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Regulatory Comments I appreciate the opportunity to comment on the FTC’s Proposed Enforcement Policy Statement Regarding Personalized Pricing (“Proposed Policy”).[1] This comment offers my own views as . . .
I appreciate the opportunity to comment on the FTC’s Proposed Enforcement Policy Statement Regarding Personalized Pricing (“Proposed Policy”).[1] This comment offers my own views as a long-time student of and practitioner in the FTC’s consumer protection mission.[2]
The comment begins with a brief overview of personalized pricing and the issues it raises as a form of price discrimination in Section I. Section II then argues that when there are competing sellers, consumers can easily avoid any injury from personalized pricing by the simple expedient of searching for another price. Section III argues that the Commission’s premise that consumers generally expect one price for all customers is unsubstantiated. Consumers are well aware that different consumers pay different prices in ordinary purchase situations. Section IV considers discounts based on personal information. It argues that such practices benefit consumers, and that the Commission should create a safe harbor to avoid requiring disclosures for personalized discounts. Section V argues that disclosure is an inappropriate remedy for the problems the Commission seeks to address and should, in any event, be tested before it is required.
Some critics of the information economy have become concerned about personalized pricing, in which businesses use consumer-specific information to set different prices for different consumers. By definition, charging different prices for different consumers (assuming costs are the same) is price discrimination. The economics literature has long been clear that price discrimination can be either welfare increasing or welfare reducing, depending on the circumstances.[3] Whether a given instance of price discrimination is good or bad for consumers is thus an empirical question. Nevertheless, many scholars have argued that common forms of retail price discrimination lead to increased output and enhanced consumer welfare.[4]
As the Proposed Policy notes, “the extent to which businesses currently use personalized pricing is not well understood, and the effects of personalized pricing on consumers are unclear.”[5] Instead, the discussion is driven by concern about a wide variety of hypothetical business practices which are not known to have actually occurred, and which may never occur.
The hypothetical scenario that has attracted the most attention is the possibility that a monopolist could charge each individual consumer the maximum amount that consumer would be willing to pay, thus extracting all consumer surplus. Although a theoretically interesting polar case, such personalized pricing is not possible in practice: Statistical uncertainty remains. Even the best models cannot predict with certainty, and data, even in the physical sciences and especially in economics, are subject to measurement errors. Dubé and Misra show by example that, even in a monopoly model that incorporates statistical uncertainty, a database that allows different prices for different consumers may increase both profits and consumer surplus.[6] In their careful experimental study, personalized pricing never extracted more than 30% of consumer surplus that would result from uniform pricing, whereas “true perfect price discrimination … would extract all consumer surplus.”[7] Moreover, in their experiment, more than 60% of consumers received a lower price with personalized pricing. Why such a pricing outcome might warrant consumer protection enforcement is hardly obvious.
More important than the limitations of personalized pricing in the monopoly context is the fact that most industries are not monopolies. When there are competitors, the same tools and data that allow a monopolist to charge more to consumers who are more willing to pay also enable competitors to identify the consumers who are most overcharged and compete for their business through lower prices. Firms can also offer discounts to consumers who prefer their rival’s product, again pressuring the rival to lower price.[8] These uses of information-based pricing offer clear consumer benefits.
Empirical questions that underlie a public policy deserve empirical answers rather than adopting a policy that assumes an answer. The impact of price discrimination on consumer welfare is just such a question, as economists have recognized for decades. Empirical answers about the effects of personalized pricing as a method of price discrimination are, at present, lacking. Whether a particular implementation of personalized pricing benefits consumers or harms them should be central to the Commission’s enforcement decisions. Under the Proposed Policy, the Commission does not appear to ask that key factual question in deciding to bring a case.
The specific “personalized pricing” scenarios the Proposed Policy identifies as requiring disclosure highlight the important role of competition as a constraint. Marketing delivery services to those who are unable to leave home, milk to people with several children, hotels to people who need to travel, or home security to crime victims are examples that appear to be competitive markets. Information identifying these consumers makes competition, including offering a lower price, more likely, not less. Similarly, in the Commission’s example of a consumer standing in the store who is shown a higher price online, the consumer can buy the item off the shelf. Moreover, a competitor using the same information to offer online discounts to consumers who are in its rival’s stores would seem to produce clear consumer benefits. As discussed in the next section, consumers can easily avoid injury in such circumstances.
The most troubling of the Commission’s scenarios is the rideshare company charging a premium price for a consumer in dire need of transportation, particularly if the consumer has no reasonable alternatives. Here, however, the problem is more akin to duress, rather than a failure to disclose personalized pricing. The common law of contract has long policed closely related situations. For example, a seller may refuse to continue performance under a contract without a price higher than previously agreed. In another example, a seller who finds a prospective buyer in a sensitive position with few if any alternatives, raises the price to extraordinary levels. In either circumstance, common law courts scrutinize the contract with extra care and may refuse to enforce it.[9] Most importantly, although this exploitation may constitute a Section 5 violation,[10] the problem is not the failure to disclose. No amount of disclosure about how the price was set will either generate new alternatives or relieve the consumer of the dilemma.
Consumers cannot buy anything without first locating a seller. Although some may purchase from the first seller they find, consumers frequently gather information about the offerings of other sellers to choose the best option. That process of consumer search means that consumers do not come to a particular offering in ignorance. They have some information about prices at other sellers, or perhaps this seller at an earlier time, that provides context for the offered price. Even when a new seller or new product is first encountered, consumers can easily generate a context by searching for other offerings. In the online context that seems to be a primary concern of the proposed personalized pricing policy, the simple expedient of clicking the next link will generate additional information about whether the price is high or low.
Rather than focusing on the injury, the draft statement’s analysis of materiality and avoidability focuses on the process that allegedly generates the injury.[11] It is true that if consumers are unaware of personalized pricing they would not know to take steps like using a VPN or a private browser.[12] But the injury is not the process of setting the price, it is the high price that may result. Consumers can avoid the actual injury with the same simple process they routinely employ to avoid any price they think is high: check another seller. Consumers can therefore reasonably avoid any injury that might result from personalized pricing.
Of course, consumers may decide to purchase without additional search. That decision, however, is based on the perceived benefits and costs of further information gathering. The manner in which the seller determined the price does not affect the search decision. It is likely that consumers who choose not to search will pay a higher price on average, but not searching may nonetheless be a rational choice. In addition to avoiding the costs of search, some consumers prefer familiarity with one seller and will pay for that benefit. Choosing not to search also captures the Commission’s scenario of a rideshare company charging more for a consumer who has only one installed rideshare app. Moreover, installing another app would seem an easy way for a consumer to avoid injury. In any event, disclosure at the point of sale will not convert a non-searcher into a searcher and does nothing to reduce the costs of search.
The presence or absence of personalized pricing has no effect on search behavior in two of the most studied strategies in the economics literature. In a fixed sample size strategy, consumers choose a number of sellers to sample based on the costs of checking another price and the expected benefit of finding a lower price.[13] Personalized pricing does not affect either side of this equation. Another much-studied search strategy is an optimal stopping rule,[14] in which consumers continue to search until they find a price below some specified value. Again, nothing about the presence or absence of personalized pricing would affect this determination or the transaction price that results.
The information that consumers need to make optimal choices is information about the price itself, not how it was determined. As Nobel Laureate Friedrich Hayek observed in his seminal paper The Use of Knowledge in Society, the beauty of the price system is that the price aggregates and summarizes all information about value and cost into a single statistic, one that provides the basis for decisions without exploration of the underlying details.[15] Whatever consumers may expect about how it was determined, that summary remains the same for the particular consumer and the particular proposed transaction. In most circumstances consumers can remain blissfully ignorant of the process by which prices are set and the range of information used to set them.
Charging different prices to different consumers is as old as retailing. Consumers who are more willing to pay for a product or service, or less sensitive to price, are often charged higher prices. Consumer characteristics may serve as a proxy, as is the case with discounts for students or for the elderly. But many traditional price discrimination techniques rely on consumers who care more about price to self-identify, usually by their willingness to jump over some “hurdle” to qualify for a lower price. Rebate offers or discount coupons are common examples: Consumers who are more price sensitive are more willing to clip coupons or jump the hurdles necessary to claim the rebate. As one economics textbook noted, “[i]t is a rare product whose seller does not use the hurdle model of differential pricing.”[16]
Indeed, nothing is more common in the experience of every consumer than the simple fact that prices vary. Different sellers offer the same goods at different prices, in different locations, at different times, and to different consumers. Similar goods that are close substitutes are available at a similar array of prices. The only way for any consumer to know whether a particular price is a good one is to compare it to other prices—to search for a price they are willing to pay.
Even in circumstances most favorable to the Commission’s assertion that consumers have “reasonable expectations” of one price for all, it is highly likely that consumers understand that the transaction price will differ for different consumers. Consider a posted price for an item in a grocery store, arguably an express representation of one price for all. Consumers understand that at checkout some will pay the posted price, but others will pay less because they use a coupon on the purchase (and perhaps different coupons offering different discounts). Still others may receive a different loyalty program discount or take advantage of a volume discount. The range of prices expands even further when we consider competing brands, including store brands that may be functionally identical. Each of these arrangements means that different consumers pay different prices, based on their personal choices and behavior. Such pricing arrangements are ubiquitous in retailing, obvious to consumers, and make clear that the posted price is not “one price for all.”
The Proposed Policy cites evidence that consumers do not understand the nature and extent of data collection and use.[17] It does not follow that they therefore expect “one price for all,” despite their everyday experience to the contrary. Moreover, the Commission recognizes that consumers do expect individualized pricing in some circumstances, but it offers no principled distinction between those instances and others where consumers allegedly expect a single price, and no way for a company to assess what consumers “reasonably expect” in any particular instance.
In any event, consumer expectations about prices and how they are set are a foundation of quicksand for enforcement that actually benefits consumers. The Commission has a sad history of using claims of “deception” to attack discounters and other low-price sellers,[18] spurred on by competitors seeking to suppress competition that benefits consumers. Presumably most consumers who choose to buy “expect” that the price they are paying is a good one. By the logic of the Proposed Policy, however, the failure to disclose that the price is in fact higher than most other offerings in the market would seem to be a deceptive practice. That approach, however, would make the Commission a price regulator, something it clearly is not under its statute.
Although the possible downsides of personalized pricing are at this point largely hypothetical, concrete benefits of information-based pricing abound. Using the same data and techniques as personalized pricing, loyalty programs and discount email marketing are widespread. Industry estimates indicate that millions of consumers are members of loyalty programs, often multiple programs, that offer discounts and other promotional benefits based on the consumer’s history with the seller. Capital One Shopping reports that discounts are the strongest drivers of loyalty program participation.[19] Zoho, a provider of online platforms for loyalty programs, reports that 80% of Americans are members of at least one loyalty program.[20] EMARKETER reports that the average consumer is a member of a surprisingly high 17 loyalty programs,[21] and notes that the best programs tailor offers and content based on the individual member’s preferences and behavior. Email marketing also makes extensive use of consumer information. Capital One reports that 77% of consumers want to receive emails offering discounts, and that personalized promotional emails with discounts are opened 29% more often and clicked 41% more often than those without.[22]
These programs offer clear consumer benefits, reducing the costs of living for American families. They use the same kinds of data, and the same or similar analytical techniques, to determine how large a discount (if any) to offer any individual consumer. Unless the Commission creates a safe harbor for such discounts, the analysis of the proposed policy statement would seem to require exactly the same personalized pricing disclosure that the policy statement contemplates when personalization leads to higher prices. In the Commission’s example of a price for a security system based on knowledge that the consumer was a recent crime victim, the seller would have to disclose that “this price is personalized based on data showing you are a recent crime victim” whether the price was higher or lower than the usual price. When the price is a discount, however, the disclosure offers no benefits whatsoever. Defining “discounts” with enforceable precision is a difficult challenge, but the Commission can clearly state that it does not intend to require disclosure when information is used to offer discounts, and consider whether a given price is in fact a “discount” on a case-by-case basis.
Although the Proposed Policy is based on disclosure rather than a prohibition of personalized pricing, given the well-known fact that any communication can confuse or mislead a significant number of consumers,[23] required disclosure when prices are discounted risks harming consumers. The legal risk, the cost of the disclosure itself, and the risk of consumer misinterpretation of the disclosure will discourage sellers from offering these discounts. The Commission’s past attacks on discounting argue strongly for a safe harbor, rather than reliance on the Commission’s enforcement discretion.
The proposed policy statement would require that firms using personalized pricing “disclose not just that the price is personalized, but also the basis for that personalization and the types of data on which the personalization is based.”[24] In its evaluation of disclosures, the Taskforce on Federal Consumer Financial Law Report noted that “when disclosures are required, it should be with a clear, and articulated, goal in mind.”[25]
The contemplated disclosure fails this test. Is it simply intended to discourage personalized pricing? It will likely have that effect, but, as noted above, that will raise prices to the many beneficiaries of personalized discounts. Is it intended to motivate additional consumer search for a better price? If so, it would seem equally valuable to require any seller to disclose that its price is relatively high, whether personalized or not. Is the goal to encourage consumer use of behaviors and technologies that seek to conceal their information? If so, the disclosure should be at the point at which information is collected, when consumers can act on its message. Disclosure when a price is offered is in the wrong place and at the wrong time.
Rather than facilitating consumer choices, which should be the goal of all required disclosures, the proposed disclosure appears to be a “normative” disclosure – information provided not because consumers are interested, but because policymakers think consumers should take it into account.[26]
Like any disclosure, this one may be misunderstood. The Commission’s own research has shown that additional information can lead to worse consumer decisions, either because it is misunderstood or because consumers assign it more significance than it should have.[27] To ensure that consumers actually benefit from disclosure, the Commission should first test it, and only then consider requiring it.
In most circumstances, personalized pricing is unlikely to harm consumers. There may be harm, and a Section 5 violation, if there are instances in which personalized pricing borders on duress. Disclosure, however, does nothing to address the problem, and leaves a possibly better-informed consumer with the same unpalatable choice.
It is generally easy for consumers to avoid any injury from personalized pricing by the simple expedient of searching for a better price. The Commission’s premise that consumers generally expect one price for all is unsubstantiated. It seems highly likely that most consumers are aware that prices differ from one consumer to another because of coupon use, volume discounts, and loyalty programs. Because personalized discounts offer substantial consumer benefits, the Commission should create a safe harbor making clear that disclosures are not necessary when information is used to offer a discount. Disclosure, particularly untested disclosure, is an inappropriate remedy.
[1] Fed. Trade Comm’n, Proposed Enforcement Policy Statement Regarding Personalized Pricing, Matter No. P034101 (Aug. 19, 2026) [hereinafter “Proposed Policy”], https://www.ftc.gov/system/files/ftc_gov/pdf/p034101-ftc-enforcement-policy-statement-re-personalized-pricing-proposed-for-public-comment.pdf.
[2] I am currently Emeritus Professor of Strategic Management and Public Policy at the George Washington School of Business and a Senior Scholar at the GW Regulatory Studies Center. I was on the staff of the FTC in the Bureau of Economics and in the Bureau of Consumer Protection as an Assistant to the Director, Associate Director, and Acting Deputy Director from 1977 to 1986, and Director of the Bureau of Consumer Protection from 2001-2004. I am grateful to the International Center for Law and Economics for financial support.
