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[2025] FCA 902
General information, not legal advice.
Federal Court of Australia
2025-08-12
Mr P, Beach J
Original judgment source is linked above.
Australian Competition and Consumer Commission v Cement Australia [2017] FCAFC 159; (2017) 258 FCR 312
Barnes v Forty Two International Limited [2014] FCAFC 152; (2014) 316 ALR 408
Berry v CCL Secure Pty Ltd [2020] HCA 27; (2020) 271 CLR 151
Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft [2018] FCAFC 183; (2018) 267 FCR 428
15, 18 to 21, 25 to 28 March, 2 to 4, 8 to 11, 15 to 18, 22 to 24, 29, 30 April, 1, 2, 6 to 9, 13 to 16, 20 to 23, 27 to 30 May, 3 to 7, 11 to 14, 17 to 20, 24 to 28 June, 1 to 5 July 2024
Mr A J L Bannon SC, Mr N De Young KC, Ms K Burke, Mr D Preston, Mr B Ryde and Dr S Chordia
Counsel for the Respondents (Apple parties) in VID 341 of 2022:
Solicitor for the Respondents (Apple parties) in VID 341 of 2022
Mr A J L Bannon SC, Mr N De Young KC, Ms K Burke, Mr D Preston, Mr B Ryde and Dr S Chordia
Counsel for the Respondents (Google parties) in VID 342 of 2022:
Counsel for the Respondents (Google parties) in VID 342 of 2022 (confidentiality issues only):
Solicitor for the Respondents (Google parties) in VID 342 of 2022:
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
(a) The structure of the two class actions - [40] to [72].
(b) Matters for determination - [73] to [105].
(c) Some legal principles - [106] to [133].
(d) The counterfactual commission - introduction - [134] to [151].
(e) App Store profitability - [152] to [232].
(f) The counterfactual scenario(s) - Apple context - [233] to [365].
(g) Comparator analysis - Apple context - [366] to [516].
(h) The counterfactual commission(s) - Apple context - [517] to [549].
(i) Play Store profitability - [550] to [639].
(j) The counterfactual scenario(s) - Google context - [640] to [719].
(k) Comparator analysis - Google context - [720] to [834].
(l) The counterfactual commission(s) - Google context - [835] to [857].
(m) Conclusions - [858] to [860].
124. At all material times during the Relevant Period, the conduct of Apple Inc and/or Apple Pty Limited, referred to at paragraphs 97-98 and 108-109 (s 46), paragraphs 112-113 (s 47), paragraphs 117-118 (s 45) and paragraph 123 (s 21) (individually or in combination, the Contravening Conduct) caused the commissions paid by:
(a) The Second Applicant; and
(b) iOS App Developer Group Members
to Apple for purchases of iOS apps and/or in-app digital content within an iOS app by iOS Device Group Members to be materially higher than the commissions that would have existed had the Contravening Conduct not occurred.
We are dealing with a hypothetical situation of the past, namely, whether if a sale of Isabelle had not been made, then an equivalent sale of Yasmin would have been made. Accordingly, we must form an estimate of the likelihood that the hypothetical situation would have occurred: see Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 at 639 per Brennan and Dawson JJ. In that respect, we must assess the degree of probability that such an event would have occurred and adjust any award of damages to reflect that degree of probability: Malec at 643 per Deane, Gaudron and McHugh JJ.
In another sense, the question can be looked at through the lens of the value of a lost opportunity. The lost opportunity was to make a sale of Yasmin if the sale of Isabelle had not been made. In our view, it is not in doubt that it was established before the primary judge that, on the balance of probabilities, for all sales of Isabelle there was a loss of an opportunity to make a sale of Yasmin. The question then is: what is the value of the lost opportunity? On that question, the value is to be "ascertained by reference to the degree of probabilities or possibilities" involved in the hypothetical counterfactual: Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355 per the plurality.
Another way to express the same point is as Brennan J described it in Sellars at 368:
Although the issue of a loss caused by the defendant's conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation.
This theme of informed estimation resonates with some observations made by Hayne J in Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 77 ALJR 768; 196 ALR 257 at [37] and [38]. Any estimation must be done "with as much precision as the subject matter reasonably [permits]". Mere difficulty in estimating damages does not relieve a court "from the responsibility of estimating them as best it can".
