The General Court has issued its decision in Google and Alphabet v Commission T-612/17.
Google started offering a comparison-shopping service in 2002. In 2007, Google changed the way in which it displayed and promoted product results. In November 2010, the European Commission opened a formal investigation into alleged breaches by Google of Article 102 of the Treaty on the Functioning of the European Union. In 2017, the Commission adopted a decision to fine Google EUR2.42 billion for breaching Article 102 of the TFEU. It found that Google abused its market dominance as a search engine by giving an illegal advantage to its comparison-shopping service.
Google sought the annulment of the Commission’s decision or, alternatively, a reduction of the fine imposed. The Court largely dismissed Google’s arguments and confirmed the fine.
The General Court recognised the anticompetitive nature of the practice at issue.
The Court said that an undertaking’s dominant position alone, even one on the scale of Google’s, is not a ground of criticism of the undertaking concerned, even if it is planning to expand into a neighbouring market. However, Google favoured its own comparison-shopping service on its general results pages through more favourable display and positioning, while relegating the results from competing comparison services in those pages by means of ranking algorithms. The following three issues meant that it was liable to lead to a weakening of competition on the market:
- the importance of the traffic generated by Google’s general search engine for comparison- shopping services;
- the behaviour of users, who typically concentrate on the first few results; and
- the large proportion of ‘diverted’ traffic in the traffic of comparison-shopping services and the fact that it cannot be effectively replaced.
The General Court also noted that because Google’s general search engine is universal and is designed to index results containing any possible content, the promotion on Google’s results pages of only one type of specialised result, that is, its own, involves a certain form of abnormality.
It also said that the general results page is like an essential facility to the extent that there is currently no actual or potential substitute available on the market that would enable it to be replaced in an economically viable manner. It found that Google favoured its own comparison-shopping service over competing services, rather than a better result over another result.
The General Court noted that even if the results from competing comparison-shopping services were more relevant, they could never receive the same treatment as results from Google’s comparison-shopping service in terms of their positioning or their display. While Google did subsequently enable competing comparison-shopping services to enhance the quality of the display of their results by appearing in its ‘boxes’ in return for payment, that service depended on the comparison-shopping services changing their business model and ceasing to be Google’s direct competitors, becoming its customers instead.
The Commission correctly found harmful effects on competition
Google had challenged the decision regarding competition. The General Court pointed out that Google’s arguments only considered the impact of the display of results from Google’s comparison- shopping service, without taking into account the impact of the poor placement of results from competing comparison-shopping services in the generic results.
An abuse of a dominant position exists where the dominant undertaking hinders the maintenance of the degree of competition in the market or the growth of that competition, and that may be established merely by demonstrating that its conduct is capable of restricting competition. Accordingly, the Commission was not required to identify actual exclusionary effects on the markets. In that context the General Court noted that, in this case, after having measured the actual effects of the conduct concerned on comparison-shopping services’ traffic from Google’s general results pages, the Commission had a sufficient basis for showing as it did that that traffic accounted for a large share of their total traffic, that that share could not be effectively replaced by other sources of traffic, such as advertising (AdWords) or mobile applications, and that the potential outcome was the disappearance of comparison shopping services, less innovation on their market and less choice for consumers. These are all characteristic features of a weakening of competition.
The General Court also rejected Google’s argument that competition on the market for comparison shopping services remains strong because of the presence of merchant platforms on that market. The General Court confirmed the Commission’s assessment that those platforms were not on the same market. Although both categories of website offer product search functions, they do not do so under the same conditions, and users, whether internet users or online sellers, do not use them in the same way but do so, if at all, on a complementary basis. The General Court endorsed the Commission’s view that there is little competitive pressure on Google from merchant platforms. It makes clear that even if merchant platforms had been in the same market as comparison-shopping services, the anticompetitive effect identified would have been sufficient for Google’s conduct to be characterised as abusive because, in all the countries concerned, a not insignificant share of that market, that of comparison-shopping services, would have been affected.
The General Court therefore confirmed the Commission’s analysis regarding the market for specialised search services for comparison-shopping.
General search services
However, the General Court considered that the Commission did not establish that Google’s conduct had had – even potential – anticompetitive effects on the market for general search services and therefore annulled the finding of an infringement in respect of that market alone.
The General Court ruled out any objective justifications for Google’s conduct
Google had also argued that its conduct had pro-competitive characteristics because it had improved the quality of its search service and counterbalanced the exclusionary effect linked to the practice at issue.
The General Court rejected those arguments. It said that although the algorithms for the ranking of generic results or the criteria for the positioning and display of Google’s specialised product results may, as such, represent pro-competitive service improvements, that did not justify the unequal treatment of results from Google’s comparison-shopping service and results from competing comparison-shopping services. The General Court also said that Google had not demonstrated efficiency gains linked to that practice that would counteract its negative effects on competition.
Amount of the penalty
The General Court rejected Google’s arguments that no penalty should have been imposed on it. The annulment of part of the Commission’s decision did not affect the amount of the fine. The Court also emphasised the particularly serious nature of the infringement and the fact that the conduct in question was adopted intentionally, not negligently. Therefore, the amount of the fine was confirmed.