[3] See Jean Tirole, The Theory of Industrial Organization 138 (1988) (“The welfare effects of third-degree price discrimination are ambiguous.”).
[4] See 14 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 2340c (2024) (“most price discrimination is socially beneficial in that it produces higher output and thus yields greater consumer benefits than forced nondiscriminatory pricing”); see also Benjamin Klein, Price Discrimination and Market Power, in 2 Issues in Competition Law and Policy 977, *20 (Wayne D. Collins ed., 2008), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1657202 (“[P]rice discrimination can be used and in some circumstances accepted as a legitimate competitive business justification. . . .”).
[5] Proposed Policy, supra note 1, at 3.
[6] See Jean-Pierre Dubé & Sanjog Misra, Personalized Pricing and Consumer Welfare, 131 J. Pol. Econ. 131, 142 tbl. 1 (2023).
[7] Dubé & Misra, supra note 7, at 170. They note that “[e]ven with expanded data collection, it is unlikely that a firm could truly perfectly price discriminate using consumer data.” Id.
[8] See Jacques-François Thisse & Xavier Vives, On the Strategic Choice of Spatial Price Policy, 78 Am. Econ. Rev. 122 (1988).
[9] See, e.g., Restatement (Second) of Contracts §§ 175–76 (Am. L. Inst. 1981). See also Timothy J. Muris, Opportunistic Behavior and the Law of Contracts, 65 Minn. L. Rev. 521 (1981).
[10] The most promising theory is unfairness. There is substantial injury. By hypothesis, there is no alternative, and there are no offsetting benefits of the practice to consumers or competition. See, e.g., Holland Furnace Co. v. FTC, 295 F.2d 302 (7th Cir. 1961) (seller’s servicemen dismantled home furnaces and then refused to reassemble them until the consumers had agreed to buy services or replacement parts).
[11] Materiality is the injury inquiry in the context of deception: Would the consumer have done something differently to avoid the problem? Avoidability is the same question in the context of unfairness: Is there an injury-free alternative the consumer could reasonably have chosen?
[12] The proposed policy also points to correcting information and avoiding information collection in the first place as possible responses. But disclosure of personalization does not create an opportunity for correction, and existing disclosure requirements apply where correction rights exist. As discussed in Section V below, the point of sale is the wrong place for a disclosure aimed at information collection practices.
[13] Stigler examines a fixed sample size strategy in his seminal article on the economics of information. See George J. Stigler, The Economics of Information, 69 J. Pol. Econ. 213 (1961).
[14] See J. McCall, Economics of Information and Job Search, 84 Q.J. Econ. 113 (1970); Martin L. Weitzman, Optimal Search for the Best Alternative, 47 Econometrica 641 (1979).
[15] See Friedrich A. Hayek, The Use of Knowledge in Society, 35 Am. Econ. Rev. 519 (1945). Price conveys information even when the information is not observed directly, even when the information is not disclosed, and even when it may not be “consciously articulable” by any market participant. See Randal K. Quarles, Vice Chair for Supervision, Bd. of Governors of the Fed. Rsrv. Sys., Friedrich Hayek and the Price System Remarks at the Ninth Annual Conference of the William F. Buckley, Jr., Program at Yale 5 (Nov. 1, 2019), https://www.federalreserve.gov/newsevents/speech/files/quarles20191101a.pdf. For a formal model in a slightly different context, see Sanford Grossman, On the Efficiency of Competitive Stock Markets Where Trades Have Diverse Information, 31 J. Fin. 573 (1976).
[16] Robert H. Frank, Microeconomics and Behavior 434 (4th ed. 2006).
[17] See Proposed Policy, supra note 1, at 2–3 & nn. 4, 7.
[18] See Robert Pitofsky, Beyond Nader: Consumer Protection and the Regulation of Advertising, 90 Harv. L. Rev. 661 (1977); Robert Pitofsky, Randal Shaheen & Amy Mudge, Pricing Laws Are No Bargain for Consumers, 18 Antitrust 62 (2004); Timothy J. Muris & Paloma Zepeda, The Benefits, and Potential Costs, of FTC-Style Regulation in Protecting Consumers, 8 Competition L. Int’l 11 (2012).
[19] See Discount Marketing Statistics, Capital One Shopping (last updated June 15, 2026), https://capitaloneshopping.com/research/discount-statistics/.
[20] See 30+ Loyalty Program Statistics Businesses Should Know in 2026, Zoho Thrive (last visited Sept. 22, 2026), https://www.zoho.com/thrive/loyalty-program-software/statistics.html.
[21] See Arielle Feger, Why Loyalty Programs Are Hitting a Growth Ceiling, EMARKETER (July 31, 2026), https://www.emarketer.com/content/why-loyalty-programs-hitting-growth-ceiling.
[22] See Discount Marketing Statistics, supra note 20.
[23] As Karl Popper said, “Always remember that it is impossible to speak in such a way that you cannot be misunderstood: there will always be some who misunderstand you.” Karl Popper, Unended Quest: An Intellectual Autobiography 29 (1976) (emphasis in original). Academic studies of brief communications find that 20 to 30 percent of the audience misunderstand some aspect of the message. Regarding televised messages, see Jacob Jacoby, Wayne D. Hoyer & David A. Sheluga, Miscomprehension of Televised Communications 64 (1980). Regarding print communications, see Jacob Jacoby & Wayne D. Hoyer, The Comprehension and Miscomprehension of Print Communications: An Investigation of Mass Media Magazines (1987). Both studies compare advertisements with excerpts of editorial content designed to be roughly equal in length and find no significant differences in the extent of miscomprehension.
[24] Proposed Policy, supra note 1, at 1.
[25] Consumer Fin. Prot. Bureau, Taskforce on Federal Consumer Financial Law Report vol. I, at 326 (Jan. 2021, amended Jan. 2022) [hereinafter “Taskforce Report”], https://files.consumerfinance.gov/f/documents/cfpb_taskforce-federal-consumer-financial-law_report-volume-1_2022-01_amended.pdf. The CFPB’s Taskforce included four members with vast FTC experience, including me.
[26] See the discussion in the Taskforce Report, id. at 327–28 (noting that disclosures that reduce information costs help consumers achieve their goals but “normative disclosures seek to change their goals.”).
[27] See James M. Lacko & Janis K. Pappalardo, Fed. Trade Comm’n, Bureau of Econ., The Effect of Mortgage Broker Compensation Disclosures on Consumers and Competition: A Controlled Experiment 28–29 (Feb. 2004), https://www.ftc.gov/sites/default/files/documents/reports/effect-mortgage-broker-compensation-disclosures-consumers-and-competition-controlled-experiment/030123mortgagefullrpt.pdf. The experiment tested alternative disclosures on the closing forms required under the Real Estate Settlement Procedures Act, and found that when the broker’s compensation was disclosed, consumers were less likely to select the low-cost mortgage.
Regulatory Comments I. Introduction and Summary The International Center for Law & Economics (‘ICLE’) welcomes the opportunity to respond to the Department for Business and Trade’s (‘DBT’) . . .
The International Center for Law & Economics (‘ICLE’) welcomes the opportunity to respond to the Department for Business and Trade’s (‘DBT’) consultation on Swifter and Simpler Competition Redress, Regulatory Appeals and Competition Enforcement.[1] ICLE is a nonprofit, nonpartisan research centre that promotes rigorous economic analysis in public-policy debates. Its scholars have written extensively on competition enforcement, private litigation, and regulatory design. ICLE has also responded to the government’s Refining Our Competition Regime consultation, the Competition and Markets Authority’s (‘CMA’) merger-efficiencies review, and its proposed first conduct requirements under the Digital Markets, Competition and Consumers Act 2024 (‘DMCC Act’).[2]
ICLE submits these comments by email as a single document rather than through the online survey. Headings identify any specific consultation questions addressed in a section. Paragraph references are to the Consultation unless otherwise indicated.
The Consultation’s three chapters share an ambition to make redress, appeals, and enforcement ‘swifter and simpler’. ICLE supports that aim. Speed and simplicity help when they lower the cost of reaching sound outcomes. They can, however, do harm when they remove safeguards needed to reach those outcomes. We therefore assess each proposal through the error-cost framework that has long guided law & economics analysis of enforcement institutions: Does the reform reduce the expected cost of error, including false positives, false negatives, and enforcement costs?[3]
Our principal conclusions follow.
The government’s diagnosis is broadly right, and most of its remedies point in the right direction. The regime has two linked problems. First, certification has become too easy, leaving funders’ appetite for returns to filter claims that the Competition Appeal Tribunal (‘CAT’) should assess for merit and proportionality. Seconds, even successful claims have returned very little to the consumers in whose name they are brought
ICLE supports codifying an absolute-suitability test with a weighted cost-benefit assessment (Q4–Q6), clarifying class representatives’ obligations through the CAT Rules (Q1–Q3), permitting damages-based agreements subject to disclosure (Q7–Q9), requiring budgets from both sides (Q13–Q14), and introducing settlement offers with automatic costs consequences (Q18–Q20). We oppose two proposals. Requiring the CAT to indicate at certification what funder return would be ‘reasonable’ (Q10) would import rate-of-return regulation into litigation finance. This risks blending into rate-of-return regulation of litigation finance with the associated cost inflation. It would be neither workable nor wise. Allowing the CMA to order redress based on a presumed overcharge (Q22–Q26) would turn an enforcement agency into an administrative damages tribunal without the experience, evidence, or standard of review that role requires.
ICLE supports transferring the CMA’s appellate functions to the CAT (Q44–Q45). Adjudication belongs in a judicial body, and the CMA’s resources are better spent on its primary functions.
That transfer should, however, preserve parties’ right to a meaningful appeal. Applying judicial-review principles ‘taking due account of the merits’ (Q47) would lower the standard that now governs energy appeals and replace water redeterminations with a materially more deferential process. Decisions that set the return on tens of billions of pounds of regulated investment warrant a genuine merits appeal.
Several proposals would sensibly reorganise procedures and institutions. Others would remove statutory safeguards and replace them with CMA guidance. Most notably, omitting Rule 3 (Q65) would allow the official who issued a statement of objections to sit in judgment on it.
The proposals would also withdraw the right to make confidentiality representations (Q67), narrow access to the file (Q75, Q77, Q78), and codify appeal waivers in settlement (Q68). Together, these would weaken checks on an agency whose infringement decisions bind courts in follow-on damages actions. ICLE supports faster competition-law procedures, but notes that procedural fairness protects the parties, lends credibility to enforcement decisions, and makes the UK a more attractive place to do business.
The opt-out regime began in 2015 with three objectives: better redress for victims of anticompetitive conduct, deterrence, and protection for defendants against unmeritorious claims.[4] A decade later, the evidence assembled in the Consultation suggests that the regime is falling short on redress and protection for defendants. It also pursues deterrence in a way that generates large private returns without commensurate public benefit.
The regime has grown rapidly since 2020. Claimants have filed cases with a cumulative estimated value exceeding £130 billion on behalf of some 655 million class members.[5] Claimant budgets routinely exceed £20 million, and defence budgets can be expected to match or exceed them.[6] Funders will not back a claim worth less than roughly £500 million.[7]
Yet in the only case to reach distribution, less than one per cent of the class made a claim. Approximately £216,000 reached consumers, while more than £10 million went to lawyers, funders, and other stakeholders.[8] In the only case to reach a judgment in the claimant’s favour, the Tribunal had to determine what a ‘fair’ commission for access to a digital platform would have been. As ICLE has explained elsewhere, this exercise in administered pricing is unlikely to produce stable or welfare-enhancing results. The judgment is now the subject of an application for permission to appeal.[9]
These outcomes reflect a well-understood divergence between the private and social incentives to litigate.[10] The lawyer or funder who selects and controls a claim captures much of its private return, while society bears the costs of adjudication and any over-deterrence. Research on ‘entrepreneurial litigation’ shows that when those who select claims are paid from the proceeds, they are likely to favour claims that promise returns to themselves over those that benefit the people they represent.[11] Opt-out proceedings sharpen that divergence because class members are dispersed, passive, and often unaware of the claim.
Two features of the UK regime make it especially susceptible to this dynamic. First, since Merricks, certification has been understood as a ‘relative suitability’ test that ‘does not involve a merits test’.[12] Second, because the regime covers only competition law, claimants have pleaded claims ‘not obviously rooted in competition’ as abuses of dominance. In some cases, the Tribunal has observed that the alleged conduct ‘seem[s] not to be competition law infringements at all’.[13]
Together, these features have made the regime increasingly attractive as an asset class for litigation finance rather than a route to redress: a portfolio of large standalone claims certified at a low threshold, whose value to investors depends on a handful settling or succeeding.
We agree with the government that the regime should be neither expanded nor further restricted at this stage.[14] The answer to the ‘dressing up’ problem is to enforce its existing boundaries. At certification, the Tribunal should require a pleaded competition claim with a real prospect of success, rather than accept a competition-law label alone. Cost-benefit analysis should also be undertaken; at the moment, only cost-effectiveness analysis is. This necessarily implies considering the market impact of the claim, including at the certification stage; this omission is the driver of claims which simply incur costs without improving markets (and sometimes harming them). The proposals discussed below would do much to achieve this.
ICLE supports all three proposals in paragraph 29. Together, they would restore the ‘strong process of judicial certification, including a preliminary merits test’ that the government promised when it created the regime and that subsequent case law has eroded.[15]
Intrinsic (absolute) suitability. A relative-suitability test asks whether collective proceedings are preferable to individual proceedings. Because individual claims for small losses are rarely viable, the answer is usually clear, and certification does little to filter claims. An intrinsic test asks whether the claims are fit to be grouped and determined collectively under the Act. It also asks whether collective proceedings offer a reasonable prospect of a just outcome at proportionate cost.[16] Where claimants seek aggregate damages, they must offer a methodology with a realistic prospect of establishing class-wide loss and evidence that the necessary data exist.[17]
Some mature class-action jurisdictions take a similar approach. In the United States, Rule 23 requires a ‘rigorous analysis’ that will ‘frequently … entail some overlap with the merits’.[18] The class plaintiff must also show that damages can be measured on a class-wide basis consistent with its theory of liability.[19]
Greater weight for costs and benefits, including expected take-up. This is, in our view, the Consultation’s most important reform. The error-cost logic is straightforward. Certification imposes immediate and certain costs: defence spending that can match a £20 million claimant budget, years of management distraction, and, critically, settlement pressure largely independent of a claim’s merit.[20] The benefit is uncertain and, on the evidence so far, small: only a fraction of a damages award reaches a fraction of the class.
A test that gives this comparison real weight and counts likely take-up among the benefits would screen out claims most likely to enrich stakeholders while compensating few class members. It would also encourage funders and law firms to design claims and distribution plans around the class rather than headline quantum.
To make the test operational, the CAT Rules should require the proposed class representative (‘PCR’) to file a costed distribution plan and a reasoned estimate of take-up at certification. A projected return to the class disproportionate to projected costs should be a presumptive ground for refusal. The Tribunal’s recent refusal to certify Waterside v Mowi because litigation costs far exceeded the likely benefit and distribution return to consumers shows that the existing Rules permit this reasoning. Codification would make it the norm rather than the exception.[21] Importantly, this should be cost-benefit analysis and not just cost-effectiveness analysis: there should be an assessment of whether the lawsuit will improve market performance, and not just its costs, or this analysis is unduly truncated.
