Background
In March this year, the European Commission (the “Commission”) fined Google €1.49 billion for allegedly breaching EU competition rules in online advertising. The fine is the third levied against the company following two earlier fines:
- In June 2017 the Commission imposed a fine of €2.42 billion on Google for allegedly abusing its dominant position. The Commission found that Google gave an unlawful advantage to its own comparison shopping service.
- In July 2018 the Commission fined Google €4.34 billion for what the Commission considered to amount to illegal practices regarding Android mobile devices to strengthen the dominance of Google’s search engine.
The Commission’s latest decision relates to services provided by Google in placing advertising content on its search results pages.
Dominance
In relation to dominance, the Commission concluded that Google held market shares exceeding 70% in the EEA online search advertising intermediation market from 2006 to 2016 through its AdSense for Search platform. The Commission also held that in 2016, Google held market shares generally above 90% in national markets for general search and above 75% in national markets for online search advertising. Although market dominance is not illegal under EU competition rules, dominant companies have a special responsibility not to abuse their market position by restricting competition.
Alleged anti-competitive restrictions
The Commission held that Google abused its dominant market position by including the following restrictions in Google’s agreements with publishers:
- Exclusivity: From 2006, Google included exclusive supply obligations in its contracts which prohibited publishers from placing any search adverts from competitors on their search results pages. The Commission considered that this prevented competitors from placing their search adverts on the most commercially significant websites.
- “Premium Placement” clauses: From March 2009, Google started replacing its exclusivity clauses with “Premium Placement” clauses, which required publishers to reserve the most profitable space on their search results pages for Google’s adverts, and requested a minimum number of Google adverts. In the Commission’s view, this prevented competitors from placing their search adverts in the parts of the websites’ search results pages with the highest visibility and user traffic.
- Approval for changes to the display of rival adverts: Also from March 2009, Google included clauses which required publishers to seek written approval from Google prior to making changes to the way rival adverts were displayed. The Commission considered that this gave Google control over the visibility, appearance and likely incoming user traffic of competing search adverts.
The Commission found that Google’s infringing conduct harmed competition and stifled innovation as its competitors were unable to grow and offer alternative services. Google did not demonstrate, in the Commission’s view, that these clauses created any efficiencies to justify its conduct.
Comment
The Commission’s decision requires Google to stop the conduct found by the Commission to be unlawful (to the extent it had not already done so) and to refrain from any measure that has the same or equivalent object or effect. Google will almost certainly appeal the Commission’s decision, as it has appealed the Commission’s two previous decisions. Civil damages claims from persons or businesses affected by its anti-competitive conduct can also be expected to follow.
Beverley Flynn