Summary

The European Commission has today fined Google a record €2.42 billion for abusing its dominance as a search engine. Google has found itself in breach of EU antitrust rules by giving an unlawful advantage to another Google product, its comparison shopping service, above the search results of competitors also advertising on the search engine.

Next Steps

Google is now compelled to end the conduct within 90 days, or face penalty payments of up to 5% of average daily worldwide turnover of its parent company, Alphabet.

Comment from the Commission

EU Competition Commissioner, Caroline Vestager, has commented with regard to the case that: “Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of competitors”. Vestager highlighted the negative impact this behaviour has had on competitors of Google: “It denied other companies the chance to compete on the merits and to innovate”. Moreover, the Commissioner also commented that the European consumers were denied a genuine choice of services and the full benefits of innovation. The strategy of the European Commission with regard to tackling abuse of competition and promoting market fairness has centred on consumer welfare rights, and the position of competitors operating in related markets who are adversely affected by these unfair practices.

Breach of EU Antitrust Rules

It should be noted that a dominant position within a defined market is not per se illegal. What is illegal is when this position is abused, resulting in conditions of restricted competition. Google has a dominant position in general internet searches throughout the EEA. However, the Commission ruled that it was the act of Google giving prominent placement to its own comparison shopping site, whilst demoting rivals in its search results that afforded Google with a significant advantage as compared to its rivals in breach of EU competition law. It is the accrual of an unfair gain in this manner, deriving from its market dominance, which is prohibited in the EU under Article 102 of the Treaty on the Functioning of the European Union (TFEU), and across the EEA under Article 54 EEA Agreement.

Calculation of the Fine and Compliance

The calculation of the fine is based on two factors: the duration and gravity of the infringement, and the revenue Google derived from its comparison shopping site across the 13 EEA countries concerned.

Impact and Relevance of the Decision

Today’s decision lays down a precedent which establishes the framework for the assessment of the legality of this type of conduct. This is not good news for Google who have two other abuse of dominance cases currently being investigated by the Commission. It also opens the door for civil actions to be brought to the Courts of the Member States for any person or business adversely affected by this anti-competitive behaviour. Individuals may wish to obtain damages relying on Member State legislation transposing the EU Antitrust Damages Directive.