Sufficient evidence for aggregate damages. Aggregate awards make opt-out proceedings viable, but they also make them risky. The Tribunal should distinguish injured from uninjured class members and tie awards to a sound theory of loss so that they reflect the harm class members actually suffered.[22] Rule 79(2)(f) already requires the Tribunal to consider whether claims are suitable for an aggregate award. Under the current approach, though, suitability is only one factor in a broader assessment of ‘all matters it thinks fit’.[23] Suitability for aggregate damages should instead be a condition of certification, supported by credible evidence grounded in the facts of the case.
The government should also address the ‘multiple bites of the cherry’ problem noted in paragraph 61. Repeatedly filing reformulated claims after a refusal imposes costs on defendants and the Tribunal. The Rules should require permission to refile and allow the Tribunal to make payment of the earlier application’s costs a condition of that permission.
The concern that a statutory merits element would generate satellite litigation (¶ 27) is overstated. Parties already contest certification at length. In Evans v Barclays, the Supreme Court held that the weakness of a claim was properly treated as a powerful factor against opt-out certification under Rule 79(3)(a), without requiring a separate merits trial.[24]
ICLE agrees that greater certainty would help in all three areas identified in paragraph 19: funding arrangements, costs specialists, and consultative panels.
The class representative is the only participant in the proceedings whose incentives are meant to align with the class. Yet a funder or law firm typically recruits the representative, who has no financial stake in the outcome and relies on the funder to meet an adverse costs order.[25]
Gutmann v First MTR South Western Trains illustrates the problem. The class representative, a private individual, could not have met costs beyond the £15 million indemnity his funder provided, so the defendants pursued the funder directly.[26] The funder had advanced about £6.58 million of the representative’s own costs—less than half the adverse costs cover it had provided. The solicitors absorbed later budget increases through deferred and contingent fees. When the defendants sought costs above the cap, the funder argued that the lead solicitors should bear the excess. The solicitors, in turn, wrote to the Tribunal to rebut the funder’s account. The representative sat between two parties financing the litigation, each with a contingent interest, without an independent adviser on the dispute. The agency problem identified in the class-action literature is acute.[27]
The Tribunal’s decisions in Riefa and Hammond ask the right questions: Does PCR understand and genuinely negotiate the funding terms? Has the PCR obtained independent costs advice? Is there a way to make informed decisions on settlement?[28]
The CAT Rules should answer those questions, with guidance on what is proportionate for a given claim. Rule 78 should require the PCR to (i) disclose the litigation funding agreement (‘LFA’) to the Tribunal, including provisions on funder control, termination, and payment priority; (ii) confirm that the PCR obtained independent advice on the funding terms; and (iii) explain how the representative will decide questions of settlement and distribution, including through any consultative panel.[29] This would address the concern in paragraph 17 that PCRs might overspend to cover every base. The requirement is informed independence, not a prescribed governance structure.
Damages-based agreements (Q7–Q9). ICLE cautiously supports lifting the prohibition on damages-based agreements (‘DBAs’) in opt-out proceedings. The economic case rests on competition. When third-party funders paid a multiple of their investment are the only source of finance, they gain substantial pricing power over the claims the regime exists to enable.[30] Allowing lawyers to take a share of recoveries would introduce a competing source of capital and—as the experience in Victoria, Australia suggests—may lower funding costs and improve returns to the class.[31] It would also align lawyers’ incentives more closely with the size of the recovery than hourly billing does.
The government identifies credible risks, but certification safeguards can address them. We recommend three: full disclosure of the DBA to the CAT through the Rule 78 process; approval of the percentage at settlement or judgment based on the sum actually distributed, rather than the headline award (see Section II.D); and CAT approval of ‘stacked’ arrangements in which a funder and law firm each take a return from the same recovery, so that the CAT can assess their combined cost to the class.
Funder returns: rate-of-return analysis of damages (Q10–Q12). The proposal in paragraph 52 responds to a genuine problem. Funders do not know what return the CAT will approve at the end of a claim, and that uncertainty raises the cost of capital.[32] But asking the CAT at certification to indicate a reasonable return and payment order would, in substance, regulate the rate of return on litigation finance, albeit reading on damages. It would bring the well-documented problems of that model into the CAT.
Rate-of-return regulation asks a decision-maker to determine in advance what return on invested capital is ‘reasonable’. Decades of utility regulation reveal three recurring problems.[33] First, the decision-maker cannot obtain all the information needed to set the rate correctly. The appropriate return on a funded claim depends on the funder’s cost of capital, how the claim’s risk relates to the rest of its portfolio, and the likelihood of success. The CAT cannot observe those factors at certification.[34]
Second, fixing a return as a multiple of cost, or damages, gives the regulated party an incentive to inflate its cost base or the damages estimate (e.g., by not settling). In litigation, an ‘approved’ multiple on invested capital or damages would reward spending more rather than litigating better. The Consultation’s evidence that claimant budgets have doubled within months of certification (¶ 60) suggests that this dynamic is already present. Third, an early indication would become an anchor for later decisions. The promised discretion to ‘revisit’ the assessment at the end of the claim (¶ 52) could prove illusory in practice.
A better response has three parts. First, funders should obtain certainty from their agreements and efficient operations so that they are competitive providers of finance, rather than advance CAT approval. If the PCR has disclosed the LFA, negotiated it with independent advice, and shown at certification that it preserves the PCR’s independence, the Rules should provide that the CAT will enforce the agreed return absent fraud, undue influence, or a material change in the claim. Second, DBAs and the transparency measures proposed above would discipline returns through competition. Third, the Rules should address returns that rise with the passage of time and thus reward delay past the next step-up date. They could bar recovery from the class of any increase triggered after a reasonable settlement offer of the kind discussed in Section II.D. That would target the incentive to delay without regulating the rate. Indeed, a regulated return on damages would likely discourage settlement and slow down lawsuits (e.g. by going to trial to extract more damages than settlement would give).
ICLE sees the force of the time-value argument for paying funders when the CAT makes an award or approves a settlement (¶ 53; Q11–Q12), but the proposed presumption raises a concern. If the funder receives its entire return from the gross sum before distribution, no participant retains a financial interest in whether the class receives anything. Gutmann shows how little may otherwise reach class members.[35]
We would support a presumption that the funder recovers its capital and costs on award or approval, while the CAT ties payment of the profit element to distribution. The funder could draw any remaining profit from undistributed funds only after the CAT finds that reasonable distribution efforts were made. This would preserve an incentive to design and carry out distribution effectively. The CAT’s residual discretion (Q12) is welcome but should not be the class’s only protection. Indeed, the major problem has been precisely that the claimant class is already too far back in the queue; further demoting their claims is not the answer here.
Budgets and costs conduct (Q13–Q14). ICLE supports requiring both parties to submit budgets after certification and to notify the CAT of material changes. Transparency on both sides reduces surprises when costs are assessed and helps the CAT exercise its powers under Rule 104.[36]
The Rules should not presume that vigorous defence of a claim worth hundreds of millions of pounds is a ‘scorched earth’ tactic (¶ 61). Costs sanctions should apply equally to both sides, turn on objective conduct—such as applications that fail comprehensively, repeated failure to follow directions, or refiling a refused certification application—and follow an assessment of the record. The cost-benefit test at certification offers the strongest discipline on claimant budgets. A realistic prospect that only meritorious claims will be certified offers the strongest discipline on defendant budgets.
Mediation (Q15–Q17). ICLE supports allowing the CAT to order mediation after the parties exchange expert reports and to account for an unreasonable refusal when awarding costs. This would align with the approach now taken under the Civil Procedure Rules.[37] At that point, both sides have enough information to value the claim. Mandatory ADR before filing would add costs without resolving disputes, as the government recognises (¶ 71).
Settlement offers with automatic costs consequences (Q18–Q20). ICLE supports extending a Rule 45-type mechanism to collective proceedings. The current asymmetry is striking. A funded PCR faces little downside from refusing a reasonable defendant offer. A defendant that refuses a Calderbank offer faces, at most, a discretionary costs sanction that, as Kent v Apple shows, may never be imposed.[38] Automatic consequences for both sides would create stronger incentives to settle.
Existing CAT approval under Rule 94 addresses the concern that such a mechanism might put undue pressure on PCRs (Q19). The CAT must find a settlement just and reasonable before approving it, so an offer cannot compel acceptance of a bad settlement.[39] The mechanism should otherwise follow Rule 45, with enough time for acceptance to accommodate CAT approval. The approval process itself (Q21) should develop through experience, with a review once the CAT has considered more settlements.
Distribution and undistributed sums (Q34–Q37). Listing certified claims on the CAT website is sensible and inexpensive. But when fees and returns depend on the gross award, no participant has a financial interest in getting money to the class. Evidence from the mature US regime shows that claims rates in consumer class actions are typically in single digits.[40]
The reforms proposed above would create that interest: counting expected take-up in the certification cost-benefit test, requiring a costed distribution plan, and tying payment of funder profit to distribution. Parties could also agree that undistributed sums revert to the defendant, an option the government rightly leaves to them (¶ 129).
Destination of undistributed damages (Q37). Large undistributed sums may show that the parties overstated the claim’s benefit to the class at certification. The CAT should be able to consider that record in later certification decisions involving the same representatives, funders, or firms.
ICLE also strongly advises against designating the Consumers’ Association (Which?), an active class representative and litigant before the CAT.[41] Directing undistributed damages to an organisation that brings collective proceedings creates a perception—and a real risk—of circularity: more certified claims and less distribution would mean more money for that organisation. US experience with cy pres awards to organisations connected to litigants has drawn scrutiny from the Supreme Court.[42] By contrast, the Access to Justice Foundation may have little connection to competition law, but it has no stake in the regime.
ICLE supports simplifying the Redress Scheme Regulations (Q23),[43] allowing the CMA to accept binding redress undertakings when a business volunteers them in a settlement or commitments decision, and making clear that payments under a redress scheme reduce any subsequent damages claim and count at certification (Q24, Q27). These measures would make voluntary redress easier without displacing the adjudication of loss.
We oppose the two proposals that go further: a statutory presumption of overcharge and a power for the CMA to direct a business to establish a redress scheme (Q22, Q25–Q26).
Presumed overcharge. Damages compensate loss actually suffered. The Organisation for Economic Co-operation and Development (OECD) impact-assessment methodology and meta-studies of historical cartels discussed in paragraph 92 can help estimate the aggregate benefits of enforcement across many cases. The issue is to identify the true overcharge, because correcting the overcharge is how the economic harm of principled cases is addressed. The underlying studies report overcharges ranging from zero to well above 50 per cent, so any single default figure will systematically overcompensate some purchasers and undercompensate others.[44] A presumed overcharge will therefore not achieve optimal deterrence.
The Consultation would also apply the presumption to abuse-of-dominance cases, where ‘overcharge’ is often a poor fit because the alleged harm concerns exclusion rather than price. And because the same agency would find the infringement, impose a penalty, and set the presumed sum, the presumption could operate in practice as a second penalty under another name. It would increase deterrence without improving compensation.[45]
Mandatory redress. The government rejected this power in 2013 for reasons that remain relevant: assessing loss lies outside the CMA’s expertise and would divert resources from investigation and enforcement.[46] The CMA’s role has since expanded considerably, while Chapter 3 of the Consultation proposes to reduce safeguards around its infringement decisions (see Section IV below).
Giving the CMA power to order compensation, subject to a standard of review the Consultation does not specify, would place investigation, prosecution, adjudication, penalties, and damages assessment in one administrative body. ICLE warned against that concentration of functions in its response to the January consultation.[47] It would also sit uneasily with the principle that redress should follow from the merits of a claim rather than regulatory direction. If the government wants more redress in follow-on cases, it should make the collective regime fit for purpose through the certification reforms discussed above
Leniency is the most effective cartel-detection tool available to competition authorities. The decline in Type A applications from an average of 21 a year in 2014–16 to eight a year in 2022–24 is a serious warning sign.[48] The economics are well understood: a firm will report its own conduct only if the expected benefit of immunity exceeds the expected cost of exposure. As private damages exposure has grown, the calculation has shifted against reporting.[49] Immunity from penalties offers little to a firm whose main exposure is civil liability.
ICLE therefore supports extending immunity from civil liability to Type A applicants in principle (Q28), subject to two safeguards (Q29–Q30). First, the government should retain the set-aside for unrecoverable damages proposed in paragraph 108 and define it using the Damages Directive’s model. Under that model, the immunity recipient remains liable when victims cannot obtain full compensation from the other infringers.[50]
Second, immunity should depend on continued cooperation with claimants as well as the CMA. The US model, for example, conditions relief from treble and joint-and-several liability on ‘satisfactory cooperation’ with civil plaintiffs.[51] That would make the immunity recipient a source of evidence for claims against the remaining cartel members and help address the concern about compensation. The objection that the recipient ‘escapes’ liability has less force when its report enables the cartel’s detection and makes redress possible (¶ 103).
ICLE supports transferring the CMA’s appellate functions to the CAT and bringing telecoms price-control disputes within its jurisdiction. Consolidation would give these disputes a judicial forum and reduce duplication. The CAT will need the capacity and sectoral expertise to take on the work. The transfer should also preserve meaningful scrutiny of decisions that shape billions of pounds in infrastructure investment. A genuine merits standard, with power to substitute a decision where the correct answer is clear, would allow the CAT to correct errors without unnecessary remittals.
ICLE supports transferring the CMA’s appellate functions to the CAT, converting the remaining reference functions into appeals, and extending the CAT’s jurisdiction to price-control matters in telecoms appeals.
The current allocation assumes that sectoral regulation is best reviewed by a body with deep experience assessing pricing decisions across sectors. The Competition Commission, and later the CMA, built that expertise through decades of price-control appeals and references. But deciding a dispute between a regulator and a regulated firm is a judicial function. The Consultation itself accepts that a judicial body with the right technical expertise ‘would be equally capable of dealing with these issues’ (¶ 166).[52]
The CAT can acquire that sectoral depth by selecting and, where necessary, supplementing its Ordinary Members (Q46). It would thereby gain independence without sacrificing technical competence. Transfer would also free CMA resources: a single large regulatory appeal can absorb the equivalent of two or three market studies (¶ 167). The CAT already hears appeals from the Office of Communications (Ofcom), the Office of Gas and Electricity Markets (Ofgem), the Payment Systems Regulator (PSR), and the Civil Aviation Authority (CAA). Consolidation would improve consistency and help precedent develop across sectors, as the Penrose report recommended five years ago.[53]
Extending the CAT’s jurisdiction to price-control matters in telecoms appeals (Q45) follows the same logic. The CAT currently hears a telecoms appeal but must refer any price-control element to the CMA, then incorporate the CMA’s conclusions into its judgment (¶ 174).[54] Splitting one appeal between a judicial body and an administrative agency adds procedure, lengthens timetables, and divides the reasoning between institutions with different processes. If the CAT can determine price-control appeals in water and energy, as the Consultation proposes, it can do so in telecoms.
The proposed transfer also bears on the CMA’s independent panel. In March, ICLE argued that the panel should not be abolished without introducing merits-based appellate review at the CAT. The panel provided an independent, quasi-judicial layer of decision-making that helped justify deferential judicial review.[55] The Consultation now cites the panel’s impending abolition as a reason to move regulatory appeals out of the CMA (¶ 169). While that is sound, abolishing the panel does not eliminate the need for the functions it performs. The CAT is the right place for regulatory appeals. For merger and market decisions, the same logic points to merits review at the CAT, which the government has yet to propose.