Interestingly, Staughton LJ in Gerber Garment Technology [1996] EWCA Civ 1245; [1997] RPC 443 at 459 cited Sellars with approval and discussed the matter in terms of evaluating the loss of a chance. Gerber Garment Technology both at first instance ([1995] RPC 383 per Jacob J at 407 and 408) and on appeal ([1997] RPC 443 per Staughton LJ at 459 and 460) evaluated and applied a loss of a chance approach based on the possibilities and probabilities. Moreover, Jacob J at [1995] RPC 383, 395 also invoked the themes of Lord Diplock in Mallett v McMonagle [1970] AC 166 at 176, which resonate with the themes discussed in Malec at 639 and 643 that we have referred to above.
Whichever way one expresses it, in assessing the possibilities or probabilities of a hypothetical counterfactual, one is engaged in the task of estimation, even if the estimation involves an assessment of the counterfactual as being close to a certainty. But being close to a certainty is not the same thing as a certainty. If one is estimating, one still needs to apply a discount, albeit a very modest one, to reflect the assessment that one is not at a certainty. If one is looking at the value of a lost opportunity which is not certain to occur, then the valuation must involve some discount, even if a very modest one.
A fundamental requirement for the fair trial of allegations of contravention of law requires "the party making those allegations [in this case BlueFreeway] to identify the case which it seeks to make and to do that clearly and distinctly": Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; 291 ALR 399; 91 ACSR 128; [2012] HCA 39 at [25] per French CJ, Gummow, Hayne and Kiefel JJ. BlueFreeway failed to do this in relation to its alternative causation and damages case.
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Further, "if a plaintiff has suffered damage of a kind which is not the necessary and immediate consequence of the wrongful act, he must warn the defendant in the pleadings that the compensation claimed will extend to this damage": Perestrello E Companhia Limitada v United Paint Co Ltd [1969] 1 WLR 570 at 579; [1969] 3 All ER 479 at 485-6 per Lord Donovan delivering the judgment of the court. This was not done by BlueFreeway...
Not only were the appellants "entitled" to a pleading by BlueFreeway identifying the head of loss as "loss of opportunity", but they were also entitled to have that head of damage properly particularised: see, for example, David Benson Nominees Pty Ltd v Dicksons Ltd [2005] SASC 97 at [39]-[40] per Besanko J. None of this was done by BlueFreeway. For his Honour to permit BlueFreeway late in the day to put its case based upon the alternative scenario produced an unsatisfactory and inherently unfair state of affairs so far as the appellants were concerned. Pleadings serve "to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him": Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286; 92 ALR 53 at 58 per Mason CJ and Gaudron J. BlueFreeway's further amended statement of claim did not ensure that basic requirement in relation to its alternative scenario. To ensure this basic requirement of procedural fairness, BlueFreeway should have been confined to its pleaded case that did not include this alternative scenario. This was not a case "in which the parties [had] deliberately chosen some different basis for the determination of their respective rights and liabilities": at CLR 287; ALR 58-9 per Mason CJ and Gaudron J. How the trial was conducted provides no support for such an inference.
In summary, once his Honour had found against BlueFreeway's pleaded causation and damages case, he should have dismissed the proceeding. The alternative scenario had not been pleaded, opened or run. Moreover, to allow it to be advanced for the first time in closing addresses produced inherent unfairness to the appellants. The course of evidence was not conducted on the basis of the alternative scenario. Moreover, the appellants lost the opportunity to call evidence and to appropriately cross-examine on such a scenario...
The principles developed in connection with the assessment of damages, namely, that where it is clear that substantial loss has been incurred, the fact that an assessment is difficult because of the nature of the damage is no reason for awarding no damages or merely nominal damages, are not directly comparable with the present context.
First, the assessment of damages is a different exercise to the imposition of a civil penalty. The Court is principally concerned in the present context with general and specific deterrence. The perspective of putting a party in the position that they would have been in if a contract had been performed, or with putting an injured party in the position that they would have been in but for the statutory contravention or the tortious conduct has little to do with the matter.
