The European Court of Justice (ECJ) found that Google abused its dominant position by favoring its own comparison shopping service through more prominent display in search results, while at the same time demoting the results of competing comparison shopping services. .
But not all favoritism is doomed. According to the ECJ, to establish whether self-preference can deviate from competition on the basis of merit and thwart it as an efficient rival, the specific characteristics of the conduct, the market and the conduct The impact it will have on the market will be decisive. That assessment requires a case-by-case analysis. The European Commission’s draft guidelines on exclusionary abuse may help in this regard (see September 2024 newsletter).
background
In June 2017, the European Commission fined Google €2.42 billion for abusing its market power as a search engine by promoting its own comparison shopping service in search results. In November 2021, the General Court almost completely dismissed Google’s appeal against the European Commission’s Google Shopping decision. The General Court recognized that self-preference may constitute an abuse of supremacy (see December 2021 Newsletter).
ECJ judgment
In September 2024, the ECJ upheld the General Court’s decision, confirming that self-preference is different from a complete “refusal of supply”.
Under the “denial of supply” test, dominant companies could be forced to allow competitors access to their infrastructure. Given that this forced access deeply violates companies’ freedom of contract and property rights, the following strict conditions must be met for a denial to be considered an abuse:
Refusing to grant access is likely to eliminate all competition on the part of the company requesting access, and there is no objective justification for the refusal. And infrastructure is essential.
Google claimed that’s exactly what happened in this case. The European Commission took issue with Google’s failure to give competitors access to its infrastructure, which consists of a prominent, dedicated box on search results pages. Therefore, strict conditions, in particular mandatory requirements, should have been applied by the European Commission.
The ECJ reiterated settled EU case law to distinguish between “pure” acts of denial of access and “unfair” acts of access. Requiring companies to access infrastructure previously kept private is a far-reaching measure that can only be imposed in special circumstances. However, if a company has already provided access to its infrastructure but is doing so on “unfair” terms, the ECJ will force it to provide access on fair terms. The court ruled that this would have less negative impact on the company’s freedom of contract and property rights. . Therefore, in situations where the Commission alleges that there is access under unfair conditions, it is not necessary to prove that the infrastructure is “essential” to the activity in order to qualify as a potential abuse ( (See April 2021 Newsletter).
Accordingly, the ECJ found that the European Commission was correct in not applying the prerequisite to Google’s self-preferential conduct. In other words, rival companies were given access to Google’s general search services and general results pages, but with less favorable conditions.
This does not mean that all self-preference by dominant corporations is prohibited. According to the ECJ, acts of self-preferential treatment are considered abuses of a dominant position only if they fall outside the scope of competition on the basis of merit and have the potential to produce exclusionary effects. To determine whether this is the case, all relevant factual circumstances must be considered. These include not only those relating to the act itself, but also those relating to the markets in question and the effects of the act on those markets.
The ECJ states that the General Court has determined that (i) the importance of Google search traffic on shopping comparison services; (ii) the search behavior of users (users focus on the former 3-5 search results); and (iii) the importance of Google search traffic on shopping comparison services. the fact that it could not be effectively replaced by other sources (see December 2021 Newsletter on GC judgments);
conclusion
This decision confirms that even if a dominant company treats its products more favorably, it does not necessarily deviate from competition based on merit. It all depends on the situation. Leading companies therefore need to carefully self-assess the immediate situation before taking on the favorites.
Apart from a closer look at the circumstances relevant to future decisions in Google AdTech, the Commission’s draft guidelines on exclusionary abuse may help (see September 2024 newsletter). These guidelines include a list of factors that indicate when preferential treatment ends. Guidance on how to determine whether self-preference creates anticompetitive effects, as well as from competing on merits.
