knowledge 20 September 2022 |

Commission’s decision on Google largely confirmed by General Court

In this case, the Commission had fined Google for abuse of its dominant position finding that it had imposed anticompetitive contractual restrictions on manufacturers of Android mobile devices and on mobile network operators in order to protect and consolidate its dominant position on the national markets, within the EEA, for general search services. The Commission identified three types of restrictions.

• those contained in ‘distribution agreements’, requiring manufacturers of mobile devices to pre-install the general search (Google Search) and (Chrome) browser apps in order to be able to obtain a licence from Google to use its app store (Play Store);

• those contained in ‘anti-fragmentation agreements’, under which the operating licences necessary for the pre-installation of the Google Search and Play Store apps could be obtained by mobile device manufacturers only if they undertook not to sell devices running versions of the Android operating system not approved by Google;

• those contained in ‘revenue share agreements’, under which the grant of a share of Google’s advertising revenue to the manufacturers of mobile devices and the mobile network operators concerned was subject to their undertaking not to pre-install a competing general search service on a predefined portfolio of devices.

The Commission directed Google to bring these practices to an end and imposed a fine of almost €4.343 billion on it. This fine was the largest ever imposed by a competition authority in Europe.

Review before the court

Google then sought review of this decision before the General Court of the EU. It pleaded that the following were incorrectly assessed by the Commission:

• the assessment of market definition and dominance;

• the finding that certain pre-installation conditions were abusive;

• the finding that the sole pre-installation condition included in the portfolio-based revenue share agreements was abusive;

• the finding that it was abusive for Google to make Play Store and Google Search licences conditional on compliance with obligations under anti-fragmentation agreements;

Google also alleged infringement of the rights of the defence and that the various factors taken into account to calculate the fine were incorrectly assessed.

Decision of the court

The General Court has now given judgment¹ and has upheld most of the Commission’s decision. However, it has annulled the decision to the extent that the Commission had found that the portfolio-based revenue share agreements constituted, in themselves, an abuse.

Notwithstanding the partial annulment, the court said that this did not affect the overall validity of the finding of an infringement, in the light of the exclusionary effects arising from the other abusive practices implemented by Google during the infringement period.

In relation to the fine imposed, in common with the Commission, the court took account of the intentional nature of the implementation of the unlawful practices and of the value of relevant sales made by Google in the last year of its full participation in the infringement. However, it ultimately decided to impose a lower fine of €4.125 billion on Google, its reasoning differing in other respects from that of the Commission.

Where to now?

Google may appeal this decision. An appeal on a point of law now lies to the Court of Justice.

So much for disputes around past behaviour. With the advent of the EU Digital Markets Act, the future behaviour of large gatekeeper platforms will be very much in focus for the Commission. The new legislation establishes a more level playing field for businesses operating online and better protects the rights of users. Compliance will be monitored by the Commission who will investigate and sanction offending behaviour and who will also carry out market investigations where necessary.

The Commission will be able to impose fines of up to 10% of annual global turnover which may increase to 20% for repeat infringement. It will also be possible to impose periodic penalty payments as well as other measures to ensure compliance which could include structural remedies such as obliging an offender to sell a business or prevention of a merger where there is systematic non-compliance.