The government should assess the CAT’s staffing needs before the transfer takes effect. Comparing the expected caseload with the pool of people who have the necessary sectoral and financial expertise, and who are eligible and willing to serve as Ordinary Members, would let the CAT build capacity in advance. Without that assessment, the reform could improve the forum while lengthening the queue—undermining the timeliness gains it seeks.
The Consultation proposes that the CAT decide all regulatory appeals by applying ‘the same principles as would be applied by a court on an application for judicial review, while also taking due account of the merits of the case’. This follows the telecoms model in section 194A of the Communications Act 2003 (¶ 204(a)).[56] For most appeals within scope, it would reduce the intensity of review. Energy licence-modification appeals currently succeed when a decision is wrong on specified grounds, including errors of fact and failure to give appropriate weight to relevant matters. The CMA may substitute its own decision in price-control appeals, while water redeterminations involve a fresh decision on the merits.[57] The proposal would replace those approaches with a review in which the CAT ‘takes [the regulator’s] decision as a starting point’, accords it ‘an appropriate degree of respect’, and asks whether it is ‘materially wrong’ (¶ 202).
The government may argue that the telecoms formula also asks whether a decision is ‘wrong’ (¶ 201), but two differences matter. First, under the existing energy, water, and air regimes, an error of fact, a failure to give appropriate weight to relevant matters, or—in the air regimes—an error in the exercise of discretion can independently justify allowing an appeal. Under section 194A, the CAT considers the merits through the judicial-review grounds of illegality, irrationality, and procedural unfairness. A decision can therefore be wrong without meeting the threshold for intervention.
Second, treating the regulator’s decision as a starting point gives it a degree of deference. An appeal on specified grounds instead requires the reviewing body to form its own view of whether the decision was wrong, giving the regulator’s judgement only the weight the evidence warrants.
Research on regulatory disputes supports that distinction. Despoina Mantzari argues that deference to a regulator’s economic assessment should depend on the relative institutional competence of the regulator and the reviewing body, rather than on the regulator’s expertise alone.[58] The CAT’s own economic and technical expertise supports meaningful scrutiny, even when the regulator’s specialised judgement deserves weight.
ICLE’s concern is with the error costs of a deferential standard. Price controls set the allowed return on tens of billions of pounds of infrastructure investment, and regulatory error runs in both directions. If a regulator sets the cost of capital too low and an appeal cannot correct it, consumers may bear the cost of underinvestment for decades. If it sets the allowed return too high, consumers pay excess returns for a full control period. The Consultation itself acknowledges that the current arrangements ‘can … deter investments in UK markets’ (¶ 199).
From a law & economics perspective, the question is how the review standard allocates the risk of error among regulators, regulated firms, investors, and consumers. A merits standard, combined with the proposed standing for consumer bodies that ICLE supports, would allow errors in either direction to be corrected.
The Consultation’s principal argument for deference is that many elements of a price control, ‘e.g. the cost of capital’, are ‘complex matters requiring the exercise of regulatory judgement with no single right answer’ (¶ 199). That may be true, but a merits appeal can still give the regulator appropriate latitude within a range of defensible values. In the RIIO-2 appeals, the CMA upheld the networks’ challenges to the ‘outperformance wedge’ and, for five of the eight appellants, an innovation uplift unsupported by evidence. It nonetheless dismissed every challenge to the cost of equity.[59]
Fresh redetermination has not simply favoured regulated firms, either. In the PR24 redeterminations, the CMA raised the allowed return from 4.03 to 4.20 per cent but granted the five disputing companies £463 million in additional revenue—17 per cent of the £2.7 billion they sought.[60] A judicial-review standard would do more than respect regulatory judgement: it would leave wrong decisions standing when they fall short of irrationality. The lack of a single right answer strengthens the case for external review because a regulator may struggle to identify its own errors.
The standard also matters to the government’s growth agenda. Water and energy networks must raise substantial private capital over the coming decade, and investors account for the available appellate review when pricing risk. If an erroneous determination of the allowed return can be corrected only when it is ‘materially wrong’ under judicial-review principles, investors may demand a higher risk premium, with consequences for allowed returns and investment.
A merits appeal need not entail unrestricted de novo review. It asks whether the regulator’s decision has evidential support and accords with its statutory duties. It does not require the CAT to take over the regulator’s continuing administrative role. The weight due to a technical assessment will depend on the issue under review.
ICLE therefore recommends a genuine merits appeal set out in statute. A single list of grounds drawn from the existing energy, water, and air regimes should cover error of fact; error of law; failure to consider, or give appropriate weight to, relevant matters; failure to follow the applicable procedure; failure of a modification to achieve its stated effect; and error in the exercise of discretion. The CAT should decide whether the regulator was wrong on those grounds, giving its assessment the weight the evidence warrants.[61] This would largely extend the existing energy standard across sectors. The Consultation offers no evidence that the standard has produced excessive appeals or unmanageable proceedings.
Requiring a notice of appeal to identify whether each ground alleges an error of fact, law, or discretion (Q48) would help focus proceedings, provided a mistaken label does not bar a sound argument. ICLE also agrees with the approach to new evidence (Q49) and cross-examination (Q50) in paragraph 204(c): the CAT should retain discretion under its existing Rules to allow both. Restricting appeals to material available to the regulator could reward opaque reasoning, since an appellant may not know what evidence informed the decision until its publication. The principal barriers the proposals would create (Q52) are thus the review standard and the proposed rule on remedies.
On remedies (Q51), mandatory remittal should not be the default. When the CAT finds an error and the correct answer follows from that finding—for example, a discrete input to a price control—remittal would delay the outcome and invite another appeal. The CAT should be able to substitute its own decision on that point, as the CMA can in energy price-control appeals and as the appeal bodies can in the air and postal regimes (¶ 195).[62] It should remit cases when the regulator needs to exercise fresh judgement in light of the CAT’s findings. Confined in this way, substitution corrects an error without beginning a second round of regulation.
ICLE supports faster enforcement, but the CMA’s decisions must remain reliable when they bind courts in follow-on damages claims. The Rules should keep final decision-makers separate from the team that investigated a case, preserve a meaningful chance to protect confidential information and inspect the evidence, and maintain safeguards when the CMA imposes interim measures. Settlement procedures can be simpler, provided they give parties adequate access to the case against them and clearly define the scope of their admissions.
Rule 3 of the CMA Rules embodies a simple principle: the officials who decide to issue a statement of objections (‘SO’) should not decide whether those objections are well founded.[63] The Consultation proposes removing Rule 3 and letting the CMA set its decision-making model in guidance. One option is an ‘SRO + 2’ model, in which the senior responsible officer (‘SRO’) who issued the SO would make the final decision alongside two colleagues who had not worked on the case (¶ 229).
Basic procedural fairness weighs against this change. Separating investigative and decision-making functions within an enforcement agency is an important safeguard against confirmation bias: the tendency to interpret new evidence as supporting a theory one has already formed.[64] The concern is not misconduct by CMA officials. Any decision-maker can be influenced by a view formed earlier in a case, and institutional rules should account for that risk.
Critics have long challenged the European Commission’s combination of these functions. The European Court of Human Rights has accepted such an arrangement in an administrative competition authority where a court can fully review its decisions on the facts and the law.[65] The UK’s case-decision-group model was a deliberate improvement on the Commission’s approach.
The consumer-protection regime offers no reason to remove Rule 3. It also separates functions, but the CMA sets that safeguard itself and can revise it. The difference concerns where the rule sits—in CMA guidance or in a statutory instrument. It does not diminish the need for separation. Nor does the SRO’s familiarity with the case outweigh the risk of confirmation bias. Two uninvolved colleagues may give undue weight to the views of the officer who led it.
Three considerations make separation especially important. First, infringement decisions under the Competition Act 1998 bind courts in follow-on damages actions,[66] which now include opt-out collective claims worth hundreds of millions of pounds. The reliability of the underlying decision matters more than it did in 2014. Second, although the CAT hears appeals on the merits, [67] an appeal is costly and slow, and a party that settles waives it. For a meaningful share of decisions, internal separation is the only check. Third, moving the safeguard from the Rules to guidance would let the CMA change it after a consultation it controls, without parliamentary scrutiny.
If the government considers Rule 3 too prescriptive, it should retain the core requirement in the Rules: people who took part in the investigation or decided to issue the SO should not make the final infringement or penalty decision. The CMA could set the decision-makers’ composition and procedures in guidance. The same principle should govern settlements (Q66). A party’s admission does not relieve the CMA of its duty to establish an infringement, and someone outside the case team that negotiated the settlement should make that judgement.
Rule 7 (Q67). Rule 7 should be amended, not omitted. The Consultation may be right that the CMA must process too many blanket confidentiality claims that offer no reasons. It should therefore require parties to identify and explain each claim, and allow the CMA to disclose information without further representations when a claim is unreasoned or manifestly unfounded. Parties should retain the right to make representations on substantiated claims. Competition Act 1998 investigations can uncover trade secrets whose disclosure is irreversible. Even well-resourced authorities have failed to protect such information.[68] A chance to be heard before disclosure is a minimal safeguard.
Confidentiality rings (Q71–Q74). ICLE supports a standardised framework that gives economic as well as legal advisers access to confidentiality rings, so parties need not negotiate the arrangements afresh in every case. This is already the case following Practice Direction 2/2026 and the framework there, which amounts to a rebuttable presumption, seems apt. Predictability would benefit both the CMA and the parties it investigates. Civil sanctions for breaches (Q72) are acceptable in principle if they require fault, are proportionate to the breach, and provide a safe harbour for prompt self-reporting. Employer liability should apply to systemic failures, not automatically to every breach (Q73). Extending the framework to mergers and markets (Q74) is sensible if the same safeguards apply.
Access to the file (Q75–Q77). Aligning the Rule 6(2) exceptions with the consumer-enforcement rules would let the CMA withhold ‘routine correspondence’ and documents ‘to the extent that they identify an individual’ (¶ 253).[69] Neither category defines its own limits. In an abuse-of-dominance investigation, correspondence the CMA regards as routine may matter to the defence. Any new exception should be narrow and require a list of withheld documents, so a party can request specific items.
Disapplying Rule 6 altogether in settlement cases (Q77) is more troubling. A settling party admits an infringement that binds courts in follow-on claims and gives up its right of appeal. It should understand the full case file before doing so, rather than see only the documents the CMA chooses to cite. The CMA could offer streamlined access if the party agrees to it. The Rules should not impose it as the default.
Interim measures (Q78). ICLE opposes removing Rules 13(1) and 13(2). Interim measures are the CMA’s most intrusive tool short of a final decision. They impose binding obligations on the basis of a prima facie case, before any finding of infringement.[70] Removing the right to inspect the file could require a business to change its conduct without seeing the evidence said to justify the direction. A targeted rule could address the efficiency concern: give the business access to documents on which the CMA relies, through a confidentiality ring where needed, within a short, fixed period. The safeguard should remain in the Rules rather than move to guidance.
Settlement benefits both sides. It saves CMA resources and gives the settling party a penalty reduction and an earlier end to the investigation. But settlement decisions also affect third parties: they establish binding infringement findings on which follow-on collective claims may rest.
Together, the proposals would allow an infringement decision without an SO (Q69–Q70), full access to the file (Q77), or a right of appeal (Q68). Each proposal reflects existing practice in isolation.[71] In combination, they could produce a decision that no one outside the case team has tested against the full evidence, yet that carries the weight of a binding infringement finding in litigation worth many times the penalty.
ICLE does not object to codifying the agreement not to appeal. The Rules should, however, also make clear that the settling party admits only the facts and infringement set out in the settlement decision, and that follow-on claimants cannot extend that admission. The decision should state that it resulted from a settlement.
When all parties settle before an SO, a summary statement of facts may serve as the section 31 notice if it sets out the CMA’s case with the specificity that section 31 requires and the parties have seen the documents on which it relies. The consumer-enforcement rules should not set the benchmark for this process. The procedural rules should instead reflect the difference between conduct whose illegality is usually clear and conduct whose illegality turns on contested economic analysis.
The Consultation is right to seek swifter, simpler competition redress, regulatory appeals, and enforcement. Several proposals would also improve accuracy: certification that tests claims’ merit and proportionality, settlement offers with meaningful consequences, a judicial forum for regulatory appeals, and standardised confidentiality arrangements. ICLE supports these proposals.
Other proposals would sacrifice accuracy for speed. Regulating the rate of damages, allowing the CMA to order redress based on a presumed overcharge, weakening review of regulatory decisions worth tens of billions of pounds, and removing the separation between investigation and decision-making in Competition Act 1998 cases would concentrate discretion while weakening checks on it. These proposals draw on the DMCC Act’s consumer-enforcement provisions, which address a narrower set of issues and remain largely untested. Their effects should be understood before they become a model for more complex and contested cases.
The reforms most likely to meet the government’s aims will align private incentives with public purposes: claims brought on their merits, funders rewarded when consumers receive compensation, and binding enforcement decisions reached through fair procedures.
[1] Dep’t for Bus. & Trade, Swifter and Simpler Competition Redress, Regulatory Appeals and Competition Enforcement (17 July 2026) [hereinafter Consultation].
[2] Geoffrey A. Manne et al., Refining Our Competition Regime: ICLE Response to the Department for Business and Trade Consultation Published 20 January 2026 (Int’l Ctr. for L. & Econ., 31 March 2026) [hereinafter ICLE Refining Comments]; Dirk Auer, Selcukhan Ünekbas & Mario A. Zúñiga, Comments of the International Center for Law & Economics: UK Competition and Markets Authority Call for Evidence for Merger Efficiencies Review (Int’l Ctr. for L. & Econ., 25 February 2026); Geoffrey A. Manne et al., Comments of the International Center for Law & Economics: The CMA’s Proposed Steering Conduct Requirements for Apple and Google (Int’l Ctr. for L. & Econ., 28 July 2026) [hereinafter ICLE Steering Comments].
[3] See Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1 (1984); Geoffrey A. Manne & Joshua D. Wright, Innovation and the Limits of Antitrust, 6 J. Competition L. & Econ. 153 (2010).
[4] Consultation, supra note 1, ¶ 1.
[5] Id. ¶ 38 (citing CMS, European Class Action Report 2025, at 14, 36 (2025)).
[6] Consultation, supra note 1, ¶ 34.
[7] Id. ¶ 38.
[8] Id. ¶¶ 29, 116 (discussing Gutmann v First MTR South Western Trains Ltd [2025] CAT 72).
[9] Dr Rachael Kent v Apple Inc [2025] CAT 67 (application for permission to appeal pending); see ICLE Steering Comments, supra note 2, at 11 (discussing the Tribunal’s difficulty in determining a fee justified by the value provided).
[10] Steven Shavell, The Fundamental Divergence Between the Private and the Social Motive to Use the Legal System, 26 J. Legal Stud. 575 (1997); see also William M. Landes & Richard A. Posner, The Private Enforcement of Law, 4 J. Legal Stud. 1 (1975).
[11] John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669 (1986); Jonathan R. Macey & Geoffrey P. Miller, The Plaintiffs’ Attorney’s Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 U. Chi. L. Rev. 1 (1991); John C. Coffee, Jr., Entrepreneurial Litigation: Its Rise, Fall, and Future (2015).
[12] Merricks v Mastercard Inc [2020] UKSC 51, ¶¶ 59, 70, 74.
