Short Reads

Google Shopping: self-preferencing is a form of abuse of dominance

Google Shopping: self-preferencing is a form of abuse of dominance

Google Shopping: self-preferencing is a form of abuse of dominance

02.12.2021 NL law

On 10 November 2021, the General Court (GC) almost entirely dismissed Google’s action against the European Commission’s Google Shopping decision. According to the European Commission (the Commission), Google illegally favoured its own comparison shopping service by displaying it more prominently in its search results than other comparison shopping services (see our July 2017 Newsletter). The Commission found that Google was abusing its dominant position and imposed a EUR 2.42 billion.

The GC confirmed that self-preferencing may constitute an abuse of dominance. While the judgment relies heavily on the particular context of the case, it innovates on important issues such as an equal treatment obligation for (dominant) online companies that prohibits discrimination between their own services and third parties.

Leveraging and competition on the merits

The GC held that leveraging a dominant position into a neighbouring market is not prohibited as such, even it if has exclusionary effects; excluding less efficient competitors can be part of normal competition. However, leveraging can violate Article 102 TFEU when it departs from competition on the merits and has anti-competitive effects.

Whether self-preferencing is abusive depends on the particular circumstances. The GC found that the Commission had demonstrated that Google’s conduct was liable to weaken competition on the market for comparison shopping services. Three specific circumstances were particularly relevant, namely:

(i) the importance of Google search traffic for comparison shopping services,

(ii) user search behaviour (users focus on the first 3-5 search results), and

(iii) the fact that Google search traffic could not be effectively replaced by other sources.

Google favouring its own service therefore impaired the ability of other comparison shopping services to attract visitors and compete effectively.

Equal treatment

Importantly, the GC also infers an ‘equal treatment’ obligation for dominant online companies from case law concerning public undertakings and EU legislation imposing network neutrality on internet service providers (which Google is not). The GC held that in view of Google’s ‘superdominant’ position and its role as a gateway to the internet, the principle of network neutrality “cannot be disregarded” when analysing Google’s practices on the downstream market. Hence, dominant online companies have a special responsibility to provide non-discriminatory access and to not restrict or interfere with internet traffic by favouring their own services.

Indispensability

The judgment also contributes to the debate on the indispensability test for refusal of access cases. In principle, case law gives (dominant) companies the right to choose their trading partners and an obligation to supply may only be imposed if access is indispensable in order to compete effectively (also referred to as an ‘essential facility’). This strict indispensability criterion seeks to protect the right of a dominant company to freely choose its own trading partners.

The GC holds though that where an infrastructure “has characteristics akin to those of an essential facility”, the dominant company may be under an obligation to provide access to it. This may in particular apply where the infrastructure cannot be duplicated, even if such access is not strictly indispensable for rivals to compete.

Conclusion

The GC innovates on a number of issues, such as the equal treatment obligation for certain dominant online firms and the creation of a quasi-essential facility doctrine that does not require indispensability. If the judgment is upheld on appeal, this would significantly expand the scope of the Commission’s powers against dominant platforms.

This article was published in the Competition Newsletter of December 2021. Other articles in this newsletter:

Team

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