//by Matthias Horn
Introduction
The European Court of Justice (ECJ) recently decided to uphold a €2.42 billion fine imposed on Google by the European Commission for abusing its dominant market position in the Google Shopping case. This landmark decision reinforces the European Union’s commitment to ensuring fair competition in digital markets. The ruling has significant legal implications for Google’s business practices and sets a precedent for how self-preferencing by dominant platforms is treated under EU competition law.
Background of the Google Shopping Case
In 2017, the European Commission fined Google €2.42 billion after a thorough investigation revealed that the company had been systematically favoring its own comparison shopping service in its general search results. Competitors were demoted in search rankings, making it difficult for them to compete effectively. Google’s practices were found to distort competition and harm consumers by limiting choice and stifling innovation.
Legal Considerations Under EU Competition Law
The case centers on the interpretation of Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant market position. Several key legal considerations were addressed:
Dominant Market Position: The ECJ confirmed that Google holds a dominant position in the general search market within the European Economic Area (EEA), with market shares exceeding 90% in most Member States.
Abuse Through Self-Preferencing: Google’s practice of favoring its own comparison shopping service over those of competitors was deemed an abuse of its dominant position. The court highlighted that self-preferencing can constitute an abuse when it has anti-competitive effects that harm consumer welfare.
Market Definition: A crucial aspect of the case was defining the relevant market. The ECJ agreed with the Commission’s delineation between general search services and specialized comparison shopping services, acknowledging that they serve different purposes and user needs.
Effects-Based Approach: The court adopted an effects-based analysis, focusing on the actual or potential effects of Google’s conduct on competition and consumer welfare, rather than merely the form of the conduct.
The ECJ’s Judgment
On September 10, 2024, the ECJ dismissed Google’s appeal and confirmed the General Court’s decision, effectively upholding the Commission’s findings and the associated fine. The court concluded that:
Abuse Was Established: Google’s conduct amounted to an abuse of its dominant position by leveraging its power in the general search market to gain an undue advantage in the comparison shopping market.
No Objective Justification: Google’s arguments that its practices were intended to improve user experience and were pro-competitive were rejected. The court found no objective justification for the preferential treatment.
Procedural Fairness: The ECJ affirmed that Google’s rights of defense were respected throughout the Commission’s investigation, and there was no procedural irregularity that could invalidate the decision.
Implications for Google’s Business Practices
The upholding of the fine has immediate and long-term implications for Google:
Financial Impact: The €2.42 billion fine remains one of the largest ever imposed by the European Commission, signaling the serious consequences of violating EU competition laws.
Requirement to Cease Illegal Practices: Google is obliged to comply with the ruling by treating rival comparison shopping services equally in its search results.
Potential for Further Scrutiny: The decision may open the door for additional investigations into other Google services and practices that could be considered anti-competitive.
Broader Legal Implications for the Digital Market
The ECJ’s ruling has significant ramifications beyond Google:
Precedent on Self-Preferencing: The judgment clarifies that self-preferencing by dominant platforms can constitute an abuse under Article 102 TFEU, setting a legal precedent for future cases involving digital platforms.
Encouragement for Competitors: The decision empowers other companies that may have been adversely affected by similar practices to seek legal remedies.
Regulatory Framework Reinforcement: The ruling supports the EU’s broader regulatory efforts, such as the proposed Digital Markets Act (DMA), aimed at ensuring fair competition in digital markets.
Conclusion
The ECJ’s decision to uphold the €2.42 billion fine against Google marks a pivotal moment in the enforcement of EU competition law in the digital age. By confirming that self-preferencing by a dominant company constitutes an abuse of market position, the court has sent a clear message that anti-competitive practices will not be tolerated. This ruling not only impacts Google’s operations but also sets a significant legal precedent that will influence the behavior of other digital platforms.
Matthias Horn is Data Privacy Lawyer at Ottobock, Berlin (Germany). In addition, he advices organizations on issues at the interface between data, technology and law.