[13] Consultation, supra note 1, ¶ 7 (quoting Gormsen v Meta Platforms, Inc [2023] CAT 10, ¶ 30(1)); see also Gutmann v First MTR South Western Trains Ltd [2025] CAT 79 (holding that ‘[c]ompetition law is not a general law of consumer protection’).
[14] Consultation, supra note 1, ¶ 10.
[15] Dep’t for Bus., Innovation & Skills, Private Actions in Competition Law: A Consultation on Options for Reform—Government Response ¶ 5.55 (January 2013) [hereinafter 2013 Government Response]; Consultation, supra note 1, ¶ 21.
[16] Merricks v Mastercard Inc [2020] UKSC 51, ¶¶ 117–119.
[17] Id. ¶¶ 120–123.
[18] Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011).
[19] Comcast Corp. v. Behrend, 569 U.S. 27, 34–35 (2013); see also In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008) (requiring courts to resolve factual disputes relevant to certification, even when they overlap with the merits).
[20] See In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1298–1300 (7th Cir. 1995) (Posner, J.) (describing the ‘intense pressure to settle’ that certification imposes even on defendants with strong defences); Merricks v Mastercard Inc [2020] UKSC 51, ¶¶ 118, 154, https://supremecourt.uk/uploads/uksc_2019_0118_judgment_6dd114686b.pdf (Lord Sales & Lord Leggatt, separate judgment) (noting that collective actions ‘confer substantial legal advantages on claimants and burdens on defendants which are capable of being exploited opportunistically’).
[21] Waterside Class Ltd v Mowi ASA [2026] CAT 32; Consultation, supra note 1, ¶ 29 & n.15; see also Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 79(1)–(2) (UK), https://www.legislation.gov.uk/uksi/2015/1648/article/79.
[22] See Comcast Corp. v. Behrend, 569 U.S. 27, 35–38 (2013).
[23] See Merricks v Mastercard Inc [2020] UKSC 51, ¶ 61 (‘The listed factors are not separate suitability hurdles, each of which the applicant for a CPO must surmount.’), https://supremecourt.uk/uploads/uksc_2019_0118_judgment_6dd114686b.pdf.
[24] Evans v Barclays [2025] UKSC 48.
[25] See Gutmann v First MTR South Western Trains Ltd [2025] CAT 21.
[26] Id.
[27] See Coffee, Understanding the Plaintiff’s Attorney, supra note 11; Macey & Miller, The Plaintiffs’ Attorney’s Role, supra note 11.
[28] Riefa v Apple Inc [2025] CAT 5, ¶¶ 89(5), 95, 114; Hammond v Amazon.com, Inc. [2025] CAT 42, ¶¶ 56, 67(1), 156(1).
[29] Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 78 (UK).
[30] See Jonathan T. Molot, Litigation Finance: A Market Solution to a Procedural Problem, 99 Geo. L.J. 65 (2010).
[31] Consultation, supra note 1, ¶ 42 (citing evidence from Victoria, Australia, after the introduction of group costs orders under s. 33ZDA of the Supreme Court Act 1986 (Vic.)).
[32] Consultation, supra note 1, ¶¶ 46–51 (discussing Merricks v Mastercard Inc [2025] CAT 28, ¶ 188; Gutmann v Apple Inc [2024] CAT 18, ¶ 38; and Gutmann v Apple Inc [2025] EWCA Civ 459, ¶ 78).
[33] See 1 Alfred E. Kahn, The Economics of Regulation: Principles and Institutions ch. 2 (1988); Harvey Averch & Leland L. Johnson, Behavior of the Firm Under Regulatory Constraint, 52 Am. Econ. Rev. 1052 (1962); Jean-Jacques Laffont & Jean Tirole, A Theory of Incentives in Procurement and Regulation (1993).
[34] See Friedrich A. Hayek, The Use of Knowledge in Society, 35 Am. Econ. Rev. 519 (1945).
[35] See Gutmann v First MTR South Western Trains Ltd [2025] CAT 21.
[36] Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 104 (UK).
[37] See Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416; Consultation, supra note 1, ¶¶ 74–76.
[38] Consultation, supra note 1, ¶¶ 78–80.
[39] Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 94 (UK).
[40] Fed. Trade Comm’n, Consumers and Class Actions: A Retrospective and Analysis of Settlement Campaigns 11–13 (September 2019) (finding a median claims rate of 9 per cent and a weighted mean of 4 per cent across the settlements studied); see also Consultation, supra note 1, ¶ 122 (noting that take-up in North America ‘will not often exceed ~10 per cent’).
[41] Consultation, supra note 1, ¶ 127.
[42] Marek v. Lane, 571 U.S. 1003 (2013) (Roberts, C.J., statement respecting denial of certiorari); Frank v. Gaos, 139 S. Ct. 1041 (2019) (per curiam); Martin H. Redish, Peter Julian & Samantha Zyontz, Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis, 62 Fla. L. Rev. 617 (2010).
[43] Competition Act 1998 (Redress Scheme) Regulations 2015, SI 2015/1587 (UK).
[44] See Oxera, Quantifying Antitrust Damages: Towards Non-Binding Guidance for Courts (December 2009) (study for the European Commission finding wide variation in estimated cartel overcharges); John M. Connor & Robert H. Lande, Cartel Overcharges and Optimal Cartel Fines, in 3 Issues in Competition Law and Policy 2203 (ABA Section of Antitrust Law 2008).
[45] See Wouter P.J. Wils, The Relationship Between Public Antitrust Enforcement and Private Actions for Damages, 32 World Competition 3 (2009).
[46] 2013 Government Response, supra note 15, ¶ 6.36; Consultation, supra note 1, ¶ 89.
[47] ICLE Refining Comments, supra note 2, at 5–8.
[48] Consultation, supra note 1, ¶¶ 103–104; see also Organisation for Economic Co-operation and Development (OECD), The Future of Effective Leniency Programmes: Advancing Detection and Deterrence of Cartels (2023).
[49] See Massimo Motta & Michele Polo, Leniency Programs and Cartel Prosecution, 21 Int’l J. Indus. Org. 347 (2003); Giancarlo Spagnolo, Leniency and Whistleblowers in Antitrust, in Handbook of Antitrust Economics (Paolo Buccirossi ed., 2008).
[50] Directive 2014/104/EU, art. 11(4), 2014 O.J. (L 349) 1.
[51] Antitrust Criminal Penalty Enhancement and Reform Act of 2004, Pub. L. No. 108-237, § 213, 118 Stat. 661, 666–67 (2004).
[52] See OECD, Recommendation of the Council on Transparency and Procedural Fairness in Competition Law Enforcement, OECD/LEGAL/0465 (2021) (calling for review by an impartial, independent adjudicative body).
[53] John Penrose MP, Power to the People: Independent Report on Competition Policy 18 (February 2021); Consultation, supra note 1, ¶¶ 152 n.62, 171.
[54] Communications Act 2003, c. 21, § 193 (UK).
[55] ICLE Refining Comments, supra note 2, at 5–8.
[56] Communications Act 2003, c. 21, § 194A(2) (UK); TalkTalk Telecom Group PLC v Office of Communications [2020] CAT 8, ¶¶ 137–140 (5 March 2020).
[57] Consultation, supra note 1, ¶¶ 192, 195 (table); see Gas Act 1986, c. 44, §§ 23D–23E (UK); Electricity Act 1989, c. 29, §§ 11E–11F (UK).
[58] Despoina Mantzari, Economic Evidence in Regulatory Disputes: Revisiting the Court-Regulatory Agency Relationship in the US and the UK, 36 Oxford J. Legal Stud. 565 (2016).
[59] Competition & Mkts. Auth., Energy Licence Modification Appeals 2021: Summary of Final Determination (28 October 2021) (upholding challenges concerning the outperformance wedge and the innovation-related ongoing-efficiency uplift, while rejecting challenges concerning the cost of equity).
[60] Competition & Mkts. Auth., Water PR24 References: Final Determinations—Summary (10 March 2026) (following an 18 March 2025 reference, raising the allowed return from 4.03 to 4.20 per cent and allowing £463 million in additional revenue, 17 per cent of the £2.7 billion sought).
[61] See Consultation, supra note 1, ¶ 195 (table); Gas Act 1986, c. 44, § 23D(4) (UK); Electricity Act 1989, c. 29, § 11E(4) (UK); Water Industry Act 1991, c. 56, § 12F(4) (UK); Transport Act 2000, c. 38, § 19B (UK); Civil Aviation Act 2012, c. 19, § 26 (UK).
[62] Consultation, supra note 1, ¶ 195 (table) (identifying substitution powers in energy price-control, air traffic and airport licence, and postal price-control appeals); Gas Act 1986, c. 44, § 23E (UK); Postal Services Act 2011, c. 5, § 59 (UK).
[63] Competition Act 1998 (Competition and Markets Authority’s Rules) Order 2014, SI 2014/458, sch., r. 3 (UK), https://www.legislation.gov.uk/uksi/2014/458/pdfs/uksi_20140458_en.pdf.
[64] See Ian S. Forrester, Due Process in EC Competition Cases: A Distinguished Institution with Flawed Procedures, 34 Eur. L. Rev. 817 (2009).
[65] A. Menarini Diagnostics S.r.l. v. Italy, App. No. 43509/08, ¶¶ 57–67 (Eur. Ct. H.R. 27 September 2011).
[66] Competition Act 1998, c. 41, § 58A (UK).
[67] Competition Act 1998, c. 41, sch. 8, ¶ 3 (UK).
[68] See ICLE Refining Comments, supra note 2, at 13–14 (discussing the inadvertent public disclosure of confidential Microsoft materials in the Microsoft/Activision proceedings).
[69] Competition & Mkts. Auth., Direct Consumer Enforcement Rules r. 5 (CMA201, April 2025).
[70] Competition Act 1998, c. 41, § 35 (UK).
[71] Competition & Mkts. Auth., Guidance on the CMA’s Investigation Procedures in Competition Act 1998 Cases ch. 14 (CMA8, December 2024).
TOTM The next serious competitor may be waiting for a license, or working on a product nobody has seen yet. Neither shows up in today’s market-share . . .
The next serious competitor may be waiting for a license, or working on a product nobody has seen yet. Neither shows up in today’s market-share figures. And much of the current antitrust debate ignores both of those figures completely, even as it ponders how aggressively the government should reshape markets.
By contrast, a dynamic approach to antitrust can enforce the law vigorously while also recognizing that competition changes over time and that government officials rarely know enough to redesign complex markets. The practical questions are which restraints deserve priority, what evidence should justify intervention, and how the law can leave room for the experiments that produce tomorrow’s competitors.
I propose two commitments.
First, enforcement agencies and policymakers should pay closer attention to government-created barriers to entry. Licensing restrictions, certificate-of-need laws that require approval before a provider can open or expand, discriminatory subsidies, procurement preferences, and legal immunities can all keep would-be competitors out.
Second, enforcers should judge private conduct by its likely effects on innovation and the competitive process. That means considering firms’ capabilities and the costs of mistaken enforcement decisions, rather than treating today’s market concentration figures as the last word. Cartels, anticompetitive mergers, and exclusionary monopolization still warrant action. But size, integration, and commercial success alone do not establish harm.
Read the full piece here.
Popular Media (ICLE) Some in Congress want to give teenagers their childhoods back by taking away the last place many of them can gather without adults. That cure . . .
Some in Congress want to give teenagers their childhoods back by taking away the last place many of them can gather without adults. That cure may prove worse than the disease.
Presentations & Interviews ICLE Senior Scholar of Competition Policy Mario Zúñiga joined LP- Pasión por el Derecho podcast to discuss competition in digital markets, AI, and Peru’s banking sector. . . .
ICLE Senior Scholar of Competition Policy Mario Zúñiga joined LP- Pasión por el Derecho podcast to discuss competition in digital markets, AI, and Peru’s banking sector. He explained why market concentration alone does not establish a lack of competition, and considered how Peru can encourage technology adoption and entry by new financial providers.
Regulatory Comments I. Introduction The International Center for Law & Economics (ICLE) supports Kuiper Systems LLC’s (Amazon Leo) application to provide direct-to-device (D2D) service in the 1.6/2.4 . . .
The International Center for Law & Economics (ICLE) supports Kuiper Systems LLC’s (Amazon Leo) application to provide direct-to-device (D2D) service in the 1.6/2.4 GHz mobile-satellite service (MSS) bands (ICFS File No. SAT-LOA-20260601-00224; Call Sign S00917).
Satellite broadband and D2D are emerging, capital-intensive markets. High fixed costs and long deployment cycles make it difficult to enter the consumer low-Earth-orbit (LEO) broadband market.[1] Amazon Leo’s deployment would help a competitor capable of operating at scale to overcome those hurdles, thereby strengthening competition and benefiting consumers.[2]
Amazon Leo’s proposed entry also shows how existing spectrum transactions can support new service. Amazon has agreed to acquire Globalstar, including its 1.6/2.4 GHz MSS authorizations, subject to the transaction’s closing.[3] The deal would pair Globalstar’s operating MSS network and spectrum authorizations with Amazon Leo’s planned D2D constellation. It would put scarce spectrum to more intensive use while giving companies a predictable basis for investment, consistent with the Federal Communications Commission’s (FCC) longstanding support for secondary-market spectrum transactions.
The FCC should grant the application and appropriate limited waivers so that another operator can expand D2D capacity using licensed spectrum that sees limited use. It should also address legitimate coexistence and interference concerns raised by terrestrial licensees and other satellite operators.
LEO satellite broadband remains a developing market with steep entry costs. Before serving customers, a provider must invest heavily in satellites, launches, ground infrastructure, and regulatory approvals. Building a constellation—and earning a return on it—takes years.[4]
Those costs, along with spectrum constraints, likely limit how many providers can operate at scale. There is no fixed number of competitors that every broadband market needs,[5] but entry by a credible additional provider can put pressure on incumbents and give consumers more choice.[6] Timely application review and workable spectrum-sharing rules can reduce the uncertainty and delay that compound the costs of entry.[7]
Starlink dominates commercial LEO broadband service in the United States and nothing in the record suggests that it gained that position through anticompetitive conduct. Still, another provider capable of operating at scale would give consumers and terrestrial partners an alternative.
Amazon Leo proposes a D2D constellation of 5,105 satellites in five orbital shells, at altitudes ranging from 510 to 580 kilometers.[8] It plans to use the 1.6/2.4 GHz band and standards developed by the 3rd Generation Partnership Project (3GPP) to connect with compatible commercial handsets, without specialized customer equipment.[9] That design could extend messaging, location sharing, roadside assistance, and emergency communications to people beyond the reach of terrestrial networks, including those in rural and remote areas.[10] D2D could also provide backup connectivity when disasters disrupt terrestrial service.[11]
The application and Amazon’s proposed acquisition of Globalstar could also make more intensive use of existing MSS authorizations. MSS bands support satellite links to consumer devices, but use varies considerably by band.[12] The 2 GHz MSS band sees relatively limited use,[13] while Globalstar and Iridium actively serve customers in the Big LEO band. Globalstar uses 1.6 GHz frequencies for uplinks and 2.4 GHz frequencies for downlinks; Iridium uses 1.6 GHz frequencies in both directions.[14] Satellite operators are also developing D2D services through agreements involving MSS rights and terrestrial mobile spectrum.[15]
If the transaction closes, Amazon Leo could pair Globalstar’s operating network and MSS authorizations with its planned constellation. That combination offers a practical way to expand the capacity and reach of spectrum that already supports D2D service.
