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1 1 (May 9, 2023)

handle is hein.crs/goveloe0001 and id is 1 raw text is: Congressional SA Research Service Appeals Court Holds That Apple's Walled Garden Does Not Violate Federal Antitrust Law May 9, 2023 On April 24, 2023, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court decision holding that Apple does not violate federal antitrust law by restricting app distribution on iOS devices to its App Store or by requiring in-app purchases on iOS devices to use Apple's in-app payment processor. The decision implicates competition issues that have garnered considerable legislative interest. This Legal Sidebar provides an overview of general antitrust principles, the litigation challenging Apple's app-distribution restrictions, and the Ninth Circuit's decision. It concludes with options for Congress. Antitrust Basics The Sherman Antitrust Act contains two core prohibitions. Section 1 of the statute prohibits concerted conduct that unreasonably restrains trade. Section 2 bars unilateral activities that monopolize commerce. Under Section 1, some practices-like price fixing among competitors-are per se illegal, meaning courts need not inquire into their effects in individual cases. Most restraints of trade, however, are evaluated under a standard called the rule of reason. Under the rule of reason, courts conduct fact-specific assessments of a defendant's market power and the details of a challenged agreement to determine a restraint's competitive effects. Plaintiffs can establish that a defendant possesses market power either directly (via evidence of supracompetitive prices and restricted output) or indirectly (via evidence that the defendant possesses a large market share and that the market contains entry barriers). The indirect route requires plaintiffs to define a relevant market-an exercise that turns on the range of items that are reasonably interchangeable with one another. In conducting this inquiry, many courts employ a methodology under which a proposed market is iteratively expanded until a hypothetical monopolist in that market would be able to profitably impose a small but significant non-transitory increase in price. Stated differently, market definition involves an attempt to identify the smallest Congressional Research Service https://crsreports.congress.gov LSB10960 CRS Legal Sidebar Prepared for Members and Committees of Congress

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