Case T‑612/17

Google LLC, formerly Google Inc.
and
Alphabet, Inc.

v

European Commission

 Judgment of the General Court (Ninth Chamber, Extended Composition), 10 November 2021

(Competition – Abuse of dominant position – Online general search services and specialised product search services – Decision finding an infringement of Article 102 TFEU and Article 54 of the EEA Agreement – Leveraging abuse – Competition on the merits or anticompetitive practice – Conditions of access by competitors to a dominant undertaking’s service the use of which cannot be effectively replaced – Dominant undertaking favouring the display of results from its own specialised search service – Effects – Need to establish a counterfactual scenario – None – Objective justifications – None – Possibility of imposing a fine having regard to certain circumstances – Guidelines on the method of setting fines – Unlimited jurisdiction)

1.      Action for annulment – Review of legality – Criteria – Decisions adopted by the Commission in competition matters – Elements to be taken into consideration – Elements which predate and post-date the contested decision – Elements presented in the context of the administrative procedure or presented for the first time in the context of the annulment proceedings – Included

(Arts 101, 102, 261 and 263 TFEU)

(see paragraphs 129-131)

2.      EU law – Principles – Fundamental rights – Presumption of innocence – Procedures in competition matters – Applicability

(Charter of Fundamental Rights of the European Union, Art. 48(1))

(see paragraph 132)

3.      Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission – Extent of the burden of proof – Decision based on evidence sufficient to demonstrate the existence of the infringement – Evidential obligations of undertakings disputing the reality of the infringement

(Art. 102 TFEU)

(see paragraphs 133, 134)

4.      Action for annulment – Jurisdiction of the EU judicature – Interpretation of the reasoning of an administrative measure – Limits

(Arts 263 and 264 TFEU)

(see paragraph 135)

5.      Dominant position – Abuse – Concept – Objective concept relating to conduct which is such as to influence the structure of a market and having the effect of hindering the maintenance or growth of competition – Obligations on the dominant undertaking – Competition on the basis of merit

(Art. 102 TFEU)

(see paragraphs 150-157)

6.      Dominant position – Abuse – Leverage effect – Dominant position on the market for online general search services – Practices favouring the comparison shopping service of the dominant undertaking and disadvantaging competing comparison shopping services – Whether abusive – Criterion for assessment – Practices constituting a quality improvement within the scope of competition on the merits – Absence – Practice in line with the open nature of the infrastructure underlying the general search engine – Absence

(Art. 102 TFEU)

(see paragraphs 158-189, 193-197)

7.      Judicial proceedings – Intervention – Plea which has not been raised by the applicant – Inadmissibility

(Statute of the Court of Justice, Arts 40, fourth para., and 53, first para.; Rules of Procedure of the General Court, Art. 142(3))

(see paragraphs 191, 192)

8.      Dominant position – Abuse – Leverage effect – Dominant position on the market for online general search services – Practices favouring the comparison shopping service of the dominant undertaking and disadvantaging competing comparison shopping services – Abuse distinct from that of refusal to supply

(Art. 102 TFEU)

(see paragraphs 212-249, 285, 287, 290, 292, 314, 315, 351)

9.      Dominant position – Abuse – Concept – Objective concept relating to conduct which is such as to influence the structure of a market and having the effect of hindering the maintenance or growth of competition – Whether necessary to establish the existence of an anticompetitive intent – Not necessary

(Art. 102 TFEU)

(see paragraphs 255, 257, 262)

10.    Dominant position – Abuse – Anticompetitive effect – Dominant position on the market for online general search services – Practices favouring the comparison shopping service of the dominant undertaking and disadvantaging competing comparison shopping services – Practices capable of having anticompetitive effects on the market – Need to establish a counterfactual scenario – None

(Art. 102 TFEU)

(see paragraphs 369, 372, 373, 376-378, 419)

11.    Dominant position – Abuse – Anticompetitive effect – Burden of proof on the Commission – Whether potential effect sufficient – Dominant position on the market for online general search services – Practices favouring the comparison shopping service of the dominant undertaking and disadvantaging competing comparison shopping services – Impact on the relevant markets – Overall decrease in traffic from the dominant undertaking’s general results pages to competing comparison shopping services – Conduct of the dominant undertaking affecting only one category of its competitors – Irrelevant – No obligation to use the as-efficient-competitor test