Amazon Leo seeks limited waivers of several rules in Parts 2 and 25.[16] Some requests address filing procedures. Others concern frequency allocations, handset licensing, limits on signal strength, the treatment of links to users and ground stations, and rules for reviewing competing satellite applications.
The FCC may waive a rule for good cause when special circumstances warrant a departure and a waiver would serve the public interest. That includes cases in which strict application would frustrate the rule’s purpose.[17] The question for each request is whether the FCC can grant relief while retaining meaningful technical review and protection against interference.
Amazon Leo’s Schedule S request illustrates the distinction. Schedule S collects technical data for satellite applications. Amazon Leo entered a representative orbital plane in the form and supplied a separate spreadsheet with the full dataset the rules require.[18] If those materials let FCC staff assess individual satellites and potential interference, requiring Amazon Leo to enter the same data again in Schedule S would add work without strengthening review.
The FCC took a similarly tailored approach in its June 2026 Amazon Leo milestone order. It granted a limited waiver with conditions designed to preserve incentives for rapid deployment and efficient spectrum use.[19] The FCC should grant the requests here where Amazon Leo shows that substantive review and interference protections will remain intact, imposing conditions where needed to protect coexistence.[20]
Expedited review must still address credible technical concerns from terrestrial licensees and other satellite operators. The FCC should evaluate evidence of potential interference and, where needed, impose conditions tied to actual performance or require coordination. That approach can protect existing services while allowing more intensive non-geostationary orbit (NGSO) operations and more efficient spectrum use.[21]
Good-faith frequency coordination is essential to sharing spectrum. The FCC can address documented objections through conditions and coordination requirements, leaving operators room to negotiate the details of coexistence. Speculative disputes should not delay a decision on the application.
The FCC should grant Amazon Leo’s application and the limited waivers that preserve substantive technical review and safeguards against interference. High entry costs and long deployment timelines make a credible additional LEO provider especially valuable. Amazon Leo’s planned constellation could expand D2D service through compatible handsets, give consumers and network partners another option, and provide connectivity where terrestrial networks are unavailable or disrupted.
If Amazon’s acquisition of Globalstar closes, the combined system could put Globalstar’s operating network and MSS authorizations to more intensive use. The FCC should address documented engineering concerns through tailored conditions and coordination requirements. Timely approval on those terms would support competitive entry, protect existing services, and make more efficient use of scarce spectrum.
[1] Kristian Stout & Michael Calabrese, Competition in the Low-Earth-Orbit Satellite Industry, Truth on the Mkt. (Oct. 10, 2023), https://truthonthemarket.com/2023/10/10/competition-in-the-low-earth-orbit-satellite-industry [hereinafter Stout & Calabrese, LEO Competition]. See also Kuiper Systems LLC, Application for Extension or Waiver of the Milestone Deadline, Order, ICFS File No. SAT-MOD-20260129-00065, DA 26-553, ¶ 1 (Space Bur. June 5, 2026) (calling Amazon Leo a “new competitor-at-scale” in low-Earth-orbit broadband).
[2] Michael Calabrese et al., Low Earth Orbit Satellites: Policies to Promote Spectrum Sharing, Foster Competition, and Close Digital Divides (Int’l Ctr. for L. & Econ. & New America Oct. 30, 2025), https://laweconcenter.org/wp-content/uploads/2025/10/Low_Earth_Orbit_Satellites_FINAL.pdf [hereinafter LEO Policy Working Group].
[3] Approval of the Proposed Assignment and Transfer of Control of Licenses and Authorizations Held by Globalstar to Amazon, Public Notice, GN Docket No. 26-134, DA 26-550, at 1 (June 4, 2026) (accepting the transfer applications for filing).
[4] Stout & Calabrese, LEO Competition, supra note 1.
[5] Eric Fruits et al., Dynamic Competition in Broadband Markets: A 2024 Update (Int’l Ctr. for L. & Econ. June 4, 2024), https://laweconcenter.org/wp-content/uploads/2024/06/Broadband-Competition-2024-Update.pdf [hereinafter Fruits et al., Dynamic Competition]; Eric Fruits et al., A Review of the Empirical Evidence on the Effects of Market Concentration and Mergers in the Wireless Telecommunications Industry (Int’l Ctr. for L. & Econ. Sept. 17, 2019), https://laweconcenter.org/wp-content/uploads/2019/09/ICLE-Telco_Merger_Lit_Review_Jud_Rpt_FINAL.pdf; Thomas W. Hazlett & Robert W. Crandall, Competitive Effects of T-Mobile/Sprint: Analysis of a “4-to-3” Merger, in Proceedings of the TPRC2024: The Research Conference on Communications, Information and Internet Policy (2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4736059.
[6] Fruits et al., Dynamic Competition, supra note 5. See also Kuiper Systems LLC, DA 26-553, ¶ 1.
[7] LEO Policy Working Group, supra note 2.
[8] Application of Kuiper Systems LLC for Authority to Launch and Operate a Non-Geostationary Satellite Orbit System, Legal Narrative § II, ICFS File No. SAT-LOA-20260601-00224 (July 24, 2026) [hereinafter Kuiper D2D Application] (proposing 5,105 satellites in five orbital shells at altitudes of 510–580 km); see also Space Bureau Accepts for Filing Application of Amazon Leo for NGSO D2D System, Public Notice, ICFS File No. SAT-LOA-20260601-00224, DA 26-866, at 1 (Space Bur. Aug. 18, 2026) (accepting the application for filing).
[9] Kuiper D2D Application, supra note 8, at 7, 10.
[10] Id. at 10 (explaining that D2D would improve coverage for rural and remote users); see also id. at 2 (describing service for people beyond existing networks).
[11] Id. at 11 (explaining that D2D could keep rescue and emergency communications running when terrestrial networks fail); see also id. at ii (describing D2D as a fallback during terrestrial outages).
[12] LEO Policy Working Group, supra note 2.
[13] Timothy M. Farrar & J. Armand Musey, Spectrum for Emerging Direct-to-Device Satellite Operators (TMF Assocs. & Summit Ridge Grp. Jan. 27, 2025), https://summitridgegroup.com/wp-content/uploads/D2D-White-Paper-SRG-TMF-Final.pdf [hereinafter Farrar & Musey, SRG/TMF].
[14] Id.
[15] GSMA Intell., What Does the Early Data on D2D Usage Tell Us? (May 29, 2026), https://www.gsmaintelligence.com/blogs/what-does-the-early-data-on-d2d-usage-tell-us. See also Fed. Commc’ns Comm’n, Order, DA 26-398, ¶¶ 1–2 (Space Bur. Apr. 23, 2026), https://docs.fcc.gov/public/attachments/DA-26-398A1.pdf (reaffirming licensees’ exclusive mobile-satellite-service spectrum rights and encouraging secondary-market transactions).
[16] See Kuiper D2D Application, supra note 8, Ex. B (Waiver Requests), at 1, 6–9; 47 C.F.R. § 1.3 (2026); Ne. Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990); WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969).
[17] 47 C.F.R. § 1.3 (2026); Ne. Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990); WAIT Radio v. FCC, 418 F.2d 1153, 1157, 1159 (D.C. Cir. 1969).
[18] Kuiper D2D Application, supra note 8, Ex. B (Waiver Requests), at 7.
[19] Kuiper Systems LLC, DA 26-553, ¶¶ 1–2.
[20] Kuiper Systems LLC, DA 26-553, ¶¶ 1–2; Gerald Adams, Out of Orbit: How Outdated Spectrum Rules Hold Back Satellite Broadband (Int’l Ctr. for L. & Econ. Aug. 12, 2026), https://laweconcenter.org/resources/out-of-orbit-how-outdated-spectrum-rules-hold-back-satellite-broadband [hereinafter Adams, Out of Orbit].
[21] See Adams, Out of Orbit, supra note 20; Eric Fruits & Kristian Stout, Comments of the International Center for Law & Economics Regarding Modernizing Spectrum Sharing for Satellite Broadband, SB Docket No. 25-157 (July 28, 2025), https://laweconcenter.org/wp-content/uploads/2025/07/2025-EPFD-Comments.pdf.
TOTM Marriage is a natural subject for law & economics scholars. From Gary Becker’s “A Treatise on the Family” (1981) to Margaret Brinig’s “From Contract to Covenant” (2000), . . .
Marriage is a natural subject for law & economics scholars. From Gary Becker’s “A Treatise on the Family” (1981) to Margaret Brinig’s “From Contract to Covenant” (2000), scholars have expanded our understanding of romantic love by examining it through an economic lens.
Some object that bringing law & economics into marriage risks coarsening and cheapening this fundamental institution. That concern is noble, but it overlooks history and mistakes scholarship for advice. Marriage’s deep association with romantic love is itself partly the result of a legal change: the medieval church’s adoption of dispositive spousal consent, under which the spouses’ consent determined whether a marriage was valid (Berman 1985, Piano and Piano 2025). Far from being removed from legal analysis and price theory, marriage’s beauty and complexity cannot be fully appreciated without these tools.
Although most couples view marriage as more than a contract, it is at least a contract with both economic and legal purposes. Saying that marriage has an economic purpose does not mean that it maximizes wealth, although it usually does. It means that marriage solves coordination problems between two people.
Likewise, saying that marriage has a legal purpose does not mean that the state must regulate it, although it usually does. It means that marriage solves coordination problems between the couple and the rest of society. In “The Economics of the Marriage Contract: Theories and Evidence” (2008), Niko Matouschek and Imran Rasul ask: What exactly are the coordination problems that the marriage contract solves?
Presentations & Interviews ICLE Director of Competition Policy Dirk Auer joined The Center Edge to discuss AI safety, whether leading AI labs need an antitrust exemption to coordinate . . .
ICLE Director of Competition Policy Dirk Auer joined The Center Edge to discuss AI safety, whether leading AI labs need an antitrust exemption to coordinate development slowdowns, how existing law applies to AI, and whether new regulation could shield established firms from competition.
Amicus Brief Interest of Amicus Curiae[1] The International Center for Law & Economics (ICLE) is a nonprofit research organization that applies economic analysis to legal questions, with . . .
The International Center for Law & Economics (ICLE) is a nonprofit research organization that applies economic analysis to legal questions, with particular expertise in competition, intellectual property, and digital markets. ICLE has participated as amicus in earlier stages of this litigation, including the original appeal, the ensuing rehearing and certiorari proceedings, and the appeal from the district court’s contempt order. Its scholars have written extensively about platform competition, investment incentives, and the consequences of judicial error in evaluating business conduct.
The 2021 injunction required Apple to allow developers to communicate with customers about alternative purchasing mechanisms, including through links within their apps. It established no commission rate or method of calculating one. Pet. App. 166a–167a. The Ninth Circuit nonetheless found a limit on “prohibitive” commissions in the injunction’s spirit, even though “the text of the Injunction does not address commissions at all.” Pet. App. 34a n.9.
The injunction rested on a finding of informational harm to consumers—that Apple’s anti-steering rules prevented consumers from making informed choices because they were left ignorant of non-Apple purchasing mechanisms. Apple’s revised guidelines alleviated that harm by allowing developers to inform users within the App Store of external payment alternatives. Apple also imposed a commission on those external payments.
The contempt order then treated the commercial attractiveness to developers of external purchasing as the measure of whether the informational harm had been remedied. A commission can affect developers’ willingness to offer links and thus the information consumers receive. But its effect on developers’ incentives does not, by itself, establish whether a lower commission would improve competition and consumer welfare. The injunction left Apple discretion to determine compensation for the services it continued to provide, and a commission did not violate the order merely because a lower rate would have been preferred by some developers.
A business required to change its conduct must still decide how to run its business. When an injunction leaves several permissible ways to comply, choosing a compliance mechanism that also preserves the most revenue is still compliance. The firm need not prefer an alternative because it is less profitable, and its decision to compare the financial consequences of available choices is entirely ordinary. The contrary approach would make the sacrifice of revenue a test of obedience even where an injunction imposed no such requirement.
Apple faced a practical question in determining the exact terms of compliance: how to collect compensation for services that developers continued to use when a user followed a link-out and paid elsewhere. Preserving that compensation is not inconsistent with the obligation to enable developer communications, and, indeed, doing so furthers the competition the obligation was intended to promote.
The underlying California Unfair Competition Law (UCL) judgment makes the competitive effects of commissions particularly relevant. The UCL reaches conduct beyond completed antitrust violations, but the standards applied in this case remain concerned with harm to competition and the benefits of the challenged conduct. A court invoking the competitive purpose of an injunction must account for the procompetitive effects of the defendant’s conduct, including its role in sustaining valuable services. Because those services require financial backing, it does not further competition simply to equate a larger financial advantage for developers with a better competitive outcome.
An external payment changes who processes a transaction. It does not eliminate the software development, distribution, and access to users that helped make the transaction possible. Commissions provide a way to finance the development, provision, and ongoing improvement of those services while allowing developers to enter with low initial charges and pay more as they succeed. They can also prevent developers from free riding by avoiding payment for valuable platform services simply by moving the final purchasing step elsewhere. Consideration of these functions is essential to evaluating a remedy intended to promote competition.
In finding Apple’s commission prohibitive, the courts below relied heavily on the conclusion that developers’ outside transaction costs exceeded the alleged three-percentage-point difference between Apple’s in-app and link-out commissions. Pet. App. 20a, 136a. That comparison may be relevant to assessing the competitive effects of a chosen commission, but it does not establish the value of Apple’s contribution. Nor does it capture the full range of reasons other than short-term cost that a developer might choose another purchasing channel. For these reasons, increasing use of that alternate channel will not necessarily promote competition. A rule that encourages migration by limiting compensation for services still supplied can reduce the resources and incentives to provide those services, ultimately harming competition and consumer welfare.
The resulting rate-setting problem is not trivial, and it necessitates exactly the sort of internal commercial deliberations that the district court treated as evidence of contempt. The Ninth Circuit rejected a permanent prohibition on commissions but contemplated a court-approved fee based on selected costs and uses of intellectual property. Pet. App. 34a–36a. Determining that fee requires decisions about common costs, continuing investment, and the allocation of charges across different users. A general instruction to promote competition answers none of those questions.
This Court has cautioned against imposing duties that require judges to administer complex commercial terms and that discourage beneficial conduct. See, e.g., Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 414–15 (2004); Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223 (1993). Those concerns have particular force when contempt supplies the means of imposing a pricing obligation absent from the injunction. The questions the injunction left unanswered create at least a fair ground of doubt about whether it barred Apple’s commission, which rules out civil contempt. Taggart v. Lorenzen, 587 U.S. 554, 561 (2019).
The 2021 injunction rests on a violation of California’s Unfair Competition Law predicated on informational harm to consumers. Apple’s anti-steering rules prevented users from learning that purchasing options existed outside in-app purchase. See Pet. App. 34a n.9. Apple’s revised guidelines removed the source of that harm by permitting developers to tell users—through buttons, links, and calls to action—that other options exist. Once that information reaches consumers, the injunction has accomplished what it set out to do.
Apple did not simply replace a 30% commission with a 27% commission. Rather, Apple adopted a multi-pronged approach in response to the district court’s initial order and injunction which makes the repeated assertion of a 27% rate factually inaccurate.
