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EU COURT RULES ON GOOGLE SHOPPING CASE: ANTI-COMPETITIVE BEHAVIOUR IN THE DIGITAL REALM

Writer's picture: Niclas JohannNiclas Johann
Apr 7, 20224 min read





On the 10th of November 2021, the EU General Court upheld a €2.42 billion fine imposed on Google by the Commission for anti-competitive practises by using its dominant position in the general search engine market to favour its comparison shopping service over competitors unfairly. The judgement marks an essential step in the EU’s struggle against the dominance of American Big Tech in the digital realm as it reaffirms the confrontational course taken by the Commission.


So what exactly happened? In the mid-2000s, Google - at this point already the biggest general search engine provider - entered the market for comparison shopping services, allowing consumers to compare the price for a product amongst several vendors online. However, Google’s service struggled to assert itself against existing rival services. Google thus started positioning its service at the top of Google search results within a graphical interface while actively demoting the websites of competitors in the result rankings.


This attracted the attention of the EU Commission, which subsequently 2010 instituted proceedings against Google. While it initially attempted to resolve the conflict through binding commitments by Google to change its practises, these efforts failed. A prolonged investigation eventually accumulated in a €2.42 billion fine against Google in 2017.


The Commission based this decision on several premises. Firstly, it was observed that Google occupied an uncontested dominant position in the general search engine market by this time. Further, it follows that - as is well documented by now - the positioning and ranking of a search result has an immense influence on the likelihood with which a user clicks it, with the vast majority of clicks going to the top three results and results not on the first page receiving only a fraction of traffic. The Commission concluded that Google’s practice of positioning its service more favourably and demoting competitors likely significantly reduced the number of users that visited rival comparison shopping sites with potentially devastating consequences. Furthermore, these services heavily depended on organic search results for user acquisition, improving their products. It thus argued that the conduct constituted an abuse of dominant market position with anti-competitive effects and was consequently in violation of Art. 102 TFEU.


Considering the significant size of the fine, Google unsurprisingly decided to challenge the decision before the court. It argued that the conduct was aimed to improve the quality of service to users, that the Commission had failed to provide empirical evidence for anti-competitive effect and that a fine was unjustified considering the novelty of the offence.


The EU General court disagreed. On the 10th of November 2021, it upheld the fine imposed by the Commission and affirmed the view that Google’s self-favouring practices constituted an abuse of market dominance. In doing so, the court left us with many noteworthy observations. Firstly, it attributed an extreme obligation to ensure fair competition on Google concerning its ‘super-dominant’ position in the general search engine market. The court further found that even though the case essentially involved a question of equal access for competitors to an essential facility, the Commission did not have to prove that the stricter criteria established in Bronner (C‑7/97, EU: C:1998:569) were fulfilled. This was justified by the fact that the favouring of its service by Google was a central part of the abuse.


Moreover, the case was a matter of discrimination against competitors and not merely concerned with a refusal to supply or grant access. Another notable finding by the court was that, contrary to Google’s argument in the appeal, the Commission did not need to provide evidence for actual instances where Google’s conduct led to the suppression or elimination of rival services. Instead, it was sufficient that the Commission presented a plausible argument for ‘at least potentially anti-competitive effects.


Regarding the dimensions of the fine, the court upheld the hefty sum that the Commission had imposed initially. Google’s argument that the fine should be lowered or even waived due to the novelty of the offence was dismissed. The court found that Google had engaged in the illegal conduct with intent and that it could have reasonably foreseen that its actions constituted a violation of EU competition law. This finding crucially reaffirms that companies cannot escape responsibility for anti-competitive behaviour by being the first to engage in a particular type of conduct. This seems an essential signal towards big tech, invoking accountability from firms that famously pride themselves on ‘moving fast and breaking stuff.


For all its significance, the judgement also illustrates one of the shortcomings of the existing procedures for investigating anti-competitive practises - they are slow. By now, the actual abusive conduct dates back almost 15 years, and the Commission initiated proceedings over ten years ago, which is akin to an eternity in the digital space. Moreover, Google can lodge an appeal against the General Court’s judgement before the European Court of Justice, which may further prolong the dispute for another couple of years.


Overall, the ruling can nevertheless be considered wind in the sails for those looking to restrict or break the dominant market position of big digital platforms. The conviction that stricter rules should be imposed on tech companies that act effectively as ‘gatekeepers’ to the internet is also increasingly cementing itself amongst EU lawmakers. The currently debated proposal for the Digital Markets Act (DMA) seeks to address many of the concerns that have been raised with regards to companies abusing their dominant market position in the digital space. It may, for example, include an explicit prohibition of self-preferencing, which would give greater legal certainty to firms and equip the Commission with more concrete enforcement powers in the event of such conduct. However, the legislative initiative unsurprisingly faces heavy resistance by big tech. Still, the recent judgement may provide some of the momentum needed to pass a potent version of the DMA proposal into EU law.




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