Google case: A turning point in competition rules enforcement

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on 13 December following a decision of the EC which renders legally binding the commitments offered by Apple and four international publishers – Simon & Schuster (CBS Corp., USA), Harper Collins (News Corp., USA), Hachette Livre (Lagardère Publishing, France), Verlagsgruppe Georg von Holtzbrinck (Germany; owner of inter alia Macmillan) – to stop following competition breaching practices.

Enforcing fair competition in the fast-moving digital markets, like in the Google case, is a fight against time. If the antitrust procedures take the long way of legal battles before the European courts, the possible competition law breaches may purport billions to the culpable party.

That is why, Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy, while presenting on 21 May 2012 the preliminary conclusions of the antitrust investigation into allegations that Google had abused a dominant market position, said clearly: “I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified”.

In case however that those proceedings take a long time to give results and secure fair competition, the public in general and the companies in particular which were touched from the unduly behaviour of a market leader, expect that the European Commission will impose fines analogically related to the illegal profits, pocketed by the culpable party, even if this last one agrees to stop exercising the activities proved detrimental to others.

Following the facts

In November 2010 the European Commission launched an antitrust investigation, into allegations that Google had abused a dominant market position. These complaints had been filed by a number of firms, which considered themselves aggrieved by Google’s practices. Fortunately the Commission didn’t restrict its investigation to these cases, but included in its research other topics too.

In May 2012, Joaquín Almunia, spelled out the four competition concerns identified by the Commission in the course of this investigation, as presented below:

“First, in its general search results on the web, Google displays links to its own vertical search services…differently than it does for links to competitors.

Our second concern relates to the way Google copies content from competing vertical search services and uses it in its own offerings… This practice may impact for instance travel sites or sites providing restaurant guides.

Our third concern relates to agreements between Google and partners on the websites of which Google delivers search advertisements…The agreements result in de facto exclusivity requiring them to obtain all or most of their requirements of search advertisements from Google…

Our fourth concern relates to restrictions that Google puts to the portability of online search advertising campaigns from its platform AdWords to the platforms of competitors”.

Not a few points by any count.

Then in December 2012 Almunia issued a statement saying: “After meeting Eric Schmidt, executive chairman of Google, today in Brussels, I have decided to continue with the process towards reaching an agreement based on Article 9 of the EU Antitrust regulation…On the basis of the progress made, I now expect Google to come forward with a detailed commitment text, in January 2013”.

The strategy

Following the whole story one can easily understand that the strategy followed by Google was not to counter the Commission head on. In the face of it, the company shared Commission’s worries for a swift settlement of the case, without taking refuge to courts. A traditional legal route would presumably delay the restoration of fair competition in those digital markets.

What if, however, Google changes its strategy in January 2013 and instead of showing a collaborative attitude with the EU authorities, decides to take its case to the European Court? In this way Google may gain some more years, exploiting its allegedly dominant position in the market.

Some analysts take this hypothesis even further, by alleging that Google can use the Court “card”, to negotiate with the EU Commission for a lower fine. In any case January 2013 is here. Depending on what Google does, the entire EU antitrust apparatus will have a good lesson to learn, and use this new knowledge for future similar cases.

All in all, digital markets are a completely new “animal”. They have fast gained huge economic and social dimensions, surpassing the most favourable predictions. Regulating them is an entirely new task, overshadowing the traditional legal proceedings. The European authorities must try their best to catch up. It’s exactly like what the digital police digital are doing, when run to catch up with the technics developed by criminals.

The European Sting is here, setting as its task to follow closely those brave new developments.