The imposition of a penalty is affected by many questions which are then balanced as a matter of intuitive synthesis. The amount of loss or damage causally connected to the contravening conduct is only one of the relevant factors. Moreover, the exercise of intuitive synthesis is an evaluative exercise. To suggest that there must be quantitative precision on any one factor feeding into the question of what a penalty should be is misplaced. Contrastingly, in the assessment of damages or the value of a lost opportunity, some monetary quantification resulting from the process of some degree of estimation, albeit imperfect, must be made (see for example Sellars v Adelaide Petroleum NL at 350-355 and 368; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 77 ALJR 768; 196 ALR 257 at [38]; and Malec v JC Hutton Pty Ltd at 642 and 643). And indeed that quantification is the singular goal of such a compensatory exercise. But in setting a penalty, the goal is to fix a monetary amount for the penalty sufficient to address the principal objective of deterrence, rather than to quantify loss or damage as compensation.
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Further, if the ACCC's principle was to be accepted, contrary to our view, it was a matter for the ACCC to have adduced such evidence as was necessary to enable the primary judge, to the requisite standard (s 140(2) of the Evidence Act 1995 (Cth)), to make the appropriate quantification of damage or market harm. It failed to do so. It did not seek to apply and justify quantification based upon any sufficiently probative method. It was not appropriate for the ACCC to say in effect to the primary judge or contend before us that his Honour had to do his best with the ad hoc and less than systematic approach which the ACCC advocated. In elaboration, we would note the following.
First, the only expert evidence concerning market harm relied on at the penalty hearing was from Dr Philip Williams, who was called by the respondents. The ACCC chose not to adduce its own expert evidence on the subject. Dr Williams' evidence was to the effect that the matters relied upon by the ACCC did not provide a sound economic basis for quantifying the effect of the conduct. In the absence of contrary and probative evidence, his Honour was entitled to accept and act upon Dr Williams' opinions.
Second, it may have been possible for the ACCC to probatively measure the benefits derived or the market harm suffered even if the identity of the entities that might have entered the market was unknown. Dr Williams referred to economic literature that suggested there were various methods that could have been employed to quantify market harm: Penalty Reasons, [641]. But the ACCC chose not to rigorously engage with any such methodologies. Moreover, its criticisms of the primary judge's conclusions as to the lack of probative evidence (see for example at [818](14)) are unwarranted, particularly in the context where it only chose to put before his Honour its own, if we may say so, piece-meal analysis.
We accept that estimating damage from anti-competitive behaviour of the type found by the primary judge in the present case is difficult. The question of making such an assessment usually involves in an economic context a "but for" analysis. But in a legal context where compensatory loss is being assessed, sometimes a "but for" approach may not be suitable or comprehensive. Section 76(1) in using the phrase "any loss or damage suffered" may embrace but is clearly not confined to the lens of compensatory loss. It is to be analysed in part in its economic context. And for economists, a "but for" analysis is usually appropriate. The question normally posed in such a framework is: what would the price of the relevant product have been absent the anti-competitive conduct? This is compared with the actual price to determine loss. Of course, such an approach may not consider other types of loss such as harm done arising from the reduced use of the relevant product because of the higher price that may also have to be considered. But the issue principally posed for economists is how to calculate the "but for" price. Various but problematic methods may suggest themselves (see Brander JA and Ross TW, "Estimating Damages from Price-Fixing" in Pitel S (ed), Litigating Conspiracy: An Analysis of Competition Class Actions (Federation Press, 2006) at 335), including:
(a) making before and after comparisons of prices;
(b) using marginal cost or average cost as a proxy for price;
(c) using prices in similar markets as analogues; and
(d) undertaking econometric simulations to determine a competitive price benchmark.
But before the primary judge the ACCC did not put forward any probative analysis using any of these methods, although it did suggest rough and ad hoc approximations utilising some aspects of methods (a) and (c).
Third, in relation to some aspects of its analysis the ACCC relied upon what the respondents not unfairly described as a "patchwork quilt of figures" from budget assumptions or forecasts prepared by different personnel of the respondents at different times. But these were premised on counterfactuals and other assumptions in part correctly rejected by the primary judge. Moreover, the ACCC inappropriately equated perceived benefit with market harm. The ACCC's approach was correctly rejected by the primary judge.
