EEA and the consequences elsewhere would clearly have reduced the revenues of such groups and thus their ability to fund activities in the EEA. The PD 6B gateways[44]I turn to the gateways for service out under Practice Direction 6B, which brings in also the third way the Claimants seek to put their case on jurisdiction. The Claimants here rely cumulatively or in the alternative on four of the gateways under para 3.1, of which the material provisions are as follows: para 3.1(2): a claim for an injunction ordering the defendant to do or refrain from doing an act within the jurisdiction; para 3.1(3): where a claim is made against a person (the defendant) on whom the claim form has been served and there is between the claimant and the defendant a real issue which it is reasonable for the court to try, and the claimant wishes to serve the claim form on another person who is a necessary or proper party to the claim; para 3.1(9): where a claim is made in tort where damage was sustained within the jurisdiction. para 3.1(4A): where a claim is made against a defendant in reliance on, inter alia, paragraphs (2) or (9) and a further claim is made against the same defendant which arises out of the same or closely connected facts.[45]As regards the injunction gateway, it is clear that the acts within the jurisdiction do not include the suspension/refusal of access to the Play Store and AdMob as regards the Boost Dealz app in the US or the flybuys app in Australia. Although I have accepted, and it is indeed now conceded, that the Claimants can obtain jurisdiction over D3 on the basis of access to the Tesco Mobile app in England and Wales, and their claim for an injunction in that regard, that does not mean that D3 thereby comes within the jurisdiction of this court for a claim for an injunction which also orders the defendant to do an act elsewhere. See Conductive Inkjet Technology Ltd v Uni-Pixel Displays Inc [2013] EWHC 2968 (Ch), where I observed at [61]:
“If jurisdiction could be founded on an injunction seeking an order governing acts all over the world on the basis that this included acts within the jurisdiction, that would in my view undermine the statutory scheme and enable jurisdiction to be grasped way beyond what is envisaged by para 3.1 of PD 6B on the back of a claim to relief that applied only in part, and perhaps in relatively small part, to England.”
[46]As regards the “necessary or proper party” gateway, the claim against D1 and D2 concerns the suspension/refusal of access in connection with the Tesco Mobile app (and no doubt other potential apps in the UK and, perhaps, the EU). D1 and D2 do not appear to be engaged in the supply of the Play Store or AdMob for apps containing the Unlockd product in the US and Australia. Even if they were, I have concluded above that there is no arguable case that the suspension/refusal in those countries founds a claim under Article 102. Since such a claim is not sustainable against D1 and D2, D3 cannot be a necessary and proper party to it.[47]Thirdly, as regards the tort gateway, the only way that damage is sustained in the jurisdiction by what happens regarding the apps in the US or Australia is on the basis of the decline in intra-group funding from C1 to its English subsidiaries as a result of damage sustained in the US and Australia. Since I have determined that this is not a sufficient basis for Article 102 to apply, the Claimants have failed to show an arguable case, let alone a good arguable case, that this gateway is satisfied in respect of that claim. The Claimants do have an arguable claim for breach of statutory duty, but this does not form a proper part of it.[48]Finally, as regards the “same or closely connected facts” gateway, the claim for which service out on D3 is permitted, and indeed no longer resisted, concerns the suspension of the Unlockd product from the Play Store and AdMob as regards the Tesco Mobile app in the UK (and other potential apps in the EU). The relevant gateways for permitting that claim include the injunction gateway (2) and the tort gateway (9). I did not hear detailed argument on the “same or closely connected facts” gateway or have cited any of the recent authorities which have considered how that phrase should be understood and applied: e.g. Eli Lilly and Co v Genentech Inc [2017] EWHC 3104 (Pat). In the light of that, I am prepared to accept that there is a good arguable case that the claim against D3 as regards the Boost Dealz app and the flybuys app arises out of closely connected facts, since it rests on the same decision of D3 albeit applied in another part of the world. I doubt that this further claim would raise significant additional matters of disputed fact. If I had considered that the Claimants raised a serious question to be tried in respect of that claim, I would have found that it came within the terms of this gateway. The appropriate forum[49]In the light of my conclusions above, it is not strictly necessary for me to consider the third condition, i.e. whether to exercise my discretion to permit service on D3 on the basis that this court is clearly the appropriate forum for the claim. However, for completeness, I should state that I do not regard that condition as satisfied in this case as regards any claim concerning Unlockd apps outside the EU.[50]Where allegedly anti-competitive conduct concerns the Australian market, that is a matter for Australian competition law, and similarly where it concerns the US market, that is a matter for US Federal or State antitrust law. Indeed, I note that on 21 March 2018 well-known Australian lawyers instructed by Unlockd Media Pty Ltd sent a letter before action to Google alleging a breach of Australian competition law and threatening to seek an interim injunction in the Federal Court of Australia. And on the same day, a leading US law firm wrote on behalf of the same company to Google, threatening an antitrust claim for damages and a complaint to the relevant US antitrust authorities.[51]I recognise that when a global company pursues an allegedly anti-competitive international strategy which may affect its competitors in many different markets across the world, it is much more convenient if such an adversely affected competitor could bring its complaint against that conduct in one forum. But mere convenience is not a basis to extend further the extraterritorial reach of EU competition law, still less does it make it appropriate for the English court to assume the role of competition policeman of the world.

ARTICLE 101

[52]Mr Thompson made clear that the alternative claim pleaded under Article 101 was not the Claimants’ primary case and that it was included only out of an abundance of caution.[53]It has long been established that where subsidiary companies do not enjoy real autonomy from their parent in determining their actions in the market, the companies together constitute a single “undertaking” for the purpose of competition law such that an agreement between them cannot violate Article 101: Bellamy & Child, European Union Law of Competition (7th edn), para 2.025. Here, D1 and D2 are wholly owned subsidiaries of D3, and the evidence filed on the present applications on behalf of Google shows that as regards both Google’s general policy and its application to the Unlockd product D1 and D2 did not act independently of D3. Indeed, Mr Kevin Wang, the Director of Google Play Operations at D3, states in his witness statement that, at least as regards the Play Store, all non-US entities within the Google group “act as agents of [D3] in California.”[54]I can understand the Claimants including this secondary claim in their initial pleading in case Google might have adopted a different line in its evidence. However, it is the Claimants’ case against D3 that D1 and D2 are implementing D3’s policy and instructions, and it seems clear from its evidence even at this stage of the proceedings that Google is not seeking to rebut the inference that a wholly owned subsidiary does not enjoy autonomy from its parent. In these circumstances, I do not think it is seriously arguable that as regards the subject-matter of the claim the three Defendants are other than a single economic entity and thus one undertaking. Accordingly, there is no basis for a claim under Article 101.

CONCLUSION

[55]For these reasons, therefore, I granted permission to serve the proceedings out of the jurisdiction on D3 as regards the claim under Article 102/Chapter II, provided that that claim was amended so as to restrict it to cover the refusal or suspension of access to the Play Store and AdMob services in the EU. And I refused permission as regards the claim under Article 101/Chapter I.