First, Apple dropped the anti-steering provisions that the court had found to violate the UCL, so that links to external (non-Apple) purchasing mechanisms would be permitted. Apple also provided a mechanism by which approved developers could “include within their apps buttons or links with calls to action directing users to out-of-app purchasing mechanisms other than IAP.” JA506–507. That, in itself, lowers information costs for developers who wish to alert users to external payment options, for the users themselves, and, by extension, for external payment sites.
Second, Apple adopted a varied schedule of commissions for off-app purchases facilitated by that mechanism. For linked off-app purchases made more than “seven days after a user taps on an External Purchase Link and continues . . . to an external website,” JA519, Apple would charge no commission. For linked off-app purchases made within seven days, Apple would charge either 12% (for developers participating in the App Store Small Business Program) or 27% (for larger participating developers). JA518.[2] The program also specified a 12% rate for qualifying transactions otherwise subject to a 15% in-app commission. JA518.
Third, Apple reiterated recently adopted provisions under a separate settlement that permitted developers to send out-of-app communications to their users about alternative purchasing methods. JA521. These provisions permit developers to request basic contact information from their app users and to “send communications outside of the app to their user base about purchasing methods other than in app purchase.” JA504. Apple’s notice further explained that developers could use those communications to direct users to their websites without incurring a link-out commission at all. JA520–21.
Apple also provided a procompetitive rationale for its multi-pronged approach—one that neither the district court nor the court of appeals refutes—arguing that its approach balances “(1) Apple’s entitlement to a commission for purchases facilitated through the App Store, even if the user waits a small amount of time after leaving the App Store to actually finalize the purchase, with (2) the fact that the longer the time between the link out and the purchase, the more attenuated the connection between the purchase and Apple’s facilitation of the purchase.” JA519–520.
Further, while Apple did adopt a 27% commission on a subset of linked purchases made within one week of linking via apps on the App Store, it is not correct to characterize its compliance as imposing “a 27 percent commission . . . on off-app purchases, where it had previously charged nothing.” Pet. App. 51a. Rather, the 27% commission applied to only a subset of the previously barred purchases, and the effective commission rate was considerably lower.[3]
Moreover, Apple permitted previously barred in-app links to external purchasing mechanisms, with commissions of 0%, 12%, or 27% commissions depending on the timing and type of purchase and the developer’s eligibility for reduced rates. JA518–20. The prior bar on those links was a clear and categorical prohibition tantamount to an infinite price for using that route—it was not a zero-percent commission.
Thus Apple did not implement a 27% charge on transactions for which it previously charged nothing; rather, it opened a previously prohibited purchasing channel, with a maximum commission of 27% and an effective rate it expected to be lower.
Apple’s Notice of Compliance should be assessed as a whole, considering both its stated rationale and the informational harm the injunction was designed to remedy. JA500–522. The Ninth Circuit’s question—”whether charging a 27% commission has a prohibitive effect, in violation of the Injunction,” Pet. App. 20a—cannot be answered by isolating that rate from the other terms Apple adopted.
The expanded opportunities to communicate and the varied commission rates cannot simply be presumed to undermine the injunction’s informational objective. The 27 percent figure was the highest rate in a schedule that also included lower rates and commission-free purchases. Apple could reasonably expect those features to produce a lower effective rate. JA518–20. Treating the headline rate as controlling fails to address the Ninth Circuit’s own admonition that “[t]he district court must be mindful of the threshold upon which commissions become ‘prohibitive.’” Pet. App. 34a n.9.
Whether Apple’s response “thwarted the Injunction’s goals, and continued its anticompetitive conduct,” Pet. App. 51a, must also be assessed against the injunction’s express terms and the details of Apple’s approach. But the contempt order treated the commercial attractiveness of external purchasing to developers as the full measure of whether the informational harm had been remedied. It reasoned that Apple’s commission left external purchasing so financially unattractive that developers would decline to offer it, leaving consumers with a right to information but nothing to be informed about. Pet. App. 69a–87a.
A developer’s reluctance to offer an in-app link because of the commission can affect how readily consumers learn about an alternative. But a link both communicates an alternative and provides a direct route to a purchase; it is not the only way to inform users that purchasing is available through the developer’s website. Apple also permitted out-of-app communications directing users to developers’ websites without triggering a link-out commission. JA520–21.
The Ninth Circuit properly distinguished the mere existence of a commission from its effect on developers’ willingness to offer links. Pet. App. 34a n.9. In the courts’ analysis, however, developer savings became a proxy for consumer benefit. A lower commission may encourage more linking, but that alone does not establish that it benefits consumers when the commission also finances services they continue to use.
Recasting the injunction’s informational premise as a guarantee of a commercially attractive alternative does not enforce it. It sets a new commercial term the injunction never fixed, essentially modifying the injunction without proper process.
An injunction that does not enjoin a company from doing business entirely implicitly contemplates that it will undertake activities necessary to ensure its continued operation so long as they do not conflict with the terms of the injunction. This is especially true for the injunction at issue here, which is premised on increasing competition by permitting developers to direct users to outside purchasing options while still maintaining Apple’s platform, including its In-App Purchasing (IAP) as a viable alternative.
Incorporating a new operating procedure—here, enabling developers to direct customers to alternate payment mechanisms, Pet. App. 166a–167a—may entail any number of adjustments to other activities not addressed by the injunction and necessary to ensure effective continued operations. Managers implementing compliance with an injunction have two related responsibilities: identify the changes the order requires and decide how best to make those changes while preserving the quality and profitability of the business as a whole. Both are constituent parts of compliance.
This is especially true for managers of firms, who owe a fiduciary duty to exercise their considered business judgment to act in the corporation’s best interests. See Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 348–49 (1985). And it is no less true when exercising their business judgment in choosing among lawful means of complying with a court order. See Schenker v. E. I. du Pont de Nemours & Co., 329 F.2d 77, 78–79 (2d Cir. 1964) (upholding directors’ chosen method of implementing a court-ordered divestiture as “a reasonable exercise of business judgment”). The business must continue to assess costs, respond to customers, and earn revenue. Financial analysis does not become evidence of evasion simply because, while determining how to comply with an injunction, the firm is also attempting to avoid a loss.
An injunction must identify required and forbidden conduct with specificity and reasonable detail, which necessarily leaves discretion over implementation on various dimensions. See Fed. R. Civ. P. 65(d)(1); Schmidt v. Lessard, 414 U.S. 473, 476 (1974) (“[Rule 65(d)] was designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood.”). The firm knows more than the court about its operations, and it can use that knowledge to identify less costly ways to comply. Preserving that discretion allows the injunction to achieve its stated objective without unnecessary losses to the business and the customers it serves.
Where several alternatives may satisfy the same obligation, managers must assess the full consequences of each form of compliance. The underlying court-ordered obligation may affect how rivals compete and how users behave, and the commercial and operational consequences of those changes may require numerous adjustments throughout the defendant’s business that go well beyond the text of the injunction.
It was thus predictable that compliance would require internal deliberations over the precise mechanism to employ and the follow-on adjustments that mechanism might entail. These included, e.g., how to collect commissions on purchases made outside Apple’s payment system, Pet. App. 73a; whether to change the amount or basis of its charges, Pet. App. 78a; how to adapt its commission discounts and partner programs to the new payment arrangements, 3-ER-433; how to allocate responsibility for subscription management and refunds, JA509, JA511; how to revise its communications with users, Pet. App. 145a; and how to manage developer accounting, audits, interest charges, and payment offsets, JA520. Its implementation discussions also addressed the software changes, developer materials, and review procedures needed to meet the anticipated compliance deadline. 3-ER-443.
Indeed, Apple’s planning documents illustrate the work of translating the injunction into practice. One presentation treated persistent, discoverable links and in-app price comparisons as requirements, while identifying placement, frequency, design, and pricing language as matters still to be resolved. 3-ER-385, 387. The injunction did not specify those details, Pet. App. 166a–167a; rather, Apple had to determine how to give effect to the order on those dimensions and incorporate the resulting changes into its existing services.
The necessity of such considerations was, in fact, even contemplated by the district court. In its order denying Apple’s request for a stay of the injunction, the court acknowledged that “the injunction may require additional engineering or guidelines,” Order Denying Apple’s Motion to Stay Injunction Pending Appeal at 3, Epic Games, Inc. v. Apple Inc., No. 4:20-cv-05640-YGR (N.D. Cal. Nov. 9, 2021) (“Stay Order”), and that it could “envision numerous avenues for Apple to comply with the injunction,” specifically noting that Apple could “take steps to protect users, to the extent that Apple genuinely believes that external links would create issues.” Id. Tellingly, the court added that it was not “here to micromanage.” Id.
Consider Apple’s specification of lower commissions for small developers and qualifying subscription renewals as part of its compliance plan. JA518. Having elected to collect commissions on linked-out purchases, Apple also had to decide how its existing discounts would apply to those transactions. The injunction did not prescribe that treatment. For a profit-making enterprise obligated to provide a return to its shareholders, that decision inevitably included an evaluation of the revenue consequences of the various possible arrangements. Considering those consequences was thus an inherent function of compliance, not an indication of noncompliance.
Permitting in-app links to outside purchases also necessitated a reconsideration and revision of how to convey Apple’s resulting responsibilities and users’ risks when users opt to leave the App Store to make external payments. Thus, Tim Cook asked the compliance team to revise the customer notice to reflect that “Apple’s privacy and security standards do not apply to purchases made on the web.” Pet. App. 145a. Enabling those links required Apple to decide how to explain the consequences of outside payments to users, even though the injunction did not specifically address that issue.
In considering different commission rates, Apple also assessed how its pricing rationale would compare with “existing discounting approaches in other jurisdictions” and whether it could explain those rates “without implicitly devaluing our IP / proprietary technology.” Pet. App. 81a. Implementing the injunction had consequences both for Apple’s day-to-day operations as well as for its pricing and commercial relationships elsewhere, and incorporation of those effects was a function of compliance with the order, not of its evasion.
Because the injunction left compensation available, Apple’s decision to preserve it cannot itself show that the firm frustrated the order. Nor does the existence of a cheaper option for developers establish that the more remunerative choice was impermissible. That inference would assume the very pricing obligation in dispute: that Apple had to forgo otherwise available compensation to make the external alternative more attractive. As long as Apple was still providing services, it had to decide whether and how to collect compensation for them through other means. The injunction specified the communications Apple must permit; it did not establish a price for the platform services that remained in use. Pet. App. 166a–167a. Evaluating the revenue consequences of alternative collection arrangements was a necessary and predictable part of implementing the order.
The Ninth Circuit expressly stated that the district court had not found contempt merely because Apple selected the most advantageous option for its business. Pet. App. 16a. That distinction must have practical consequences for how a court evaluates commercial deliberations and their resulting decisions. Discussions about protecting revenue, calculating the cost of different options, and retaining a return on services supplied are consistent with ordinary efforts to comply. Managers can plan around an identified obligation and choose among ways of satisfying it. The possibility that another arrangement would leave more money with developers supplies no additional standard for determining what compliance requires.
This Court has recognized that “[e]conomic hardship can influence choice only as among two or more effective remedies.” United States v. E. I. du Pont de Nemours & Co., 366 U.S. 316, 327 (1961). That holding arose in the context of the Court’s rejection of an ineffective remedy, chosen by a court to avoid severe economic consequences for the defendant. What the Court rejects is the ineffectiveness, not the economic consideration, and the same distinction is relevant to managers implementing a presumptively effective remedy: Economic considerations may inform the choice among compliant alternatives. Once the firm has identified permissible alternatives, it has every reason to select the one that works best commercially.
Attention to commercial self-interest does not conflict with the competitive purpose of the court’s remedy. Indeed, it furthers it. The prospect of earning revenue encourages firms to compete by improving their products, attracting customers, and sustaining services that others value. See Trinko, 540 U.S. at 407–08. The injunction left Apple free to compete for users’ business alongside outside purchasing options. Requiring it to disregard costs and returns when choosing among compliant arrangements would weaken its incentive to improve the services on which that competition depends.
The competitive purpose of this injunction must be understood in light of the UCL standards that produced it. The judgment addressed restrictions on developers’ ability to inform users about alternative purchasing options. The district court found that those restrictions impaired informed choice and competition in the relevant market, and it ordered Apple to permit the specified communications. JA373–79, JA403–05. Apple’s response to the injunction complied with its express terms and addressed the underlying competitive harm identified in the decision.
The UCL reaches conduct that threatens an incipient antitrust violation or otherwise significantly harms competition. JA487 (citing the Supreme Court of California in Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 186–87 (1999)). It also reaches “unfairness to consumers . . . us[ing] the balancing test, which ‘weigh[s] the utility of the defendant’s conduct against the gravity of the harm to the alleged victim.’” JA487 (quoting Progressive W. Ins. Co. v. Super. Ct., 135 Cal. App. 4th 263, 285 (2005)).
The Ninth Circuit applied both standards here, explaining that they “are not mutually exclusive.” JA487. Under either approach, a conduct’s benefits to competition and consumers are just as much a part of its competitive effects as are its costs. As the Supreme Court of California noted, when fashioning equitable remedies under the UCL, the court must consider “the equities on both sides of the dispute.” Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163, 180 (2000). To ask only whether Apple could do more to favor developers would truncate the competitive inquiry that justified the original judgment and injunction.
Apple’s IAP processes payments and collects compensation for the broader services Apple supplies. The Ninth Circuit described Apple’s developer agreement as providing tools and “access to Apple’s vast consumer base” in exchange for “a $99 fee and an ongoing 30% commission on developers’ iOS revenue.” JA418. Payment processing is one of those tools. But moving payment processing to another provider does not eliminate developers’ access to consumers and use of other tools, nor does it obviate the need for an annual fee and continuing commission.
In the absence of a commission, a developer could, for example, make an app available for download without charge and earn revenue later through purchases of content used in the app, effectively cutting off Apple’s mechanism for compensation for distribution, software, security, and access. The district court recognized this distinction and explained that Apple could collect a commission even without requiring use of IAP, although another collection method could be more costly to administer. JA347–48 & n.617. The distinction between payment processing and other attributes of Apple’s system does not disappear when a customer follows a link to complete a purchase outside Apple’s App Store. The app still uses the platform, and the developer may still have acquired the customer through Apple’s distribution services. Ensuring Apple receives compensation for those contributions does not become economically baseless when a different firm happens to handle the final payment.
In addressing Apple’s app-distribution and in-app-payment-processing restrictions under the UCL, the district court noted that “Apple has proffered mostly valid and non-pretextual procompetitive justifications. To a large extent that makes the conduct more than ‘not anticompetitive’ but potentially beneficial to consumers.” JA372–73. Specifically, the court found that Apple’s app distribution restrictions “increase security in the ‘broad’ sense by allowing Apple to filter fraud, objectionable content, and piracy during app review while imposing heightened requirements for privacy.” JA270. The court also recognized that “security and privacy have remained a competitive differentiator for Apple,” JA271, and noted that “[t]he witnesses are unanimous that user security and privacy are valid procompetitive justifications.” JA272.
The court also agreed “with the general proposition that Apple is entitled to be paid for its intellectual property,” and that Apple “invests enormous sums into developing new tools and features for iOS.” JA277. It also recognized that “[b]oth Apple and third-party developers like Epic Games have symbiotically benefited from the ever-increasing innovation and growth in the iOS ecosystem.” JA87.
