Chillin'Competition

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What to make of the fresh charges against Google

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Making habits

The Commission is making a habit of sending Statements of Objections to Google. There should be little doubt that Google has become the most emblematic saga of the decade (and one cannot exclude at this stage that it will also dominate the coming one). Yesterday, it brought additional charges relating to the Search case and fresh ones concerning its ‘AdSense for Search’ platform. Neither of the two moves is particularly surprising, as they have been expected for a while. Yet they reflect very well the current trend and the remaining open questions. ‘How many more Statements of Objections?’ is of course the one that springs to mind immediately. I can also think of the following:

All Google-related cases are essentially variations on the same theme: When reading about the AdSense case, it became pretty clear to me that it raises the same fundamental issue as Google Search and Android. The question is whether – and why – it is an abuse for an integrated firm to favour its own activities. The case law does not support the idea that dominant firms are bound by a general duty of non-discrimination. Thus, the Commission will have to articulate a coherent legal test and to explain how its interpretation of Article 102 TFEU is consistent with prior case law and its overall approach to the enforcement of the provision.

Clarity in this sense is indispensable, as the positions hinted at by the Commission in the press release are potentially far-reaching. For instance, they suggest that a TV channel could be abusing its dominant position by keeping its advertising space and revenues for itself, or that supermarkets may be bound by a duty of non-discrimination when placing goods on their shelves.

The industry has changed a great deal since 2010: The Google Search case has been going on for a very long time. This is always dangerous in EU competition law, and even more so in dynamic industries. It is obvious that end-users’ habits have changed a great deal since 2010. Firms’ behaviour and strategies have also changed. As the press release shows, this is something that promises to be contentious in the case. Amazon and eBay look more like price comparison websites. And Google Shopping looks more like them. As a result:

  • The credibility of the case depends, by and large, on market definition: If one assumes that Amazon and eBay compete with Google on the same market, the Google Search case certainly sounds far less problematic. Can one credibly argue that Google’s practices are an issue where it faces rivalry from two giants? Unsurprisingly, the press release refers to this point of contention. The Commission acknowledges that the market may be broad enough to encompass Amazon and eBay. Still, it believes that these two firms do not compete with price comparison sites. In any event, it clarifies, Google’s practices would still be abusive under a broad definition of the market.
  • It is not clear that there is a causal link between Google’s practices and the abuse claims: When the industry changes significantly during a period of time, the exclusion of some firms may very well be the natural consequence of the evolution of the market. In Post Danmark II, the Court emphasised that Article 102 TFEU applies where the effects are ‘attributable’ to the dominant firm, that is, where there is a causal link between the practice and the alleged effects.
    Irrespective of how the market is defined, the Commission would have to show, accordingly, that the alleged decline of some price comparison sites is the consequence of Google’s behaviour, and not the consequence of the rise of Amazon and eBay and/or of changes in end-users’ behaviour. You will certainly remember that this is where Streetmap failed. Mr Justice Roth concluded that the decline of that firm would have happened anyway, and was not attributable to Google.

Is Google Search an object or an effects case?: I wrote last year that it was not entirely clear to me whether Google’s practices were deemed abusive by their very nature or only insofar as they are likely to have exclusionary effects. The issue is not any clearer after reading yesterday’s press release. Google’s practices have been under investigation for so long that we should know by now whether they had exclusionary effects. But maybe this fact does not really matter that much.

There are references to exclusionary effects in the press release, of course, but I am not sure that they are decisive. Bloomberg echoes the statements made by the Commissioner, which suggest that what really matters is the fact that Google discriminates in favour of its own services, and that evidence in this sense may point to a broader ‘pattern’. If Google Search is indeed being pursued as an object case, what I wrote above is irrelevant. A ‘by object’ approach could allow the Commission to start new cases (concerning travel and local search, for instance) very soon. Which is, I understand, exactly what the Commissioner has suggested.

Written by Pablo Ibanez Colomo

15 July 2016 at 10:49 am

Posted in Uncategorized

One Response

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  1. Hi there. Do you think charging integrated firms for abuse of dominance for favouring their own activities could make obtaining concentration clearance easier?

    IU

    19 July 2016 at 12:50 pm


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