(Art. 102 TFEU)

(see paragraphs 382-394, 406, 414, 417, 438-443, 454, 501, 504-506, 523, 537, 538, 541)

12.    Dominant position – Relevant market – Delimitation – Two-sided market – Criteria for assessment – Market for online specialised comparison shopping search services, encompassing comparison shopping services and not including merchant platforms – Services serving different purposes

(Art. 102 TFEU; Commission Notice 97/C 372/03)

(see paragraphs 466-495)

13.    Dominant position – Abuse – Dominant position on the market for online general search services – Practices favouring the comparison shopping service of the dominant undertaking and disadvantaging competing comparison shopping services – Objective justification – Burden of proof

(Art. 102 TFEU)

(see paragraphs 551-555, 560-567)

14.    Competition – Fines – Amount – Determination – Discretion of the Commission – Judicial review – Unlimited jurisdiction of the EU judicature – Scope

(Arts 101, 261 and 263 TFEU; Council Regulation No 1/2003, Art. 31; Commission Notice 2006/C 210/02)

(see paragraph 605)

15.    Competition – EU rules – Infringements – Committed intentionally or negligently – Concept – Undertaking not capable of being unaware of the anticompetitive nature of its conduct – No previous Commission decision relating to a similar infringement – Irrelevant

(Art. 101 TFEU; Council Regulation No 1/2003, Art. 23(2))

(see paragraphs 608, 616, 618)

16.    Competition – Administrative procedure – Commission decision finding an infringement – No previous Commission decision relating to a similar infringement – Breach of the principle that offences and penalties must be defined by law – None – Commission having envisaged accepting commitments by the undertaking concerned before making the finding of an infringement – Irrelevant – Infringement of the principle of legitimate expectations – None

(Art. 101 TFEU; Charter of Fundamental Rights of the European Union, Art. 49; Council Regulation No 1/2003, Art. 23(2))

(see paragraphs 619, 628-630, 634, 636-639)

Résumé

The General Court largely dismisses Google’s action against the decision of the Commission finding that Google abused its dominant position by favouring its own comparison shopping service over competing comparison shopping services

The General Court upholds the fine of EUR 2.42 thousand million  imposed on Google

By decision of 27 June 2017, (1) the European Commission found that Google LLC had abused its dominant position on the market for online general search services in 13 countries in the European Economic Area (EEA), (2) by favouring its own comparison shopping service, a specialised search service, over competing comparison shopping services.

The Commission found that the results of product searches made using Google’s general search engine were positioned and displayed in a more eye-catching manner when the results came from Google’s own comparison shopping service than when they came from competing comparison shopping services. Moreover, the latter results, which appeared as simple generic results (displayed in the form of blue links), were, as a result, prone to being demoted by adjustment algorithms in the general results pages, unlike results from Google’s comparison shopping service. In that way, Google had, in essence, reduced the traffic from its general results pages to competing comparison shopping services while increasing such traffic to its own comparison shopping service (‘the practice at issue’).

According to the Commission, that practice had produced anticompetitive effects both on the 13 national markets for specialised comparison shopping search services and on the 13 national markets for general search services.

Concluding therefore that the prohibition of abuse of a dominant position under Article 102 TFEU and Article 54 of the EEA Agreement had been infringed, the Commission imposed a fine on Google of EUR 2 424 495 000, of which EUR 523 518 000 jointly and severally with Alphabet, Inc., its parent company.

The action brought by Google and Alphabet against that decision is largely dismissed by the Court, which also confirms the amount of the fine imposed by the Commission.

Findings of the Court

As regards, in the first place, the anticompetitive nature of the practice at issue, the Court considers that a mere finding that an undertaking has a dominant position, even one on the scale of Google’s, is not in itself a ground of criticism of the undertaking concerned, even if that undertaking is planning to expand into a neighbouring market. It is the ‘abuse’ of a dominant position that is prohibited by Article 102 TFEU. The special responsibility imposed, in that context, on a dominant undertaking must be considered in the light of the specific circumstances of each case which show that competition has been weakened.

Having regard to the importance of traffic generated by Google’s general search engine for comparison shopping services, the behaviour of users, who typically focus on the first few results, the significant proportion of ‘diverted’ traffic and the fact that such traffic cannot be effectively replaced, the Court rules that the practice at issue constitutes a difference in treatment that deviates from competition on the merits and is liable to lead to a weakening of competition on the market that may be contrary to Article 102 TFEU.

