EU’s Google victory emboldens enforcers in pursuit of Big Tech

10 September 2024
By Lewis Crofts

EU antitrust investigators will feel that their victory against Google at the bloc’s top court has given them important backing on key notions about how to probe potential abuses by tech companies.

But opponents may exploit parts of the judgment to push back against the regulator, arguing cases need to be tighter if they are to survive court scrutiny.

First things first: this is a huge victory for the commission and Margrethe Vestager, who poured resources, legal expertise and political will into prosecuting a case that, at the time, was the first of its kind.

The outgoing commissioner made clear today that her staff had taken risks and are now emboldened to keep swinging antitrust’s biggest stick.

While the fears of most tech companies have moved onto the threat of the bloc’s new Digital Markets Act, today’s ruling will still be pored over to see what it means for future antitrust cases. Has the once almighty EU power to hit monopolies become easier to deploy? Or will cases pursued by Vestager’s successor be just as tricky?

As regards the legal theory: Judges sided with the EU’s view of how Google was harming competition. It seems simple now, but it was innovative at the time.

They said “self-preferencing” wasn’t always an abuse, but in Google’s case — where it promoted its own results and pushed down those of rivals — it “was discriminatory and did not fall within the scope of competition on the merits.”

With self-preferencing now common shorthand for a lot of seemingly deleterious conduct, all eyes will be on interpreting the court’s ruling. If self-preferencing is not “as a general rule” abusive, what are the conditions for ruling it is? Only when there are anticompetitive effects?

The judge said Google fell foul of the law because of the “specific circumstances identified.” What will those be next time around?

In the meantime, the EU has the Digital Markets Act which bans such conduct, so such ruminations may remain a thought experiment for now.

Effects

The judgment also says that the causal link between the conduct and any effects is “one of the essential constituent elements” of finding an abuse. The commission has to prove it, potentially with the help of “participants, their suppliers, their customers or professional or consumer associations.”

Some companies will welcome that, arguing the commission should create a more direct connection rather than just pointing toward potential effects on the market.

Indeed, Google — like any company under investigation — was free to put forward its view of how the market would have otherwise developed, in a bid to challenge the commission’s assessment of the market impact. But the commission retains significant leeway to build this part of its case.

For judges, this was the right way to handle the review and didn’t amount to reversing the burden of proof.

The court “merely found that it is permissible for the commission to rely on a range of evidence, without being required systematically to use any single tool to prove the existence of such a causal link.”

The commission will like that and expect to be able to meet that standard without breaking a sweat.

Comparing to competitors

One of the major fights in dominance probes is whether EU investigators need to check if the company’s conduct would have harmed similar kinds of businesses, or if it was, in fact, just pushing inefficient rivals out of the market.

In short, was it illegal exclusion or just the rough and tumble of a competitive market?

Traditionally, the commission has argued that the economics-heavy number-crunching for this — known as the As Efficient Competitor Test, or AEC — is relevant in only a handful of cases, where the cost base of companies can be compared.

In contrast, companies are keen to deploy such an AEC wherever possible, and, according to previous EU judgments, have the right to see their submissions fully reviewed and answered by investigators.

Still, the fight remains over when exactly such a test is relevant.

Judges walked that same tightrope today, appearing to say the test must be used, with the caveat of only where it is “relevant.” This reference, in particular, may become a battleground.

The commission “must establish the existence of an abuse of a dominant position in the light of various criteria, by applying, inter alia, the as-efficient competitor test, where that test is relevant, its assessment of the relevance of such a test being, where appropriate, subject to review by the EU judicature.”

So, do officials need to do an AEC test? Not quite.

Judges said today that the test was “not mandatory” and in the Google case it was “not relevant.” Furthermore, the commission would have struggled to get “objective and reliable results” on the efficiency of Google’s competitors, meaning the test would have been of little help anyway.

Questions will continue to swirl over when the AEC test is relevant.

Guidelines

When the dust settles on the commission’s thumping victory today, attention will turn to how the ruling tallies with a draft policy document released last month that points the way on pursuing future dominance-abuse cases.

The regulator will be happy with the pronouncements of the court on many of the key issues, seeing harmony with how they have framed their views in the draft guidelines.

But opponents will argue that the ruling has tightened the screw on how the commission views corporate conduct, and judges have not made its life any easier.

The case reference number is C 48/22 P.

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