Rivals expected to seek damages after Google competition fine

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Jun 28, 2017
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Other search engines had claimed Google excluded them from the market and may now sue

Google’s troubles are “only going to get worse” after the European Commission slapped the search engine with a €2.42 billion fine for abusing its dominant position, lawyers predicted yesterday.

The fine, which was the largest ever imposed on a single company for breach of EU competition law, was the culmination of a seven-year investigation into Google as the EU regulator found that the business put its own shopping service at “illegal advantage”. The commission has given Google 90 days to stop this or face fines of up to 5 per cent of the average daily worldwide turnover of its US owner, Alphabet. The decision requires Google to adhere to the principle of neutrality, with lawyers saying it sets a precedent that will cause the search engine and other technology giants to review their business models. 

FairSearch, a coalition of consumer search aggregators, brought the case against Google, having instructed the “magic circle” firm Clifford Chance, according to The Lawyer magazine. The US firm Cleary Gottlieb Steen & Hamilton acted for Google.

”It remains to be seen whether the European decision will inspire regulators in South Korea, India and other parts of the world to find against Google in the same way," said Adam Rooney, a partner at City of London law firm Signature Litigation. “All in all this is a bad day for Google and their situation will only get worse; the Android case … has potential to do significantly more damage.”

The Commission is also investigating Google’s Android operating system over allegations that it is limiting the development of alternatives by requiring smartphone and tablet manufacturers to pre-install its own applications. 

There is also another case around the effect of exclusivity arrangements allegedly preventing advertisers from moving their online advertising campaigns to rivals.

Suzanne Rab, an EU and competition law specialist at Serle Court chambers in Lincoln’s Inn, pointed out that the commission’s focus on Google – and Microsoft before it – “has prompted the often recurring question as to whether US companies are receiving rather more EU competition law scrutiny than their European rivals”. 

However, Rab said, Margrethe Vestager, the EU commissioner for competition, “has made clear her views that Google is a good company and that it makes no difference from the EU competition law perspective whether a company is American or European”.

Peter Willis, a partner at Bird & Bird, a City law firm, predicted litigation would follow the commission’s ruling. “We can expect to see a series of damages claims brought by the rivals that were excluded from the market by Google’s conduct,” he said. “They will be able to use the decision as the basis for a damages claim before the national courts. The commission decision will establish Google’s liability and a damages claim will in principle be limited to establishing the loss.”

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