Against that background, the Court points out that, given the universal vocation of Google’s general search engine, which is designed to index results containing any possible content, the promotion on Google’s general results pages of a single type of specialised result – its own – involves a certain form of abnormality.

The Court also notes that while Google’s general results page has characteristics akin to those of an ‘essential facility’, in the sense of an indispensable service for which there is no actual or potential substitute, the practice at issue can be distinguished, in its constituent elements, from a refusal to supply an essential facility. As a result, the analysis set out by the Court of Justice in its judgment in Bronner (3) in relation to such a refusal cannot be applied in the present case.

Lastly, the Court observes that, since the differentiated treatment applied by Google is based on the origin of the results, that is, whether they come from its own or from competing comparison shopping services, it follows that the results from competing comparison shopping services can never receive the same treatment as results from Google’s comparison shopping service as regards their positioning and their display. Thus, Google favours its own comparison shopping service over competing comparison shopping services rather than the best results.

As regards, in the second place, the anticompetitive effects generated by the practice at issue, the Court recalls that an abuse of a dominant position exists where, through recourse to methods different from those governing normal competition, the dominant undertaking hinders the maintenance of the degree of competition or the growth of that competition. In that context, in order to establish an infringement of Article 102 TFEU, the Commission is not required to show that the practices concerned have had actual exclusionary effects, proof of potential effects being sufficient.

In that regard, the Court confirms the Commission’s conclusion that the practice at issue could give rise to potentially anticompetitive effects on the market for specialised comparison shopping search services. The Commission had, more specifically, established that there were actual effects on traffic from Google’s general results pages to the detriment of competing comparison shopping services and to the benefit of Google’s comparison shopping service and, moreover, that competing comparison shopping services’ traffic from those pages accounted for a large proportion of their total traffic and could not be effectively replaced by other sources, such as advertising (AdWords) or mobile applications, and therefore that the practice at issue could result in the disappearance of competitors, less innovation in the market and less choice for consumers, features which are characteristic of a weakening of competition.

By contrast, the Court finds that the Commission did not establish that Google’s disputed conduct had had anticompetitive effects, even potential effects, on the market for general search services, and consequently annuls the finding of an infringement in respect of that market alone.

As regards potentially anticompetitive effects on the market for specialised comparison shopping search services, the Court also rejects Google’s argument that competition remains strong because of the presence of merchant platforms on that market, and confirms the Commission’s assessment that those platforms are not active in the same market.

The justifications on which Google relied in denying that its conduct was abusive are also rejected by the Court. In that regard, it notes that, while the algorithms ranking generic results or the criteria for the positioning and display of Google’s specialised product results may as such represent pro-competitive service improvements, that does not justify the practice at issue, namely the unequal treatment of results from Google’s comparison shopping service and results from competing comparison shopping services. Furthermore, Google had failed to show any efficiency gains linked to that practice that would counteract its negative effects for competition.

Following a fresh assessment of the infringement, the Court ultimately confirms the amount of the fine imposed by the Commission, rejecting Google’s arguments as to the fact that the conduct at issue had been analysed for the first time by the Commission in the light of the competition rules and that, at one stage of the procedure, it had been willing to try to resolve the case by means of commitments.

Making its own assessment of the facts with a view to determining the level of the penalty, the Court finds, first, that the annulment in part of the contested decision in regard to the market for general search services has no impact on the amount of the fine, since the Commission did not take the value of sales on that market into account in order to determine the basic amount of the fine imposed. Secondly, the Court points out that while it takes account of the fact that the abuse has not been demonstrated on the market for general search services, it also takes into consideration the fact that the conduct at issue constitutes a particularly serious infringement and that it was adopted intentionally, not negligently.

Following that analysis, the Court confirms the amount of the pecuniary penalty imposed on Google.

1      Commission Decision C(2017) 4444 final of 27 June 2017 relating to proceedings under Article 102 TFEU and Article 54 of the EEA Agreement (Case AT.39740 – Google Search (Shopping)).

2      Belgium, Czech Republic, Denmark, Germany, Spain, France, Italy, Netherlands, Austria, Poland, Sweden, United Kingdom and Norway.

3      Judgment of 26 November 1998, Bronner (C‑7/97, EU:C:1998:569).