Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

I Started Something and Now I’m Not Too Sure? (or The Commission and Google)

with 3 comments

(Note by Alfonso: Last week I announced that Pablo Ibañez, a great friend of ours, a co-author of mine, and a truly brilliant legal mind, would be writing a post on the Google investigation. Here it is. As lucid as always).

Thanks very much to Nicolas and Alfonso for giving me some space to share a few quick thoughts with their (numerous and growing in number) readers on the nascent Google case! I was looking forward to posting something as soon as I read the press release. For the many readers who do not know me, I am a Lecturer in Competition Law at the LSE (P.Ibanez-Colomo@lse.ac.uk).

My concern with the ongoing proceedings has less to do with the technicalities of the case, very well outlined by Alfonso a few days ago, and more with the future of Article 102 TFEU. More precisely, I wonder whether this investigation is in line with the spirit and purpose of the 2009 Guidance or whether it represents, again, a step back to the pre-Discussion Paper era.

Even though it is an imperfect document, the 2009 Guidance represented a great victory in at least two important respects: it promised consistency (i) across competition law provisions and (ii) within Article 102 TFEU itself. Put differently, the Guidance Paper gave us the hope that the standards of intervention would be the same regardless of the provision (in particular, Article 101 vs. 102 TFEU) or the formal label with which the case is brought. This means, for instance, that a ‘margin squeeze’ will from now on be treated as a ‘constructive refusal to supply’ (and, as a result, it will in most instances be necessary to establish that the access to the input in question is ‘indispensable’ within the meaning of the Bronner and Magill cases).

Why is the ongoing investigation in Google problematic from this perspective? Because the European Commission seems to suggest that it is justified to open an investigation on grounds that Google may be discriminating against its rivals in web searches.

Is secondary-line discrimination a problem in and of itself under Article 102 TFEU? Clearly not, it would seem, in the light of the logic underlying the 2009 Guidance and the Non-Horizontal Merger Guidelines. What is more, secondary-line discrimination is not even an ‘enforcement priority’ for the European Commission (try to find the word ‘discrimination’ in the 2009 Guidance using Microsoft Windows’ built-in search engine!).

– Is a dominant undertaking obliged to provide non-discriminatory access to its inputs in the first place?

o Maybe, if, as in the case of a ‘margin squeeze’, the conditions set out in Bronner are fulfilled (i.e. if non-discriminatory access is indispensable to compete and non-discrimination is necessary to avoid foreclosure on the neighbouring market).

o Maybe, if it is a recently liberalised market (a decisive factor in the few precedents on secondary-line discrimination cases).

o Maybe, if there are concerns with market integration and nationality discrimination (the second crucial factor explaining the outcome of these precedents).

None of these ‘maybes’ seem to apply in the Google investigation. Suggesting that non-discriminatory access to Google (however powerful and dominant its search engine) is indispensable to avoid foreclosure in a neighbouring market is hardly a credible claim. In addition, Google has emerged as a market leader in a deregulated and fast-moving market.

In view of the above, I hope that, it the case is not dropped, the European Commission explains convincingly and at length (even though this seems to exclude the kind of reasoning displayed so far in ‘commitment decisions’) why secondary-line discrimination may in and of itself constitute an abuse of a dominant position in the specific circumstances of the Google proceedings (or, alternatively, that the conditions set out in Bronner are met). If this is not the case, the promise of the 2009 Guidance will not have been fulfilled (and this, only a year after its adoption).

To be honest, I also hope that, if the European Commission adopts a prohibition decision, Google decides not to appeal this decision before the General Court. I can already imagine the General Court stating, in a terse and unreasoned paragraph, that secondary-line discrimination is not a form of ‘competition on the merits’ and is therefore caught by Article 102 TFEU by its very nature (i.e. à la AstraZeneca).

Written by Alfonso Lamadrid

22 December 2010 at 11:59 pm

Posted in Guest bloggers

3 Responses

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  1. All fine and good. My main remark is, where is the consumer detriment supposed to be? I understand that in Microsoft that was at least a case of defensive tying (rather then offensive one), but here the problem is niche incumbents being pissed off because Google venture into their turfs. Now, that Google has to give away lots of freebies to keep traffic on its search engine is a given (so called third party pay), but I’d just be interested to see to what extent Google entry in these niche markets has led to a drop in traffic/contacts (the old eyeballs) for these complainants – or whether theiy were crap anyway. That is to say, to the extent that Google involvement expands the demand for these specialised search services (demand shifts outward) it is a bit odd to pretend to say that people have been squeezed out because their market share dropped (even if traffic remained flat by and large). All speculative of course, but let’s see what they’ve got.
    Constructive remedy? Set up a standard feedback system for customers’ review and use this composite index in the search algorithm to rank results – simples…

    Paolo Siciliani

    23 December 2010 at 11:42 am

  2. The investigations in Google are not only focused on a possible discrimination or refusal to supply. There are also bundling concerns in this case, and exclusionary bundles are referred by the 2009 guidance. So what prevent the Commission to resume what it did in the Microsoft case? If the Commission really want to condemn Google, it will regrettably find a way.

    Jonathan Dahmoun

    23 December 2010 at 12:02 pm

  3. […] Once again it´s a luxury to have Pablo Ibañez Colomo as a guest blogger at Chillin´Competition.  He has some strong views on the Opinion delivered last week by AG Kokott on the “Greek decoders case” that we thought should be of great interest to you. Here they are: […]


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