Fourth, .... Moreover, given that a comparison was required between the actual position of the respondents with the counterfactual position where the relevant contracts did not contain the impugned provisions (rather than the total loss of the contract(s) to a third party), it was incorrect for the ACCC to assert that the whole of the EBIT should be taken to have been causally connected to the contravening conduct. Indeed and more generally, in our opinion the ACCC never properly engaged with his Honour's statement at [489] of the Penalty Reasons (set out at [313] above).
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Finally and as a general observation, we of course accept that the mandatory consideration of loss does not necessarily require evidence from victims or expert evidence on a "but for" basis (Reckitt Benckiser at [93]); moreover, in some cases an assessment can be made even absent precise evidence on causation or mathematical precision. The primary judge was required to consider and analyse the information before him, and draw any necessary but reasonable inferences open to him in making some assessment. But to say as much is not to say that his Honour was in error in failing to make a quantification of the type contended for by the ACCC. We would also note that the forensic context that his Honour was dealing with was quite different and considerably more complex than that discussed by the Full Court in Reckitt Benckiser at [98]. Depending upon the context and the exercise, more or less precision in the assessment may be justified. At the end of the day the task is principally an evaluative exercise for the trial judge...
... you can have the hypothesised cartel period, and you look at the prices in that period, and then compare them with the prices before the cartel started and/or the prices after the cartel is over, and you run multiple linear regression calculations, and you use a dummy variable for the within period cartel prices, and you're able to work out through linear regression analysis what the price has done during the cartel period and causally relate that to the collusion as distinct from just other market or nonmarket factors. And that's a very standard way that sort of thing is done in the US. Now, of course, we've got something much more complicated.
HIS HONOUR: But that would change in terms of dynamics and how new entrants came in. So, if low quality, what they were doing etc, and how the incumbent reacted to those new entrants. How the incumbent might want to back out the potential for that new entry or threat to grow. But that might all occur dynamically - do you follow what I mean? So in a counterfactual, I just wonder whether I should be looking at one rate at all - some unitary, you know, single rate or I should be looking at it more dynamically over time.
MR HOLT: I think either are potential alternatives, I think, would be open to you. The approach that I've adopted is to look at this as an effective average over the relevant period.
Credible threat of entry into the in-app payment solutions market
The omission of console stores and Android stores
Now, it's important to recognise what I have done. I have not tried to find the best comparator for Apple. I have not tried to identify a single comparator that, in my view, represents the whole market. What I've done is identify, in the round, the best evidence that points to what would likely have happened in the counterfactual across the iOS app distribution market and in-app payments solutions markets. So there's no suggestion that I am relying on any particular app store.
... it doesn't necessarily matter the number of them. It matters the overall revenue to which the discounts apply. I would expect in general that it's the largest developers, the ones who account for the most significant proportion of revenue, who will be most attractive for the individual platforms to negotiate with because it's those very develop that they really want to attract to their platforms.
... [I]n a competitive environment, there can be a number of issues that might arise. There could be increases in quality, there could be new innovations, there could be increased choice, there could be, you know, many sort of developments that could happen. I've essentially abstracted from the specific detail as to what business models and what level of quality individual entrants would take, and formed an overall view as to what likely would happen in the market.
... [W]hat I've measured is the effective average that would apply across the market. That could include some app stores charging higher amounts, some charging lower; that allows for differentiation on quality. It could allow for some app categories to have some on higher rates, some to have lower. There's nothing in my analysis that precludes any degree individualised outcomes of that nature.
Comparator analysis in relation to in-app payment solutions
The counterfactual scenario(s) - Google context
The reasons would be that if you charge for free downloads, it substantially increases the barrier to entry for innovation. It will substantially reduce the diversity of apps that are available to users, and developers really hate the idea.
The counterfactual commission - Google context
The Play Store commission in the actual is not competitive
Is the counterfactual commission calculated by Mr Holt arbitrary?
Is there a single answer concerning overcharge that applies to all apps?
I certify that the preceding eight hundred and sixty (860) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Beach.
Anthony
Apple Inc [2025] FCA 902
(2017) 258 FCR 312
(2018) 267 FCR 428
(1990) 169 CLR 279
(2014) 316 ALR 408
(2020) 271 CLR 151
(1990) 169 CLR 638
(1994) 179 CLR 332
(2003) 77 ALJR 768
(2012) 247 CLR 486