Having observed that the evidence at trial did not resolve the question of the extent to which Apple’s investments in its ecosystem were specific to the App Store “with precision,” the court strained to qualify that lack of precision, finding that “the record is devoid of evidence that Apple set its 30% commission rate as a calculation related to the value of its intellectual property rights.” JA278. More curious still, the court therefore found “that with respect to the 30% commission rate specifically, Apple’s arguments are pretextual, but not to the exclusion of some measure of compensation.” JA278. That was, at least, a recognition that the UCL does not require a commission rate of zero.
The court nonetheless discounted the connection in its initial judgment, reasoning that “[a] UCL action is equitable in nature,” and that “[c]ourts have ‘broad discretion’ to fashion equitable remedies to serve the needs of justice.” JA373 (internal citations omitted).
Whatever mechanism the injunction leaves available, the underlying economic problem does not disappear once anti-steering provisions are removed. This Court has recognized that vertical price restraints can properly be used to prevent free riding. Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 890–91 (2007) (explaining that absent vertical price restraints, discounting retailers can “free ride on retailers who furnish services” such as showrooms and demonstrations, and finding that it is proper to impose restraints that alleviate the problem by encouraging retailers to “invest in tangible or intangible services or promotional efforts that aid the manufacturer’s position as against rival manufacturers”).
Left unaddressed, free riding weakens the incentive to supply the services that made the underlying transaction possible in the first place and to keep investing in them. Id. Courts have recognized that vertical restraints—including anti-steering rules that restrict point-of-sale merchant steering—can curb negative externalities by preventing retailers from free-riding on network investments. See Ohio v. Am. Express Co., 585 U.S. 529, 547 (2018) (quoting Leegin, 551 U.S. at 890–91, for the proposition that “vertical restraints can prevent retailers from free riding and thus increase the availability of ‘tangible or intangible services or promotional efforts’ that enhance competition and consumer welfare”). The injunction here forecloses that particular tool. It does not, however, eliminate the economic problem a restriction on steering might otherwise have addressed.
A developer that uses Apple’s distribution, discovery, curation, and security-review services to acquire and retain users and then completes the resulting sale through a channel that contributes nothing toward the cost of those services captures the value of Apple’s investment without paying for it. This is the same dynamic that concerned this Court in Leegin. A commission on such purchases addresses that problem by collecting compensation when the developer earns revenue from using Apple’s services. Its effect on developers’ willingness to offer links must be assessed together with its role in financing those services. If anything, that approach is less restrictive of developer and consumer conduct than the vertical restraint this Court sustained in Leegin, because it regulates only compensation for services actually used, not communication about, or access to, an alternative purchasing channel.
The allocation of those charges also matters to competition. As this Court explained in Am. Express, prices on a two-sided platform reflect the interdependence of its users; higher merchant fees alone do not establish anticompetitive effects. 585 U.S. at 535–37. Commissions on successful transactions can help finance services available to developers who generate little or no revenue, supporting low initial charges that encourage entry and experimentation. Reducing those commissions may benefit the developers who pay them, but it can also shift charges to other participants or weaken incentives to maintain and improve the shared services.
The competitive inquiry must include Apple’s ability to continue competing. Developers benefit from improvements in the tools, distribution services, and customer experience that make a platform useful. Rules that reduce the return from supplying those services can weaken the incentive to improve them and shift their costs to other participants. A remedy aimed at competition must consider those consequences alongside the immediate benefit a developer receives from paying a lower fee.
That inquiry also distinguishes permission to communicate from a guarantee about the commercial results of communication. Better information can help customers compare available offers and encourage sellers to improve them. The resulting competition may change prices, quality, and the division of revenue among businesses. Its value does not depend on ensuring that every purchasing channel attracts transactions or that the platform providing access to customers receives less compensation.
As noted, the Ninth Circuit’s commission analysis concentrated on the difference between Apple’s 30 percent in-app commission and its maximum 27 percent external-purchase commission, together with developers’ additional costs of completing a purchase elsewhere. It reasoned that those outside costs exceeded the difference and make the external alternative economically nonviable. Pet. App. 19a–21a.
That comparison focuses on only one source of commercial attraction (lower transaction charges), but developers may prefer a particular purchasing mechanism for other reasons. As the Ninth Circuit recognized in the initial appeal, it is incorrect to conclude that a developer would have no reason to choose another in-app payment processor if Apple charged a commission. Different refund practices, a closer customer relationship, or changes affecting fraud, for example, could make another arrangement attractive. JA478. Those features illustrate why alternatives can compete without offering an identical service at a lower price.
In fact, the district court also recognized that competition is multidimensional, and that part of the purpose of the injunction was to preserve competition through product differentiation—including by Apple. In its order rejecting Apple’s request for a stay of the injunction, the court made clear that it “did not enjoin [the availability of IAP,] but rather enjoined the prohibition to communicate [alternatives.].” Stay Order at 4. The intent was that Apple would have the incentive to compete by offering a better alternative. Thus the court acknowledged Apple’s assertion that IAP was more convenient for users and specifically noted that “if it can compete on pricing, developers may opt to capitalize on that convenience, including any reassur[ance] that Apple provides to consumers that it may provide a safer or better choice.” Id.
For similar reasons, it is a mistake to infer competitive effects from one developers’ idiosyncratic preferences. A channel unattractive to one developer may be useful to another. Some developers may value greater control over ongoing subscriptions, for example, while others—particularly less-established and smaller developers—may value the opportunity to establish and maintain a direct commercial relationship with users. Developers also differ in the costs of operating their own purchasing services and in the number of sales over which they can spread those costs. Requiring every alternative to produce a particular margin of savings would make one price comparison control the inquiry despite those differences.
Because of these differing developer characteristics and preferences (as well as the free-rider problem discussed above), whether a commission frustrates the conduct the injunction protects requires more than a superficial price comparison and recognition of one developer’s self-interested preference for a cheaper alternative. The commission’s effect cannot be understood simply by assuming that the competitive purpose of permitting information was to guarantee a cheaper transaction after accounting for outside payment costs. Rather, as the district court itself noted in its Stay Order, “[c]onsumer information, transparency, and consumer choice is in the interest of the public.” Stay Order at 4. Such considerations plainly implicate the full range of competitive attributes upon which a consumer might decide, not just price.
The original injunction removed specified restrictions on communications. Whether further limits on compensation would improve the competitive outcome requires an economic inquiry of its own. The breadth of the UCL supplies no answer to that inquiry.
Nor can an appeal to the injunction’s “spirit” replace the requisite economic inquiry. In its 2025 decision, the Ninth Circuit recognized this Court’s instruction that “a decree will not be expanded by implication or intendment beyond the meaning of its terms,” and that those terms must be “‘read in the light of the issues and the purpose for which the suit was brought.’” Pet. App. 11a (quoting Terminal R.R. Ass’n of St. Louis v. United States, 266 U.S. 17, 29 (1924)). As noted above, those terms do not address commission rates at all. Nonetheless, citing one of its own earlier decisions, the Ninth Circuit argues that courts can “find a breach of the decree in a violation of the spirit of the injunction, even though its strict letter may not have been disregarded.” Pet. App. 11a-12a (citing Institute of Cetacean Research v. Sea Shepherd Conservation Society, 774 F.3d 935, 949 (9th Cir. 2014) (internal quotations omitted)).
The injunction’s goal of promoting competition does not, by itself, tell Apple how much cheaper external purchasing must be. The contempt decision faulted Apple both for failing to establish that its commission reflected the value of its intellectual property and for choosing a rate that left insufficient savings after developers paid outside transaction costs. Pet. App. 135a–138a. Those criticisms ask different economic questions. One concerns what Apple contributes; the other concerns the financial attraction of a purchasing arrangement that depends on services supplied by other firms. The problem is that the two need not be the same.
Suppose a commission reasonably reflected the value of the software and distribution services a developer continued to use. That would not establish how much the developer must pay an outside processor, spend handling refunds, or devote to operating a website. Those costs could leave the developer with little reason to use the external channel even though the value of Apple’s contribution had been properly assessed. Conversely, a developer’s ability to operate an inexpensive purchasing service would not tell a court what Apple’s contribution was worth.
A court could require a commission to satisfy both conditions, but doing so would require it to decide which developers’ costs matter, what margin is sufficient, and which services Apple may charge for. That would be a substantive choice about the terms of trade. Neither a general objective of promoting competition nor an instruction to permit external purchasing communications determines those terms.
Similarly, a firm ordinarily prices by considering what customers will pay and how its proposed charge compares with alternatives. It need not begin every pricing decision by assigning a separate value to every component of its offering. If a particular valuation method is required, that is an additional constraint on the decision.
But the injunction prescribes neither that method nor a required relationship between the combined costs of the two purchasing channels. Pet. App. 166a–167a. Indeed, the injunction says nothing about commissions at all, let alone about how to calculate one. The Ninth Circuit recognized this and remanded the case to the district court with instructions to “amend the April 30 Order’s commission prohibition,” along with recommendations on how to do it. Pet.App.35a–36a. A later preference for one particular approach to pricing cannot establish that choosing a different approach was incompatible with the competitive spirit of the injunction.
This case illustrates how quickly a commission dispute becomes a rate-setting exercise “beyond the practical ability of a judicial tribunal to control.” Brooke Group, 509 U. S. at 223. The Ninth Circuit rejected the permanent ban on commissions and contemplated a prohibition lasting until the district court approved an appropriate fee. Its proposed approach would allow compensation for costs necessary to coordinate external links and for intellectual property directly used in external purchases, with reductions reflecting the non-use of intellectual property reading solely on Apple’s IAP. It also proposed accommodations for security and privacy features and possible assistance from experts or a technical committee. Pet. App. 34a–36a.
Those instructions require much more than merely identifying the expense of processing an external payment. The court would have to decide which parts of the platform contribute to an external purchase, what compensation they warrant, and how to divide costs among uses. Software can support an app whose customers buy through several channels. Distribution can bring a customer to the app long before a purchase. An expense can support both activities without being uniquely attributable to either transaction.
Describing an allocation as proportionate does not resolve the commercial question. The court would still need to choose a measure of use and explain why that measure should determine the allocation of costs or compensation. The number of transactions, the revenue they generate, and the value different developers receive can point toward different charges. A division based on current use can also change as developers respond to the resulting prices. The decision thus requires judgments about behavior and value, as well as accounting.
The problem becomes only more difficult over time. A new service may support several kinds of purchases; a change in outside processing costs may alter the relative attractiveness of different channels; an improvement may require expenditure before it generates revenue. If the permissible commission depends on maintaining a particular commercial advantage for external purchasing, those changes can require further judicial decisions. The court must then administer the continuing relationship among businesses whose products and costs keep changing.
California’s courts have recognized this difficulty in applying the UCL. In California Grocers Ass’n v. Bank of Am., a trial court limited a bank service fee through an injunction based on its assessment of costs and an allowable profit. 22 Cal. App. 4th 205, 211–12 (Ct. App. 1994). The appellate court held the ongoing limitations inappropriate, explaining the institutional problems with judicial supervision of a particular service fee. Id. at 218–19.
Further, the existence of broad remedial authority does not itself equip a court to choose and maintain commercial prices. See Willard v. AT&T Commc’ns of Cal., Inc., 138 Cal. Rptr. 3d 636, 641 (Ct. App. 2012) (collecting cases on the proposition that where a UCL action would drag a court of equity into a complex economic policy question like setting prices, abstention is appropriate because policy is “primarily a legislative and not judicial function”).
This Court has made the same economic concern central to its competition decisions. Trinko cautioned against requiring courts to administer terms of dealing, including prices, in ways that can impair investment and competition. 540 U.S. at 407–08, 414–15. And National Collegiate Athletic Ass’n v. Alston emphasized the difficulties of continuing judicial supervision and the importance of leaving room for business decisions in implementing relief. 594 U.S. 69, 102–06 (2021). These concerns apply with particular force when a court derives detailed compensation terms from an injunction that supplied no pricing standard.
The practical effect is the district court is put in the position of managing Apple’s business relationships with developers, right down to the cent of what is charged as a commission. This type of “micromanaging is beyond the scope of court oversight contemplated by injunction law.” LabMD, Inc. v. FTC, 894 F. 3d 1221, 1237 (11th Cir. 2018). See also Stay Order at 3 (noting the court is not “here to micromanage”).
A business subject to an injunction must decide which activities it can continue, how it should change its arrangements, and which investments remain worthwhile. If complying with the order’s stated terms leaves the firm exposed to contempt because a court later prefers a more expansive understanding of its purpose, the firm may decide to abandon commercially valuable choices the order left available.
And that pressure operates in only one direction. An appeal to an injunction’s spirit can be used to demand restrictions beyond those stated in the order; the firm cannot invoke that spirit to disregard an express command.
Adding such an enforcement rule therefore encourages firms to do more than the order requires whenever the court might later demand an additional restriction. In a competition case, that can mean foregoing prices, products, or investments that serve customers but expose the firm to a court’s disagreement about how best to promote competition.
The resulting costs can be difficult for courts to observe. Cf. Frederic Bastiat, That Which Is Seen, and That Which Is Not Seen (1850).[4] A complaint about continuing restrictions creates a dispute that can be investigated and reviewed. A service improvement abandoned because its permissible compensation is uncertain may produce no comparable record. Neither will a pricing arrangement discarded to avoid another round of litigation. An enforcement approach aimed at improving the competitive process must account for both these “unseen” lost opportunities as well as visible conduct that fails to comport with an injunction. That is the practical importance of the error-cost framework in competition law. See Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1, 2–5 (1984); Geoffrey A. Manne & Joshua D. Wright, Innovation and the Limits of Antitrust, 6 J. Competition L. & Econ. 153, 157–59 (2010).
Apple supplies services that retain value regardless of where payment occurs. Commissions can support their continued provision, and the terms of compensation involve choices that the injunction does not resolve. Treating those choices as settled by an appeal to the injunction’s spirit of facilitating competition risks suppressing the conduct that competition law seeks to encourage. Those economic consequences leave a “fair ground of doubt as to the wrongfulness of the defendant’s conduct” under the injunction. Taggart, 587 U.S. at 561 (quoting California Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885)).
Applying this Court’s contempt standard requires reversing the judgment below. The commission-related contempt determination and the remedial directions dependent on it should be set aside.
[1] No counsel for a party authored this brief in whole or in part, and no party or counsel for a party made a monetary contribution intended to fund its preparation or submission. No person other than Amicus and their counsel made a monetary contribution to the preparation or submission of this brief.
[2] Apple’s link-out commission generally applied only to purchases made within seven days after a user followed an in-app External Purchase Link, but renewals of subscriptions initially purchased within that period could remain subject to commissions after the seven days expired. JA518–19. Apple estimated that this seven-day limitation brought the effective rate closer to 18%, rather than the 27% figure the decisions below treated as controlling. Pet. App. 77a n. 25.
[3] Epic challenged some of the assumptions underlying Apple’s estimate, and the district court questioned the extent of its evidentiary support. 6-ER-1140–42; Pet. App. 77a n.25. But even without accepting Apple’s specific estimate of an 18% effective commission, the record supplies a firm basis to expect a rate below 27%. Apple’s customer-spending data and experience with direct purchasing channels supported the expectation that some purchases would occur on that basis. JA518–20; Feb. 25, 2025 Tr. 1588:14–19, 1590:15–1591:18 (Oliver), Dkt. 1307. The presence of any such purchases would reduce the average commission below the headline rate.
[4] Available at https://mises.org/articles-interest/which-seen-and-which-not-seen.
