No business is safe from the scrutiny of competition authorities, not even the world’s largest search engine Google – indeed, it is the term “world’s largest” that’s now causing Google problems. One might say that with success must come caution in the competition law world, as companies with real strength in the market can be accused of abusing that strength to achieve a competitive advantage. Although abuse of dominant position cases have not had the profile enjoyed by cartel cases in recent times, one only needs to recall the woes of Microsoft to appreciate the implications of falling foul of this aspect of competition law.
The allegations against Google have been made by some of its competitors including Foundem, a price comparison site, and legal search engine ejustice.fr. They allege that Google manipulates both its unpaid and sponsored search results in a way that is unfavourable to their services and gives preferential treatment to Google’s own services. It is all very technical and relates to algorithms used to rank websites, which is something our tech buffs will be able to explain better than us! The European Commission will carry out an investigation into the allegations.
This is a very interesting development, and although entirely coincidental, is timely given the Scottish Competition law Forum’s winter event on ‘online distribution’. The Commission investigation will certainly feed into the debate about how best to regulate the sale of goods and services over the internet, which is getting competition authorities and ‘enthusiasts’ very excited. Consumer protection is a key focus for the OFT here, though there are also a number of issues about the competitive landscape of markets operating via the web. One of the key questions is whether markets operating via the web should be included in any competition law assessment of ‘bricks and mortar’ markets which sell the same or substitutable products.
There is some guidance in relation to the operation of internet markets, including the OFT’s recent investigation into online targeting of advertising and prices, published in May this year. The new EU vertical agreement regime (Regulation 330/2010) also considers the impact of supply and distribution agreements on internet sales and gives examples of what are considered to be ‘hard-core’ (and so unlawful) restrictions on competition over the internet. These issues will no doubt grow with the increasing growth of the web as a commercial marketplace.
One interesting issue to keep an eye on might be how Google ranks the coverage of the investigation (and, dare we hope, this blog)!
On December 7, 2010