Bulletins | August 2, 2017

EC Google Shopping ruling may prompt further abuse of dominance cases and private actions for damages

The European Commission (‘EC’) handed down a fine of €2.42 billion to Google on 27 June 2017, after finding that Google had breached EU antitrust rules by abusing its market dominance as a search engine throughout the EEA by giving an illegal advantage to its Google Shopping comparison shopping service.

“The EC’s decision confirms its view that Google’s search engine holds a dominant position,” notes Paul Stone, Partner at Charles Russell Speechlys LLP. “This means that the EC can rely on this finding to pursue other abuse of dominance cases against Google.”

The EC found that Google gives, on a systematic basis, a prominent placement to Google’s comparison shopping service results in response to relevant user searches, and that Google’s criteria in its generic search algorithms demote rival comparison shopping services in results. As a result of its practices, Google “denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation,” said EU Commissioner Margrethe Vestager.

As part of its investigation, which began in November 2010, the EC gathered a substantial amount of evidence, including 5.2 terabytes of Google search results alongside financial and traffic data used to examine the importance of Google search result visibility from a commercial perspective. “In terms of procedure we think that the EC’s decision sets something of a precedent, due principally to the remarkably wide and comprehensive evidence gathered by the EC before reaching its decision,” explain Jonathan Cornthwaite and Elisa Spanu of Wedlake Bell LLP. “This could provide a useful precedent for future regulatory investigations into the abuse of online markets.”

The EC has not specified a remedy to Google and instead has left it to Google to establish how to bring Google Shopping into compliance. Google will then need to explain this method to the EC, which will subsequently monitor Google’s compliance. Failure to comply with the EC’s decision will result in Google being liable for payments of up to 5% of the average daily worldwide turnover of Google’s parent company Alphabet. “It is noticeable that the decision expressly requires Google to comply with the principle of giving equal treatment to rival comparison shopping services and its own service, so – unless the decision is reversed on appeal – an obvious alteration to Google’s business model would be having to make its own comparison shopping service subject to the generic search algorithms that control where services appear in Google’s search results, and thereby also not displaying its own service at the top of search results – this would create a ‘level playing field,’” said Cornthwaite and Spanu.

The EC notes in its press release on the decision that persons or businesses affected by Google’s anti-competitive behaviour may look to obtain damages from Google, and Stone believes “we can expect to see a number of private actions for damages being pursued by operators of rival comparison shopping services.” Additionally two formal EC investigations into Google remain outstanding, with the EC also looking at Google’s search advertising practices and Google’s bundling of other Google products with its Android mobile OS respectively. “It is possible that we could see similar fines in those cases, although this decision might encourage Google to pursue the possibility of entering into commitments with the EC, in order to avoid fines and to seek to bring these cases to an end,” said Stone.

Please click here to read the full article which was first published in e-comlaw on 2 July 2017.