Unfair terms in contracts with app developers

The provisions sanctioning significant imbalance constitute a mandatory law. It is on this basis that 6 clauses of the contracts concluded between Apple and application developers were declared abusive by the Commercial Court of Paris.

On December 19, 2022, the Commercial Court of Paris issued a judgment sanctioning clauses deemed unfair in the contracts offered to application developers by Apple.

The Directorate-General for Competition Policy, Consumer Affairs and Fraud Control (below ” DGCCRF “) opened an investigation in 2015 into the commercial relations between the companies of the Apple groups (Apple Distribution International Limited, Apple INC and Apple Software Services Limited hereinafter” Apple “) and app developers on the App Store.

These commercial relationships are materialized in particular by a contract defining the contractual relationship between Apple and the application developers.

Following this investigation, the Minister of Economy and Finance (hereinafter the ” Minister “), considering that a number of clauses of this contract created a significant imbalance towards developers, sued Apple before the Commercial Court of Paris for the purpose of having it sanctioned on the basis of Article L. 442-6 2° of the Commercial Code, and in particular for a civil fine of 2 million euros to be pronounced against it.

In its decision of 19 December 2022, the Commercial Court of Paris (hereinafter the “Court”) affirmed the character of the article sanctioning the significant imbalance (1), and confirmed the significantly unbalanced nature of several clauses stipulated in the contract in question (2).

1. On the character of the article sanctioning the significant imbalance as a police law

The Court considers that with regard to Article 9 of the Rome I Regulation, and with regard to recital 9 of Regulation 1/2003 (Regulation No. 1/2003 of 16 December 2002), the provisions of Articles L. 442-6 2° and L. 422-6 III of the Commercial Code constitute a mandatory law. Its respect is considered crucial for the preservation of a certain equality of arms and loyalty between economic partners, and is therefore essential for the economic and social organization of France, within the meaning of Article 9 of the aforementioned Rome I Regulation, defining a police law.

2. On the characterization of unfair terms

First, the Court finds that the indisputable position of leader in the App Store market and the unbalanced balance of power between Apple and its co-contractors makes it possible to characterize the submission condition of Article L. 442-6, 1, 2°. The essential role of Apple and its negotiating power are revealed in particular by a set of indices such as its size, its notoriety, the lack of real margin for negotiation of the co-contractors, or the presence of the disputed clauses in all the contracts, indices that are all combined in this case, the Court of First Instance ruled.

Of the 11 clauses considered unfair by the Minister, the Court upheld 6.

Canada has made commitments on all environmental services. clauses considered unfair in particular, clauses may be noted providing for unilateral options for Apple such as the possibility of unilaterally modifying the contract, the option to modify at its sole discretion the distribution of an application or access to its services or that offering Apple asymmetric termination conditions.

Clauses without consideration or reciprocity such as that limiting the legal actions of developers, the one providing for more favourable notification conditions for Apple than for its developers, and that exempting Apple from any warranty and liability to third parties on the products.

On the contrary, because, in particular, of their current nature, or even beneficial to developers, the Court considered that certain clauses do not create a significant imbalance. This is the case, for example, with the imposing clause to app developers the exclusivity of Apple’s payment system, that imposing on each paid transaction the levy of a 30% commission for the benefit of Apple or that imposing Note to Developers to set the rates of their application among a grid.

Consequently, the Court finally orders a civil fine of €1,090,909 against Apple.

Commercial Court of PARIS 19 2022, No. 2017040626