Chillin'Competition

The Commission Decision in Google Ad Tech exemplifies, better than any other, the shift in the centre of gravity of competition law enforcement towards remedies (see here for a more extensive discussion of this point). It also shows that remedy design is probably the single most important aspect to address in the ongoing reform of Regulation 1/2003.

In the current economic and technological landscape, a finding of infringement no longer marks the end of a case. This milestone is, as they say, just the end of the beginning. The effectiveness of enforcement, in digital and others markets, depends less on establishing an abuse of dominance than it does on ensuring that the infringement is brought to an end by means of a workable and well-crafted remedy.

Towards a structured framework for the design and implementation of remedies

The approach that the Commission is following in Google AdTech is a (welcome) innovation against this background. It has implemented what is, in effect, an ad hoc procedure to define the obligations with which the firm must comply. As this post is being finished, the Commission and Google are in the midst of conversations in the context of this informal procedure (see here for a recent update on the matter).

The aftermath of the decision suggests that the Commission acknowledges that merely ordering a firm to bring the infringement to an effective end no longer does the trick, and neither does a ‘principles-based’ approach that requires an undertaking to abide by an open-textured standard (such as non-discrimination). As I have written elsewhere, the complexity of remedies cannot be wished away by authorities.

Even if only de facto for the time being, Google AdTech suggests that the design and implementation of the remedy will, from now on, follow a structured framework that is independent from the finding of infringement.

Pursuant to the Automec doctrine, this ad hoc procedure gives the firm the chance to come up with a proposal to bring the infringement to an effective end. On the other hand, it allows the Commission to evaluate whether the undertaking’s proposal indeed addresses the concerns identified in the decision.

Where necessary (and this is the crucial third step), the Commission will specify the obligations with which the firm must comply (just like it does in the context of a commitments procedure). On this point, it has clearly signalled that it may adopt structural measures breaking up Google’s adtech business.

What matters, irrespective of the nature of the remedy, is that the duties imposed upon the firm are spelled out clearly and in sufficient detail to ensure immediate and full compliance.

The need for a structured framework: the experience of Google Shopping

The experience of the past few years shows that a framework for the specification of remedies is indispensable for the effective operation of the competition law regime. Delegating the design and/or implementation of remedies to firms is in nobody’s interest, neither that of the competition authority, nor the addressees of the decision nor of third parties potentially benefitting from intervention.

More importantly, it is now difficult to dispute that the ‘principles-based’ approach to remedial action has failed. The uncertainty to which it gives rise has major practical consequences, which were dramatically exposed last week (see here).

Google Shopping is a case where controversy around compliance with the remedy never really went away. Whether or not the measures implemented by the firm back in 2017 brought the infringement effectively to an end has always been (and remains) contentious.

It is against this background of perpetual limbo that a German court awarded damages to two of Google’s rivals on the market for price comparison last week. Crucially, the damages award extends to the period following the adoption of the Commission decision, and is therefore based on the assumption that the firm never actually complied with the principles-based remedy imposed.

Even though the Commission never opened non-compliance proceedings against Google, the absence of a decision formally and positively declaring that the infringement had been brought to an effective end paved the way for the award of damages beyond 2017.

This judgment suggests that any remedy implemented following a ‘principles-based’ approach is potentially vulnerable to challenge and, as such, a source of legal and non-legal uncertainty.

Moving forward: codifying the framework

The Commission’s introduction of an ad hoc remedial framework in Google AdTech is therefore the right way forward. Acknowledging the realities and demands of contemporary industries is not just wise but indispensable. It would be desirable if the ad hoc remedies procedure were improved along three dimensions.

First, transparency. The exchanges between the firms and the authority should benefit from similar levels of openness as those observed in the context of commitment procedures. What the firm proposes as per Automec and the authority’s assessment of the proposal should not happen behind closed doors.

Second, third-party involvement. One of the advantages of the commitments procedure within the meaning of Article 9 of Regulation 1/2003 is that obligations are ‘market-tested‘ with stakeholders. A structured procedure would give these stakeholders a meaningful chance to provide input about the proposals and to express their concerns, if any.

Third, codification. Ideally, this procedure would be enshrined in a reformed Regulation 1/2003. As a second best, it could at least be codified at the internal level (the 2019 version of the Manual of Procedure was, say, succinct about the issue or remedies and would definitely benefit from a revamp and further detail).